It was an Indian business valued at $11 billion – and a lawsuit that involved Vodafone Group Plc.’s acquisition of 67% stake in Hutchison Essar from Hutchison Telecommunications International Ltd. that took place in Cayman Islands way back in 2007.

While the Income Tax department claimed taxes on the grounds of the transaction being a transfer of an Indian asset; Vodafone disputed the claim as a deal between two global companies, even if the assets involved in the deal were located in India.

Finally, the curtains are down – Vodafone wins $2.5 billion tax case, as adjudicated by the Supreme Court. The Government of India can no longer tax the capital gains arising from the transaction that took place in Cayman Islands between the two non-resident companies.

In the words of the Supreme Court of India’s Chief Justise S.H. Kapadia:

“The government has no jurisdiction over Vodafone’s purchase of mobile assets in India as the transaction took place in Cayman Islands between HTIL & Vodafone”

Interestingly, after losing the suit in High Court, this multi-billion dollar tax case has unfolded in Vodafone’s favor in the Supreme Court. Apart from being a big thumbs-up for the British telecom giant, the outcome is a moral victory for similar litigations being faced by foreign companies in India such as GE, Cadbury and Vedanta amongst others.

Though, this set back to the I-T department comes as a big knock on the exchequer’s kitty to the tune of Rs.11000 crore on a deal abroad; this landmark judgment will boost people’s confidence in Indian judiciary and promote Indian shores as attractive investment destination, given that tax regulations play a major role in cross border transactions and investments in a country.

It was one of the rare cases where the Indian I-T department went full throttle to lift the corporate veil, issuing a show-cause notice to Vodafone as to why income tax was not deducted at source at the time of purchase of the Indian JV partnership business and paid to the Government of India.

The apex court ruling has now directed the country’s I-T department to return Rs.2500 crore deposited by the telecom giant within two months, along with 4% interest on the said amount; for an offshore transaction that was ‘bonafide’, hence it was non-taxable.

Huge win for Vodafone – Wide repercussions for I-T dept, isn’t it?

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Its Official – If you are salaried and earn less than Rs. 5 Lakh a year – There is no need for you to file income tax returns for assessment year ending 2012. What his means that salaried persons will not have to file returns for earnings in current financial year (2010-2011).

Indian Government has been trying to simplify Indian taxation processes for past couple of years now, and this announcement is a big step towards that. Last year, during the budget announcement, Direct Tax Code bill was introduced which promised to make life simple for consumers as well as Businesses for filing tax returns.

Although, this directive was part of the Direct Tax code bill, it was officially announced yesterday. This will save lot of time, effort & money of over 85 lakh Indian citizens (who earn less than Rs. 5 Lakh p.a) and file tax returns year after year, without much change.

However, there are certain caveats – This is applicable only to people who do not have any income from any other sources. For e.g: If you are trading in stocks, investing in mutual funds or earning money from real estate property etc. you will have to file Income Tax returns.

Also, under this scheme if you if you want to claim Tax refunds – you will have to file taxes.

How it will work for Salaried Employee

Essentially, Employees who are eligible under this scheme for filing tax returns will have to disclose their earnings (other than salary, like interest, dividends) to his / her employer. The Form 16 which is issued at the end of the year will then be treated as Employees Income Tax Return itself.

In India majority of employees earn less than Rs. 5 Lakh salary, but most of them have other sources of income as well. So, it will be interesting to see how many of them actually avail this facility of “No Income Tax Return Filing”.

What do you think?

[Suggested reading: Top tax saving instruments for investors]

Related posts:

1. File your Income Tax Return now – Download Online Tax return ITR Forms…
2. Here’s a quick look at earnings of Indian people.
3. New Income Tax Calculations [Union Budget 2011]

It’s time for the Union Budget 2011. Undoubtedly, this most awaited annual exercise will bring with it hopes to raise the standard of living of the common people; especially looking at the way the soaring inflation has eroded the value of money. Moreover, most of the debt or fixed-yielding investment avenues are providing negative returns in real terms.

Though, the Union budget covers many issues which indirectly affect our lives in many ways such as Centre’s spending towards defense, allocations for education, health services, infrastructure etc.; but the main component of the budget which every aam-aadmi eagerly waits for is the personal tax structure.

Today being the B-day, I would like to present my views on various fronts on the personal tax structures and income tax slabs and budgetary expectations for the same.

First of all I would like to mention the presently applicable tax slabs and deductions in taxes via Section 80C of the Income Tax Act.

Current Tax Slabs:

1. Income upto an annual sum of Rs.1,60,000 is tax free.
2. Income in the range of Rs.1,60,001 to Rs.5,00,000 is taxable at a rate of 10%
3. Income in the range of Rs.5,00,001 to Rs.8,00,000 is taxable at a rate of 20%
4. Income above Rs.8,00,001 is taxable at a rate of 30%

Note: There are higher slabs for Senior citizens, ladies in all the above tax slabs.

Current Tax Deductibles:

A) A person can claim tax deduction upto Rs.1,00,000 by investing in various instruments like Equity Linked Savings Schemes (ELSS), PPF, NSC, 5-year Fixed Deposits in RBI-notified Scheduled Banks, Housing Loan Principle repayments, etc. which come with various clauses for them to be applicable. (These schemes are already discussed in our earlier article)

B) A person can also claim an additional tax deduction upto Rs.20,000 by investing in Government notified Infrastructure Bonds.

Let us switch to my wish list as a common man. We need to se whether the Finance Minister Pranab’da comes anywhere near to the modifications in the Tax slabs as follows:

This has been done in view of abnormal cost of living due to high inflation (8-10%) last year due to which the net income of the common man has gone down. Actually, every year, common man is hoping for some increase in tax slabs and once in every two to three years the government has revised the tax slabs.

However, inflation is eating into the purchasing power of people year after year without any real respite. So the tax slabs / tax rates should consider inflation every year and, accordingly, be raised to keep pace with such pressures.

Tax Slabs – Will these changes comes?

1. Income upto an annual sum of Rs.2,00,000 be made tax free.
2. Income in the range of Rs.2,00,001 to Rs.5,00,000 be taxable at 8%
3. Income in the range of Rs.5,00,001 to Rs.10,00,000 be taxable at 10%
4. Income in the range of Rs.10,00,001 to Rs.25,00,000 be taxable at 20%
5. Income above Rs.25,00,001 be taxable a rate of 30%

The reason for increasing one more slab is the people who are marginally better off than the tax free income bracket should not feel the pinch of 10% dose suddenly, once they go above taxable income. They should be slowly brought into tax net.

Note: For Senior Citizens, ladies or any other special category of people who deserve some thing extra (e.g. physically handicapped, ex-military men and dependents of those who died valiantly like men on border or those killed by extremists or naxalites) the tax free limit to be raised to Rs.2,50,000.

Now coming to the Tax deductibles under Section 80C, the limit should be raised to Rs.2 lakh from current Rs.1 lakh. It is of common knowledge that the investments in the instruments which cover Section 80C are used for the common good of the nation. By increasing the limit of deduction, the government can encourage people to invest in the instruments which are working for nation building on a long-term basis.

Similarly, the limit deductible in infrastructure bonds be increased drastically to Rs.1,00,000. Remember, the government has planned to spend $500 billion in next few years on developing the national infrastructure. The government is finding it difficult to attract such massive investments (especially FDI) against pre-set target plans. Just imagine, even if 10% or 20% of the investments can be procured from such schemes, it will be that much easy for the government to achieve its targets.

What’s your say? Have you any wish-list from FM Pranab’da?

Related posts:

1. Union Budget 2010: Unraveling Direct Tax Proposals
2. Union Budget 2010 Highlights: Aam-aadmi Oriented & yet Financially Inclusive
3. Union Budget 2010 Expectations: Speedy Implementation of Reforms, Taming Fiscal Deficit and Rising Inflation

Let me share with you a small personal tryst with investment in Equity-linked Savings Scheme (ELSS) for tax-saving purposes. Since I track stock markets closely, my preference is usually tilted towards direct equity investments rather than going through the mutual fund route.

However, in order to stifle my taxable income, I had to invest Rs. 30,000 in an ELSS scheme way back in Feb-2008. The Indian markets were in the midst of a severe bear phase then, with Sensex hovering around 16000 levels.

The time ticked by and it was Feb-2009 on the calendar. It was time to invest another Rs. 30,000 to save on taxes. The Sensex was quoting at paltry 8000 levels – on hindsight, it turned out to be the trough of the bear market. Needless to say, there was panic written all over the screen.

Fortunately, for me, this period turned out to be a golden opportunity to average my previous lump-sump investment which went in at higher levels of market. The average value of my total Rs. 60,000 investments now stood correlated with Sensex 12000 levels.

But, you might not be lucky enough to get such averaging opportunities just around the end of every financial year. Your lump-sump investments may not necessarily stand you in sweet spot if your investments are made arbitrarily during the year-end. They need to be planned well in advance through out the year.

LESSONS:

1. Plan your tax-saving instruments – don’t leave it for the last hour.
2. Even tax-saving investments can be routed through systematic plans.
3. Most of the tax-saving investments are for minimum of 3 years.
4. Determine which investment option to save taxes suits you the best.
5. Investments with mere intention of saving taxes might backfire on you.

It’s that time of the year when most of the individuals are found scrambling to invest in tax-saving instruments just before the financial year-end. Currently, Section 80C of the Income Tax Act allows deduction of upto Rs.1 lakh from the gross total income. Plus another Rs. 20,000 for investments in infrastructure bonds if this Rs.1 lakh limit is exhausted.

Let’s have a look at some of the tax-saving options available to individuals:

1) Public Provident Fund

Public Provident Fund, or PPF, is a long-term, statutory scheme of the Central GOI. Currently, the interest rate offered through government-backed small savings scheme is around 8%, which is compounded annually. On maturity, you pay absolutely no tax under Section 80C.

This long-term scheme is for 15 years; hence if your investment horizon is short-term in nature, PPF is not meant for you as it locks your liquidity for a relatively long period of time. In this scheme, you need to invest a minimum deposit of Rs.500 and upto maximum of Rs.70,000 in a financial.

2) Unit-linked Insurance Plans

Unit-linked Insurance Plans (ULIPs), which are eligible for Section 80C tax rebate, are investment products that provide dual benefits of life insurance and savings element as a one stop solution for an individual’s financial goal. However, if you don’t need insurance, going with ULIP is not the best investment bet on the horizon.

Recently, insurance regulator IRDA had initiated a few corrective measures by hiking the threshold limit for ULIPs from 3 years to 5 years of lock-in period and mandated a minimum guarantee for such plans. Now, the policyholders can also opt for pre-mature exit without any penalty.

3) Equity-linked Savings Scheme

Equity-linked Savings Scheme (ELSS) is mutual funds that help you save taxes under Section 80C as well as generate decent long-term returns from the equity markets. Such schemes are typically characterized by a three-year lock-in period.

However, the tax benefits of ELSS will be phased out with the introduction of the Direct Tax Code (DTC) starting from April 1, 2012. But, the revised code mandates that existing ELSS funds will be able to claim tax-exemptions. So, this might just be your last opportunity to put money is lucrative tax-saving mutual funds.

4) 5-Yr Bank Fixed Deposits

You might be thinking how come bank fixed deposits are included in tax-saving schemes? Since 2006, Bank Term Deposits which are of over 5 years tenure and upto Rs.1 lakh are allowed exemption under Section 80C of the Income Tax Act, 1961. Such deposits should necessarily be in the RBI mentioned list of Scheduled Banks.

Most of such tax-saving fixed deposit avenues are of fixed tenure and do not allow pre-mature withdrawal facility. Further, such term deposits can not be pledged to secure a loan. Most importantly, the biggest drawback of this scheme is that the interest for the amount deposited is taxable.

5) Employee’s Provident Fund

Salaried individuals are compulsorily required to contribute 12% of the sum of basic pay and dearness allowance to Employee’s Provident Fund (EPF). This sum is deducted by the employers from the monthly payroll of employees as a social security scheme akin to a forced-saving towards retirement planning.

EPF brings with it key benefits as a fixed-income instrument providing tax benefits under Section 80C at the time of investment. Even the returns from EPF are tax free on maturity. The employer also has to make a matching contribution to the EPF.

6) National Savings Certificate

The 8% returns from National Savings Certificate (NSC) are not only assured and tax exempt under Section 80C, but also government guaranteed. Unlike PPF, NSCs have no upper limit on the maximum amount that can be invested in a fiscal year.

This small saving scheme offers tax-free initial deposit for 6 years. However, interest in NSC is taxable. But, the interest for the first 5 years is eligible for a deduction as NSC is a cumulative scheme – where interest is reinvested and is qualified under fresh deduction in NSC.

7) Infrastructure Bonds

In Union Budget 2010, Finance Minister Pranab Mukherjee proposed the deduction for funds flowing in long-term infrastructure bonds in India upto Rs.20,000 under Section 80 CCF of the IT Act, 1961.

These bonds issued by RBI-notified entities carry long tenures of 5-10 years for facilitating investment in infrastructure projects within the country. The interest earned can vary from 7.5% to 8.5% depending upon the issuer and investment option chosen. For the investors at highest tax bracket, such investments can bring in savings of upto around Rs. 6000.

8) Insurance, 9) Health Premiums & 10) Tuition Fees

You can claim tax benefits for the health insurance premiums to the extent of Rs. 15000 under Section 80D. Moreover, you can also claim an equal amount of deduction for buying medical policies for your parents. Any amount paid towards life insurance premium for yourself or your family is eligible for tax break under Section 80C.

If you’re paying tuition fees for your children’s full-time education, you are eligible for tax deduction under Section 80C. Mind you, the said tax benefit is not for the donations paid to such institutions.

Are you still waiting for the last week of March to invest your taxable income?

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2. How India Earns, Spends and Saves
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Whenever there is crisis, he is there… So goes the cliché in the political circles with respect to the Indian Finance Minister Pranab Mukherjee.

The great leader from the UPA government has served terms at different positions in various portfolios ranging from Industrial Development, Shipping and Transport, Revenue and Banking, Commerce, Planning Commission, External Affairs, Defence and, last but not the least, the Finance. You name it and he has almost been there at that job.

In latest, the London-based magazine ‘Emerging Markets’ has named Pranab Mukjerjee “Finance Minister of the Year for Asia 2010”, for his immaculate ability to guide India through the global recession and balancing strong growth with fiscal prudence.

The prestigious award is based on nominations from public and private sector economists, analysts, bankers and other experts. The Bengali Babu has presented four Union Budgets for India in his political career. The winning of the Best Finance Minister in Asia award does not come as a big surprise, if one recalls the fact that Mr Mukherjee was once rated as the Best Finance Minister in the world, in 1984.

The Finance Minister has been applauded for his efforts to steer India out of the slowdown alongside maintaining fiscal transparency, regulating fuel price reforms and inclusive growth strategies. The award signals the confidence the FM has inspired in key stakeholders.

Pranab Mukherjee has also been on the forefront to raise voice across the global countries on various issues related to the emerging markets. The FM has pitched a view for making a strong case for minimum 5% rise in voting power in the IMF for emerging economies- thus, placing emphasis on changing governance structure of the agency in light of the shifting global economic reality.

During the recession, Mr Mukherjee played a crucial role along with RBI to take prompt measures to protect the economy from the external shocks and turbulences. The Finance Minister has also taken several initiatives to chug along the path of major financial reforms in the areas of GST taxes, the Indirect Taxes and the Takeover Code, to name a few.

Congratulations to Mr Pranab Mukherjee for the prestigious Award!

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The much-awaited Direct Tax Code (DTC) Bill was approved couple of days back and few more clarifications have come out – some positive, some negative.

In fact, there is difference of opinion among various analysts. Some say that the new DTC Bill is nothing but old wine in a new bottle, while other says that the government might try to recoup revenue shortfall from DTC from the proposed GST regime.

Updated Direct Tax Code Highlights

1. The most annoying one was that of pushing the effective date of DTC by a year to April 1, 2012. Most of us had almost discounted the roll-out date at April 1, 2011.
2. The long-term capital gains exemption on listed equities stays along with STT. This will ensure that long-term capital investments are not discouraged. And, the short-term capital gains will be taxed at half your slab rate in whichever taxable income bracket you fall in.
3. There is one negative news for women though – women could cease to enjoy income-tax exemptions over and above men get. Only senior citizens will get extra relief with tax exemption upto income of Rs.2.5 lakhs.

facts about the present tax slabs and Changes proposed

Earning groups and their tax slabs :

How it will effect the people paying taxes ??

1. Rs. 0 to Rs. 1,60,000 : No difference (Neither they paid earlier, nor would they now)
2. Rs. 1,60,000 to Rs 2,00,000 : Earlier they were paying 10% and they dont pay now
3. Rs. 2,00,000 to Rs 5,00,000 : Saving of Rs.4000 (Rs.40,000 x 10%)
4. Rs. 5,00,000 to Rs. 8,00,000 : Saving of Rs.4000 (Rs.40,000 x 10%)
5. Rs. 8,00,000 to Rs.10,00,000 : Earlier they were paying 30% and will now pay only 20%
6. Rs. 10,00,000 and above: No difference (They were paying and continue paying 30%)

Data crunching – how many people paid tax at what rate

1. Total number of tax payees during last year: 3.25 crore people (in 3 slabs of 10, 20 and 30%)
2. 95.25% of the total tax payees fall under Rs.1 lakh to Rs.5 lakh slab; contributing 30% of total taxes collected.
3. 2.05% of the total tax payees fall under 20% slab; and their contribution is 10% of all taxes collected.
4. 2.2% of the total tax payees fall under 30% slab; and their contribution is 60% of the total tax collected.

Interesting Observations:

The above figures indicate that vast majority of our fellow countrymen fall in the income range of Rs. 1,60,000 to Rs. 5,00,000 per annum. Though the successive governments drum up the fact that we are a middle-class economy, the facts state that we are infact a lower middle-class economy as 96% of our tax payees are at the lowest level and contribute only 30% of taxes while the cream of the society of 4% contribute 70% of the taxes.

Government and many international agencies claim that the middle class population in India is 300 million strong and is more than the entire population of Germany.

Now consider this – 300 million people means at least 60 million families i.e. 60 million heads of families (consider one family pays only one tax). Still our tax payees are only 3.25 crores. Why the other 2.75 crore people are not paying taxes? Are they farmers (as farm income is tax free)? Are they businessmen (a chunk of whom earn in black)? Are they politicians (who don’t declare their incomes)? Who are they?

Benefits to government due to Direct Tax Code (DTC)

Government by increasing the tax paying limit to Rs. 2,00,000 will effectively bring down the tax payers by almost 10-15% (those falling in the nominal Rs.1,60,000 and Rs.2,00,000) and consequently reducing its paper work.

Loss to government due to Direct Tax Code (DTC)

On the other hand, by raising the tax slab from Rs. 8,00,000 to Rs.10,00,000 at the rate of 20%, from earlier 30%; it will loose a decent chunk of its tax income as the segment of Rs.8,00,000 and above contributes around 60% of all taxes collected, though the numbers are only 2.2% of tax payees – this, assuming that the majority chunk of tax contributors likes at the lower band of a tax slab.

From the above, you can see that due to these changes very few income groups benefitted. I have a strong feeling that this exercise is to reduce the paper work of the tax department rather than to transfer benefits to people.

Instead what government could have done (Our 2 cents)

For transferring the benefits to people it is equally important to consider two factors.

1. Increase taxable slabs (of course, until a certain point), and
2. Reduce tax rates.

Since last decade, we have seen only the taxable slabs going up from Rs. 90,000 to the present Rs.2,00,000. This sure is a welcome gesture from government.

However, the other component is conveniently overlooked – while increasing taxable income ranges liable for paying taxes, the government could have brought down the effective tax rates from 10%, 20% and 30% to 8%,15% and 25% and, so on, gradually upto 5%, 10% and 15% for the above income groups (in line with many developed nations).

This way instead of only two groups of income groups, everybody could have benefited from the exercise.

Related posts:

1. Direct Tax Code Bill approved – Positive for Individuals, Dampener for Corporates!
2. Revised Direct Tax Code – What you should know !
3. Direct Tax Code Bill: Highlights & Full Report

Finally, India is warming up to broadest tax reforms in the form of Direct Tax Code (DTC) and Goods and Services Tax (GST)  . The former is centered around expectations to minimize tax exemptions, but widen tax slab on personal finances; and the latter revolves around evolving an efficient and harmonized consumption tax system in the country.

While the proposed GST Bill still remains mired by the opposition from BJP on grounds related to fiscal autonomy of States in indirect taxation, the Union Cabinet on Thursday approved legislation for the crucial direct tax reform – The Direct Tax Code (DTC) Bill.

Personal Income Tax Slabs – Basic Exemption Limits Raised!

In a big relief for the individual taxpayers, the new DTC has proposed widening of personal income-tax slabs marginally. The Cabinet-approved Bill proposes widening of the tax slabs with lowest rate of:

• 10% for Rs. 2-5 lakh taxable income (current slab Rs.1.6-5 lakh)
• 20% for Rs.5-10 lakh (current slab Rs.5-8 lakh) and
• 30% for above Rs.10 lakh taxable income group of people (current slab above Rs.8 lakh).

If you’re a Senior citizen or women, there is good news for you – the threshold income has been fixed at a higher Rs.2.5 lakh as against Rs.2 lakh for standard categories.

                                                                         (Source: Sify)

Higher Corporate Tax

On the Corporate tax front, the DTC Bill cleared by Cabinet has sought to retain the present level of 30% (for domestic companies), but inclusive of 10% surcharge and a 3% education cess. However, the above figure fall trifle short of expectations of the corporate lobby which stood at 25%, as proposed by the DTC draft released earlier.

Minimum Alternate Tax @20% – A Dampener!

The Bill seeks to impose Minimum Alternate Tax (MAT) at 20% of the book profit as against 18% being levied currently on the Indian companies. The original DTC draft had proposed to calculate MAT on gross asset base which could have translated into effective higher tax rate based on huge asset base for the companies operating in capital-intensive sectors such as infrastructure and capital goods. But, owing to sharp criticism, the levy is to be maintained on book profits, as now.

Further, the axe is likely to fall on Indian IT companies with the advent of DTC regime which would call for the end of “Tax holidays” enjoyed by these companies. This step will bring these IT companies on par with other industries prevailing in India.

Savings – EEE Model on PF to Reign!

In the first DTC draft released in August 2009, the Centre had proposed to cease most of the exemptions, including savings instruments, by taxing them at withdrawal of the investments as per the Exempt-Exempt-Tax (EET) methodology of taxation. However, the Cabinet-cleared DTC Bill has proposed to continue with the EEE method of taxation.

On public demand, the finance ministry had agreed to abandon its previous proposal on tax retirement benefits under Provident Fund. This measure is likely to act as a booster for public savings and income, but may culminate into potential losses in terms of prospective government revenues from taxes that could have been earned during the maturity of investments up to Rs.3 lakh in a fiscal year as per the Exempt-Exempt-Exempt (EEE) model.

To sum it up, the DTC Bill is softer on the aam-aadmi with a decent up-tick in the basic exemption limits, while not so conducive on the corporate lobbies in terms tax reliefs from what is already there in the Income Tax Act currently.

Your thoughts on new DTC ?

Related posts:

1. Direct Tax Code Bill: Highlights & Full Report
2. Revised Direct Tax Code – What you should know !
3. Union Budget 2010: Unraveling Direct Tax Proposals

Last weeks biggest news undoubtedly was the launch of low-cost $35 tablet by the Indian Government for Educational purposes. Trak.in saw huge surge of traffic as we managed to bring out this news before anyone else and also procured some exclusive pictures, which were used by many popular blogs like Gizmodo, Wired, the next web and and many other websites worldwide.

Here is a quick wrap-up of some of the other posts we wrote last week:

Indian Government is funding Doordarshan to push its DTH offerings. In a bid to double up their subscription base, they will be offering Free DTH set-top boxes to consumers across India. In other related news, TRAI has put a maximum cap of Rs. 150/- as subscription charges for all Cable TV as well as DTH providers. Additionally, each Television channel will have to be offered individually on a la carte basis.

It seems that people are traveling abroad lesser as, for the first time in 5 years, the demand for passports has dropped

For all those Apple fans who have been waiting for much coveted iPhone 4, it will be launched in India around Sept-October by Airtel, but be ready to shell out a princely sum of Rs. 45k to Rs. 50k for this gadget !

Tata Nano cannot be called a 1 lakh car anymore – more like a 1.5 Lakh car, as the increase in raw material prices have forced Tata’s to increase the Nano price tag as well.

Paul the Octopus hoopla is still not dying down – Now Paul the Octopus tells you who the next Russian President will be !

Expect 3G services to be launched in India later this year – However, Bollywood production houses are already gearing up to take advantage of 3G speeds, by launching Made-for-mobile Bollywood movies.

New Google Maps has been launched to depict more consistent and accurate geopolitical features of International boundaries – But, it has screwed up when it comes to Indian Northern Boundaries – It shows whole of Kashmir and Arunachal Pradesh as disputed.

We have started doing Earnings round-up now – Here is the Earnings round-up of major Multinationals like Apple, PepsiCo, IBM, Goldman Sachs and Yahoo..

If you want to know what is the new GST structure all about, read this.

Here is another news of last week that will startle you – Indian Railways has parted ways with IRCTC citing low quality of food. However, it seems that same food is going to be served to International Athletes at CWG as they have procured catering services from IRCTC.

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During his Union Budget 2010 Speech, Finance Minister Pranab Mukherjee had pointed out that the prospects for imposing the Direct Tax Code from April1, 2011, was strong. However, he didn’t sound as much confident speaking about the same for the biggest indirect tax reform – The Goods and Services Tax (GST).

But, some progress certainly seems to have been made by the Centre on this ambitious reformist movement. Pranab’da has unveiled a three-rate structure for GST – which is also a three-year plan – which, if all things go well, could converge into a single-rate regime of 16% on all goods and services.

The Proposed three-rate Structure for GST – How does it look like?

The Centre has proposed a bifurcation of GST rates into services and goods separately, to begin with. For services sector, Pranab’da has articulated a constant rate of taxation at 8%. Further, he has screened goods into two varieties – one with a lower rate of 6% for essential items and other with a standard rate of 10%.

The aforementioned taxation rates will to be payable at both the Centre and the State levels – effectively doubling up as a final impact on the consumers.

The Finance Minister has recommended that the effective rate of taxation for the Standard rate goods should be cut down by 1% in each of the two ensuing fiscal years – with the aim to emerge at a convergent price of 8% for both goods and services by 2014. Thus, the GST should eventually move to a single-rate 16% (8% Centre + 8% State) structure in the third year of its operation.

Once a shift to the GST implemented, all other indirect tax levies such as excise, VAT and service tax will cease to exist as they constitute as a component of the broader tax regime.

The Manmohan Singh-led UPA-II government has fast-tracked its path to Reforms from its current stint at the Central government, thanks to the absence of Left party as its coalition partner this time around.

In its second avatar as the government of India, the UPA has approved of several key reforms such as Women’s Reservation Bill, Education Reforms and several Economic reforms such as 25% public shareholding norm, proposed Direct Tax Code, proposed Take-over Code and two biggest reforms ever in the form of UIDAI project and proposed GST regime.

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