TIOL-DDT 600 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399" size="3">TIOL-DDT 600</font><br>
25.04.2007<br>
Tuesday</b></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>New Services and new rate – not yet in force – Budget is not enacted –wait till the 2<sup>nd</sup> week of May.</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We receive many enquiries as to whether the Secondary and Higher Education Cess imposed in this budget is already effective as many service providers had already started collecting it. It was to dispel such misconceptions that we carried an article recently <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=5325" target="_blank">Changes in rates of Indirect Taxes - Effective dates demystified !</a></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But still doubts seem to be persisting. Yesterday a consultant from Mumbai called up and asked me whether the Finance Bill was enacted and that Service providers have already started collecting 12.36% Service Tax. He asked me to highlight in TIOL that the new 1% SHE would be effective only after the Finance Bill is enacted. I told him it is obvious and has been clarified several times, but he persisted and told me, “I know, but if you report it, people will take it as authentic, and please clarify again as there is a lot of confusion”</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT confirms that the new 1% Secondary and Higher Education Cess on Service Tax will be effective only after the enactment of the Finance Bill and the Finance Bill 2007 has not yet become the Finance Act 2007 and is likely to be enacted in the second week of May 2007. <b>TIOL</b> will keep you informed about the enactment.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the new services introduced in the budget will be effective only from a date to be notified and not from the date of enactment. The new services are likely to be notified as effective from 1<sup>st</sup> June 2007.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And I have a vested interest in carrying this news- the Mumbai consultant has offered to take me out for lunch, the next time I am in Mumbai. </font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Secondary & Higher Education Cess – no accounting head yet</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Principal Chief Controller of Accounts has clarified that the new Head of Accounts to book the SHE is yet to be opened. Pending finalization of new head of account, it has been decided that wherever collections is made manually, the amounts may be shown separately in the challans reflecting Education Cess and Secondary & Higher Education Cess. Against the amount shown as Secondary & Higher Education cess it may be mentioned that the Account code is yet to be allotted.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>But why is the accounting code yet to be opened? </b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2007/eduction_cess.htm" target="_blank">F.No. Coord/13-6/Head of A/c/06-07/Vol-VI/317 of the Office of the Principal Chief Controller of Accounts, CBEC </a></font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>RBI Governor announces Annual Policy Statement for the year 2007-08</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Dr. Y. Venugopal Reddy, Governor, in a meeting with Chief Executives of major commercial banks yesterday presented the Annual Policy Statement for the Year 2007-08. The Highlights</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Greater emphasis on price stability and well-anchored inflation expectations while ensuring a monetary and interest rate environment that supports growth momentum.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Swift response with all appropriate measures to all situations impinging on inflation expectations and the growth momentum</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Renewed focus on credit quality and orderly financial markets conditions in securing macroeconomic, in particular, financial stability.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Bank Rate, Reverse RepoRate and Repo Rate kept unchanged.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Scheduled banks required to maintain CRR of 6.5 per cent with effect from the fortnight beginning April 28, 2007. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ GDP growth projection for 2007-08 at around 8.5 per cent.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Inflation to be contained close to 5.0 per cent during 2007-08. Going forward, the resolve is to condition policy and perceptions for inflation in the range of 4.0-4.5 per cent over the medium term.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ M3 expansion to be contained at around 17.0-17.5 per cent during 2007-08.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Deposits projected to increase by around Rs.4,90,000crore during 2007-08. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Adjusted non-food credit projected to increase by around 24.0-25.0 per cent during 2007-08, implying a graduated deceleration from the average of 29.8 per cent over 2004-07.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Appropriate liquidity to be maintained to meet legitimate credit requirements, consistent with price and financial stability.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Ceiling interest rate on FCNR (B) deposits reduced by 50 basis points to Libor minus 75 basis points.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Ceiling interest rate on NR(E)RA deposits reduced by 50 basis points to LIBOR/SWAP rates.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Average cut-off yield on 182-day Treasury Bills to be used as a benchmark rate for floating rate bonds.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Working Group to be set up to go into all the relevant issues and suggest measures to facilitate the development of interest rate futures market.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Overseas investment limit (total financial commitments) for Indian companies enhanced to 300 per cent of their net worth.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Listed Indian companies limit for portfolio investment abroad in listed overseas companies enhanced to 35 per cent of net worth.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Aggregate ceiling on overseas investment by mutual funds enhanced to US $ 4 billion.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Prepayment of external commercial borrowings (ECBs) without prior Reseve Bank approval increased to US $ 400 million.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Present limit for individuals for any permitted current or capital account transaction increased from US $ 50,000 to US $ 100,000 per financial year in the liberalised remittance scheme.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ A Working Group on Currency Futures to be set up to suggest a suitable framework to operationalise the proposal in line with the current legal and regulatory framework.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Risk weight on loans up to Rs.1lakh against gold and silver ornaments for all categories of banks reduced to 50 per cent.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Introduction of a credit guarantee scheme for distressed farmers.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Indian banks permitted to extend credit and non-credit facilities to step-down subsidiaries within the existing prudential limits and some additional safeguards.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Banks and primary dealers permitted to begin transactions in single-entity credit default swaps.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Risk weight on residential housing loans to individuals for loans up to Rs.20lakh reduced to 50 per cent as a temporary measure. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Existing relaxed prudential norms applicable to Tier I and Tier II urban cooperative banks extended by one year.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Ceiling rate of interest payable by NBFCs (other than RNBCs) on deposits raised by 150 basis points.</font></p>
</blockquote>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>HEART ON THE RIGHT SIDE</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While replying to the discussion on the consideration motion of the Finance Bill, 2006, on 20.03.2006, Finance Minister P. Chidambaram made an announcement about giving exemption to cardiological items like coronary stents and coronary stent system for use of cardiac catheters from customs duty and special CVD. And he explained that ‘this shows that <b>our heart is on the right side</b> (of the people)' </font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Civil Servants </b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“Civil Servants need not be discouraged if somebody criticized them by saying that the administrative efficiency has dwindled down. This cry existed even when I was a junior officer of the civil service some three decades ago. Critics must realize that a civil servant today was assailed with various problems that never existed before such as food deficit, labour trouble, communist problem and many others”</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Does this sound familiar and contemporary? This is an extract from a speech by Mr. M.K. Vellodi, Chief Minister of Hyderabad in 1951.</font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>DDT is 600 - THANK YOU</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When I started this daily column, not even my best friends, gave me a survival beyond 50 editions. And when I completed 100, I was really tired and wanted a break, but my editor told me, “it's just not possible” and here I am with the 600<sup>th</sup> edition! It may take 15 to 20 minutes for you to read a DDT, but it takes me four to five hours to make one. While working in the Department, a few years ago, I told a Commissioner who was running a court of “yes boss men”, that he should have a clown like me in his court to tell him the truth about his actions and what the people really thought of him. He liked the idea in the beginning, but truth ultimately became unbearable and he transferred me to Timbuktu. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT is not against any one; it only tries to explain and analyse and tell the king that he is not wearing any clothes – if the King listens, it's good, if he doesn't, you know that he is nude and doesn't listen to reason. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT is grateful to the Revenue Boards – for giving it enough material – and to all the Netizens for all the support.</font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until tomorrow with more DDT</font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day. </font></p>
<p align="justify"><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"><u> <a href="file://///192.168.0.10/Editor/Desktop/vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></u></font></p>
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