Issue of Passports - faster process

The Ministry has announced two major changes recently that will expedite the process for first time passport applicants as well as make it more convenient to secure an appointment at local Passport Seva Kendras.  As per the announcement, the first time passport applicants who furnish Aadhaar Card, Electoral Photo Identity Card (EPIC), PAN Card and an affidavit in the format of Annexure-I will get faster service without payment of any additional fees, subject to successful online validation of Aadhaar and EPIC and PAN Cards, if required from the respective databases. The passports under this liberal dispensation will be issued on Post-Police Verification basis.

The second measure announced pertains to securing online Appointments for submission of passport applications at Passport Seva Kendras. The new provision is allowing applicants to choose any appointment date from the earliest five available dates (working days) for scheduling/rescheduling an appointment for Passport related services. Earlier, the System used to offer only one available date to the applicants for seeking appointment for Passport related services.

No extra charge is levied for the services being rendered due to above two announcements.

            

Hydrocarbon Exploration and Licensing Policy

PIB Press Release dated 10th March, 2016

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has approved the Hydrocarbon Exploration and Licensing Policy (HELP).

Four main facets of this policy are:

                                i.           uniform license for exploration and production of all forms of hydrocarbon,

                              ii.           an open acreage policy,

                            iii.           easy to administer revenue sharing model and

                            iv.           marketing and pricing freedom for the crude oil and natural gas produced.

The decision will enhance domestic oil & gas production, bring substantial investment in the sector andgenerate sizable employment. The policy is also aimed at enhancing transparency and reducing administrative discretion.

The uniform licence will enable the contractor to explore conventional as well as unconventional oil and gas resources including CBM, shale gas/oil, tight gas and gas hydrates under a single license.  The concept ofOpen Acreage Policy will enable E&P companies choose the blocks from the designated area. 

Present fiscal system of production sharing based on Investment Multiple and cost recovery /production linked payment will be replaced by a easy to administer revenue sharing model. The earlier contracts were based on the concept of profit sharing where profits are shared between Government and the contractor after recovery of cost. Under the profit sharing methodology, it became necessary for the Government to scrutinize cost details of private participants and this led to many delays and disputes. Under the new regime, the Government will not be concerned with the cost incurred and will receive a share of the gross revenue from the sale of oil, gas etc. This is in tune with Government’s policy of “Ease of Doing Business”.

Recognising the higher risks and costs involved in exploration and production from offshore areas, lower royalty rates for such areas have been provided as compared to NELP royalty rates to encourage exploration and production.  A graded system of royalty rates have been introduced, in which royalty rates decreases from shallow water to deepwater and ultra-deep water. At the same time, royalty rate for onland areas have been kept intact so that revenues to the state governments are not affected. On the lines of NELP, cess and import duty will not be applicable on blocks awarded under the new policy.  This policy also provides formarketing freedom for crude oil and natural gas produced from these blocks.  This is in tune with Government’s policy of “Minimum Government –Maximum Governance”

Amenities for women passengers in Indian Railways

Section 58 of the Railways Act, 1989 provides for earmarking of accommodation for female passengers in trains. Accordingly, in trains carrying passengers, Indian Railways have earmarked following accommodation for female passengers: 

i. A reservation quota of six berths in sleeper class in long distance Mail/Express trains. 

ii. A combined quota of four lower berths per coach in Sleeper class and two lower berths per coach in Air Conditioned 3 tier (3AC) and Air Conditioned 2 tier (2AC) classes for Senior citizens, Female passengers 45 years of age and above, and pregnant women. 

iii. Second class accommodation for women in the second Class-cum-Luggage-cum Guard’s Coach (SLR) in most of the long distance trains. 

iv. Unreserved coaches/compartments for female passengers in EMU (Electrical Multiple Unit)/DMU (Diesel Multiple Unit)/MMTS(Multi Modal Transport System) trains & local passenger trains depending upon demand pattern as well as availability of accommodation. 

v. Running of ladies special EMU/MEMU/MMTS services on the suburban sections of Mumbai, Kolkata, Secunderabad and Chennai as well as on the Delhi-National Capital Region (NCR) sections.

Clarifications on EPF Withdrawal

PIB release dated 1st March, 2016

Clarification about Changes made in the Tax Treatment for Recognised Provident Fund & National Pension System (NPS)

There seems to be some amount of lack of understanding about the changes made in the General Budget 2016-17 in the tax treatment for recognised Provident Fund & NPS. 

The following clarifications are given in this matter:- 

(i) The purpose of this reform of making the change in tax regime is to encourage more number of private sector employees to go for pension security after retirement instead of withdrawing the entire money from the Provident Fund Account. 

(ii) Towards this objective, the Government has announced that Forty Percent(40%) of the total corpus withdrawn at the time of retirement will be tax exempt both under recognised Provident Fund and NPS. 

(iii) It is expected that the employees of private companies will place the remaining 60% of the Corpus in Annuity, out of which they can get regular pension. When this 60% of the remaining Corpus is invested in Annuity, no tax is chargeable. So what it means is that the entire corpus will be tax free, if invested in annuity. 

(iv) The Government in this Budget has also made another change which says that when the person investing in Annuity dies and when the original Corpus goes in the hands of his heirs, then again there will be no tax. 

(v) The idea behind this mechanism is to encourage people to invest in pension products rather than withdraw and use the entire Corpus after retirement. 

(vi) The main category of people for whom EPF scheme was created are the members of EPFO who are within the statutory wage limit of Rs.15,000 per month. Out of around 3.7 crores contributing members of EPFO as on today, around 3 crore subscribers are in this category. For this category of people, there is not going to be any change in the new dispensation. 

(vii) However, in EPFO, there are about 60 lakh contributing members who have accepted EPF voluntarily and they are highly - paid employees of private sector companies. For this category of people, amount at present can be withdrawn without any tax liability. We are changing this. What we are saying is that such employee can withdraw without tax liability provided he contributes 60% in annuity product so that pension security can be created for him according to his earning level. However, if he chooses not to put any amount in Annuity product the tax would not be charged on 40%.

(viii) There is no change in the existing tax treatment of Public Provident Fund (PPF). 

(ix) Currently there is no monetary ceilings on the employer contribution under EPF with only ceiling being that it would be 12% of the salary of the employee member. Similarly, there is no monetary ceiling on the employer contribution under NPS, except that it would be 10% of salary. 

(x) Now the Finance Bill 2016 provides that there would be monetary ceiling of Rs1.5 lakh on employer contribution considered with the ceiling of the 12% rate of employer contribution, whichever is less. 

(xi) We have received representations today from various sections suggesting that if the amount of 60% of corpus is not invested in the annuity products, the tax should be levied only on accumulated returns on the corpus and not on the contributed amount. We have also received representations asking for not having any monetary limit on the employer contribution under EPF, because such a limit is not there in NPS. The Finance Minister would be considering all these suggestions and taking a view on it in due course. 

Service tax exemptions

The Service Tax department has vide its notification no. 9/2016 dated 1st March, 2016 extended further exemptions from the service tax as following. What they have done is amended a mega notification no. 25/2012 dated 20th June, 2012 and all amendments in the nature of exemption notifications are made to this notification. Defeats me why they keep on amending the notifications instead of having a separate chapter itself for exemptions in the Service Tax Act. Some bureacracies fail common sense. 

Anyways, the following services are exempt from service tax (it is a detailed list, which I have copied from the portal directly)

1. In the said notification,-

(a) in the first paragraph,- (i) in entry 6, for clause (b) and clause (c), the following clauses shall be substituted, namely,-

“(b) a partnership firm of advocates or an individual as an advocate other than a senior advocate, by way of legal services to- (i) an advocate or partnership firm of advocates providing legal services; (ii) any person other than a business entity; or (iii) a business entity with a turnover up to rupees ten lakh in the preceding financial year; or

(c) a senior advocate by way of legal services to a person other than a person ordinarily carrying out any activity relating to industry, commerce or any other business or profession;”;

(ii) after entry 9A, the following entry shall be inserted with effect from 1st March, 2016, namely,-

“9B. Services provided by the Indian Institutes of Management, as per the guidelines of the Central Government, to their students, by way of the following educational programmes, except Executive Development Programme, -

(a) two year full time residential Post Graduate Programmes in Management for the Post Graduate Diploma in Management, to which admissions are made on the basis of Common Admission Test (CAT), conducted by Indian Institute of Management;

(b) fellow programme in Management;

(c) five year integrated programme in Management.”;

(iii) after entry 9B as so inserted, the following entries shall be inserted, namely:-

“9C. services of assessing bodies empanelled centrally by Directorate General of Training, Ministry of Skill Development and Entrepreneurship by way of assessments under Skill Development Initiative (SDI) Scheme;

9D. services provided by training providers (Project implementation agencies) under Deen Dayal Upadhyaya Grameen Kaushalya Yojana under the Ministry of Rural Development by way of offering skill or vocational training courses certified by National Council For Vocational Training.”;

(iv) after entry 12, with effect from the 1st March, 2016, the following entry shall be inserted, namely-

“12A. Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of - (a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession; (b) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or(iii) an art or cultural establishment; or (c) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in the Explanation 1 to clause (44) of section 65 B of the said Act; under a contract which had been entered into prior to the 1st March, 2015 and on which appropriate stamp duty, where applicable, had been paid prior to such date: provided that nothing contained in this entry shall apply on or after the 1st April, 2020;”;

(v) in entry 13, after item (b), the following items shall be inserted with effect from 1st March, 2016, namely – “(ba) a civil structure or any other original works pertaining to the „In-situ rehabilitation of existing slum dwellers using land as a resource through private participation‟under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana, only for existing slum dwellers. (bb) a civil structure or any other original works pertaining to the „Beneficiaryled individual house construction / enhancement under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana;”;

(vi) in entry 14, with effect from 1st March, 2016, A. for item (a), the following shall be substituted, namely:-

“(a) railways, excluding monorail and metro; Explanation.-The services by way of construction, erection, commissioning or installation of original works pertaining to monorail or metro, where contracts were entered into before 1st March, 2016, on which appropriate stamp duty, was paid, shall remain exempt.”. B.

after item (c), the following item shall be inserted, namely –

“(ca) low cost houses up to a carpet area of 60 square metres per house in a housing project approved by the competent authority under: (i) the “Affordable Housing in Partnership” component of the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana; (ii) any housing scheme of a State Government.”.

(vii) after entry 14, with effect from the 1st March, 2016, the following entry shall be inserted, namely-

“14A. Services by way of construction, erection, commissioning, or installation of original works pertaining to an airport or port provided under a contract which had been entered into prior to 1 st March, 2015 and on which appropriate stamp duty, where applicable, had been paid prior to such date: provided that Ministry of Civil Aviation or the Ministry of Shipping in the Government of India, as the case may be, certifies that the contract had been entered into before the 1st March, 2015: provided further that nothing contained in this entry shall apply on or after the 1st April, 2020;”;

(viii) in entry 16, for the words “one lakh rupees”, the words “one lakh and fifty thousand rupees” shall be substituted;

(ix) in entry 23,- (A) after clause (b), the following clause shall be inserted with effect from 1 st June 2016, namely,- “(bb) stage carriage other than air-conditioned stage carriage;”; (B) clause (c) shall be omitted;

(x) in entry 26, after clause (p), the following clause shall be inserted, namely,- “(q) Niramaya‟ Health Insurance Scheme implemented by Trust constituted under the provisions of the National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999).”;

(xi) after entry 26B, the following entry shall be inserted, namely,-

“26C. Services of life insurance business provided by way of annuity under the National Pension System regulated by Pension Fund Regulatory and Development Authority of India (PFRDA) under the Pension Fund Regulatory And Development Authority Act, 2013 (23 of 2013);”;

(xii) after entry 48, the following entries shall be inserted, namely,-

“49. Services provided by Employees‟ Provident Fund Organisation (EPFO) to persons governed under the Employees‟ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952);

50. Services provided by Insurance Regulatory and Development Authority of India (IRDA) to insurers under the Insurance Regulatory and Development Authority of India Act, 1999 (41 of 1999);

51. Services provided by Securities and Exchange Board of India (SEBI) set up under the Securities and Exchange Board of India Act, 1992 (15 of 1992) by way of protecting the interests of investors in securities and to promote the development of, and to regulate, the securities market;

52. Services provided by National Centre for Cold Chain Development under Ministry of Agriculture, Cooperation and Farmer‟s Welfare by way of cold chain knowledge dissemination;”;

(xiii) after entry 52 as so inserted, the following entries shall be inserted with effect from 1 st June 2016, namely:-

“53. Services by way of transportation of goods by an aircraft from a place outside India upto the customs station of clearance in India.”;

(b) in paragraph 2, - (i) after clause (b), the following clause shall be inserted with effect from such date on which the Finance Bill, 2016 receives assent of the President of India, namely: - „

(ba) “approved vocational education course” means, - (i) a course run by an industrial training institute or an industrial training centre affiliated to the National Council for Vocational Training or State Council for Vocational Training offering courses in designated trades notified under the Apprentices Act, 1961 (52 of 1961); or (ii) a Modular Employable Skill Course, approved by the National Council of Vocational Training, run by a person registered with the Directorate General of Training, Ministry of Skill Development and Entrepreneurship;‟;

(ii) for clause (oa), the following shall be substituted with effect from such date on which the Finance Bill, 2016, receives assent of the President of India, namely : - „

(oa) “educational institution” means an institution providing services by way of: (i) pre-school education and education up to higher secondary school or equivalent; (ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force; (iii) education as a part of an approved vocational education course;”;

(iii) after clause (zd), the following clause shall be inserted, namely:- „(zdd) “senior advocate‟ has the meaning assigned to it in section 16 of the Advocates Act, 1961 (25 of 1961);‟

Save as otherwise provided in this notification, this notification shall come into force on the 1st of April, 2016.

Union Budget - Major Highlights

1)The ceiling of tax rebate under Section 87A of IT Act has been proposed to be raised to Rs. 5,000 from Rs. 2,000 for individuals with income less than Rs. 5 lakhs.

2)The limit of deduction of house rent paid under section 80GG has also been raised to Rs. 60,000 from the existing Rs. 24,000 per annum to give relief to employees who live in rented houses.

3) Under the presumptive taxation scheme under Section 44AD of the Income tax Act, the limit of turnover or gross receipts has been raised to two crore rupees from the exiting one crore rupees to benefit about 33 lakh small business people. It frees a large number of such assesses in the MSME category from the burden of maintaining detailed books of account and getting audit done.

4) The presumptive taxation scheme is to be now extended to professionals with gross receipts up to Rs. 50 lakh with the presumption of profit being 50% of the gross receipts.

5) Withdrawal up to 40% of the corpus at the time of retirement tax exempt in the case of National Pension Scheme(NPS). In case of superannuation funds and recognized provident funds, including EPF, the same norm of 40% of corpus to be tax free will apply in respect of corpus created out of contributions made after 1.4.2016. Further, the annuity fund which goes to the legal heir after the death of pensioner will not be taxable in all three cases.

6) The monetary limit for contribution of employer in recognized Provident and Superannuation Fund of Rs. 1.5 lakh per annum for taking tax benefit. 

7) Annuity services provided by the National Pension Scheme (NPS) and Services provided by EPFO to employees will be exempt from service tax. Also service tax on Single premium Annuity (Insurance) Policies will be reduced from 3.5% to 1.4% of the premium paid in certain cases.

8) 100% deduction for profits to an undertaking from a housing project for flats upto 30 sq. metres in four metro cities and 60 sq. metres in other cities, approved during June 2016 to March 2019, and is completed within three years of the approval. Minimum Alternate Tax will however apply to these undertakings.

9) Distribution made out of income of SPV to the REITs and INVITs having specified shareholding will not be subjected to Dividend Distribution Tax.

10) For the ‘first – home buyers’, there will be a deduction for additional interest of Rs. 50,000 per annum for loans up to Rs. 35 lakh sanctioned during the next financial year, provided the value of the house does not exceed Rs. 50 lakh.

11) Exemption from service tax on construction of affordable houses up to 60 sq. metres under any scheme of the Central or State Government including PPP Schemes. Alongside, extension of excise duty exemption, presently available to Concrete Mix manufactured at site for use in construction work at such site to Ready Mix Concrete.

12) A Bill shall be introduced in the current Budget session of the Parliament in order to amend the Companies Act 2013. This will remove the difficulties and impediments to ease of doing business. The Bill would also improve the enabling environment for start-ups. The registration of companies will also be done in one day.

13) In order to reduce multiplicity of taxes, associated cascading and to reduce cost of collection, abolition of 13 cesses, levied by various Ministries in which revenue collection is less than Rs.50 crore in a year, is proposed.

14) Measures to rationalize TDS provisions for Income Tax have been proposed to improve cash flow position of small tax payers who get their funds blocked due to current TDS provisions. Also, Non-residents without PAN are currently subjected to a higher rate of TDS, however with amendment to relevant provision will allow that on furnishing of alternative documents, such higher rate will not apply. The facility for revision of return hitherto available to service tax assesses only will be extended to Central Excise assesses also.

15) Additional options for reversal of input tax credits with respect to non-taxable services provided by banking companies and financial institutions, including NBFCs, by way of extending deposits, loans and advances are proposed in Budget 2016-17.

16) Government of India has taken steps to reduce the cargo release time and transaction costs of EXIM trade. Shri Jaitley also proposed to amend the Customs Act so as to provide for deferred payment of customs duties for importers and exporters with proven track record.

17) Indian Customs Single Window Project would be implemented at major ports and airports starting from beginning of next financial year. Also, customs baggage for international passengers are simplified as filing of baggage declaration will be required only for those passengers who carry dutiable goods. 

18) General Insurance Companies will be listed in stock exchanges for improving transparency, accountability and efficiency. Comprehensive Central legislation to deal with Illicit Deposit Taking schemes will be enacted.

19) To provide better access to financial services, especially in rural areas, the government will undertake a massive nationwide rollout of ATMs and Micro ATMs in Post Offices over the next three years.

20) SARFAESI Act is to be amended to strengthen Asset Reconstruction Companies. This will help in dealing with stressed assets of Banks.

21) 100% deduction of profits for 3 out of 5 years for start-ups, during April, 2016 to March 2019, with certain riders. Similarly to promote innovation, a special patent regime with 10% rate of tax on income from worldwide exploitation of patents developed and registered in India was proposed.

22) Non-banking financial companies shall be eligible for deduction to the extent of 5 % of its income in respect of provision for bad and doubtful debts.

23) The corporate income tax rate for the next financial year of relatively small enterprises i.e companies with turnover not exceeding Rs. 5 crores (in the financial year ending March 2015) is proposed to be lowered to 29 % plus surcharge and cess.

24) The new manufacturing companies which are incorporated on or after 1.3.2016 are proposed to be given an option to be taxed at 25% plus surcharge and cess provided they do not claim profit linked or investment linked deductions and do not avail of investment allowance and accelerated depreciation.

25) Service tax on services provided under Deen Dayal Upadhyay Grameen Kaushalya Yojana and services provided by Assessing Bodies empanelled by Ministry of Skill Development and Entrepreneurship are also proposed to be exempted.

26) The determination of residency of foreign company on the basis of Place of Effective Management (POEM) is deferred by one year.

27) To get more investment in Asset Reconstruction Companies (ARCs), which play a very important role in resolution of bad debts, a complete pass through income-tax to securitization trusts including trusts of ARCs has been proposed. The income will be taxed in the hands of the investors instead of the trust.    

28) The Finance Minister also enunciated a plan for phasing-out various exemptions as the corporate tax is proposed to be reduced from 30% to 25 % over a period. Such graduated plan includes 

1. a) The accelerated depreciation provided under IT Act will be limited to maximum 40 % from 1.4.2017.
2. b) The benefit of deductions for Research would be limited to 150% from 1.4.2017 and 100% from 1.4.2020
3. c) The benefit of section 10AA to new SEZ units will be available to those units which commence activity before 31.3.2020.
4. d) The weighted deduction under section 35CCD for skill development will continue up to 1.4.2020.  

Source PIB

Extension of e-tourist visas to 37 more countries

The e-Tourist Visa (e-TV) facility will be extended to 37 more countries from tomorrow. The total count of countries under the scheme will become 150. 

The new 37 countries included in e-Tourist Visa scheme are Albania, Austria, Bosnia & Herzegovina, Botswana, Brunei, Bulgaria, Cape Verde, Comoros, Cote d'lvoire, Croatia, Czech Republic, Denmark, Eritrea, Gabon, Gambia, Ghana, Greece, Guinea, Iceland, Lesotho, Liberia, Madagascar, Malawi, Moldova, Namibia, Romania, San Marino, Senegal, Serbia, Slovakia, South Africa, Swaziland, Switzerland, Tajikistan, Trinidad & Tobago, Zambia and Zimbabwe. 

Government of India had launched the e-TV facility on November 27, 2014. Till now the scheme has been extended to 113 countries at sixteen Indian airports designated for providing e-Tourist visa service.

PIB release dated 25th February, 2016