Govt to remove multi-level TDS on software from July1.
In a big relief to the software industry, the government today said it will do away with the complex multi-level system of Tax Deduction at Source (TDS) for the sector from July 1. “… No deduction of tax shall be made on… Payment by a person (transferee) for acquisition of software from another person (transferor), being a resident,” the Finance Ministry said in a notification. The provisions will come into force from July 1, 2012, it said. Under the current structure, TDS of 10% is levied at every level of software distribution chain — right from master distributor to retailer and then to the final consumer. Responding to the long-standing demand of the software sector, Finance Minister Pranab Mukherjee had last week said that Section 194J of the Income Tax Act, 1961, would be amended so as to avoid multi-level TDS on information technology sector. 
Source: http://business-standard.com/india/news/govt-to-remove-multi-level-tdssoftwarejuly/174775/on

 

No service tax on MF distributors from July 1.

Mutual fund agents and their sub-agents will not have to pay service tax from July 1 for distributing or marketing mutual funds.

The Centre’s move to provide service tax exemption to mutual fund distributors is being seen as booster dose for the mutual industry, which has been agitated over this levy.

Mutual fund investors too will have cause for cheer as service tax is passed on to them. Distribution of mutual funds attract service tax, although the mutual fund houses in many cases absorb this tax to provide relief to their agents or distributors.

NEGATIVE LIST TOO

“Wherever the main agent is exempted, it is natural that even their sub-agents would be exempted,” a Finance Ministry official clarified.

This service tax exemption for mutual fund distributors will be available even under the negative list regime, which is also proposed to be ushered in from July 1.

Under the negative list approach, the Centre would specify the 17 services that would be specifically service tax exempt. All other services would automatically attract service tax, it was pointed out.

In mutual fund industry, it is common practice for main distributor of mutual funds or the main agent to work through various sub-agents.

The industry was under the notion that only the main distributor agent would be exempt from service tax with effect from July 1.

 

Kolkata bench of ITAT allows Rajarani Exports to claim benefit for bribe

Debunking a norm that income-tax laws in India strictly prohibit any allowance to illegal payments, including kickbacks, a Kolkata bench of the Income-Tax Appellate Tribunal (ITAT) has allowed deduction for illegal kickbacks paid by an Indian company to authorities in Iraq, on the ground that the Indian company did not know its payment would ultimately end up as a bribe.Explanation to Section 37 (I) of the Income-tax Act does not allow tax benefits for illegal payments. Yet, the ITAT justified its decision by holding that there was no material to suggest the taxpayer company, Rajarani Exports, was aware that the payment it made would end up as kickbacks. The transaction in question was made under the “oil for food” programme administered by the United Nations for helping the people of Iraq. Under this scheme, Iraq was allowed to export oil and deposit the proceedings in an escrow account for importing essential items for its people.

© 2012 GODHWANI LAW CO.