TIOL-DDT 318 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <b><font color="#663399" size="3">TIOL-DDT
318</font><br>
08 03 2006<br>
Wednesday</b></font></p>
<p align="center"><b><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Cascading
effect of budget changes</font></b></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Normally Government
works without the left hand knowing what the right hand is doing. It is really
difficult to keep track of the links to all the proposals in the budget. In
these tax matters, for every action there is a connected (but often undetected)
reaction. For some of the changes brought in by this budget, it is required
to amend the Cenvat Credit Rules, which is being blissfully ignored. We bring
you two such issues.<br>
<br>
1. <b>Supplies to projects under International Competitive Bidding</b>
was exempted under Notification No.6/2002 C.E dated 1/3/2002. The Notification
is rescinded but the exemption continues in 6/2006. As per Rule (6) (6) (vii)
of Cenvat Credit Rules 2004, an assessee can avail Modvat Credit for inputs
used in the manufacture of final products supplied to a project under International
Competitive Bidding in terms of notification No.6/2002 C.E dated 1/3/2002.
The assessee need not follow the restrictions imposed under Sub Rules (1)
to (4) of Rule 6 of Cenvat Credit Rules, 2004. As, Notification No.6/2002
C.E. dated 1/3/2002, has been withdrawn, Rule (6) (6) (vii) also needs amendment
inserting the new notification No.6/2006 C.E. dated 1/3/2006. <b>This
will be done in due course, but till then? Confusion.</b><br>
<br>
2. <b>Cenvat credit on goods received from EOUs:</b> The cenvat credit is
based on a formula. But now the very duty structure has been changed, but
not the formula for taking credit. Will the credit be allowed on the existing
formula or will a new one be prescribed. This also requires amendment to the
Cenvat Credit Rules.<br>
<br>
This requires urgent attention of the Board.</font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">
<b>Authorised Dealers – RBI issues clarifications</b></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>The Scheme</b></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">With a view to
providing adequate foreign exchange facilities to common persons for efficient
customer service through competition there was a need to widen the scope of
activities which the Authorised Persons are currently eligible to undertake
and also to increase the number of entities that are eligible to sell foreign
exchange to public for their day-to-day current account transactions. The
Reserve Bank has, therefore, decided to grant licences to certain entities
to undertake more transactions, in addition to what Full Fledged Money Changers
(FFMCs) are currently permitted, by authorising them to undertake release
/ remittance of foreign exchange for certain non-trade related current account
transactions. Such entities will be called Authorised Dealers – Category
II (ADs - Category II).<br>
<br>
ADs will be permitted to release / remit foreign exchange for the following
transactions:<br>
<br>
a. Private Visits,<br>
<br>
b. Remittance by tour operators / travel agents to overseas agents /
principals / hotels,<br>
<br>
c. Business Travel,<br>
<br>
d. Fee for participation in global conferences and specialized training,<br>
<br>
e. Remittance for participation in international events / competitions (towards
training, sponsorship and prize money).<br>
<br>
f. Film shooting,<br>
<br>
g. Medical Treatment abroad,<br>
<br>
h. Disbursement of crew wages,<br>
<br>
i. Overseas Education,<br>
<br>
j. Remittance under educational tie up arrangements with
universities abroad,<br>
<br>
k. Remittance towards fees for examinations held in India and abroad
and additional score sheets for GRE, TOEFL etc.,<br>
<br>
l. Employment and processing, assessment fees for overseas
job applications,<br>
<br>
m. Emigration and Emigration Consultancy Fees,<br>
<br>
n. Skills / credential assessment fees for intending migrants,<br>
<br>
o. Visa fees,<br>
<br>
p. Processing fees for registration of documents as required by
the Portuguese / other Governments,<br>
<br>
q. Registration / Subscription / Membership fees to International
Organizations.<br>
<br>
<b>Who are eligible?</b><br>
<br>
A. Existing Full-fledged Money Changers (FFMCs).<br>
<br>
B. Urban Co-operative Banks (UCBs)<br>
<br>
C. Regional Rural Banks (RRBs)<br>
<br>
5. <b>Opening of Foreign Currency Accounts (Nostro) abroad. [What is nostro?
See Greek and Latin today]</b><br>
<br>
The entities proposed to be licensed are being permitted to undertake the
transactions that involve conversion of one currency into another. Such transactions
may not necessarily require opening and maintaining foreign currency denominated
(NOSTRO) account with a bank outside India. However, to facilitate issuance
of foreign currency draft, etc. for such transactions, they may enter into
arrangements with banks authorised to deal in foreign exchange in India.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=49&filename=notification/rbi/2005/rbi05cir025.htm">See
RBI Circular No 25, Dated : March 6, 2006</a><br>
</font></p>
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<TD><IMG height=67 hspace=5 src="http://www.taxindiaonline.com/RC2/image/ddt/gnl_word.jpg" width=67 align=absMiddle vspace=5><B><I> Nostro
account </I></B></TD>
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
A bank account that one bank holds with another bank in a foreign country.
This account is usually held in the foreign country's currency, and is used
to carry out transactions that are denominated in that foreign currency.<br>
<br>
<font color="#663399"><b>If the laws could speak for themselves they would
complain of the lawyers in the first place.</b></font></font></p>
<p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
<i>(Lord Halifax (1633-1695) - Political Thoughts and Reflections)</i></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <font color="#FF6666"><b>Until
tomorrow with more DDT and the budget<br>
<br>
Have a nice day.<br>
<br>
Mail your comments to</b></font> <a href="vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com
</a></font> </p>
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