PAN card must to purchase jewellery worth over Rs 5 lakh

BANGALORE: In an attempt to combat black money, the Centre has made it compulsory to submit permanent account number (PAN) for purchase of jewellery or bullion exceeding Rs 5 lakh . The rule of quoting PAN will also apply to those who avail debit cards from banks . The Central Board of Direct Taxes (CBDT) and the Income Tax Department have issued a notification amending the rules.

This amendment will come into effect from July 1, 2011. The CBDT and IT department has already sent a communication to all jewellery dealers, bullion traders, nationalised and private banks which are distributing debit cards.

CBDT has now incorporated four new transaction sunder Rule114Bof the Income Tax Act which will require PAN for these transactions. The rule also stated that the PAN number is necessary for use of debit card, insurance payments exceeding Rs 50,000 a year, buying jewellery or bullion exceeding Rs 5 lakh.

As per the old act PAN was compulsory for getting a credit card. The new amended provision under rule 114B (ii) was inserted for issue of a credit or debit card after quoting PAN. At present any withdrawal of more than Rs 50,000 in a single purchase or issue of cheque for Rs 50,000 needed PAN. Now payment of Rs 50,000 or more in a year as life insurance premium will also require PAN. “It is good from the view point of the country’s economic development but we fear the new rule will create inconvenience for our business and daily transactions,” S Venkatesh Babu , secretary , Bangalore Jewellery Association, said .

Ref http://m.timesofindia.com/business/india-business/PAN-card-must-to-purchase-jewellery-worth-over-Rs-5-lakh/articleshow/8783665.cms

India has enormous opportunity for Sharia-compliant investments With nearly 200m Muslims, the country could expand sector

By Rushdi Siddiqui, Special to Gulf NewsPublished: 00:00 June 19, 2011

When you consider that there are nearly 200 million Muslims in India, it is surprising that one of the world’s fastest growing economies has little or no facilities for them to invest their money in a Sharia-compliant manner.
Indeed, the total size of 100 per cent Islamic funds registered for sale in India was a miniscule $3.1 million (Dh11.4 million) as of March 2011, according to Lipper, a Thomson Reuters company.
Not that India’s reluctance to embrace Islamic finance is unusual in non-Muslim countries, like so many other places, there is a hostility to the practice based on the incorrect belief that it is a political or religious movement, or that it propagates an ideology that is inconsistent with democratic values.
It is fair to say that the Islamic finance industry also shares some of the blame for this perception, it is not yet savvy or sophisticated enough in the realm of public relations and marketing.
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But, actually, India is important for the growth of Islamic finance. The country has historical ties to the Gulf, and is not only part of the Bric group of nations (Brazil, Russia, India and China), but it is also categorised as a rapidly developing economy (RDE).
So India presents an obvious opportunity, but the question remains: is India ready for Islamic finance?
Key effect
The recent establishment of an Islamic finance institution in Kerala, with the backing of the local government, has at least gone some way to suggesting that it is. One of the key effects of this has been the revelation that Islamic finance is about business and not religion, it does not favour one religion over another. Islamic finance is “user agnostic”; its door is open to all.
In recognition of this, the local proponents and Indian stakeholders should perhaps think about rebranding Islamic finance.
Turkey has achieved this by renaming Islamic banking “participation banking”. This is an initiative that India could certainly consider.
Soon, as it happens, India will have “participation banking” at its doorstep — Turkey’s Bank Asya, an Islamic bank, announced in March its interest in establishing a representative office in India.
Fourteen of the countries that make up the G20 have some form of Islamic fin-ance, including India. The UK, for example, has been involved in Islamic finance since the early 1980s and it is still a well-functioning inclusive secular democracy.
A more technical question is: if India was to expand its level of Islamic banking, should this be a retail or wholesale approach?
A deposit-taking Islamic commercial bank, that is, retail, will present more challenges, as legislation, regulations, and mindset issues still need to addressed. Second, what is the number of bankable Muslims in India?
How many Islamic funds, with small minimum amounts, have been launched and available to the onshore “man on the street” since the BSE launched their Sharia index in 2010?
It is also worth mentioning that a number of financial scams have been perpetrated on this generally financially illiterate Muslim community, hence, new offerings are viewed with scepticism.
A wholesale approach implies fewer signs-offs from regulatory bodies, because it is not dealing with the public’s money. For example, in 2006, Bahrain-based Islamic investment bank, Gulf Finance House, embarked on the ambitious Energy City India, a $2 billion project in Maharashtra.
Funds
Other areas for consideration for India include Islamic trade finance funds (major bilateral trade with GCC) and Islamic venture capital (VC) funds working with technology parks in, say, the UAE for areas like alternative energy, health care, water and others.
But it does not mean non-bankable Indians would be excluded from Islamic fin-ance. Indeed, some of the recent developments with micro-finance in Andra Pradesh have not left the best impression with recipients and regulators. I have said elsewhere, unlike micro-finance, which creates a creditor-debtor relationship and interest rates often becomes usurious, we should look at Islamic micro-funding, as an equity approach aligns the interests of the parties and prevents the debt trap.
The amounts to be disbursed would be the same, and the areas for funding will be Sharia-compliant, as micro-finance doesn’t typically involve financing the “sin” sector.
The funding would be for Muslims and non-Muslims, therefore building future customers. Obviously, vetting and monitoring costs are higher, but it should result in more focused investments.
Finally, if Islamic finance is involved in developing local infrastructure, financial enfranchisement and contributing to employment – as it no doubt would be – I imagine that the opposition to it on the part of chief ministers of Indian states would eventually fade away.

The writer is global head of Islamic Finance at Thomson Reuters. Opinions expressed are in his personal capacity.

Government Issues Clarification On DTC (Direct Tax Code) Clause For NRIs (Non Resident Indians)

If you are an NRI (Non Resident Indian) fretting over the New Taxation Clauses, due to be introduced as part of DTC (Direct Tax Code), adversely affecting your tax-liabilities, we have some good news in store for you. In one of our earlier blog-posts, we had mentioned a New Clause in DTC (Direct Tax Code), which when implemented will ensure NRIs (Non Resident Indians) who frequent their native country i.e, India, will have to pay More Taxes on their Global Income.

As per the existing laws, an NRI(Non Resident Indians) is liable to pay taxes on his or her global income, if he or she stays in India for a period of more than 182 days in a financial year. But DTC (Direct Tax Code) proposes to shorten this duration to just 60 days.

Indian Government has just issued a clarification on DTC (Direct Tax Code) clauses specific to NRIs. On Saturday, Finance Minister Pranab Mukherjee allayed apprehensions among Non Resident Indians (NRIs) that the proposed Direct Taxes Code (DTC), when implemented, would badly affect them in terms of their tax liability owing to a clause in the Bill defining their residential status. Moreover, no final decision has been taken as yet on the clauses incorporated in the DTC (Direct Tax Code), as the Bill is still under scrutiny by a Standing Committee Of Parliament.

He clarified that it was a “misconception” that if an NRI stays in India for 60 days in a financial year, his status turns into Indian residents for taxation purposes. As per the DTC proposal, an NRI will be deemed as resident only if he has also resided in India for 365 days or more in the preceding four financial years, together with 60 days in any of these fiscal years. “Only when the two criteria are met, an individual will be considered resident for taxation purposes,” he said.

In a further clarification, Mr. Mukherjee pointed out that even if an NRI becomes a resident in any financial year, his global income does not immediately become liable to tax in India. Global income would become taxable only if the person also stayed in India for nine out of 10 precedent years, or 730 days in the preceding seven years.

The NR EYE: NRIs to pay more tax if they stay more in India by MOIZ MANNAN

Overseas Indians would now be severely restricted with regard to their length of stay in India if they were to avoid paying income tax on their global income. A Bill to that effect was introduced in the Indian Parliament last week and if approved is sure to cause a lot of worry to non-resident Indians (NRIs). Perhaps the most severely hit would be NRI businessmen in the Gulf who continue to have business interests at home and thus are frequent visitors.
The new Direct Tax Code (DTC) bill introduced in Parliament proposes to impose tax on the global income of NRIs if they stay in India for a period or periods amounting to 60 or more days in a year. Under the existing Income Tax Act, 1961, an NRI is liable to pay tax on global income if he is in India in that year for a period or periods amounting to 182 days. Thus, if an NRI wants to escape the tax net he will have to spend 10 months out of the country compared to six months under the existing law.
The new code is expected to come into effect from April 1, 2012. The DTC also retains the existing provision under which an NRI is also liable to pay tax on his global income if he resides in India for a period of 365 days or more over a period of four years prior to the assessment year. In addition, the DTC has also removed the ‘Resident Not Ordinarily Resident (RNOR)’ category to simplify the tax laws. Now, there would be only two categories, ‘Resident’ and ‘Non-Resident’.
According to experts, under the proposed dispensation, a non-resident would be at greater risk of becoming an ordinary citizen and become liable to pay tax in India as the threshold limit has been reduced. Officials have been quoted by the media as saying that a phrase “being outside India” in the existing income tax law exempted individuals who stayed outside the country for six months from paying taxes. This was prone to misuse and allowed individuals to escape tax in any country.
More than 25 million Indians stay overseas and one million visit the country every year. A large number of NRIs particularly those working in the gulf countries usually visit India for longer durations. They will be given relief from payment of tax for two years on their global income in the transition period when they become resident from non-resident, a Central Board of Direct Taxes (CBDT) official has been quoted as saying.
Financial expert A.N.Shanbag of Wonderland Consultants says, “Whether NRIs and PIOs will agree – especially with the last point is a moot question – for a finer reading of the DTC seems to suggest that it’s the diaspora who seems to have been the most adversely affected constituency under the DTC.” He makes the point with an example of an NRI who, say, currently earns Rs2,00,000 as NRO interest. With the protection of the basic exemption limit of Rs1,60,000, only Rs40,000 would be taxed at the rates of 10 per cent resulting in a tax liability of Rs4,000. Under DTC, straightaway a flat rate of 20 per cent tax would apply thereby resulting in a tax payable of Rs40,000 – ten times the earlier amount.
Another provision with a sharp impact is that the hitherto fully exempt long-term capital gains on equity and equity mutual funds are slated to be taxed at a flat rate of 30 per cent. The discrepencies in the provisions are so vast that while a resident Indian will be required to pay tax of Rs3,84,000 on his taxable income of Rs25,00,000, an NRI earning equivalent capital gains will be called upon to pay almost double tax of Rs7,50,000.
However, Shanbag says, what will come as a blow to most NRIs and investors in property is that even for let out or deemed let out properties, tax will be payable on the higher of the actual or ‘presumptive rent’. This presumptive rent is a new concept under the DTC. Presumptive rent is fixed at 6% of the ratable value fixed by the local authority. Where no ratable value has been fixed, 6% shall be calculated with reference to the cost of construction or acquisition of the property.
There is one good provision, though, for returning NRIs. An exemption has been provided in case of income earned outside India, if it is not derived from a business controlled from India, in the financial year in which the returning NRI becomes an Indian resident and the immediately succeeding financial year. However, the benefit of the said exemption would be available, only if such individual was a non-resident for nine years immediately preceding the financial year in which he becomes a resident.
The proposed code provides for wealth tax liability in the case of the value of all global assets of an individual or HUF (Hindu Undivided Family). However, an exemption has been provided in case of the value of assets located outside India in case of an individual who is not a citizen of India or an individual or HUF not resident in India. Hence, while returning NRIs who are non-citizens will enjoy wealth-tax exemption for their overseas assets, NRIs with Indian citizenship becoming residents will attract wealth-tax liability on such assets held abroad.

DTC – an NRI perspective

To begin with, the NRI can draw comfort from the fact that there are no changes in the manner of taxability or scope of income. But having said that one of the biggest blows in the DTC for an NRI is the removal of the “NOR” or the “Not Ordinarily Resident” Category. Under the existing Act, basis physical presence, a Resident is further classified as Resident and Resident Ordinary (ROR) and Not Ordinarily Resident (NOR). A person is said to be “not ordinarily resident” in India in any previous year if such person is an individual who has not been a resident in India in nine out of the ten previous years preceding that year, or has not during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and thirty days or more. The latter two differ in the scope of Income that is held taxable. The RORs are subject to tax in India on their worldwide income but the NORs/NRs are taxable in India only on their India sourced income. Now under DTC, every NRI visiting India for greater than 182 days in a financial year would become a “Resident” by default, and he would be subject to taxes on his global income.

The concept of NOR has been replaced by providing exemption to the individual on the income which is sourced out of India. This exemption will be available from the financial year in which the NRI becomes a resident and the immediately succeeding financial year, if such individual was a non resident for nine years immediately preceding the financial year in which he becomes a resident. So typically, in case of a returning Indian who has been out of India for a long period of time, he may become liable for tax on his worldwide income (if he retains sources of income overseas) from 3rd or 4th year of coming to India.

Another change is in the DTAA claims. India has signed treaties with 74 different countries to avoid dual taxation on the income of a NRI who is paying taxes in the other country. This is called the Double Taxation Avoidance Agreement or DTAA, under which the NRI could enjoy the benefit of lower withholding of tax. While the current tax law, required the NRI to merely declare that he was a tax resident, under the DTC structure, he will need to submit a Tax residency certificate from the country of his residency. This makes claiming the benefit more stringent and cumbersome.

Having said this, the little breather or if we may call it that, the DTC also has provided special rates of withholding tax on investment income by way of interest on dividends on which DDT has not been paid by the company, etc.

TO summarize, the DTC is a tough nut for the NRI and will add some discomfort once it comes into force on April 1st, 2012.

Direct Taxes Code: How you are affected!

The year 2009 was a landmark year for taxation in India. During this year, the government introduced a landmark Bill — The Direct Taxes Code Bill. It remains to be seen if the finance minister speaks further on the code during his Budget speech on February 26, 2010.

If and when it is implemented, it will affect all of us as it will not only alter the tax we pay, but will also impact our investments, borrowings, and expenses.

Here is how it will affect all of us:

Changes in tax slabs

The biggest impact of the new tax system is the significant widening of income slabs. According to this, people with annual income not exceeding 1.6 lakh (Rs 160,000) will not have to pay any tax. For those with an annual income from Rs 1.6 lakh to Rs 10 lakh (Rs 1 million), you pay tax at 10%; for incomes from Rs 10 lakh to Rs 25 lakh (Rs 2.5 million), the tax is 20%, and it is 30% for incomes exceeding Rs 25 lakh.

So if your annual income is Rs. 2 lakh (Rs 200,000), you fall in the 10% tax slab. These rates and slabs would be applicable from the financial year 2011-12.

However, with this move the government plans to make most of your allowances taxable. Hence if you are a high earner, earning a lot of allowances, your tax liability will go up significantly.

Effect on Capital Gains

As per the new tax code, both the short-term and long-term capital gains are treated equally.

The tax code recommends making both the contribution and return from your investments tax-free, but proposes to tax the maturity proceeds. This will affect your stocks and equity mutual funds. This is different from the present system, in which the maturity proceeds are tax-free.

Impact on tax savings

With the introduction of this code, the government has eliminated the various tax breaks. However the government has hiked the tax savings limit to Rs 3 lakh (Rs 300,000) per annum, while restricting the available investment alternatives.

So now you can invest only in PPF (Public Provident Fund), EPF (Employees Provident Fund), life insurance, superannuation funds, and NPS (New Pension Scheme). Besides you can also claim tax benefits on your children’s education.

However, the code proposes that there will be no more tax benefits for investing in NSCs (National Savings Certificates), Senior Citizens Savings Scheme, tax-saving bank fixed deposits and ELSS (Equity-Linked Savings Schemes).

Impact on home loans

Currently, if you have taken a home loan, the interest payments up to Rs 1.5 lakh (Rs 150,000) and up to Rs 1 lakh (Rs 100,000) towards principal repayment are eligible for tax benefit.

But this is set to end once the new code comes into effect. So if you have paid Rs 3 lakh as interest and Rs 2 lakh as principal, you will not get any tax benefit. However, if you have rented out a home, you can still avail of the tax benefits for taking the home loan.

The exemptions allowed

With the code, the government aims to tax the maturity proceeds of PPF and insurance. But in the case of insurance, deduction will be given only for the sum obtained only if the premium payable is not more than 5% of the sum assured and the sum assured is obtained only when the insurance term is over.

For PPF, the balance in the account as of March 31, 2010 will not be taxed on withdrawal.

Here is a simple example to help figure the effect of the new tax code:

Rahul is a salaried employee. His annual salary is Rs 5 lakh (Rs 500,000). He has invested Rs 50,000 in mutual funds, Rs 20,000 in insurance and Rs 40,000 in PPF.

Moreover he has taken a home loan of which he has already paid Rs 80,000 as principal and Rs 1 lakh as interest.

Let us see how his situation will change once the new tax code comes into effect.

Rahul’s current situation: Currently Rahul gets tax benefit on the amounts he has invested in PPF, mutual funds, insurance as well as on the principal repayment of his home loan. The limit on this amount is Rs 1 lakh.

Besides, Rahul has also paid interest on his home loan. So the total amount tax exempted is Rs 2 lakh (Rs 1 lakh tax exemption under Section 80C of the Income Tax Act and Rs 1 lakh as interest on home loan).

Hence now Rahul’s taxable amount is Rs 3 lakh — (Rs 5 lakh of salary minus Rs. 2 lakh of amount exempted). So the total tax that Rahul will pay on the amount of Rs 3 lakh is Rs 15,000 [Rs 3 lakh – Rs 1.5 lakh = Rs. 1.5 lakh is the taxable amount and the tax rate applicable is 10%]. So he currently pays Rs 15,000 as tax.

Rahul’s situation after the new code: Rahul’s total amount exempted from tax is Rs 1.1 lakh (Rs 110,000) (total of his amounts invested in mutual funds, PPF and insurance) plus Rs 1 lakh paid towards home loan interest. So his tax exempted amount goes up to Rs 2.1 lakh (Rs 210,000).

His total taxable income now becomes Rs. 2.9 lakh (Rs 290,000). Ultimately he ends up paying Rs 13,000 [Rs 2.9 lakh minus Rs. 1.6 lakh = Rs 1.3 lakh (Rs 130,000) that is taxed at 10%].

Rahul will now save Rs 2,000 in tax. He can do this because with the new tax code, the government plans to hike the tax slabs.

While the original tax slab for which tax was not applied was 0-Rs 1.5 lakh, the upper limit after the tax code comes into effect goes up to Rs 1.6 lakh.

Moreover the new code has hiked the tax exemption limits to 3 lakh from present limit of Rs 1 lakh.

ഡീസല്‍, പാചകവാതക വില കൂടും; നിര്‍ണായക യോഗം നാളെ

ന്യൂദല്‍ഹി: ആഗോള വിപണിയില്‍ എണ്ണ ബാരലിന് 92 ഡോളറായി ഉയര്‍ന്നതോടെ വീണ്ടും നിരക്കുവര്‍ധന നടപ്പാക്കാന്‍ എണ്ണ കമ്പനികള്‍ നീക്കമാരംഭിച്ചു. ഡീസല്‍, പാചക വാതകം എന്നിവയുടെ നിരക്ക്…

India launches sharia stock index for Muslims

MUMBAI – India’s Bombay Stock Exchange launched a share index of sharia-compliant companies on Monday in an attempt to open stock-trading to more Muslims.

The BSE TASIS Sharia 50 consists of the largest and most liquid sharia-compliant stocks within the BSE 500 index.

All the companies have been vetted to ensure they comply with Islamic law, which does not allow investors to put money into firms that benefit from interest or the sale of sinful goods such as alcohol, tobacco or firearms.

The managing director and chief executive of the Bombay Stock Exchange, Madhu Kannan, said the index would attract Islamic and other “socially responsible” investors both in India and overseas.

“This index will create increased awareness of financial investments among the masses and help enhance financial inclusion,” he said in a statement.

“The index will also build a base for licensing for the construction of sharia-compliant financial products, including mutual funds, ETFs (exchange traded funds) and structured products.”

Several studies have found that the majority of India’s 160 million Muslims have been excluded from the country’s formal financial sector due to the restrictions imposed by Islamic law.

Companies included in the index have been screened by Taqwaa Advisory and Shariah Investment Solutions (TASIS), an Indian Islamic finance company based in Mumbai, whose board members include Islamic scholars and legal experts.

TASIS said the index would “unlock the potential for sharia investments in India”.

“Bombay Stock Exchange has the largest number of listed sharia-compliant stocks in the world,” said Shariq Nisar, director of research and operations at TASIS.

“All Muslim countries of the Middle East and Pakistan put together do not have as many listed sharia-compliant stocks as are available on the BSE.”

Stocks will be reviewed every month to ensure continued compliance. Any stocks that do not meet the criteria will be removed.

RBI concerned over decline in industrial growth

Reserve Bank Deputy Governor Subir Gokarn on Saturday expressed concern over the sharp fall in factory output growth, saying the latest numbers are disconcerting.

Indian rupee, Sterling and Australian dollar decline

The Indian rupee on Monday snapped a three-day winning streak

Sterling

Sterling fell to session lows against the dollar and euro on Tuesday after a lower-than-expected reading in UK factory orders. The Confederation of British Industry survey’s total order book balance dropped to -28 this month from -17 in September, below expectations for a reading of -19. Sterling fell more than 30 pips to a session low of $1.5773. The euro extended gains to hit the day’s high of 88.25 pence.

US dollar

The US dollar index firmed 0.3 percent to 77.281. Technical charts suggest that it needs to extend above its Oct. 12 high of 77.93 to signal a short-term bottom is in place after Friday’s 10-month trough of 76.144. Treasury Secretary Tim Geithner gave a brief fillip to the dollar after he said the United States would not engage in dollar devaluation and also needed to work hard to preserve confidence in a strong dollar. The comment had little lasting impact beyond being a reassurance from the U.S. for investors to maintain confidence in the dollar as the world’s reserve currency, after the greenback’s fall of the past few months, and as tensions stir ahead of meetings of the G20 on talk of competitive devaluations.

Indian rupee

The Indian rupee on Monday snapped a three-day winning streak as the dollar’s gains versus major units overseas weighed, but hopes for capital inflows stayed firm with the launch of the country’s largest-ever share sale. The partially convertible rupee closed at 44.36/37 per dollar, 0.6 percent below 44.10/11 at close on Friday, when the rupee rose as high as 43.95, its highest since Aug. 29, 2008. The rupee traded in a band of 44.1800-44.4150 during the day. On Friday, the Reserve Bank of India governor Duvvuri Subbarao said the central bank will intervene in the forex market if inflows turn lumpy.