Amendment in Electricity Act, 2003

Based on the experience gained over the last ten years and to accommodate the recent developments in the areas of grid stability and security, development of market and progress in technology, Ministry has drafted the amendments to the Electricity Act, 2003 based on the recommendations of a committee headed by Chairman, Central Electricity Authority (CEA). This was stated by Sh. Piyush Goyal, Minister of state for Power, Coal & New and Renewable Energy (Independent Charge) in a written reply to a question in the Lok Sabha today. These amendments are expected to bring about further improvements in grid security, efficiency in distribution sector through separation of carriage and content, rationalization of tariff, dynamic and responsible regulatory framework with the overall objective of sustainable growth of the sector aimed at consumer benefits. The proposed draft amendments were circulated on 17th October, 2013 for seeking comments. The same were also uploaded on the website of Ministry of Power.
The Minister further stated that Distribution of electricity is a licensed activity. As per the provisions of Section 14 of the Electricity Act, 2003, the State Electricity Regulatory Commissions (SERCs) have the power to grant license to any person to distribute electricity. Hence, distribution companies in the States are answerable to respective SERCs for licence related activities. The Union Government has no direct role in functioning of power distribution companies. No specific details regarding the audit of various electricity companies conducted in the country is presently available with the Government, the Minister added.

Shri Kalraj Mishra launches NSICs B2C Web portal for MSMEs www.msmeshopping.com

Inaugurating the NSIC online e-commerce shopping portal, www.msmeshopping.com here today, Shri Kalraj Mishra, Union Minster for MSME appreciated the efforts of NSIC in launching their B2C portal.

The Minister said that MSMEs play a very important role in Nation building not only in India but also in other developing economics. They have been recognised as engine of growth all over the world. In spite of their immense contribution to the global economy, SMEs worldwide face many challenges: limited capital and lack of access to adequate and timely banking finance, non-availability of suitable technology, small production capacity etc. Apart from manufacturing hindrances, marketing of products is also a big challenge in regime of melting global boundaries, particularly when the domestic retails markets are being flooded with International brands. The B2C portal is a holistic, innovative and low-cost marketing platform for MSMEs where MSMEs shall be able to sell Retail products as well as Industrial equipment/machineries online. It will be immensely benefitting for both buyers and sellers.

The Minister wished great success to this innovative of NSIC and urged MSMEs to make full use of the portal in fulfilling their E-commerce requirements.
Speaking at the launch of the portal the Shri Madhav Lal, Secretary (MSME) congratulated NSIC for its timely initiative and said the shopping portal is the need of the day, in last half a decade and particularly in developed countries, it is observed that small and medium-sized enterprises (SMEs) are some of the biggest beneficiaries of e-commerce, as they now have the opportunity to overcome logistical and geographic challenges in terms of access to markets. SMEs can reap the efficiency gains associated with the use of e-commence. In addition to these gains, SMEs can also use e-commerce by adopting completely new business practices, or changing the ways in which they interact in the marketplace.

Dr. H.P. Kumar, CMD. NSIC emphasised that the Micro, Small and Medium Enterprises development is one of the thrust areas of NSIC, which can be achieved by way of providing hand holding support to the small enterprises in selection and operation of selected enterprises. NSIC B2C MSME Shopping is one of the appropriate tools to achieve this goal, as it provides necessary facilities for the prospective entrepreneurs and start-up companies to learn product purchase on line and processes coupled with technology development, business development etc, under one roof.

The Shopping portal will be a boon for MSMEs to market their products to every corner in the country. The portal facilitates online Marketing and retail selling services wherein the MSMEs shall be directly connected to millions of buyers across the country through Internet with a minimum expenditure. In addition, the MSMEs can set up individual web stores, which are like a retail shop, selling products without any geographical boundaries and remains open 24 x 7, being a virtual shop.

Cabinet approves changes in labour laws

The Union cabinet on Wednesday approved proposals to amend three key labour laws, including the Factories Act 1948, pushing ahead with reforms to archaic legislation considered an impediment to output growth and employment creation in the labour-intensive manufacturing sector. 

The other two proposals relate to the amendment of the Apprentices Act 1961 and the Labour Laws (exemption from furnishing returns and maintaining registers by certain establishments) Act, 1988, labour ministry officials said on condition of anonymity. No official announcement of cabinet approval had been made as of press time on Wednesday.

 “While we have tried to ease the process of doing business with industries, the amendments have kept in mind the safety and welfare of employees,” said one labour ministry official. 

The proposed changes to the Factories Act centre on five points—improved safety of workers; doubling the provision of overtime from 50 hours a quarter to 100 hours in some cases and from 75 hours to 125 hours in other work of public interest; increasing the penalty for violation of the Act; relaxing the norms for women to work in some industry segments at night; and reducing to 90 from 240 the number of days an employee needs to work before becoming eligible for benefits like leave with pay.

 In a written reply to the Rajya Sabha on Wednesday, minister of state for labour Vishnu Deo Sai had said the government was considering changes to the 66-year-old Factories Act to make it “more compatible with the requirement of the present scenario in the industrial sector”.

 The official said the proposed amendment would do away with a provision for prosecution of factory owners for petty offences like not maintaining a clean toilet, for instance. The amendment proposes to reduce punishments prescribed under such heads to remove the fear of persecution among factory owners.

 Sai also said in the Rajya Sabha that the government was making provisions for enhancing the safety of workers and for better amenities on factory premises. In the Apprentices Act, the government is seeking to expand the scope of employment as apprentices on the shop floor. Until now, most apprentices have been from engineering backgrounds; the government is seeking to push for the induction of non-engineers as apprentices. It is aimed at allowing young job seekers and students to gain industry-relevant skills on the shop floor. “The salary segment too has been liberalized,” the labour ministry official said. In the first year, an apprentice will get 70% of what a semi-skilled worker gets, in the second year 80% and in the third year 90%.

 For those employed in small-scale industries, the government will pay 50% of their salary and the factory management the remainder. “This will increase the...skilled manpower in the country and help industries get job-ready employees,” the official said. India has 300,000 apprentices; Germany has more than 3 million. Amending the Act would open the doors to employment as apprentices for millions more. The proposal to amend Labour Laws (exemption from furnishing returns and maintaining registers by certain establishments) Act, 1988, will allow thousands of small industries to file just one return for compliance with a dozen or more labour laws. Once the amendment is passed, it will exempt small industries with less than 40 workers from the need to comply separately with each of the laws. A single-page return on compliance will do. 

“The initiative is a fine balance between labour welfare and industry-friendly and job-oriented reform,” said a second labour ministry official, who also declined to be named. Trade unions are opposed to some of the industry-friendly changes the government is bringing about and will meet in the first week of August to discuss the proposals, said D.L. Sachdeva, national secretary of the All India Trade Union Congress. “We are opposed to the proposal to put women in the night shift. We are also opposed to increasing the overtime limit to 100 hours from 50 hours per quarter,” he said. The cabinet also decided to place in Parliament “action taken” reports on the findings by a commission that studied illegal mining in Jharkhand, Odisha and Goa.

Source : http://www.livemint.com

In large public firms, same individual can hold Chairman and MD posts: Ministry

Large public companies can now appoint an individual as Chairperson as well as Managing Director or Chief Executive Officer at the same time.

This dispensation will be available for public companies with a paid-up capital of Rs. 100 crore or more and an annual turnover of Rs. 1,000 crore or more, the Corporate Affairs Ministry has said.

It will only be available for companies engaged in multiple businesses and have appointed a CEO for each such business, an executive order issued by the Ministry said.

This would mean that large public companies with multiple businesses would not be governed by the new company law requirement of having different individuals for the positions of Chairperson, Managing Director or CEO.

The new company law – which came into effect from April 1– had stipulated that a company cannot appoint an individual to the post of Chairman as well as Managing Director at the same time.

However, this stipulation did not apply if the Articles of Association of a company explicitly provided for such an appointment.

Also, it will not apply if the company concerned does not have multiple businesses.

The new law also specified that this requirement will not be applicable for certain class of companies to be specified.

The Ministry has now specified the class of companies that will be exempt from the requirement.

“The Ministry’s latest move could be considered a corporate-friendly measure,” SN Ananthasubramanian, a practicing Company Secretary, told BusinessLine .

Lalit Kumar, Partner, J Sagar Associates, a law firm, said the move will bring relief only to large public companies. “Since the thresholds are very high, only large public companies will get the benefit of this exemption,” Kumar said.

It is very common in the public sector to appoint the same person as Chairman and Managing Director, at the same time.

But critics argued that such an approach does not recognise the distinct roles that these posts carried.

Source: http://www.thehindubusinessline.com

In a move towards IFRS, tax accounting standard on cards

As part of an integrated exercise for introduction of a new Indian Accounting Standard (Ind AS), the Government has initiated moves to put in place a Tax Accounting Standard (TAS) too.

The simultaneous exercises, experts told BusinessLine , will avoid confusion in determining taxable corporate income in financial reporting as well as complete the twin process within the two-year timeframe. The absence of a TAS had caused postponement of introduction of Ind AS in 2011.

The country restarted the preparation for the convergence towards International Financial Reporting Standards (IFRS) through Ind AS by 2016-17 after the Finance Minister announced it in his Budget speech. The process of standard setting gathered momentum recently, K Raghu, President of the Institute of Chartered Accountants of India (ICAI) said.

“In August, ICAI will meet the Central Board of Direct Taxes to deliberate on the proposed TAS,” he said. The TAS was aimed at making the Ind AS tax neutral and it would help remove the reservations of the companies on this score, ICAI President explained.

Raghu said ICAI would also submit its suggestion on the roadmap for implementation of new accounting standard in August. The revised recommendations on accounting standards would, however, be submitted by ICAI later.

According to Rahul Chattopadhyay, Partner of the audit firm Price Waterhouse, quite a bit of work has already been done. “This would help completing the exercises,” he added. Sai Venkateshwaran, Partner and Head of Accounting Advisory Services, KPMG in India, TAS would address the biggest concern for the corporate taxpayers and provide relative stability in tax treatments.

The Ministry of Corporate Affairs, which is spearheading the move to involve the stakeholders, also needs to take actions in institution building, such as the National Financial Reporting Authority (NFRA) and Registrar for valuers. Though the Companies Act 2013 paved the way for creation of NFRA, the Government is yet to notify formation of the regulator.

Venkateshwaran said till NFRA is put in place, the National Advisory Committee on Accounting Standards (formed under the Companies Act, 1956) will be allowed to continue work on the new accounting standards.

Source: http://www.thehindubusinessline.com

No amnesty for tax evaders; government vows re-look at GAAR

The Narendra Modi-led government has ruled out a tax amnesty scheme to unearth black money saying it goes against honest taxpayers but sought to send out positive signals to foreign investors promising a relook at the controversial General Anti-Avoidance Rules (GAAR).

"The experience shows when you bring in VDIS (Voluntary Disclosure of Income Scheme), it discriminates against genuine taxpayers. Those of you who pay taxes are disincentivised...it goes against honest taxpayers... It may not be a conducive path for recovering more taxes," minister of state for finance Nirmala Sitharaman said while responding to specific issues raised by members in the Rajya Sabha.

 Referring to demand of some states such as West Bengal, Bihar, Odisha and Punjab, Union finance minister Arun Jaitley said the government will take a view on the specific demands of the debt-ridden states after receiving the report of the finance commission, which is expected by the year-end.

Jaitley was speaking in the upper house of Parliament while winding up the debate on Finance Bill which was later returned marking the completion of the budgetary process for 2014-15.Jaitley said the government will re-examine GAAR.

GAAR, which aims to minimise tax avoidance by routing investments through tax havens, is tocome into effect from April 1, 2015, after being postponed once.

Seeking to allay fears over monsoon condition, Jaitley said: "The situation is more optimistic, monsoons have picked up... There is no drought-like situation." He added there is a back-up plan which would be put into action if the situation demands.

On the issue of taxes foregone, the minister said it is an ambiguous phrase which includes concessions given by the government to boost industrial activity and also those cases where it is difficult to collect dues as there are no assets.

Referring to the tax proposals announced in the budget, Sitharaman said attempts have been made to provide relief to small and medium taxpayers to encourage savings and promote growth despite the limited fiscal space.

She pointed that the previous government had left very little fiscal space for the finance minister to do anything out of the box and as a result there has not been much of a room available. She said Jaitley took the challenge and retained many of the targets set by the UPA government.

On increasing the tax exemption limit under 80C of the Income Tax Act from Rs 1 lakh to Rs 1.5 lakh, she said, "This is definitely going to have an impact on the savings of the country which we need to give a great impetus."

Source: http://economictimes.indiatimes.com

I-T dept adds to woes of SEZ units

The income-tax department on Wednesday clarified that businesses running Special Economic Zones (SEZs) in the IT and ITeS sector would not be eligible for income-tax sops if these export units have more than 20% of their employees deputed from other units by way of business restructure.

For SEZ units, which were disappointed with the government not removing the minimum alternate tax (MAT) and dividend distribution tax (DDT) in the first full-year Budget of the Modi government, the tax department’s move brings added woes, said industry experts.

The finance ministry that examined the quantum of exports from SEZ units and from the domestic tariff area as part of its budget-making exercise then concluded that exports from these duty-free enclaves were actually the business that got shifted from domestic tariff area in order to claim tax benefits and that tax sops had actually failed to create fresh exports or quality infrastructure.

The Income-Tax Act mandates that benefit of allowing a business to deduct SEZ export profits from their total taxable income shall be available only if these units are not formed by splitting up, or reconstructing an existing business. The norm is applicable for plant and machinery too, but the law was silent on redeployment of manpower, which is the most important resource in the IT and ITeS industry.

The circular issued on Wednesday clarified that mere transfer or re-deployment of existing technical manpower to a new SEZ unit in the first year of business will not be construed as splitting up or reconstruction of existing business if the transferred technical manpower does not exceed 20% of the total technical manpower engaged in the business. The rider is applicable at all times of an assessment year.

Experts said that in the case of disputes, courts had earlier held that manpower was not covered by the rider preventing restructured business availing the tax benefit. Some criticised the move saying the circular was not in sync with the Income-Tax Act provision.

Analysts pointed out that the Rangachary Committee that examined taxation of the IT sector, had in its 2013 report, said that there was no requirement regarding appointing new employees in a unit eligible for profit-linked deduction. It had also suggested that assigning existing staff in a new SEZ cannot be considered reconstruction of existing business for tax purposes.

The panel, however, proposed a prospective change in norms by way of having a threshold of 50% of the employees at the enterprise level in an SEZ unit in its first year should be new employees.

“This view appears to have not been accepted by the CBDT and has caused further ambiguity for beleaguered

IT sector, which is already grappling with contentious issues around tax holidays,” said Rajiv Chugh, partner, Ernst and Young.

Source : http://www.financialexpress.com