Cabinet likely to red- flag super- rich tax in DTC Bill
VRISHTI BENIWAL
New Delhi, 19 November
The proposal to levy a ' superrich' tax, at the rate of 35 per cent,
on those earning more than ₹ 10 crore a year might not receive support
of the Union Cabinet, which is to consider the Direct Taxes Code (
DTC) Bill this month. This is because the government might not like to
sully the business environment in the country in the run- up to the
general elections.
The finance ministry is moving a supplementary note to propose changes
in the DTC Bill sent to the Cabinet in August. Though it is unlikely
to propose any change to the ' super- rich' tax provision, officials
say the Cabinet might not clear it in view of the polls.
The Cabinet had not taken up the Bill at its previous meeting,
reportedly due to apprehensions at the Prime Minister's Office (PMO)
over the new tax slab. PMO, it is learnt, also worried the time might
not be right to bring a new legislation without extensive
consultation.
In Budget 2013- 14, Finance Minister P Chidambaram had imposed a
surcharge of 10 per cent on those earning at least ₹ 1 crore in ayear.
He had said this was a onetime tax on the wealthy to help the economy
tide over a difficult fiscal situation. At present, 42,800 Indians
earn more than ₹ 1 crore a year; those earning over ₹ 10 crore
annually would be much fewer.
According to a report by Kotak Wealth Management and CRISIL Research,
there were 62,000 highnetworth individuals ( HNIs) in the country as
of 2010- 11. The report, 'Top of the Pyramid — Decoding the Ultra
HNI', defined HNIs as those with a minimum average net worth of ₹ 25
crore. This gets mapped to a minimum income of ₹ 3- 4 crore.
Levying an additional five per cent tax on these individuals would
bring ₹ 19.5 lakh to the exchequer (₹ 4.5 lakh on the first ₹ 1 crore
and ₹ 5 lakh on every subsequent ₹ 1 crore) from those earning up to ₹
4 crore. The number of HNIs at 62,000 people would mean an additional
income of ₹ 21,390 crore for the government, if it is assumed they
earn up to ₹ 4 crore a year. But many of these might be earning more
than that, so the actual additional revenue could be much more.
Since the proposed ' super- rich' tax is to be imposed only on those
earning more than ₹ 10 crore, the sum would need to be adjusted
accordingly.
There will be about half a dozen changes in the supplementary note,
which the finance ministry is aligning with the new Companies Act.
Changes will also be made in the areas pertaining to petroleum,
mineral oil, financial services, urban development and the Planning
Commission.
Govt may not want to sully business environment in the run- up to polls
Fast- track courts for blackmoney cases Settlement commission to
resolve tax disputes might be done away with Threshold for indirect-
transfer shares on which capital gains tax is to be imposed might be
defined Exemption from tax on maturity of some long- term saving
instruments could continue MAT could be retained on book profits,
instead of gross assets 35% I- T rate for those earning over ₹ 10 cr a
year may not be approved
~2 lakh The current exemption limit for I- T is likely to be retained
BREAKING THE CODE
The amendments to the DTC Bill, 2010, that the Cabinet might consider this month
CHIT FUND REGULATION
SC issues notices to Centre, RBI and Sebi
BS REPORTER
New Delhi, 19 November
The Supreme Court on Tuesday issued notices to the central government,
the Reserve Bank of India ( RBI), the Securities and Exchange Board of
India (Sebi), the Enforcement Directorate and other authorities.
A public interest petition offer said Ponzi schemes were "shaking the
very foundation of the rural and the semiurban economy in India" and
robbing the innocent of their savings. The court asked the authorities
to reply to the notices within four weeks.
Chief Justice P Sathasivam said the matter was serious, as it affected
people across the country.
Prashant Bhushan, counsel for the petitioner, Humanity Salt Lake, said
Sebi had taken strong action against M/ s Rose Valley Real Estate &
Construction Company and directed that the company shouldn't collect
any money from investors or launch any scheme. It had also asked the
company not to dispose of any property, Bhushan said, adding the
regulator had also ordered MPS Greenery Developers Ltd to wind up its
scheme. The counsel also cited the Saradha Realty India Ltd
irregularities and said the Sahara group companies had refunded some
money to investors only after an order from the apex court.
Bhushan said though there were laws to control chit funds and other
schemes, these weren't implemented effectively.
The petition sought improvement in banking facilities in rural areas.
It also sought the constitution of a special expert committee
comprising officials from Sebi, RBI, the finance ministry, the
Enforcement Directorate and the Serious Fraud Investigation Office to
help devise a plan to end all unauthorised and illegal deposit and
collective investment schemes, launch prosecution against all
violators and recover the funds to return those to depositors/
investors.
The petition also sought a thorough investigation by the Central
Bureau of Investigation into large- scale financial frauds, including
the Saradha scandal, in eastern states, as well as a directive to set
up an independent expert body for receiving complaints on financial
frauds. This entity, it said, should be able to recover money and have
the requisite powers of investigation and prosecution.
PONZI CRACKDOWN
|The Supreme Court has asked the authorities to reply to the notices
within four weeks |Prashant Bhushan, counsel for the petitioner, said
though there were laws to control chit funds, these weren't
implemented effectively
|The petition seeks improvement in banking facilities in rural areas
Half of our traders dont have PAN
VRISHTI BENIWAL
Shillong, 19 November
Apart from the muchreported constitutional and political hurdles on
anational Goods and Services Tax ( GST), there is another basic one.
Barely half of dealers in the country have a Permanent Account Number
(PAN) from the tax department.
The proposed GST network (GST- N) needs a common information
technology ( IT) platform. In fact, an efficient IT infrastructure is
essential for implementing a massive reform of the complex structure
of indirect taxes at the central and state levels. The aim here is to
reduce the cascading effect of taxes, creating a seamless market
across the country and improving productivity in the economy.
In a presentation here before the Empowered Committee of State Finance
Ministers on Tuesday, GST- N Chairman Navin Kumar said 6.5 million
dealers are expected to be registered for GST. However, currently, of
about 7.4 mn dealers registered for Value Added Tax ( VAT) with the
states, only 5.9 mn are active and only 3.2 mn or 54 per cent of
active dealers have aPAN. In the GST- N experiments conducted in 11
states, Maharashtra has fared well, in terms of number of active
dealers with PAN registration.
About 94 per cent of its active dealers have a matched PAN, compared
with three per cent in Jammu & Kashmir, the lowest among all the
states where the pilot was conducted. Odisha, Assam and West Bengal
have a little more than 80 per cent active dealers with aPAN card,
followed by Gujarat ( over 70 per cent), Andhra Pradesh and Punjab
(over 60 per cent), Kerala, Karnataka and Tamil Nadu (over 30 per
cent) and Delhi ( 19 per cent). In places where such pilot projects
have not been conducted, Uttarakhand, Chandigarh and Chhattisgarh are
among the top performers. Nagaland, Mizoram and Sikkim are at the
bottom. " We are spending ₹ 30 crore for the early phase of GST- N,"
said Abdul Rahim Rather, the committees chairman.
The system will enable states to service their existing VAT dealers
through the VAT module and simultaneously test the GST module. The
integrated VAT- GST system would be so developed that the VAT reports
are aligned to GST.
Implementation of GST- N would provide shared IT infrastructure and
services to central and state governments, taxpayers and other
stakeholders, even prior to GST's implementation.
GST- N will provide services such as common registration, return
filing, settlement of interstate GST, matching of input tax credit and
e- payment services. It will also help tax authorities to plug tax
evasion.
In Budget 2012- 13, Pranab Mukherjee, then finance minister, had said
GST- N would be set up by August 2012. This did not happen. The
special purpose vehicle ( SPV) for this has been incorporated as a
not- forprofit company, with equity capital of ₹ 10 crore. The Centre
and the states have a stake of 24.5 per cent each in the SPV, while
Natioanl Securities Depository Ltd has up to 21 per cent. It will have
a self- sustaining revenue model, based on levy of user charges on
taxpayers and tax authorities availing its services.
IT network for proposed indirect tax structure needs everyone to get
one for reform's aim; picture varies widely among states
GST HOMEWORK WORK ON NETWORK
|The proposed GST network ( GST- N) needs a common information
technology ( IT) platform |The system will enable states to service
their existing VAT dealers through the VAT module and simultaneously
test the GST module
|6.5 million dealers are expected to be registered for GST
|GST- N experiments conducted in 11 states, have revealed that in
Maharashtra about 94 per cent of its active dealers have a matched
PAN, compared with three per cent in Jammu & Kashmir
Putting first things last
Someone recently sat down and counted the number of words in the
Constitution of India. The tally was 140,000. That makes it the
longest constitution in the world. It is also the most amended, over
100 times in 65 years. Fortunately, the core is intact unlike the
legendary Ship of Theseus that became a new one after suffering too
many patch- ups.
Another distinguishing mark of the Constitution is that it has made
the Supreme Court the most powerful one in any democracy. But that is
not a matter of rejoicing; its shoulders are creaking with the load of
66,000 cases in arrears and some 5,500 new ones added every month.
The founding fathers thought the court would deal only with cases of
constitutional importance, like the US Supreme Court. But over the
decades, sittings of constitution benches have become a rarity.
Special leave petitions against orders of high courts and sundry
authorities have choked the court. Last week, for instance, a strident
"Save Campa Cola" campaign in Mumbai with T- shirts and human chains
appeared to have paid dividends to the residents who had repeatedly
knocked at the doors of courts to resist the demolition of their
illegal apartments. The judges said they were " deeply disturbed"
throughout the night over the plight of the agitators purveyed on
television. Ultimately all the gimmicks didn't work. After all slums
are razed without that much fuss.
While 30 judges of the court are busy dealing with issues such as
regularisation of posh colonies that behave like little republics,
landlordtenant disputes, controversies over the retirement age of
clerks and generals, the constitutional questions referred to larger
benches long ago have literally gathered dust, collected over decades
and before computerisation of records. The court states that there are
39 constitution bench cases ( requiring more than five judges) which
are ready for hearing. They were so for a long time but the dog- eared
files have not trundled from the registry racks to the courtroom due
to shortage of judges, other urgent matters or long vacations.
Some questions waiting for answers have the potential to change the
economic landscape. For instance, the court acknowledged over a decade
ago the need to reinterpret the definition of " industry" in the
Industrial Disputes Act.
The interpretation given in 1978 in the " Bangalore Water Supply" case
was found unsatisfactory by a later set of judges as not being "
comprehensive, clear or conclusive". But such an important issue has
been under the carpet far too long.
The revision of the extent of the right to property, once a
fundamental right and now only a legal right, is waiting for the final
word for nearly 17 years. The roots of the controversy go back to the
25th amendment to the Constitution. Several constitution bench
decisions later added more forensic haze to an already problematic
issue. Unable to harmonise all of them, a bench in 1996 referred the
issues to alarger constitution bench in the
case, Property Owners' Association vs State of Maharashtra. But it has
been in limbo all these years.
Another heady question with a long hangover deals with the competing
powers of the state and the central governments over liquor trade. The
court had framed six
questions in State of UP vs Lalta Prasad. But seven years later, the
case has fallen under the stool, as it were, and not visible. The
issues involved are a heavy cocktail of constitutional questions. The
referral judgment hinted at why the answers are not forthcoming: "not
only because of the money, political clout and muscle power linked to
this field of commerce, but also due to the complexity of laws." Apart
from the above samples of high- profile cases, there are some
constitutional questions raised by parties who might as well have
forgotten
them after two decades. Rajeev Dhawan vs Vishnu Hari Dalmia (1994),
Subramanian Swamy vs Arun Shourie ( 1990), Sambalpur Merchants
Association vs State of Orissa ( 1994) are some of them.
A recent study by a Harvard researcher has reportedly found that
matters decided by constitution benches have been declining steadily
over the decades. In the first half of 1960s the court disposed of 134
such cases. In 200509, the average plunged to 6.4. The court has been
mired in minutiae far too long. The current chief justice has tried to
revive the momentum of hearing constitutional cases but he can only
scratch the surface of the problem in his short tenure, looking at the
Herculean task. Constitution bench cases, going by the revered
practice of long- winded arguments interspersed with anodyne anecdotes
by ageing counsel, take months, not counting the time to deliver
judgments. Life is too short to track their progress.
Constitution benches do not sit often enough to clear decade- old issues
OUT OF COURT
MJ ANTONY
In the first half of 1960s the court disposed of 134 such cases. In
200509, the average plunged to 6.4. The court has been mired in
minutiae far too long
EOW to attach properties of Jignesh, Massey
BS REPORTER
Mumbai, 19 November
Now, it is the turn of the directors, including Jignesh Shah and
Joseph Massey, of National Spot Exchange Limited ( NSEL). Their
properties would be attached by the economic offences wing ( EOW) of
the city police. The EOW has attached 166 properties of borrowers of
the NSEL, with ₹ 5,574 crore of dues to several thousands of
investors.
An official on Tuesday said they had not found any money borrowed by
the 24 defaulters on the platform being routed back to any subsidiary
of the Financial Technologies ( India) Limited, or FTIL.
Meanwhile, it is learnt the largest borrower of NSEL, NK Proteins, has
proposed to enter a settlement pact with the exchange. Managing
Director ( MD) Nilesh Patel is in judicial custody. The company will
pay ₹ 275 crore only. The first instalment of ₹ 15 crore will be in
three weeks. After that, it will be ₹ 5 crore a month. It proposes to
pay in four years. The proposal has not been approved by the court. A
source said the top- five borrowers were in settlement talks. Though
this could not be verified.
Probe on FIR against NCDEX
The EOW on Tuesday said it was going to start a preliminary inquiry
into the black pepper traded on the National Commodity & Derivatives
Exchange on an FIR by Vineet Chopra. The complaint is Malabar Garbled
black pepper was mixed with mineral oil. NCDEX said it had not
received any query. " It appears the complaint is by Kalimirchi
Vyapari Association, comprising entities that traded in the pepper
futures contracts.
The body is representing the interest of a cartel comprising Betul Oil
and related entities, against whom a probe on market manipulation is
in progress," NCDEX said.
NK Proteins proposes settlement plan
--
CS A Rengarajan
9381011200
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