Govt plans to issue Biometric PAN cards

The government has decided to issue biometric PAN cards to taxpayers across the country to weed out the problem of duplicate and fake ones.

The decision was taken recently by the finance ministry and it comes in the wake of a Comptroller and Auditor General (CAG) report that asked the Income Tax department to ensure that a single taxpayer is not issued multiple cards.

The proposed new biometric Permanent Account Number (PAN) cards would bear the I-T assessee's fingerprints. There could be an option to existing PAN card holders to opt for the biometric cards, but it may not be mandatory, a senior official in the I-T department said.

The finance ministry and the I-T department had put on hold the biometric PAN card project last year to avoid duplication with the UID numbers to be issued by Nandan Nilekani's Unique Identity Authority of India (UIDAI). "The bioemetric PAN card project is on again. The step will be very important when it comes to stopping the misuse of this vital identity document," top sources in the finance ministry said.

The biometric PAN card was proposed by the then finance minister P Chidambaram in 2006 to counter the problem of duplicate PAN cards which were uncovered during I-T searches and raids by police and other enforcement agencies.

The CAG report for 2010-11 on direct taxes, tabled in Parliament recently, has revealed that 958 lakh (95.8 million) PANs were issued up to March 2010 but I-T returns filed in the last fiscal were only 340.9 lakh (34.09 million). The gap between PAN holders and the number of returns filed was 617.1 lakh (61.7 million), the CAG has said.

Suggesting the Central Board of Direct Taxes (CBDT) to identify the reasons for the gap and use the information to enhance the assessee base, the CAG has said it may be due to issuance of multiple PAN cards and death of some PAN card holders.

"The (I-T) department needs to put in place appropriate controls to weed out the duplicate PANs and also update the position in respect of deceased assessees," the report has said. The plan has been set rolling for issuance of biometric PAN cards, according to sources.

It is expected that the first such cards could be issued by late this year, they said. Biometrics uses biological method to identify physical features of an individual.

 

 

Source: ET

BRICS' bigger and better hope

BRIC, the grouping of the four countries thought to radiate the largest lessons in developing an economy – Brazil, Russia, India and China – is going to transform itself to BRICS, with the much-awaited induction of South Africa into the cohort, making it more representative.

Started in year 2009, this year the summit would enter its third phase, with heads of government from these five countries getting together and preparing a road map to keep pace with the paradigm shifts in the world.


The coming summit, to be held in Sanya on south China's tropical island of Hainan on April 13-15, will be the first one for South Africa, to be welcomed as the new member. Chinese president Hu Jintao will chair the meet. Present will be Brazilian president Dilma Rousseff, Russian president Dmitry Medvedev, Indian prime minister Manmohan Singh and South African president Jacob Zuma.

“Bringing South Africa makes the grouping more representative of the emerging powers from all the developing regions. All of them are members of the G20, the high table of global economic policy coordination. This gives them a significant clout. If they can coordinate their positions in G20 Summits, they will be more effective. They should raise the issues of common interest to them. These include long-pending reform of international financial architecture. As a part of this, they could seek greater representation and voice in international financial institutions for emerging economies,” said Nagesh Kumar, chief economist and director, macroeconomic policy and development division, UN Economic and Social Commission for Asia and the Pacific.
What next?
According to Vishnu Prakash, joint Secretary and spokesperson of the ministry of external affairs, the grouping is in a nascent stage but has been able to emerge as an important voice.

“BRICS represent the world’s fastest growing market, comprising 44 per cent of the world population. All of them are members of the UN, of which two are permanent. It is a process which will evolve with the passage of time. It has emerged as a forum for policy coordination and exchange of ideas,” he underlined.

Experts say all the member-countries must take advantage of the moment and come out with a clear map for long-term sustenance. And, that the grouping should take a leadership role in closing the Doha round of multilateral trade deals under World Trade Organisation (WTO).

“It needs to be seen and analysed what BRIC, soon going to be BRICS, has been able to achieve since the forum came into being. It has to now take a firm stand on WTO. It needs to be also seen that it does not become a forum where only China dominates and the others remain silent,” said Biswajit Dhar, director general, Research and Information System for Developing Countries.
Abhijit Das, head, Centre for WTO Studies, Indian Institute of Foreign Trade, says a comparison of the per capita GDP of BRICS with those of developed countries makes the extent of the latter’s lag clear.

“It is important for BRICS to realise and also to convince developed countries that fast rate of GDP growth tells an incomplete story. This reality of such low per capita income, compared to that of developed countries, cannot be ignored. While this may deflate some of the hype associated with BRICS, this reality check is important for BRICS themselves and also for the rest of the world,” he said.

According to one estimate, the total volume of trade among BRICS countries reached $230 billion in 2010.

Besides, focusing on financial cooperation and an effective mechanism for global development, the leaders this year would also dwell on some of the recent events around the world, such as the unrest in West Asia, turmoil in North Africa and the disaster in Japan.

Source : Business Standard

EPFO to issue monthly Provident Fund statement from FY13

Faced with high defaults in provident fund contributions by employers, the Employees Provident Fund Organisation , or EPFO, has decided to give monthly updates of contributions instead of an annual statement.

The EPFO expects this will bring instances of defaults by employers to the notice of workers, who, in turn, will put pressure to demand their dues.

The EPFO, which manages retirement savings of more that 5 crore workers, has been computerising its offices across the country and will be in a position to provide monthly information from the next fiscal.

At present, subscribers only get a small slip at the end of the fiscal with just the opening and closing balance and have no idea about how the amount has grown through the year.

"Often subscribers do not calculate what the total amount should be and do not notice even if contributions have not been made in particular months," Central Provident Fund Commissioner Samirendra Chatterjee told ET. Once monthly data is available, omissions can be easily identified, he added.

The default amount identified by the EPFO through periodic inspection of random establishments in 2009-10 was about 166.12 crore. The EPFO expects more complaints about defaulting employers once the monthly statements are made available to employees.

Defaults have been highest for establishments in Tamil Nadu followed by Andhra Pradesh, Bihar, Karnataka and Kerala.

"Every subscriber is expected to have a detailed statement from 2012-13," Chatterjee said.

Both employers and employees are mandated to contribute 12% of basic pay to the fund every month. The entire contribution to the fund is usually made by employers who deduct the employees share from their pay and add it their own contribution.

About 20,000 crore to 30,000 crore is added to the corpus every year.



Source : ET

Pay Rs 50,000 and earn Rs 1 lakh within 35 days? Don't fall for the trap

Came accross this news , Thought of sharing it with Everyone - Beware of Such Calls !!!

The stock market is cracking and equity portfolios are awash in red. But Rahul Patil, a business development executive with the Ahmedabad-based equity advisory firm Radhe Advisory, has an investment plan that can erase your losses and put you on the path to profit. "If you join our premium plan for Rs 50,000, you can make Rs 1 lakh within 35 days," says Patil.

Sounds unbelievable? Patil (who has called us after we registered on another site Krishna Stocks, which is no longer functional) doesn't think so. He insists that if we join their moneyback plan, we can make big money in no time. What they are not revealing to us (and possibly to hundreds of other investors) is that the Rs 50,000 is the fee for a service of trading tips sent by SMS.

If you invest as per the tips given by the research team, you could make a profit of Rs 1 lakh in a month. "Chances are such outfits are hand in glove with market operators and take investors for a ride," says Ajay Bhaskar, head of retail, Prabhudas Lilladher, a brokerage house.

Hundreds of investors from across India have lost money this way. Till about a few months ago, another Ahmedabad-based company Krishna Stocks had used the same modus operandi to cheat gullible investors . Ambala-based Sandeep Kumar put Rs 30,000 in a special Diwali moneyback offer from Krishna Stocks in October 2010. "After the month ended, they told me that this was an SMS service," says Kumar.

Most established brokerage houses such as Prabhudas Lilladher and Nirmal Bang send trading tips to their clients free of charge. Others charge a fee, but it's not even close to the Radhe Advisory charges. For instance, the Power Your Trade service, promoted by Network 18, charges Rs 450 a month. A two-year package costs Rs 4,320.

Still, informed investors walked into the trap laid by Krishna Stocks with eyes wide shut. Hyderabad-based Kollol Chaudhury (read his account below) makes a fair amount from trading in shares and is aware of the SMS services on offer. Yet, he fell for the temptation of easy money and put in Rs 10,000 in Krishna Stocks last year.

"This is only the tip of the iceberg. The problem will become bigger as more sophisticated instruments are introduced," says Virendra Jain, founder of the Midas Touch Investors' Association. "There should be a regulatory mechanism to check such outfits."

Meanwhile, urgency is perceptible in the tone of Patil. "You can download the form and pay online. Fill in the form and send it to us along with the ID of the online payment. So, when can you make the payment?" he asks. We tell him that the salary cheque has just been deposited and it may take two days to get credited. "S**t," he mutters. "Can't you arrange for funds and make the payment today. The earlier the better."

Finance ministry okays 9.5% interest on PF, but with riders

The finance ministry has approved an interest payout of 9.5% on employee's provident fund for 2010-11, bringing cheer to millions of subscribers six months after it raised objections to a 1% increase in the rate.

The approval, however, comes with a rider. North Block has said that all employee accounts should be updated within the next six months and any shortfall after crediting of interest will have to be adjusted against interest payments in the following year.

"The approval vindicates our stand and shows that whatever we have done is absolutely correct," central provident fund commissioner Samirendra Chatterjee told ET.

The approval has come just in time for the Employees' Provident Fund Organisation , or EPFO, to update account slips with the higher interest rate. The account slips are handed over to subscribers in April.

"There is enough time for us to update account slips. We just need to put in the higher interest rate," Chattterjee said.

Last September, the EPFO had declared a 9.5% interest for 2010-11, against the 8.5% it had been paying since 2005-06, after discovering a surplus of Rs 1,733 crore in its interest suspense account following a change in accounting procedure.

The calculation was questioned by the finance ministry, which went on to seek a snap audit by the Comptroller and Auditor General of India , or CAG.

The CAG audit found that as on March 31, 2010, of the over-five crore EPF accounts, 4.72 crore accounts had not been updated, or credited interest.

Based on this, the CAG had said that the surplus could not be verified as a large number of accounts had not been updated.

It, however, did not go into the question whether there would be a surplus to justify the higher payout once accounts had been updated.

Based on the findings, the finance ministry had refused to ratify the decision to pay 1% higher interest. In the absence of a surplus, the government would have to provide funds to bridge the deficit.

The EPFO has now convinced the ministry that the surplus amount will be available even after accounts are updated.

The organization had updated 1.1 crore accounts by the end of last year. What is not clear yet is the action the ministry will take if the EPFO fails to update accounts within the stipulated time.

It is doubtful whether the EPFO has the means to work on 4.7 crore accounts in such a short time. "We will have to try our best,"



Source : ET

Union Budget 2011: Impact on various sectors

The Finance Minister tabled the Budget for the next financial year on 28th Feb . Some significant proposals in this Budget include the slight hike in the slabs of individual income tax, wider service tax net for the luxury hospitality sector, discontinuation of STPI for IT/ITeS sector, hike in the Minimum Alternate Tax (MAT) rate, and reduction in the tax surcharge for domestic companies.

The service tax net has been widened with some more services in the arena, but the maximum service tax limit has been retained at 10 percent. The Budget also gave a strong signal on containing inflation and continued the focus on spending on infrastructure, agriculture and education. In general, the markets have taken the Budget with positive sentiments.

These are some significant sectors that will be directly or indirectly impacted by the Budget proposals for the next fiscal :

Aviation

The Budget is a bit negative for the aviation sector due to the introduction of service tax on domestic and international tickets. However, the outlook for this sector is positive due to the increase in demand and load, with stable pricing backed by rising incomes

Other challenges for the aviation sector include rising fuel price and shortage of skilled manpower.

Fertilizer

The Budget proposals are expected to have a positive impact on the fertilizer sector. The proposals to include capital investments in fertilizer production as an infrastructure sub-sector will help fertilizer companies in accessing cheaper financing and tax breaks.

Also, the proposed system of direct transfer of subsidy for fertilizers is seen as a positive for the sector as the domestic industry has suffered from under-recovery of cost and delay in disbursement of subsidy for long.

FMCG

The Budget is positive for the FMCG sector in an indirect sense. The thrust on rural infrastructure development will indirectly benefit the FMCG companies looking at growth in the semiurban and rural markets. Similarly, the rising income level in rural areas is a positive for this sector.

Hospitality

The Budget is a bit negative for the hotel sector due to the introduction of service tax on hotel accommodation and air conditioned restaurants serving liquor. However, the general outlook for the hotel sector is positive as the economic growth is picking up in the global as well as domestic markets which will result in more tourism related demand.

The demand-supply gap in the hotel industry will help in increasing the rates and margins, especially in the metro cities.

Information technology

This Budget is negative for companies in the IT and ITeS sector (especially for the smaller and mid-cap companies). The Budget proposals include a levy of MAT on companies which are operating in the SEZ areas. This is expected to impact IT companies that had exemption from MAT under the SEZ scheme significantly.

On the other hand, the IT industry was expecting an extension of the sunset clause under the Software Technology Park of India (STPI) Act, which was not included in the Budget proposal. Overall, the additional tax burden is expected to have a negative impact on the small-cap and mid-cap IT companies.

However, the improvement in the global economic conditions is expected to have a positive impact on the top lines of IT companies and cushion some of this extended taxation.

Infrastructure

The Budget has many positives for the infrastructure sector. This reiterates the fact that spending on infrastructure development has been among the top priorities of the government. The foreign institutional investor (FII) investment cap is increased in corporate bonds of infrastructure companies

On the other hand, tax-free bonds to the tune of Rs 30,000 crores have been allowed to be raised by government undertakings such as National Highways Authority of India , HUDCO etc. This is expected to support and make it easy to finance projects for infrastructure companies.

However, the gestation period of these infrastructure projects is quite long and therefore investors with a long-term horizon only should look at investing in these stocks.

Oil companies

The oil refining and marketing companies have been disappointed by the Budget. They were expecting some relief in terms of a cut in the customs duty or plan to deregulate diesel prices. However, no favourable announcement in the Budget has left these companies hoping for a possible revision in the prices of diesel and cooking gas.

The government is moderating the prices as a steep hike will push the inflation rate further up which is already running beyond the comfortable levels.

Telecom

The Budget indications paint a negative picture for the telecom sector. The Finance Minister indicated that the government is expecting to raise money through recurring license fees and other usage charges from the telecom sector. These license fees will put additional financial burden on the larger telecom service providers


Source : ET

Budget opens back door for black money

Budget proposals allowing foreign individuals to invest in mutual funds and halve the tax on dividends from overseas arms of Indian companies may provide a window for undeclared income parked abroad to enter the country

Tax experts said many would use this to bring black money and cash stashed in tax havens into the country.

Public Accounts Committee member and Bharatiya Janata Party leader Yashwant Sinha agrees. “The schemes are a ploy to get back black money into the country. They have opened gates for flow of capital from tax havens, which was waiting to come to India under a pretext and incentive,” Sinha said.
Sinha, who has twice been the country’s finance minister, is also of the view that banks and mutual funds are not following the know-your-customer (KYC) norms.

“The scrutiny of KYC norms is extremely poor, leaving the field open for people to bring back illegal wealth into the country. Also, in several tax havens, it is easy to put any amount of profits on your books without anybody asking questions. The money can later be transferred to Indian companies in the form of 100 per cent dividend,” said Sinha.

For long, high net worth individuals were using offshore derivatives instruments, known as participatory notes (P-notes), for investing in the stock markets. P-note deals did not attract much scrutiny as they were struck overseas and the identity of the actual holder was hazy. Of late, however, P-notes have been linked with flow of hot money into the country.

The earlier 30 per cent tax on dividends from overseas arms took the effective cost of bringing money into the country as profits to 33.3 per cent. Mukherjee has now halved the tax to 15 per cent for financial year 2011-12.

“Since the Direct Taxes Code will kick in from the next financial year, which will again tax such dividends at 30 per cent, the scheme is a surprise. It is more like an amnesty scheme,” said a top Mumbai-based tax consultant.
“The scheme has been very smartly structured. Of course, capital will flow from tax havens. However, the money coming into the country can only be used for business purposes, as it is companies that will receive dividends, not individuals,” said Anil Harish, a partner with Mumbai-based D M Harish & Co.

“The intent is to incentivise repatriation of foreign dividends by providing a concessional tax rate. However, if these are received from non-cooperative jurisdictions, the flows will be subjected to source reviews based on the newly-introduced anti-avoidance measures,” said Sameer Gupta, a senior partner with accounting firm Ernst & Young.

“Double Irish” or “Dutch Sandwich” are some of the techniques companies use to route their money. They funnel their corporate income through Ireland and from there to a shell in the Netherlands, from where it can be transferred to Bermuda. This money is later routed to India through a subsidiary in the Gulf. This is because India has information-sharing agreements with the countries there and so these fund transfers do not attract close scrutiny. In the Emirates, it is easy to show any amount of profit, as the authorities do not get into the nitty-gritty of transactions. Once this is done, companies can even pay 100 per cent dividend.

Much of the economic activity in tax havens involves professional financial services such as mutual funds, banking, life insurance and pensions. Generally, unaccounted funds are deposited with these intermediaries, who then on-lend or invest the money.

The US National Bureau of Economic Research has suggested that roughly 15 per cent countries in the world are tax havens. Apart from Switzerland, Isle of Man, Singapore, Mauritius, British Virgin Islands, Bahamas, Bermuda -- where Indian real estate and other companies have set up base -- the diamond and bullion traders have their branches in the Gulf countries. In the past few years, Dubai has emerged as the main hub for Indians to route their hawala money.

Tax havens are countries which impose nil or nominal taxes and offer themselves, or are perceived to offer themselves, as a place to be used by non-residents to escape high taxes in their country of residence.


Source : BS