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Hello and welcome to The Week that Was - TIOL's weekly news round up.

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Lets have a quick look at the major policy changes, legal and tax news coverage this week.

SUPER - NEWS HIGHTLIGHTS

Government Approves 7 th CPC Recommendations

The government has cleared the 7th central pay commission recommendations and approved a bonanza of pay and pension benefits for Central government employees.

Monsoon Session to start on July 18 th

The Cabinet Committee on Parliamentary Affairs has recommended convening the monsoon session of Parliament from July 18th to August 12, 2016. The Monsoon session will have a total of 20 sittings over a duration of 26 days. There are 11 bills pending in the Lok Sabha and 45 bills in the Rajya Sabha. This includes the GST bill, which is expected to be passed during the Monsoon session.

Intro: The HRD Ministry has released the new draft Educational policy.

The government has released the draft version of its 43 pages New Education policy, which is India's first policy in three decades. The new Education policy seeks to raise investment in education to at least 6 per cent of GDP. It also opens up India to top foreign universities and provides for the creation of educational tribunals. The policy covers pre-school education, curriculum renewal, school assessment, faculty development besides language and culture in education. The policy provides for a five year review and has been placed in the public domain for comments and feedback.

Intro: Will Scotland Be a Thorn In UK's vote for Brexit

Scotland, an independent nation, yet a part of Britain, voted 62 per cent in favour of continuing in the European Union. The country is weighing its options. While Scotland might provoke a second independence referendum that would allow Scotland to become a part of the EU by itself, while also being a part of UK's economy and its international obligations. It is a peculiar situation.

BREXIT Pushes Up Gold Prices

With Britain surprisingly voting to exit the European Union, gold prices surged by 4 per cent to 1315 dollars an ounce, to its highest level since mid-2014, proving once again that gold becomes a safe haven in uncertain times.

High Growth in Direct Tax Collections

Direct tax collections for the first quarter have been unusually high, showing a buoyant growth of 22 per cent over last year, largely due to the change in advance tax collection rules. About 48 per cent of the total direct tax collections of Rs 1.2 lakh crore, or Rs 64,000 crore was from personal income tax collection.  

Corporate Tax Collections Poor

On the other hand, corporate tax collections, at Rs 55000 crore, for the first quarter of the current financial year, were poor, marking an increase of only 2 per cent over last year, indicating weak output and profitability, also slow economic recovery.

Imports from China Will Rise

Online e-commerce markets will fuel a 30 per cent growth in Chinese imports to India by 2018. Import, is currently around 60 billion dollars and may cross 80 billion dollars by 2018. Indian e-commerce companiesare planning to connect 10,000 Indian sellers with large suppliers from China, by offering them product quality assurance and warehousing support.

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Now for the news in detail starting with the pay hike bonanza approved by the government.

Intro: The government has approved the 7th Pay Commission recommendations.

The Union Cabinet has approved the Seventh Central Pay Commission recommendations with effect from January 1, 2016. The revised salaries of more than one crore central government employees, and pensioners, will be paid from July 1, 2016 onwards. it is perhaps for the first time in a long time, that pay commission recommendations are going to be implemented so speedily unlike the recommendations of the fifth CPC, for which employees had to wait for 19 months or even the 6th CPC, which was implemented after 32 months.

The government has approved the new pay matrix as recommended by the Commission and done away with the present system of pay banks and grade pay. The minimum pay, payable to a newly recruited employee at the lowest level, has been increased from Rs 7000 to Rs 18000 per month. The rate of increment has been retained at three per cent. The general recommendations of the Commission on pension and related benefits have also been approved.

In order to bring parity between Defence forces and the combined armed police forces, the Cabinet approved further improvements in the defence pay matrix. The Cabinet also rationalised the 196 allowances.

The government has not accepted the recommendation of the Commission relating to the steep hike in employees monthly contribution towards the central government employees group insurance scheme. The existing rates shall continue.

The implementation of the 7th central pay commission recommendations is estimated to have an additional financial impact of more than rupees one lakh crore.

Intro: Ministers are now empowered to clear high value non-plan projects

To expedite project appraisal and approvals, the government has revised the financial powers of ministers and departments to clear high value projects.

Ministries and departments can now appraise non-Plan schemes uptoRs 300 crore as against the financial limit of Rs 75 crore earlier. All non-Plan project proposals involving an expenditure higher than Rs 300 crore will be appraised by the Committee on Non-Plan Expenditure. Ministers have also been empowered to approve high value projects up to Rs 500 crore as against the earlier limit of Rs 150 crore. Only the Finance Minister shall approve projects of Rs 500 crore to Rs 1000 crore. Higher value projects shall require the approval of the Cabinet Committee on Economic Affairs. These revised financial limits cover project cost escalations too. This revision makes the financial powers of ministers and departments over non-Plan schemes at par with Plan ones.

Intro: Can credit be availed for tax paid through TDS under the Income Declaration Scheme 2016?

WITH the Prime Minister's Office closely monitoring the Income Declaration Scheme and the Finance Minister personally interacting with the professionals to lend it a big push, the CBDT is literally on its toes. Within 48 hours of what was promised by the Finance Minister, the CBDT has issued yet another FAQ clarifying the point that the information contained in the declaration will not be shared with any other law enforcement agency. In fact, it goes on to state that it would not share such information even within the Department with any other wing.

In response to a query relating to availability of credit for the TDS paid on the income declared, the Board has clarified that credit for tax deducted shall be allowed only in those cases where the related income is declared under the Scheme and the credit for the tax has not already been claimed in the return of income file for any assessment year.

However, the Government seems to have turned down the demand for immunity under the indirect tax laws and the SEBI Act.

Intro: Will banks be allowed to provide home loans, to buy land, the well-known destination for black money?

Merely reducing interest rates is not enough for the real estate sector. Banks and housing finance companies must be allowed to fund land transactions. This is a proposal, made by HDFC Bank chairman, Mr Deepak Parekh to the Reserve bank of India, in order to bring down land cost and improve housing affordability. Currently, non-banking financial companies and foreign firms charge exorbitant rates to fund these transactions. In order to streamline the real estate sector, a digital platform to grant the multiple approvals in a time bound manner, has also been proposed as a game changer for all players. After all, real estate, housing and urbanisation is the key focus of the present government.

Intro: The Delhi High Court has dismissed hundreds of appeals by the IT department.

The Income Tax department has shockingly lost 272 cases, possibly worth hundreds of crores of tax revenue, just because it failed to correct the defects.

The Delhi High Court has dismissed these 272 cases, pending since 2012, simply waiting for the department to refile after curing defects like illegible script, missing pages, lack of stamps, wrong font etc.

These cases included the appeals filed by the IT department against Airports Authority of India, and Microsoft Corporation, involving a tax effect of 300 crore each, besides other cases like Bharti Cellular, Nokia, Vodafone Essar, HCL Technologies, Nestle India, Pepsico India, etc.

The High Court bench led by Justice Mr S Muralidhar, refused to condone the department's extraordinary delay in refiling these cases and also directed the court registry to make sure these appeals were not listed for hearing ever again.

For other similarly defective appeals pending post 2012, the High Court set a deadline for the department to refile, which would be taken up on a case to case basis for condonation of delay.

Intro: A sub-contractor found an innovative way to get out of service tax troubles.

Often, sub-contractors get stuck with demand notices for payment of service tax when the main contractor does not bother to provide them the necessary proof of payment.

One such sub-contractor claimed before the CESTAT that he was not liable to pay Service Tax, because the main contractor, a public sector company, had already discharged this liability on the full contract value. This claim was backed by the information, the sub-contractor had received from the public sector contractor under the Right to Information Act, of 2005. Could information received under RTI Act be taken as conclusive proof of payment of service tax?

Faced with the unusual question, the Tribunal noted that the sub-contractor had obtained the information, from the public information officer, as per the official records of the public authority, kept in proper custody.

So, when the information was provided by a public officer, under the provisions of the RTI Act, there was no reason to disbelieve the same. Hence the sub-contractor's appeal was allowed. So the Right to Information Act seems to be an option, as far as the public sector companies are concerned.

CBEC Survey

Intro: Indirect tax reforms have worked. The CBEC has become liberal and tax friendly.

The Central Board of Excise and Customs courageously conducted a tax payers survey, wanting to know the impact of the reforms conducted over the last two years. The results are out and 72 per cent of the taxpayers have held that the Board has indeed become liberal and friendly to the taxpayer.

92 per cent of the taxpayers acknowledged the Board's success in simplifying customs and excise business processes; 85 per cent were happy with the legislative changes for warehousing; 45 per cent felt the positive attitudinal change in senior tax officials while 51 per cent acknowledged an improvement at the ground level, among tax inspectors. The most outstanding achievement of the CBEC was launching the customs single window project in April this year, that brought together six ministries on a single window, and using digital applications like whatsapp groups in problem solving. Customs clearances and processing of refunds has also speeded up.

Both FICCI and KPMG jointly conducted the survey, reaching out to 45000 respondents across India from the manufacturing, trading and service industries.

Intro: Indirect tax reforms have worked. The CBEC has become liberal and tax friendly.

The Central Board of Excise and Customs courageously conducted a tax payers survey, wanting to know the impact of the reforms conducted over the last two years. The results are out and 72 per cent of the taxpayers have held that the Board has indeed become liberal and friendly to the taxpayer.

92 per cent of the taxpayers acknowledged the Board's success in simplifying customs and excise business processes; 85 per cent were happy with the legislative changes for warehousing; 45 per cent felt the positive attitudinal change in senior tax officials while 51 per cent acknowledged an improvement at the ground level, among tax inspectors. The most outstanding achievement of the CBEC was launching the customs single window project in April this year, that brought together six ministries on a single window, and using digital applications like whatsapp groups in problem solving. Customs clearances and processing of refunds has also speeded up.

Both FICCI and KPMG jointly conducted the survey, reaching out to 45000 respondents across India from the manufacturing, trading and service industries.

Intro: the RBI has published the first edition of its Handbook of Statistics on Indian States.

No surprise, but the RBI has confirmed that Maharashtra continues to be the richest state in the country, followed by Tamil Nadu and Uttar Pradesh in terms of the gross state domestic product.

The Reserve Bank of India's first handbook of statistics on Indian states, also reveals that for 2014-15, Tamil Nadu recorded the highest fiscal deficit, followed by Uttar Pradesh and Maharastra. While Maharashtra scored as the top state in terms of state wise availability of power,Dadra and Nagar Haveli were best in terms of per capita availability of power.

Punjab saw a fall in the number of working factories. Maharashtra and Rajasthan witnessed a fall in the gross sown area for agriculture.

E-nivaran to address taxpayer Grievances

Intro: IT department will soon launch E-Nivaran

To fast-track the redressal of taxpayers grievances, the Income Tax department will soon launch a new one page form, called e-nivaran, which will be available online at the department website and at the AaykarSampark Kendra or tax facilitation centre.

The e-nivaran form, similar to the ITR form, will seek the taxpayers name, PAN card number, mobile number and email besides providing space for explaining the grievance in detail. The 'e-nivaran' project will be connected to all electronic databases of the department, and integrate all online and physical grievances received by the department, to ensure speedy resolution. The CBDT has launched a new logo for 'e-nivaran'.

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On this note, we conclude this bulletin of The Week That Was. Thank you for watching.

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You may write to us at editor@tiol.in. Have a great weekend ahead.