After exports, tax collection turns negative

The Department of Industrial Policy and Promotion is expected to release the Index of Industrial Production for September on Wednesday. But if you go by the indirect tax collections reported by the finance ministry for October, the country’s industrial growth scenario going forward looks pretty grim. Excise and custom duty collections have fallen by 5% in the month for the first time in several years.
Incidentally, when IIP growth shrunk to 1.3% in August, indirect tax collections were still seeing positive growth of 4.8%. While indirect tax collections have fallen into negative territory only in October, excise duty collections – a direct indicator of India’s manufacturing output — have seen negative growth for the second month in a row.

Read more at Financial Express

Govt to ask SC to revisit ruling on back-offices tax

The issue of taxing Indian back offices of foreign companies refuses to go away with the government planning to ask the Supreme Court to revisit its July decision that ruled that US investment bank Morgan Stanley would not have to pay tax in India on global income earned on account of the firm’s captive back-office unit in the country.

The ruling will have a bearing on the around 110 captive back offices that exist in India that serve parent companies, including Standard Chartered Bank, Fidelity Investments and ABN Amro.

“We are filing a review petition (in the Supreme Court). We had presented quite a bit of evidence which is not there in the judgement,” said an official of the income-tax department, who did not wish to be identified.

Read more at Livemint.com

FBT on ESOP: Sacrificing equity for the sake of convenience

Is ESOP (employee stock option plan) a 'fringe benefit' or a perquisite (salary)?
"Answer to this question should have held no terrors before the introduction of Finance Bill, 2007," says Mr V. Ranganathan, a Chennai-based chartered accountant. "Whether tomato is a fruit or a vegetable has been a vexed question, long eluding a botanic ally convincing reply, essentially due to forces of nature that made tomato what it is."

'Is the lawmaker in India invested with such supernatural qualities to cause such confounding that can have only one answer in any other part of the world?' he asks in return, and fumes: "It is a untoward act of distortion that ESOP has been characterise d as a 'fringe benefit'." Here's more that Mr Ranganathan has to say, in a quick interaction with Business Line.

Read more at The Hindu Business Line

Lok Sabha passes bill for CST phase out

The Lok Sabha today passed the bill to cut Central Sales Tax (CST) by one percentage point annually starting from April 1 this year.

The CST rate will be reduced to 3% from 4% in 2007-08 and will be phased out by March 31, 2009.

The government aims to merge the goods and services levies into a single goods and services tax (GST) by 2010.

Read more at Business Standard