E- payment of tax above ₹ 1 lakh a must
BS REPORTER
New Delhi, 27 November
In a bid to increase compliance and widen the tax net, the government
on Wednesday made it mandatory for traders to make online payment of
excise duty and service tax for amounts exceeding ₹ 1 lakh. Earlier,
those with dues of ₹ 10 lakh and above were required to electronically
pay their taxes.
"It has now been decided to reduce the threshold of mandatory e-
payment from ₹ 10 lakh to ₹ 1 lakh for both central excise and service
tax payment with effect from January 1, 2014," the Central Board of
Excise and Customs (CBEC) said.
The government notified the changes on Friday. Thus, from January 1, a
manufacturer or a service taxpayer who has paid tax of more than ₹ 1
lakh in the previous financial year would be required to pay tax
through internet banking.
CBEC said the move has been taken as a measure of trade facilitation
and it is expected that increased coverage of e- payment would make it
convenient for traders to pay taxes electronically.
Currently, service tax and excise duty are levied at 12 per cent. This
means anybody with an annual turnover of more than ₹ 9 lakh would have
to pay taxes online. The present assessee base for excise duty is ₹
1,30,000, while it is ₹ 7,00,000 for service tax. The threshold, the
annual turnover below which traders are not required to pay taxes, is
₹ 1.5 crore for central excise and ₹ 10 lakh for service tax. " If a
payment is made through a cheque, it takes a lot of time. Sometimes
the cheque is not cleared. E- payment will make the process faster,"
said a finance ministry official.
E- filing of service tax and excise duty will help the government make
a smooth transition to the Goods & Services Tax ( GST) regime.
According to a report by global consultancy firm EY, 57 per cent of
the 39 countries that provided information for their report required
VAT/ GST returns to be filed electronically, 35 per cent have an
optional e- filing facility and eight per cent do not offer or require
e- filing.
In order to reduce the transaction cost of the importers and expedite
the time taken for Customs clearance, in 2012, e- payment of Customs
duty was also made mandatory for importers paying an amount of ₹ 1
lakh or more per transaction.
Earlier this year, the government had made electronic filing of
returns mandatory for taxpayers with taxable income above ₹ 5 lakh.
Prior to that, those with income above ₹ 10 lakh were required to file
their returns in the electronic mode. This provision was introduced in
the Budget for 2012- 13.
Since about 80 per cent of the taxpayers who were not mandated to file
e- returns were already doing so, the finance ministry thought of
making it compulsory to include others in the category.
|Threshold of mandatory e- payment reduced from ₹ 10 lakh to ₹ 1 lakh
for both central excise and service tax payment |Changes applicable
from January 1, 2014 |Move taken as measure of trade facilitation |E-
filing of service tax and excise duty will help the government make a
smooth transition to GST |The threshold annual turnover above which
traders have to pay central excise tax is ₹ 1.5 crore; for service
tax, it is ₹ 10 lakh TAX REGIME TIGHTENED
TAX RULES GET STRINGENT FOR TRADERS
RBI DIRECTIVE ON AADHAAR
Card swipe machines may raise banks' costs
BS REPORTER
Mumbai, 27 November
For banks, compliance with the Reserve Bank of India ( RBI)' s
directive to install new card- swipe machines ( with biometric
scanners to enable Aadhaar authentication) would come at acost. But
experts say in time, this would benefit banks.
In a circular released on Tuesday, the central bank told banks to
upgrade card- swipe machines to facilitate Aadhaar authentication.
Banks are, however, free to decide whether to adopt Aadhaar as an
additional authentication factor or shift to the Europay, MasterCard
and Visa ( EMV) chip- and- pin technology to secure card- present
payment infrastructure.
"This will lead to economies of scale. Though the cost of card- swipe
machines will go up, it is bearable . The benefit is it will help get
a fresh type of transactions," said B Amrish Rau, general manager,
First Data Merchant Solutions Asia, aglobal technology and payments
processing leader. Rau said the prices of card- swipe machines would
rise ₹ 6,000- 7,000 each.
Even as banks are replacing point- of- sales ( POS) terminals with
those enabled to accept EMV chip- and- pin based cards, RBI has asked
them to add another feature in POS machines. This means, even POS
machines replaced recently might have to be replaced, raising the cost
for banks.
According to the head of the cards and direct banking business of a
private bank, this would result in an additional feature of validation
at POS machines using the Unique Identification Authority of India (
UIDAI) number.
"This has come as a surprise to us because RBI had not discussed this
with banks so far.
Now, POS terminals will have to be changed to accept biometric
validation," the official said, on the condition of anonymity.
RBI has also said in case of cards for which EMV norms weren't
mandated, banks might decide whether to adopt Aadhaar as an additional
authentication factor or shift to the EMV chip- and- pin technology as
a security feature.
Cards for which EMV norms aren't mandated are those meant for domestic
transactions alone.
Banks are free to decide whether to adopt Aadhaar as an additional
authentication factor or shift to the Europay, MasterCard and Visa
chip- and- pin technology to secure card- present payment
infrastructure
Tata says bye to banking
ABHINEET KUMAR & DEV CHATTERJEE
Mumbai, 27 November
Tata Sons, the holding company of the Tata group, has become the
second private business house to withdraw its application for a
banking licence. According to the company, the move towards banking
was seen coming in the way of the group's international operations,
which account for about 64 per cent of its revenue.
The Reserve Bank of India ( RBI), in a press statement issued on
Wednesday, said it had accepted the request for withdrawal of the
application. RBI said the company had indicated its current financial
services operating model best supported the needs of the Tata group's
domestic and foreign strategy and provided adequate operating
flexibility to its companies, while securing the interests of the
group's diverse stakeholder base.
Elaborating on the reasons, a spokesperson for the Tata group said a
detailed evaluation of the guidelines and analysis of clarifications
were done after filing of application on July 1. It was found that
group companies with foreign operations, at times, needed to provide
financing solutions to their customers. Since all financing companies
in the group needed to be under the non- operative financial holding
company ( NOFHC), there might have been situations when a particular
country was not priority for the proposed bank/ NOFHC but extremely
important for an operating company.
"An equitable framework needs to be prepared on how some of these
situations will be addressed. Overseas financing is further
complicated, as laws in some countries require operating companies to
partner with local banks to set up financing companies. Compliance
with such requirements will not be possible under the existing
guidelines, which want all financial services entities of a group to
be owned by its NOFHC; no group company can have a direct shareholding
in entities.
Whether such a restructuring will be of value for operating companies
was also a question that was examined," Tata Sons said.
The spokesperson said RBI's clarifications on its queries had come on
June 3, while the last date for filing applications was July 1. There
was hardly any time to consult all operating firms before deciding.
So, it applied for a licence, clearly mentioning any change in legal
shareholding structure would be subject to regulatory and internal
corporate approvals, as required by the transferring company and the
company whose shares were being transferred.
Turn to Page 9 >
Feels the current financial services model best suits group's needs
Tata Sons is the second applicant — after Value Industries — to opt
out of race for bank licence
________________________________
Click here to read more...Turn to Page 9 >
Click: Article continued from…Tata says bye to banking
________________________________
Tata says bye to banking
The group, however, has kept the window open for a banking foray in
future by saying Tata Sons believes solutions for each of these issues
can and will be found in the long run. " The company shall continue to
monitor developments in this space with great interest and looks
forward to participating in the banking sector at an appropriate
time," the statement said.
Tata Sons' application had been filed besides those of others like
Aditya Birla Nuvo, Bajaj Finance, L& T Finance, and Reliance Capital.
Later, on September 3, RBI had said Chandigarhbased KC Land & Finance
had also applied for a licence on July 1 but its application was
inadvertently not included in the list.
Before Tata Sons, Value Industries, promoted by Venugopal Dhoot, had
also withdrawn its application. With the latest withdrawal, the total
number of banking licence applicants has come down to 25.
Earlier, the Mahindra & Mahindra group had announced it was not
applying for a banking licence as guidelines did not favour large non-
banking financial companies like Mahindra
--
CS A Rengarajan
9381011200
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