• INDIRECT TAXATION

CBEC Customs 

Notification No. 36/2010 Customs (N.T.) Dated 05.05.2010 - Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010

CBEC has issued Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010 pertaining to assessment and clearance of imported or export goods, carried by an Authorised Courier by air, on behalf of a consignee or consignor at such Customs airports and in such form and to such extent, as the Board may, by notification, declare for the purposes of these regulation. The provisions relating to registration, Suspension or revocation of registration, obligation of the of Authorised Courier has been dealt with in details.

       SERVICE TAX

Notification No. 23/2010-ST Dated 29.04.2010 - Exemption to the taxable service on commercial training or coaching

Central Government has exempted the taxable service referred to in sub-clause (zzc) of clause (105) of section 65 of the Finance Act, when provided in relation to Modular Employable Skill courses approved by the National Council of Vocational Training, by a Vocational Training Provider registered under the Skill Development Initiative Scheme with the Directorate General of Employment and Training, Ministry of Labour and Employment, Government of India, from the whole of the service tax leviable thereon under section 66 of the Finance Act.

Circular No. 122/03/2010 - ST Dated 30.04.2010 - Clarification on availment of CENVAT credit on input services

CBEC has clarified that CENVAT credit can be taken by "Associate Enterprises" when debit is made in book of accounts and actual payment of the value of input service in money terms is not required as section 67 of the Finance Act, 1994 treats such book adjustments etc., as deemed payment, there is no reason for denying such extended meaning to the word 'payment' for availment of credit. Further, clarified that where a service receiver does not pay the full invoice value and the service tax indicated thereon due to some reasons then in those cases the payment made should be taken as final payment towards the provision of service. The mere fact that finally settled amount is less than the amount shown in the invoice does not alter the fact that service charges have been paid and thus the service receiver is entitled to take credit provided he has also paid the amount of service tax, (whether proportionately reduced or the original amount) to the service provider. The invoice would in fact stand amended to that extent. The credit taken would be equivalent to the amount that is paid as service tax. However, in case of subsequent refund or extra payment of service tax, the credit would also be altered accordingly.

• RESERVE BANK OF INDIA

Circular No.RPCD.CO.Plan.BC.78/04.09.01/2009-10 Dated 30.04.2010 - Clarification on eligibility for classification under priority sector

It has been clarified by the RBI that loans granted by commercial banks for agricultural and allied activities are eligible for classification under priority sector, irrespective of whether the borrowing entity is engaged in export or otherwise. However, export credit granted for agricultural and allied activities may be reported separately under heading "Export credit to agriculture sector".

Circular No. UBD. BPD. PCB. Cir. No. 62/16.20.000/2009-10 Dated 30.04.2010 - Classification under HTM category of investments by banks in Bonds issued by Companies engaged in Infrastructure activities

As per the instructions issued vide circular UBD. (PCB).BPD.Cir.No.46/16.20.000/2008-09,all fresh investments under Non-SLR category should be classified under Held For Trading (HFT) /Available For Sale (AFS) categories only and marked to market as applicable to these categories of investments. Accordingly, RBI has decided that investment by UCBs in the long term bonds issued by companies engaged in executing infrastructure projects and having a minimum residual maturity of seven years may also be classified under HTM category.

Circular No. 50 Dated 04.05.2010 - Limit extended for sale of foreign exchange in the form of foreign currency notes and coins, up to USD 3,000

RBI has been decided to increase the ceiling prescribed for Authorised Dealers and Full Fledged Money Changers to sell foreign exchange in the form of foreign currency notes and coins, with immediate effect, to USD 3,000 (US Dollar Three thousand only) to the travellers proceeding to countries other than Iraq, Libya, Islamic Republic of Iran, Russian Federation and other Republics of Commonwealth of Independent States without the prior permission from the Reserve Bank. Authorised Dealers and Full Fledged Money Changers can accordingly sell foreign exchange in the form of foreign currency notes and coins, up to USD 3,000 or its equivalent, out of the overall foreign exchange released.

Circular No.49 Dated  04.05.2010 - Pricing guidelines on Transfer of Shares in FDI

RBI has reviewed the Pricing guidelines on Transfer of Shares in FDI, subject to which an Indian company may issue equity shares/compulsorily convertible preference shares and compulsorily convertible debentures (equity instruments) to a person resident outside India under the FDI policy. Accordingly, guidelines relating to transfer by Resident to Non-resident (i.e. to foreign national, NRI, FII and incorporated non-resident entity other than erstwhile OCB) and transfer by Non-resident (i.e. by incorporated non-resident entity, erstwhile OCB, foreign national, NRI and FII) to Resident.

Notification No. DNBS (PD).CC. No.173/03.10.01 /2009-10 Dated 03.05.2010 - Overseas            Investment by NBFCs - No Objection (NOC)

RBI has instructed that NBFCs are not permitted to make direct investment in a foreign entity engaged in activities not approved under FEMA. Accordingly, all NBFCs desirous of making any overseas investment must obtain 'No Objection' (NoC) of the Department of Non-Banking Supervision of RBI before making such investment, from the Regional Office in whose jurisdiction the head office of the company is registered and applications in this regard must clearly state the activities intended to be undertaken by the overseas entity.

• INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY

Circular No. IRDA/ACTL/CIR/ULIP/071 /05/2010 Dated 03.05.2010 - Clarifications on Guidelines on Unit Linked Products, effective from 1st July 2010

IRDA has issued clarification on ULIP guidelines "Guidelines on Unit Linked Products" providing that minimum policy term shall be five years in the case of individual products and group products shall continue to be on annually renewable basis and no loan shall be granted under Unit Linked Insurance Products. Also, all linked products including pension / annuity products must mandatorily have a minimum sum assured payable on death, however, in case of unit linked products providing health insurance cover, the provision of death benefit is not mandatory.

Further, as per modified the ULIP guidelines all top-up premiums made during the currency of contracts must have insurance cover, treating it as single premium and shall have a lock in period of three years from the date of payment of that top up premium. However, top ups are not allowed during the last three years of the contract. Guidelines relating to Partial withdrawal also stands modified.

• SECURITIES AND EXCHANGE BOARD OF INDIA

Circular No. CIR/DNPD/2 /2010 Dated 04.05.2010 - Introduction of option contracts on Sensex and Nifty with tenure up to 5 years

SEBI has decided to permit Stock Exchanges to introduce option contracts on Sensex and Nifty with tenure up to five years subject to the condition that there are eight semi annual contracts of the cycle June/December in sequence to three serial monthly contracts and three quarterly contracts of the cycle March/June/September/December and exchange has in place the appropriate risk management framework for such derivative contracts.

Circular No. CIR/MIRSD/CRA/6/2010 Dated 03.05.2010 - Guidelines for Credit Rating Agencies

Credit rating plays a pivotal role as effective use of credit ratings by the users is crucially dependent upon quality and quantity of disclosures made by the Credit Rating Agencies. In order to impart higher credibility to the processes and procedures associated with the credit rating, it has been decided to prescribe the following transparency and disclosure norms for Credit Rating Agencies relating to Rating Process, Default Studies, Obligations in respect of Rating of Structured Finance Products, Disclosures a CRA shall make etc.