TIOL-DDT 411 · 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
411</font><br>
21 07 2006<br>
Friday</b></font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Cabinet
clears setting up of Sixth Pay Commission</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It
may not be all good news for the Government servants, for the FM is our
own PC, who is doing a hat trick with the Pay Commissions. He was Rajiv
Gandhi’s
minister for personnel and had a great role to play in the Fourth Pay Commission
Report. He was the Finance Minister when the Fifth Pay Commission Report
was implemented, much against his will. He stoutly opposed its implementation
and Prime Minister Gujral had to prevail upon him. Three years ago I attended
a meeting of businessmen addressed by PC. I was squirming in my seat as
a businessman asked, “ In spite of your personal opposition, why did you
allow the fifth Pay Commission report to be implemented pushing this country
into a huge deficit”. I was thinking
that I was a poor underpaid government servant and here was a rich business
man questioning the former finance minister for giving me a small hike,
which inflation and liberalization swallowed with a vengeance. But what
shocked me was PC’s answer. “ I am happy that there are some people in
this country who remember that I was opposed to implementing the Fifth
Pay Commission’s report
as it would be disastrous”, He said. “But I was helpless”, he continued,“ leaders of every political party in the country came to me and asked me to
implement the report.”</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Are
our babus well paid? Certainly not, especially after the software boom. I know
an IRS officer of the latest batch struggling to make both ends meet with his
salary of Rs. 15,000/- in a big city. Four years ago this boy who was an engineering
topper was offered a software job while he was in his final year. He refused
that and spent two years preparing for the civil services. I am afraid this
boy cannot remain honest for long! I know SDRs who travel by public transport
to reach the Tribunal to defend Crores of rupees for the government against
high paid lawyers. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It
is a myth that salaries of babus eat away a major chunk of government expenditure
– it is not true at least in the case of the Central Government. Already the
press has decided that babus are going to get a bonanza. 20,000 Crores for the
babus screams a headline. Where did they get that figure from? The PIB release
said that the last pay commission had an impact of 17,000 Crores. So somebody
made a quick calculation and arrived at the figure of 20,000 Crores. And what
is the strengths of the Central babus? Newspapers have put the figure between
3.3 Lakhs to 5.5 millions.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Whatever
you do the maximum benefit an employee is going to get through the pay commission
is Rs. 1500 per month, about 20% of which you can recover as income tax and
about 50% can be recovered through indirect taxes. What is left will be absorbed
by the market as tomorrow prices will go up on the assumption that government
employees are going to get a huge hike!</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">TIOL
will extensively cover the issues before the Sixth Pay Commission. To start
with, look for our piece <b>MS Groom</b> by one of our popular authors in the
Guest Column on Monday.</font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Nathu
la can resume</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Day
before yesterday, <b>DDT</b> reported about business coming to a grinding halt
in the Nathu la pass as Customs refused to clear goods in the absence of IEC
code. As per the FTP, certain categories of persons are exempted from IEC code
numbers and certain persons can use a permanent number. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now
Persons importing / exporting permissible goods as notified from time to time,
from/to China through Gunji, Namgaya Shipkila and Nathula ports, provided the
CIF value of a single consignment does not exceed Indian Rs.25,000 can use the
permanent IEC code Number 0100000134. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Let
us hope this communication reaches the Customs at Nathu La immediately so that
clearances can continue.</font></p>
<p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2006/dgft06pn035.htm">PUBLIC
NOTICE NO. 35 ( RE-2006) /2004-2009, Dated : July 20, 2006 </a></u></font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Interest
converted into loan – deduction - CBDT clarifies</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As
per the explanations to Section 43B of the Income-tax Act, inserted by the Finance
Act 2006, any sum payable by the assessee as interest on any loan or borrowing
or advance shall be allowed as deduction if such interest has been actually
paid and any interest which has been converted into a loan or borrowing or advance
but has not been actually paid shall not be allowed as deduction in the computation
of income.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
explanations only reiterate the rationale that conversion of interest into a
loan or borrowing or advance does not amount to actual payment.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now
Board has issued a clarification on how to claim this deduction.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
interest converted into loan or borrowing or advance shall be allowed if such
interest has been actually paid and any interest which has been converted into
a loan or borrowing or advance, shall not be deemed to have been actually paid
on account of its conversion into loan, etc. The unpaid interest whenever actually
paid to the bank or financial institution will be in the nature of revenue expenditure
deserving deduction in the computation of income. Therefore, the converted interest,
by whatever name called, in the wake of its conversion into a loan or borrowing
or advance, will be eligible for deduction in the computation of income of the
previous year in which the converted interest is actually paid. In other words,
nomenclature of the sum of converted interest will make no difference as the
sum of converted interest whenever is actually paid will not represent repayment
of the principal. </font></p>
<p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=36&filename=notification/cbdt/2006/it06cir07.htm">CBDT
CIRCULAR NO 7/2006, Dated : July 17, 2006 </a></u></font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Anti
dumping duty imposed on ethylene-propylene-non-conjugated diene rubber (EPDM)
from EU, USAChina and Brazil</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Anti
dumping duty has been imposed on EPDM under tariff item 4002 70 00 originating
in, or exported from, the European Union, the United States of America, People's
Republic of China and Brazil on the recommendations of the Designated Authority.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2006/ctariff06_075.htm">NOTIFICATION
NO. 75/2006-CUSTOMS, Dated : July 19, 2006 </a></u></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Roofing
tiles exempted</b></font></p>
<p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Roofing tiles
falling under heading 6905 10 00 have been exempted from excise duty. They
were under the 8% duty hitherto.</font></p>
<p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2006/etariff06_036.htm">NOTIFICATION
NO. 36/2006- Central Excise, Dated : July 19, 2006 </a></u></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Excise
Duty reduced on Textile Intermediates – to solve the problem of un utilized
credit</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In
this year’s budget, excise duty on man made fibres and filament yarns was reduced
from 16% to 8%. Representations were received from trade and industry stating
that this change has resulted in accumulation of unutilized credit with the
manufacturers of fibres and filaments. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To
address the problems associated with credit accumulation, the Government has
made the following changes in excise duty rates on specified textile intermediates:</font></p>
<table width="450" border=1 align="center" cellpadding=3 cellspacing=0>
<tr>
<td width=56 rowspan=2 valign=top > <p align="center" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>S.No.</strong></font></p></td>
<td width=304 rowspan=2 valign=top > <p align="center" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Item</strong></font></p></td>
<td width=152 colspan=2 valign=top > <p align="center" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Rate</strong></font></p></td>
</tr>
<tr>
<td width=72 valign=top > <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">From</font></p></td>
<td width=80 valign=top > <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To</font></p></td>
</tr>
<tr>
<td width=56 valign=top > <p align="center" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.</font></p></td>
<td width=304 valign=top > <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Paraxylene</font></p></td>
<td width=72 valign=top > <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">16%</font></p></td>
<td width=80 valign=top > <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8%</font></p></td>
</tr>
<tr>
<td width=56 valign=top > <p align="center" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2.</font></p></td>
<td width=304 valign=top > <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Dimethyl
terephthalate (DMT)</font></p></td>
<td width=72 valign=top > <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">16%</font></p></td>
<td width=80 valign=top > <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8%</font></p></td>
</tr>
<tr>
<td width=56 valign=top > <p align="center" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3.</font></p></td>
<td width=304 valign=top > <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Pure
terephthalic acid (PTA)</font></p></td>
<td width=72 valign=top > <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">16%</font></p></td>
<td width=80 valign=top > <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8%</font></p></td>
</tr>
<tr>
<td width=56 valign=top > <p align="center" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4.</font></p></td>
<td width=304 valign=top > <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Polyester
chips</font></p></td>
<td width=72 valign=top > <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">16%</font></p></td>
<td width=80 valign=top > <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8%</font></p></td>
</tr>
<tr>
<td width=56 valign=top > <p align="center" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5.</font></p></td>
<td width=304 valign=top > <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mono
ethylene glycol (MEG)</font></p></td>
<td width=72 valign=top > <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">16%</font></p></td>
<td width=80 valign=top > <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">12%</font></p></td>
</tr>
<tr>
<td width=56 valign=top > <p align="center" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6.</font></p></td>
<td width=304 valign=top > <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Acrylonitrile</font></p></td>
<td width=72 valign=top > <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">16%</font></p></td>
<td width=80 valign=top > <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8%</font></p></td>
</tr>
</table>
<p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2006/etariff06_037.htm">NOTIFICATION
NO. 37/2006- Central Excise, Dated : July 20, 2006 </a></u></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Irrevocable
letter of credit – DGFT amends policy</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“Confirmed
irrevocable letter of credit”, changed to “irrevocable letter of credit in case
of status holders/confirmed irrevocable letter of credit in case of others”.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“Confirmed
irrevocable inland letter of credit” changed to “irrevocable inland letter of
credit in case of status holders/confirmed irrevocable inland letter of credit
in case of others”.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In
the Appendix 22A also similar changes made. Form in Appendix 22B substituted.</font></p>
<p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2006/dgft06pn033.htm">PUBLIC
NOTICE NO. 33 ( RE-2006) /2004-2009, Dated : July 17, 2006 </a></u></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>End
Use cum End User Certificate in Case Of Export Of SCOMET Items </b></font></p>
<p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The GFT has changed
the form in Appendix 36 pertaining to the certificate in the Aayat Niryat Form.
</font></p>
<p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2006/dgft06pn034.htm">PUBLIC
NOTICE NO. 34 ( RE-2006) /2004-2009, Dated : July 18, 2006 </a></u></font></p>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">If
you pay peanuts, you get monkeys – </font></b><font color="#663399"><b>but we
have horses who are not paid even peanuts.</b></font></font></p>
<p ><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until
Monday with more DDT </font></p>
<p ><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have
a nice weekend. </font></p>
<p ><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail
your comments to</font> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></font></p>
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