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Corporate tax to be lowered

The finance ministry keen on reducing exemptions to industries and companies. So far exemptions have caused litigations and revenue loss to the government. There are around 75,000 cases in court just over service tax in India. Totally a revenue of 100 crore is stuck in legal battle.The government has planned to reduce corporate tax to 25 percent from 30 percent and remove exemptions. In a first step the expectation is to remove accelerated depreciation and incentives for special economic zones (SEZ).  Exemptions over plant and machinery, cinematography and research and development will be the first to face cuts.

The future plan is to remove all incentive except those which boost savings. Though the tax percentage is as high as 30 percent the net rate is at 23 percent due to incentives.

However the government is taking a balanced step in reduction of corporate tax and removing exemptions. With the slow growth in industries reducing too many exemptions may lead to decrease in investments

The ministry has also proposed to reduce depreciation from 100 percent to 60 percent and tax exemptions with end date will be given the last date as march 31st of 2017. Profit and investment linked, area based deduction will be removed for both corporate and non-corporate players.

The exemption has created an environment where the bigger companies are benefiting more than the smaller companies leading to unfair advantage.

The revenue lost by the government in terms of exemptions amount for 37,000 crores as corporate tax during the financial year 2015-16

Australian taxation office probe

The Australian government has started enquiry into corporate tax avoidance in October 2014. This enquiry started long before the fallout of “panama papers”. Around 800 Australians are listed in the papers for using offshore accounts to stash money with the help of “Mossack Fonseca”, a law firm which helps in setting up offshore bank accounts.

The state economics reference committee has asked Chris Jordan, The commissioner of Australian Taxation office, to give report on corporate tax avoidance along with the Australian federal police.

The committee has convened a special hearing and the evidence gathered will be a part of its final report which will be published in this year.

Member of the committee, Labor senator Chris Ketter, stated that Australia has soft rules in regard to corporate tax avoidance. The committee is try to make the tax environment more stern where evasion should be accounted for.

Australian government is conducting deep investigations into misconduct and tax evasion. “Panama papers” have forced governments to act more swiftly in this regard. Australia on an average loses billions of dollars due to tax evasion

The papers have names of national leaders of 12 countries directly or indirectly linking them to the accounts.

Tax compliance option for black money holders

Union Finance Minister Arun Jaitley provided an opportunity for individuals with undisclosed income to comply with the income tax regulations. The window period to move from the non-complaint to the complaint list is 4 months.

The government had announced 90 day period in the 2015 budget for disclosing foreign black money. This year’s budget is expected to curb domestic black money issues.

The finance minister has assured that the government is taking all necessary steps to bring back the black money. The government is trying to bring-in transparency in high-value transactions.

Individual tax payers disclosing during this period will be charged income tax rate of 30 percent and a surcharge of 7.5 percent along with a penalty of 7.5 percent. The net rate of tax would be 45 percent of the undisclosed amount.

The surcharge collected at 7.5 percent will be used for agricultural and rural development. Contact Uptra Consultancy Services for Tax & Accounting services

On comparing with the tax percentage for previous year’s foreign black money this year the percentage is lower for domestic black money. In the year 2015 a total of 4,147 crore of wealth was declared and 2,500 crore was collected as black money. This amount was collected in a time period of 90 days, which ended on September 30, 2015.


This year the time period for compliance begins from June 1 2016 and ends on 30 September 2016. The individual has to pay within 2 months after declaring. The wealth declared during this period will not be subject to the Wealth Tax Act or any further prosecution. The individual will be provided immunity against Benami transaction (prohibition) act, subject to certain conditions.

Rise in tax rates on cars to reduce pollution

Air pollution in India is at all time high. In the top 20 polluted cities of the world, 14 Indian cities have managed to secure a place. Delhi is the most polluted city in the world. The pollution levels are 15 to 20 times higher than the accepted safety limits in US and Europe.The list was published by the World Health Organization (WHO) and brings into light that India has overtaken China in pollution levels. WHO assessed the minute particles present in the air which cause breathing disorder.

The assessment was done in 1600 cities across the world.The major causes for high amounts of pollutants in the air are construction dust, vehicular emission, crop and coal burning.The stand-out reason among these causes is vehicular emission. Individual car owners have increased leaps and bound in India. In a bid to reduce pollution the government has imposed a 1 percent tax on small cars, 2.5 percent on diesel cars and 4 percent on SUVs. The tax will generate $30 billion for the government.

The Supreme Court (SC) also temporarily banned the sales of diesel cars in Delhi. In Delhi 40 percent of pollution was due to vehicular emission.Car manufacturers have refused the claims of environmentalist over these figures. After the introduction of tax charges on car industry the stock value Maruti Suzuki plunged by 5 percent.
The car maker said it was unfair from the government’s side to single out car manufacturers in pollution issue.

Government beats its own tax target

The government crossed its tax target for the year 2015-16 .The indirect taxes collected by the government crossed its own target of 7.04 lakh crore and reached 7.09 lakh crore. There has been an increase of 33 percent in indirect taxes and a 10 percent increase in direct taxes.The biggest contributor to indirect tax in India is the Mumbai zone, which recorded a 25 percent rise in indirect tax collection. The government failed to attain its target in the year 2014-15 and this year has seen improvement. Various measures were taken by the Finance ministry to accomplish this task. The tax department has been pro-active in sending notices to tax avoiders and also declared a list of defaulters under its “name and shame” policy.

The government introduced a tax amnesty to encourage tax defaulters to file their taxes without any prosecution. The tax amnesty is announced for the second year in 2016 despite being a failure the previous year. The Measures are being taken to plug-in the misuse of agriculture sector for tax evasion. The government expects a 40,000 crore additional revenue next year.This growth is achieved without the GST bill being introduced. Once the GST bill is introduced it will further increase the transparency and will get hold of tax evaders. GST is expected to bring more number of taxpayers who are currently evading taxes.The tax authorities are scrutinizing PAN details to weed out multiple PAN holders. Integrating PAN with high value transactions ensures the flow of money and source of Income.

Supreme Court deals with the service tax levy on senior advocates

According to the Union Financial budget of the year 2016-17, the senior lawyers have to levy, for their service charges from any entity or an individual.The Finance Minister, Arun Jaitley announced to charge 14% of the service tax on the legal services to extend the taxation. The service taxing will decrease the burden of the entities and the individuals, while the senior lawyers oppose it.Some senior lawyers filed petition against the case, while the others say that the service taxing on the advocates will increase the funds for the government to start certain policies or schemes. The service tax case is put on stay in three different High Courts of Delhi, Gujarat and Kolkata.

The revenue department contacted the Supreme Court to move the petition filed in all the three High Courts. The Central Board of Excise and Custom’s Chairman requested the Attorney General to dissolve the stay order from the three High Courts. The Attorney General had to submit the required documents based on the High Court case, so that the Supreme Court can fill the transfer petition.To expand the threshold tax, the Ministry of Finance proposed the service tax on senior lawyers at fourteen percent. According to the taxation, if an entity or a client seeks the advice or help of a senior lawyer, then the client or recipient, or the company has to pay the amount to the tax department authorities. Thus the fourteen percent tax on the service tax credits the income tax department.

Senior advocates voice against service tax

The Union Finance Minister, Arun Jaitley announced the financial budget for the year 2016-17. The senior lawyers are also bound to taxation.According to the new financial budget, the senior lawyers who demand high fees from their clients should pay the service tax. The Ministry of Finance has proposed taxing on service charges by senior lawyers to a law entity or advising corporate sectors or other business companies.Vikram Nankani, a senior counsel criticized the idea of taxation on senior advocates and said that this will not increase the money flow. Some senior counsels from Delhi met the Finance Minister in an event planned to negotiate about the tax implication before the budget proposal. The experts say that this service taxation on the senior lawyers would reduce the burden of the business entities.

According to the current law, the individuals or a company will follow the reverse charge process to pay the service tax. And if the company or the individual receives services from the senior advocate, then the recipient has to pay the tax to the income tax officials. The advocates filed a case against the new protocol, and the High Court has put a stay order on this notification. The Gujarat High Court has also put in a stay order the same case filed by the senior advocates.The Delhi High Court Bar Association (DHCBA) was against the notification that it would end up in double taxation which is against the basics of service taxes. The High court sent a notice to the Central government about the appeal made by the members of the DHCBA. Already there are two petitions in the Delhi High court on the same case.

Supreme court order to remove former CJI from his post

The Supreme court ordered the Central government to submit the complete income tax report of former CJI’s relatives.The Supreme court, headed by justice Dipak Misra, ordered to submit the detailed income tax assessment of the relatives of former Chief Justice of India K.G.Balakrishnan, while he was the CJI and the chairperson of the National Human Rights commission. After the attorney general reported that his relatives were not involved in that particular case.The court ordered the investigation, because of the complaint filed by the NGO Common Cause.Itreported that the case in the presence of the justice Shiva Kriti Singh, stating that the relatives and the family member of CJI Balakrishnan had a lot of wealth. And they requested the CBI to follow the case.In the hearing, the attorney general Rohatgi submitted a report which states that Balakrishnan’s relatives, brothers and sisters are subjected to the income tax and are not involved in the case.

And Justice Balakrishnan, who was the Chairperson of the National Human Rights Commission, resigned from his post even before advocate Prashant Bhushan of the NGO Common Cause requested his removal.And the court postponed the hearing to July 12th.Later the Supreme court stated that it will not include the allegations of the benami transactions, with the help of the attorney general on September 15th. It was reported that the issue also involves the income tax violation. The NGO Common Cause’s advocate Bhushan reported that Balakrishnan’s daughter and son owns about twenty one properties registered in their name. The Income tax department submitted the detailed report of the Balakrishnan’s transactions and assets. And the supreme court ordered the government on August 26, 2013 to dismiss him from the Chairperson post in the National Human Rights Commission.

Taxation depends on the residential status of an individual

A person can go abroad for higher studies or for a job offer, but has to plan their stay in India. Because the income tax return can affect the foreign pay. Mittal, who lives in abroad has a doubt on her income tax return. On September 2014, she went to London to pursue her one-year course and she visited India for 10 days. She is an employee of an MNC in Dubai on October 2015. They deposited her salary in the bank in Dubai, and this year she is in India for 6 six days. She doubts if she can qualify herself as an NRI for this year’s taxation, if she can open an NRE account in India and declare her salary. And is she liable to pay tax if she opens an NRE account and transfers the amount to India.In Mittal’s case, since her stay in India is less than 182 days within the academic year April 1, 2015 to March 31, 2016, she is an NRI.

And she need not pay tax for the amount she earned in Dubai, because of an agreement signed between India and UAE. But she cannot open an NRE account in India and transfer the amount she received in Dubai. But she need not pay tax for the amount she transfers to the NRE account in India, because it was from the bank account in Dubai. Since the first income receipt received is not in India.A retired employee, Kanu Singh has been working abroad and retired. He doubts whether his retirement amount would be taxable from 2001, if he files his return as a resident Indian 2015-16. If Kanu is a resident and an ordinarily resident of India, depending on the number days spent in India between April 1, 2015 and March 31, 2016 and the previous years, his international income will be taxable. But, there can be benefits depending upon the tax. If he is an NRI, the income he receives here is taxable. The taxability on the retirement amount earned abroad depends on the individual fact.

Uber’s brand new look in Southwest Philly

Uber the global ride-sharing company has set up a new office in Southwest Philly. The building is about 10 miles north of the Philadelphia International Airport, while can serve approximately 12,000 drivers. And it is twice the size of the last driver operation in Center City, which is only about 4,200 square feet and requires more space and parking lot. Philadelphia general manager, Joe Feldman said that the new office will provide driver-partner with the best technical support and customer service. With the proximity to the airport and free parking , the new support center will meet the driver’s needs. The front view of the support center looks like a corporate office, whereas the inside is a polished concrete floor with trendy light fixture.

The number of full time workers who work in the Southwest Philly is unknown, but the spokesperson said that they designed the office for their ‘partners’ as in the driver’s of Uber. The staffs at the office guide the drivers with the tracking of payment and help them to follow the drivers app. And they communicate with the drivers through the text, and in-app messages and weekly emails to with the latest information. Uber has several offices like this in North Carolina, one in Portland, Ore and one in Hoboken, New Jersey. Despite the legal challenges faced by the company, like the lawsuit from the taxi company, and the issues on the uberX with its own uberBLACK drivers, the office in Southwest Philly feels like a commitment to the employees.