Companies will be given a chance to amend and re-submit proposals, says DIPP
In what could be a morale booster for start-ups, the government has decided to do away with the practice of rejecting applications for tax sops.
Instead, start-ups will get an opportunity to apply again after making changes to the proposal based on the explanation given to them on the initial one.
Supportive policy
The Department of Industrial Policy and Promotion is also reworking the qualification criteria for start-ups for non-tax benefits, a government official told Business Line.
“Instead of dismissing proposals that do not meet the mark for tax-sops with a simple ‘rejected’, the inter-ministerial group examining it will give details of where they fell short. This will give the start-ups an opportunity to rework their proposals, and apply again for tax benefits,” the official said. “There has been no change in the criteria of judging whether a start-up qualifies for tax benefits. It still depends on how innovative the idea is.”
In the last meeting of the Inter Ministerial Group (IMG) on startups which met on May 1, about a dozen applications were approved.
The change in the Central government’s stance has been triggered by a general sense of dissatisfaction among start-ups with the new policy, as only about 10 proposals had qualified for tax sops till last month out of the 140 proposals vetted by the inter-ministerial group since the policy was announced last year. “The DIPP has decided to be a bit more empathetic while dealing with start-ups. After all, what good are tax sops if very few are able to benefit from it,” the official said. The 130 applicants for tax apps, who were rejected over the past year, will also get a detailed note on why their cases did not pass the test. As per the existing rules, start-ups (companies and Limited Liability Partnerships or LLPs) can get income tax exemption for three years in a block of seven years, if they are incorporated between April 1, 2016, and March 31, 2019.
Expanding definition
An IMG, including officials from the Department of Bio-technology, Department of Science and Technology and the DIPP, examine the proposals on the basis of innovation and use, and determine whether they qualify for tax sops or not.
“An official from the Ministry of Electronics, IT and Technology has been added to the IMG from May 1,” the official said.
The DIPP will come up with a new set of rules over the next few weeks, tweaking the definition of a start-up that will result in more companies and LLPs coming under in the category.
The Real Estate (Regulation and Development) Act , 2016, or RERA, aims to protect home buyers and encourage genuine private players
The much-awaited Real Estate Act comes into force from Monday with a promise of protecting the right of consumers and ushering in transparency but only 13 states and Union Territories (UTs) have so far notified rules.
The government has described the implementation of the consumer-centric Act as the beginning of an era where the consumer in king. Real estate players have also welcomed the implementation of the Act, saying it will bring a paradigm change in the way the Indian real estate sector functions. The government has brought in the legislation to protect home buyers and encourage genuine private players.
The Real Estate (Regulation and Development) Bill, 2016, (RERA Act), was passed by Parliament in March last year and all the 92 sections of the Act comes into effect from 1 May. “The Real Estate Act coming into force after a nine-year wait and marks the beginning of a new era,” Housing and urban poverty alleviation (HUPA) minister M. Venkaiah Naidu said. The minister said the law will make “buyer the king”, while developers will also benefit from the increased buyers’ confidence in the regulated environment.
“The Act ushers in the much-desired accountability, transparency and efficiency in the sector, defining the rights and obligations of both the buyers and developers,” Naidu said. The developers will now have to get the ongoing projects that have not received completion certificate and the new projects registered with regulatory authorities within 3 months from Monday.
Under the rules, it is mandatory for the states and UTs to set up the authority. However, only 13 states and UTs have so far notified the rules. The states that have notified the rules are Uttar Pradesh, Gujarat, Odisha, Andhra Pradesh, Maharasthra, Madhya Pradesh and Bihar.
The housing ministry had last year notified the rules for five UTs—Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, Daman and Diu, and Lakshadweep, while the urban development ministry came out with such rules for the National Capital Region of Delhi. The other states and UTs will have to come out with their own rules.
A HUPA ministry spokesperson said the ministry has been taking up the matter with all the states and UTs for implementation of the Act, requesting them to ensure action as per the provision of the Act within the time limit. The ministry had earlier formulated and circulated the model rules to the states and UTs for their adoption and it is their responsibility to notify the rules, the spokesperson said. Those states which have not notified the rules will face public pressure and even people could approach the court in the matter, he added. On reports that key provisions have been diluted by some states, he said it was pointed out to those states and they have assured the ministry that it would be corrected.
The Indian real estate sector involved over 76,000 companies across the county. Some of the major provisions of the Act, besides mandatory registration of projects and real estate agents, include depositing 70% of the funds collected from buyers in a separate bank account for construction of the project. This will ensure timely completion of the project as the funds could be withdrawn only for construction purposes. The law also prescribes penalties on developers who delay projects. All developers are required to disclose their project details on the regulator’s website, and provide quarterly updates on construction progress. In case of project delays, the onus of paying the monthly interest on bank loans taken for under-construction flats will lie on developers unlike earlier, when the burden fell on home buyers, said real estate service provider JLL India CEO and Country Head Ramesh Nair.
RERA also states that any structural or workmanship defects brought to the notice of a promoter within a period of five years from the date of handing over possession must be rectified by the promoter, without any further charge, within 30 days, he added. If the promoter fails to do so, the aggrieved allottee is entitled to receive compensation under RERA, Nair said.
Other highlight of the Act is imprisonment of up to three years for developers and up to one year in case of agents and buyers for violation of orders of appellate tribunals and regulatory authorities. As per industry data, real estate projects in the range of 2,349 to 4,488 were launched every year between 2011 and 2015, amounting to a total of 17,526 projects with investments of Rs13.70 lakh crore in 27 cities, including 15 state capitals. About ten lakh buyers invest every year with the dream of owning a house.
Real estate industry bodies Confederation of Real Estate Developers Associations of India (CREDAI) and National Real Estate Development Council (NAREDCO) said the implementation of this law will bring paradigm change in the way Indian real estate functions. They expect property demand to rise but supply may get affected in the near term. “It will bring a paradigm change in the real estate sector. It will protect buyers who have purchased flats in the past. The regulator under the RERA should find ways to help complete ongoing projects and provide relief to home buyers,” NAREDCO chairman Rajeev Talwar said.
CREDAI president Jaxay Shah said RERA will increase transparency in the sector and boost confidence of both domestic and foreign investors. He, however, said there will be some “teething problem” initially in implementation of this law. Asked about the impact on prices, Shah said, “Supply will dip during this year but demand will improve as buyers will have increased confidence about investing in the property market” The real estate prices will remain stable now but rates could rise by 10% in the next six months, he added.
In another move to improve ease of doing business in India, the Income Tax Department has tied up with the Corporate Affairs Ministry to issue PAN and Tax Deduction Account Numbers within a day.
In another move to improve ease of doing business in India, the Income Tax Department has tied up with the Corporate Affairs Ministry (MCA) to issue Permanent Account Numbers (PAN) and Tax Deduction Account Numbers (TAN) within a day, an official said on Tuesday.
“The Central Board of Direct Taxes has tied up with MCA to issue Permanent Account Number (PAN) and Tax Deduction Account Number (TAN) in one day,” a Finance Ministry statement said here.
“Applicant companies submit a common application form SPICe (INC 32) on the MCA portal and once the data of incorporation is sent to the Central Board of Direct Taxes by MCA, the PAN and TAN are issued immediately without any further intervention from the applicant,” it said.
During the last fiscal ended March 31, “19,704 newly incorporated companies were allotted PAN in this manner,” it added. During March 2017, of the 10,894 newly incorporated companies, PAN was allotted within four hours in 95.63 per cent of the cases and within one day in all cases.
Similarly, TAN was allotted to all such companies within four hours in 94.7 per cent cases, and within one day in 99.73 per cent cases, the Ministry said.
The Income Tax Department has also introduced the electronic PAN Card (E-PAN), which is sent by e-mail, in addition to the issue of the physical PAN Card, to all applicants, including to the individuals who have been allotted PAN, the statement added.
Inter-ministerial body FIPB has approved nine investment proposals, including those of Netmagic Solutions and Vodafone, totaling a foreign investment of Rs 659 crore.
Inter-ministerial body FIPB has approved nine investment proposals, including those of Netmagic Solutions and Vodafone, totaling a foreign investment of Rs 659 crore. “Based on the recommendations of the Foreign Investment Promotion Board (FIPB) at its meeting held on February 21, the government has approved nine proposals involving FDI of Rs 659 crore and recommended three proposals for the Cabinet Committee on Economic Affairs (CCEA),” an official statement said. The FIPB, headed by Economic Affairs Secretary Shaktikanta Das, cleared proposals of Netmagic Solutions entailing an investment of Rs 534 crore and Vodafone India Rs 55 crore. It recommended proposals of Rs 750 crore of Apollo Hospitals Enterprise, Rs 900 crore of Star Technologies and Rs 789 crore of Flag Telecom Singapore Pte to the CCEA, it said.
The panel has deferred six proposals, including those of Gland Pharma, Crown Cement Manufacturing India Private and Powervision Export and Import India Private. It also said proposals of Hindustan Aeronautics, Spectrumlabs India Private and PMI Engineering Exports Private did not come to the FIPB as these were on the automatic route. The government has already announced winding up of the FIPB by putting in place a new mechanism, a move which will further improve ease of doing business.
Finance Minister Arun Jaitley, in his Budget 2017-18, announced the decision to abolish the FIPB, saying 90 per cent of foreign investment approvals are via the automatic route and only 10 per cent go to the board. The FIPB offers single-window clearance for applications on FDI in India that are under the approval route. The sectors under the automatic route do not require any prior approval and are subject to only sectoral laws.
India allows FDI in most sectors through the automatic channel, but in certain segments that are considered sensitive for the economy and security, the proposals have to be first cleared by the FIPB. With growth in FDI in important sectors like services and manufacturing, overall foreign inflows in the country rose by 30 per cent to USD 21.62 billion during the first half of 2016-17. FDI in the country rose 29 per cent to USD 40 billion in 2015-16 as against USD 30.94 billion in the previous financial year.
Gujarat government has entered into B2B ecommerce space as it allowed UK-based cloudbuy.com to develop B2B marketplace for accelerating its growth in state business by supporting SMEs and larger organisations via digitalisation.
According to a top official from the industry department, the state plans to give a digital push to the SMEs and large organisations from Gujarat via Business to Business (B2B) ecommerce.
However, Dhananjay Dwivedi, secretary, department of science and technology, Government of Gujarat, said the company had entered into a MoU with the state government.
“Any other ecommerce company that can support business in Gujarat can also come” he added.”With B2B trading opportunities being much bigger and faster now, the businesses of Gujarat will immensely benefit both in terms of revenue growth and reaching out to a far wider audience here in India and globally,” said Nilesh Gopali, cloudBuy, Country Head – India.
He also confirmed that cloudBuy.com has not received any exclusivity from the state government for developing state-focused B2B ecommerce platform.
According to the company, the creation of this new emarketplace will create many jobs within Gujarat through the creation of technical centres to help businesses upload and optimise their content.
Each company that registers for the marketplace will be given the opportunity to list their company details along with products and services online, promoting their business to a much wider audience. cloudBuy.com would also provide full access to support system and reporting to maximise their growth through ecommerce sales.
It would also provide fulfillment services like logistics providers and financial institutions through partners on the platform making it easier for businesses to transact. Accessibility for all users through cell phones on a secure platform will enhance the user experience ensuring trades online.
The commerce and industry ministry is considering relaxing FDI norms in certain sectors including retail to further boost inflows.
Foreign investments in the services sector increased 77.6% to $7.55 billion in the first nine months of the current fiscal, helped by government steps to improve ease of doing business.
The sector, which includes banking, insurance, research and development (R&D), outsourcing, courier and technology testing, had received foreign direct investment (FDI) worth $4.25 billion during the April-December period of last fiscal, 2015-16, according to the Department of Industrial Policy and Promotion (DIPP).
The sector contributes over 60% to India’s gross domestic product (GDP) and accounts for 17% of the total foreign investment inflows.
The other sectors where inflows have recorded growth during the nine-month period of 2016-17 are telecom ($5.54 billion), trading ($2 billion), computer software and hardware ($1.81 billion) and automobile ($1.45 billion).
In step FDI growth in important sectors like services, overall foreign inflows in the country increased 22% to $35.84 billion during April-December 2016-17.
The commerce and industry ministry is also considering relaxing FDI norms in certain sectors including retail to further boost inflows. Foreign investment is considered crucial for India, which needs around $1 trillion for overhauling its infrastructure sector such as ports, airports and highways to boost growth.
A strong inflow of foreign investments will help improve the country’s balance of payments situation and strengthen the rupee against other global currencies, especially the US dollar.
India has revised 40 treaties for avoidance of double taxation so that the information exchanged with partner nations on tax matters can also be utilised for other purposes including criminal proceedings, Parliament was informed today.
“Treaty partner countries have been requested to modify the tax treaties, so as to explicitly include provisions that will enable information exchanged for tax purposes to be utilised for other purposes, including criminal proceedings in non-tax matters,” Minister of State for Finance Santosh Kumar Gangwar said in a written reply to Rajya Sabha.
“40 treaties for avoidance of double taxation have been revised accordingly,” he said.
In addition, Gangwar said, India has signed “the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which also similarly facilitates exchange of information”.
These developments enable use of such information by non-tax agencies, subject to agreement by the Competent Authorities of the Requested Contracting State, he said.
Replying to a separate question, Gangwar said the Enforcement Directorate has provisionally attached assets of worth Rs 9,298 crore in 2016.
The minister said that as per estimate over 2,000 tonnes of gold is held by household, trusts and various institutions in India.
