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Wednesday, November 30

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GENERALLY ACCEPTED COST ACCOUNTING PRINCIPLES - DOWNLOAD PDF


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Monday, November 28

FULL NOTES - Arithmetic and geometric progression - CPT

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Friday, November 25

PSUs buyback on cards; cabinet note floated

A cabinet note on buyback for inter-ministerial consultation has been floated by the Department of Disinvestment and 10 public sector units (PSUs) will be identified for the same, reports CNBC-TV18’s Aakansha Sethi.

The note proposes buybacks and crossholdings in PSUs, which has been doing the rounds for many weeks now that the government is determined to push through contentious proposals. You have seen FDI in retail go through yesterday and the government is now working on alternate strategies to disinvestment as well as on FDI in aviation.

It was only last week that ICICI Securities and the Department of Disinvestment had prepared a white paper on alternate strategies to disinvestment because the government is far from meeting its Rs 40,000 crore disinvestment target. Other alternate strategies which will not include dependence on markets have been proposed.

The government is looking at PSUs that are cash rich, even if you allow for capex, and have 50% of cash on their balance sheets to buy stakes in other PSUs or buy their stakes back from the Government from India, which holds over 70% in all of these PSUs.

The names proposed include Coal India , Oil India , ONGC , NTPC , NMDC and SAIL.

However, one point the cabinet note does not specify is what percentage of buyback or crossholdings will be done. It instead talks about it as a broad policy decision because currently the disinvestment policy is to encourage retail participation and to allow for public ownership of PSUs.

Only last year the government went in for a Coal India initial public offer and then the year after to go in for a buyback is a contradiction in sorts. So it remains to be seen whether the cabinet will actually go ahead with this, but the inter-ministerial consultations on this are on.

Courtesy: moneycontrol.com


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Next Tata will be Mistry - Cirus Mistry will be the successor of Ratan Tata




The next occupant of the corner office at Bombay House, headquarters of the Tata Group, will not have a Tata surname. Cyrus Pallonji Mistry, 43, was on Wednesday appointed deputy chairman of Tata Sons, the group’s holding company, ending the suspense over India Inc’s most awaited corporate succession. Mistry will work with chairman Ratan N Tata over the next year and take over from him when Tata retires in December next year. This, a Tata Sons release said, is according to the unanimous recommendation of a selection committee. Mistry was originally part of the committee but recused himself after other members said he was a probable candidate.

It’s only the second time in its 143-year history that the group will have a non-Tata at the helm of affairs. The only person outside the Tata family to become chairman of the group was Nowroji Saklatwala from 1932-1938. He was succeeded by J R D Tata.

Mistry may not have a Tata surname, but he is the youngest son of Pallonji Mistry, whose family is the largest individual shareholder in Tata Sons, with 18 per cent stake.

Mistry, a graduate of civil engineering from Imperial College, London, and a Master of Science in Management from the London Business School, is currently managing director of Shapoorji Pallonji Group, which has interests in construction, real estate, infrastructure and textiles. But, it is a tiny fraction of the size of the Tata empire. He is also part of the board at Afcons Infrastructure and United Motors (India).



THE EMPIRE AND THE SUCCESSOR
* 31 publicly listed Tata enterprises have a combined market cap of $77.44 billion (as on November 17, 2011)
* Cyrus Mistry is the younger son of Pallonji Mistry, whose family is the largest individual shareholder in Tata Sons
* Cyrus is managing director of the Shapoorji Pallonji Group
* He is a civil engineer from Imperial College, London, and an MSc in management from London Business School and was inducted into the Tata Sons board in August 2006

Tata was effusive in his praise of Mistry. Terming it as “a good and far-sighted choice,” Tata said Mistry has been on the board of Tata Sons since August 2006 (when Mistry was just 38) and he had been impressed with “the quality and calibre of his participation, his astute observations and his humility”.
Ratan Tata

Tata said Mistry was intelligent and qualified to take on the responsibility being offered. He would be committed to working with Mistry over the next year to give him the exposure, the involvement and the operating experience to equip him to undertake the full responsibility of the group on his own retirement.

In his statement, Mistry said he would legally dissociate himself from the management of his family businesses to avoid any issue of conflict of interest, in keeping with the values and ethics of the Tata Group. He said he felt deeply honoured by this appointment.

“I am aware that an enormous responsibility, with a great legacy, has been entrusted to me. I look forward to Mr Tata’s guidance in the year ahead in meeting the expectations of the group,” he added.
The appointment came as a surprise as speculation had earlier ranged from Tata’s half-brother Noel Tata to outsiders like Indra Nooyi, Arun Sarin, Anshu Jain, etc.
Though some said Mistry was chosen more for the family’s large stake in Tata Sons, people who know Mistry well said he was the perfect choice for the job. "I think Tata and Mistry have many things in common, especially their nature and how they interact with people. Both are shy, prefer to be low-key and very focused," said a person who has known Mistry from his early days.
Sugail Sheth, a close observer of the group, said it was a triumph of competence and continuity and youth. “He has worked with the Tata Sons board and all its directors and surely would have a long innings ahead. Also, I am glad it is a Parsi who is at the helm of affairs, as no one understands philantrophy like them," Sheth said.
But, Mistry obviously has a tough act to follow. When Ratan Tata took over from his uncle, J R D Tata, in 1991, the group was an unwieldy sprawl of 300 companies. Tata sold a number of unprofitable businesses and kicked the rest into shape.
The Tata Group comprises over 100 operating companies in seven business sectors. The group has operations in more than 80 countries across six continents and the total revenue of Tata companies was $83.3 billion (around Ra 379,675 crore) in 2010-11, with 58 per cent of this coming from business outside India. Tata companies employ over 425,000 people worldwide.
There are 31 publicly listed Tata enterprises with a combined market capitalisation of about $77.44 billion (as on November 17, 2011), and a shareholder base of 4.3 million.


Source: The Hindu


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51% FDI in multi-brand & 100% FDI in single-brand retail - India Inc. soon to see Walmart like supermarkets


An embattled UPA government has hung the 'Open' sign for foreign retailers, ending years of prevarication on an issue that had become a litmus test of its commitment to take forward the next phase of economic.

The cabinet on Thursday faced down opposition from within and outside to allow foreign retailers to own a 51% stake in the multi-brand retail sector, paving the way for global groups such as Walmart, Carrefour andTesco to open supermarkets in India.

It also allowed 100% FDI in single-brand retail, a decision that will encourage companies such as Sweden's homeware firm Ikea and clothing retailers Gap and H&M to set up shop. Until now, foreign firms were allowed 51% in single-brand retail, while being allowed to own 100% of back-end cash-and-carry operations that serve wholesalers.

The cabinet decision, confirmed to ET by several ministers who attended a late evening meeting and set to be formally announced by the government in Parliament on Friday, provided the spark for a series of realignments in the country's fledgling organised retail sector. For instance, the world's biggest retailerWalmart indicated that it would extend its 'back-end' partnership with the Bharti Group into front-end retailing soon, possibly by picking up a stake in Bharti Retail.

"We have a good relationship with Bharti in the back-end. It is only natural that we will carry this to the front-end," said Raj Jain, head of Bharti-Walmart India. This will in one stroke give US-based Walmart access to Bharti's Easy Day stores that sell directly to consumers.

The government's decision is fraught with great political risk during what is perhaps the weakest phase in its nearly eight years of governing India. The proposal was opposed by two constituents of the ruling coalition - Trinamool Congress and the DMK, a senior cabinet minister said.

"There was some opposition and concern about announcing it in Parliament but Pranab babu (FM Pranab Mukherjee) prevailed," another cabinet minister told ET.

Industry Lauds Bold Decision

Besides its coalition partners, the decision could expose the government to criticism in Parliament as the principal opposition party, the BJP, and the Left parties are opposed to allowing foreign firms in India's retail sector.

But the government's decision to press ahead in the face of opposition won it plaudits from industry, especially at a time it has been pilloried for indecision and policy paralysis. Opening up the retail sector was a key item in a list of suggestions put together by top business leaders for the government as part of ET's Agenda for Renewal campaign.

To blunt some of the expected political criticism of its decision, the government will allow foreign retailers to set up 51%-owned retail ventures subject to minimum investment conditions.





Courtesy: Economic Times

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Companies Bill 2011 approved by cabinet, soon to be presented in parliament in current session



New Delhi: The Union Cabinet on Thursday cleared the Companies Bill, 2011 and decided to take up the Bill in the Winter Session itself for approval by Parliament.

Once approved by Parliament, it will replace half-a-century-old Companies Act.

"The Cabinet has cleared Companies Bill, 2011. It is likely to be tabled (for consideration and passage) in the ongoing Winter Session," a Corporate Affairs Ministry official said after the Cabinet meeting.



The Bill, which has already been vetted by the Parliamentary Standing Committee of Finance and also by different ministries, seeks to update the company law in line with the best global practices.

The Bill has introduced ideas like Corporate Social Responsibility (CSR), class action suits and a fixed term for independent directors.

Among other things, it also proposes to tighten laws for raising money from the public. The Bill also seeks to prohibit any insider trading by company directors or key managerial personnel by treating such activities as a criminal offence.

Further, it has proposed that companies should earmark 2 per cent of the average profit of the preceding three years for CSR activities and make a disclosure to shareholders about the policy adopted in the process.

The Bill, which was originally introduced in Lok Sabha in 2008, lapsed because of change of government. It was reintroduced in August 2009.

Cabinet approval on the Companies Bill, 2009, was pending as the Finance Ministry and MCA failed to reach a common ground on powers to be delegated to the Securities and Exchanges Board of India (SEBI) in case of regulatory overlaps.

Finance Minister Pranab Mukherjee, Planning Commission Deputy Chairman Montek Singh Ahluwalia and Corporate Affairs Minister Veerappa Moily were asked to discuss and iron out issues. The ministers have come to a consensus on the issue, sources in the know said.

According to them, the Finance Ministry and SEBI have sought review of the provisions which conflicted with the SEBI Act. Apparently, it has been decided that SEBI's view will be upheld in cases where jurisdictions conflict.

(With additional information from PTI)

Courtesy: IBN7

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Wednesday, November 23

G. Ramswamy, president, ICAI elected as IFAC Board Member

G. Ramswamy, president, ICAI elected as IFAC Board Member


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REVISED CONCEPT PAPER ON TAXATION OF SERVICES BASED ON NEGATIVE LIST


REVISED CONCEPT PAPER ON TAXATION OF SERVICES BASED ON NEGATIVE LIST
PRESS RELEASE, DATED NOVEMBER, 2011
1.0 Background
1.1 A Concept Paper on the "Taxation of Services Based on a Negative List" was circulated on August 31, 2011 to seek feedback from all stakeholders. Many chambers, service providers' associations, professional institutes, business entities and individuals have provided valuable inputs.
1.2 The feedback received indicates an overwhelming support for the taxation of services based on a Negative List. It has been mentioned that a long positive list is neither conducive from the point of tax administration nor tax compliance and adds to legal disputes.
1.3 As to the timing for the introduction of the Negative List, the opinion is divided. While some feel that it should be introduced at the time of GST, with a wider Constitutional mandate, there are others who feel that the introduction of Negative List should be done independently of the GST. In fact, it has been added that such introduction at an earlier stage will pave the way for the smooth transition to the GST, and significantly ease the challenges arising out of implementing the GST. It has been further stated that the issues relating to some transactions being considered services by the Central Government and goods or luxury or entertainment by some of the State Governments are independent of the issue whether the taxation is based on positive or negative list.
1.4 Many suggestions have been made on the contents of the negative list also. This revised Concept Paper has been drafted to consider all the relevant issues that may arise if the Negative List is to be introduced either under the existing regime of taxation or at the time of GST.
2. Definition of Service and Taxability
2.1 The earlier Paper had given the definition of service to "mean anything which does not constitute supply of goods, money or immovable property" A number of specific inclusions or exclusions were further elaborated. Suggestions have been made that the "service" should be confined to economic transactions or transactions for consideration. These suggestions have arisen primarily because the provisions relating to charging section were not indicated in the earlier Paper. Taking note of all the various considerations, it is felt that the definition of "service" need not be revised in any manner and retained.
2.2 However the essence of the suggestions can be captured in the charging section somewhat as follows:
"There shall be levied a tax (hereinafter referred to as service tax) at the rate of ... per cent of the value of services provided or to be provided by a taxable person to another person and collected in such manner as may be prescribed."
2.3 The above charging section is illustrative in terms of the present scheme of taxation and the same will naturally look quite different if the negative list is introduced alongwith the GST, capturing all the various activities that will be brought within the purview of the GST.
2.4 Taxable person may be defined as: "any person who independently carries out any economic activity, whether or not for a pecuniary profit".
2.5 Thus the impact of all the proposed charging section will be to confine taxation to transactions in services carried out with another person by a person engaged in an economic activity on his own account.
2.6 A taxable person will not include wage earners as employees or others under a contract to their employers while acting in that capacity as they do not carry out economic activities independently but only on behalf of the organization they work for. This will also exclude members of legislatures likewise, which were covered by a specific exclusion in the previous Concept Paper. It is further clarified that this will apply only in so far as employees are bound to an employer by a contract of employment or by any other legal arrangement creating that relationship. It will in no case stretch to services rendered beyond the demand of the contractual arrangement. Thus an employee agreeing to serve after normal office hours against additional remuneration in terms of another arrangement beyond the terms of employment will not be construed as working in the said contractual relationship e.g. a teacher taking private tuition classes while the additional charges may be paid by the school from the amounts so collected from the students.
2.7 Economic activities are such activities as are carried out for consideration, whether or not the consideration is adequate or provided by the recipient of the service, or leads to profit at the end of a period. The taxable activities will thus exclude transactions carried out free of charge or gratis, without any direct or indirect commercial advantage, or as recreation or hobby. Statutory fines and penalties will also not constitute "economic activities". However, commercial demurrages, by whatever name called, for extended use of a service will be taxable. Moreover the presence of profit motive is not necessary while carrying out economic activity. Thus the activities of political parties, religious bodies, in so far as they carry out religious activities, decorations and awards for excellence and not as reward in lieu of recognition for services rendered, will fall outside the charging section.
2.8 It is further clarified that by virtue of Article 366 of the constitution certain supplies are deemed to be supply of goods. They will thus be excluded from the definition of "service" but only to the extent of the value of goods.
2.9 As stated in the previous Paper, having regard to its characteristics and with a view to remove any ambiguity, the Central Government shall have powers to declare an activity as a provision of service or otherwise and such activity, notwithstanding anything to the contrary, be considered as a provision of service. The inclusions and exclusions given under the definition of service in the earlier Concept Paper can be clarified under this provision and need not form a part of the main definition.
3.0 Negative List of Services
3.1 The revised Negative List of services is given in the Annexure.
3.2 A number of deletions have been made from the previous Paper and are as follows:
1. Services provided directly in relation to agriculture, horticulture and animal husbandry: These services are largely provided by the small scale sector below the threshold. The words "directly in relation to" are capable of very wide interpretation and thus prone to abuse. However, agriculture and animal husbandry would remain priority sectors for the Government and the impact of taxes on input services, wherever justified, would be considered for neutralization appropriately through other means.
2. Transport of goods to a destination outside India: Same may not be liable to taxation by virtue of the Place of Taxation/Supply rules.
3. Services provided by independent journalists, PTI and UNI and services by individuals serving on government councils and commissions and supply of goods carriage with driver.
4. Services by religious entities, political parties, decorations and awards have also been taken off as they are rendered by persons who may not be engaged in "economic activities".
3.3 Many other valuable suggestions have been incorporated and are as follows:
1. Taxation of services provided by government in areas where it competes with private sector unquestioningly finds support. However there are significant problems in defining what will comprise such activities. Moreover it will also keep changing over time as private sector gets increasingly involved in rendering services that might today be in the exclusive domain of the government. Taxation of all services provided by government for a fee or surcharge, while resolving this problem, will add administrative costs and could be more appropriately handled by revising user-charges, wherever necessary. It is thus felt that these services could be defined by way of specific entries. However, at the time of GST the issue could be revisited.
2. Exemptions in the financial sector have been expanded to cover transactions and instruments akin to the instruments and transactions indicated in the earlier Negative List.
3. In the case of transport sector, it is proposed to include passenger travel by non-AC second class as also travel in all classes of metro and monorail so as to address the needs of a common man and encourage public transport system.
4. The entry relating to construction has been revisited. It is felt that the tax paid on construction activities is not available as credit under the existing rules except as sub-contractor. Thus a case is made for keeping certain infrastructure projects within the negative list, particularly those that are meant for larger public good. At the same time construction of such projects together with projects meant for social welfare and for non-commercial use of the government will create definitional issues and amount to end-use exemption. Normally construction activities are not included in negative list worldwide. It is now for public debate to what extent construction should be covered in the negative list.
5. Renting of personal dwellings is included in the negative list only to the extent of Rs.1 lakh per month per dwelling to cover high-end apartments.
6. Option 2 relating to health sector indicated in the earlier Paper is proposed to be kept in the Revised Concept Paper at this stage. The taxability under any other option could be considered under the GST.
7. A new entry is proposed relating to services to own members by way of reimbursement of charges by an exempt entity. This has been done to obviate the burden of taxes in case of unincorporated associations engaged in non-taxable activities which get funded by own members.
8. Advertisements, other than advertisements in newspapers or broadcast on radio or TV, have also been added as this entry is covered under the State List in the Constitution.
4.0 Place of Taxation Rules
4.1 In order to operationalize the Negative List, it will be necessary to move towards Place of Taxation/Supply Rules that will determine the principles for the determination of location at which services shall be deemed to be provided. These are also intended to be released for public debate shortly.
(This Revised Concept Paper is placed in the public domain for the widest possible consultation, extensive debate and to seek views and feedback of all stakeholders. Views expressed here do not reflect the position of the Government of India in any manner. Any comments, suggestions or feedback may be given by December 15, 2011 to Shri Shobhit Jain, OSD (TRU) at shobhit.jain@nic.in, Tel: 011-23095590; Fax: 011-23093037)


Annexure
Revised Negative List of Services
SectorS. No.Negative List
1. By specified persons1.All services other than notified services provided by government
Proposed notified services:

1. Business promotion or business support services
2. Construction/works contract
3. Insurance services
4. Port or airport services
5. Postal services other than under Universal Service Obligations (post card, inland letter and money order)
6. Renting of an immovable property or right to enter or use an immovable property
7. Security
8. Trade fairs and exhibitions
9. Transport of goods and passengers
10. Warehousing
2.Services by international bodies and diplomatic missions under diplomatic and consular arrangements as per laid down conditions
2. Social welfare and public utilities3.Services by organizations registered as non-profit entities under the Income Tax Act 1961 (DTC 2012) in matters relating to public and social welfare activities substantially at or below the costs (excluding health & education)
4.Funeral, burial, crematorium and mortuary services
3. Financial Sector5.Sale, purchase or acquisition of securities, debts, mutual funds and actionable claims on principal-to-principal basis excluding (1)services in relation to such transactions and (2) when acquired in lieu of a service
6.Interest or discount on cheques, promissory notes, bills of exchange or debt instruments
7.Dividend on investments
8.Sale and purchase of foreign currency amongst banks and/or authorized dealers of foreign exchange
4.Transport9Transport of passengers with accompanied belongings by:
(a) Non-AC second class of passenger travel by railway and any class by metro and mono-rail;
(b) Public transport buses on a point-to-point basis (except tourist buses) and stage-carriage basis;
(c)  Public transport in ship or vessel of less than 15 net tonnage on a point-to-point basis (except tourist purposes);
(d)  Metered cabs or three-wheeler auto-rickshaw
5. Construction & Real Estate10Construction, works-contract, repair, alteration, renovation or restoration of:
(a) Specified infrastructure for larger public good;
(b) Residential building comprising a single dwelling unit
11Renting of personal dwellings in excess of Rs 1 lakh per month per dwelling
6. Education12Pre-school, school and recognized education** and vocational training recognized by NCVT except placement services and donations or similar charges in relation to admission
7. Health13Services by clinical establishments except in relation to health & fitness, weight reduction programmes, health check-up and cosmetic or plastic surgery;
8. Others14Copyright services of original literary, dramatic, musical and artistic works.
15Services provided by independent journalists, PTI & UNI for providing news
16Services provided by sportspersons, as a player, coach or referee/umpire and performing artists in that capacity (excluding as brand ambassadors)
17Services provided by a trade union to its members
18Representational services provided by an advocate to individuals
19Services to own members by an exempt entity by way of reimbursement of charges
20Tolls except services in relation to collection of tolls
21Betting and gambling except services in relation to promoting, marketing or organizing games of chance, including lottery services
22Advertisements other than advertisements published in newspapers or broadcast by radio or TV or displayed in other electronic media
*Government means the Union, State and local self government and government regulatory bodies established under an act but shall not include any other entity established under the Companies Act 1956 or any other law for the time being in force.
**Recognized education means education leading to the award of a certificate or degree recognized by a body established by an Indian law.

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