business standard updaates

Online refund of tax on 18 services

BS REPORTER
New Delhi, 3 January
As exports face adverse conditions amid a slowdown in growth, the government today came out with a mechanism to provide online refunds of tax paid on 18 services used beyond factory gate for outbound shipment of goods. Upbeat exporters exuded confidence that they can tackle the difficult situation ahead in the current calendar year, if the government continues to be proactive in supporting their cause.
Earlier, the Central Board of Excise and Customs (CBEC) issued a notification to provide average rates of service tax refund, ranging from 0.03 per cent to 0.20 per cent of the freight-on-board value of exports. This average rate of refund is in respect of 18 services used beyond the factory gate like those provided by an insurer, transporters from inland container depots to ports and by ports among others.
The finance ministry said service tax refund would be credited to the accounts of exporters directly.
“As in the case of payment of duty drawback, the service tax refund will be enabled by the Indian customs electronic data interchange (EDI) system resulting in the amounts getting directly credited into the exporters’ bank accounts within a few days of confirmation of export without additional export documentation,” the statement added.
Customs officers have separately been vested with powers of central excise and service tax for this purpose. A proposal to this effect was part of Finance Minister Pranab Mukherjee’s Budget speech for this fiscal.
The ministry had said the scheme limits public interface as well as reduces transaction costs in obtaining refunds.
The Federation of Indian Export Organisations said refunds through EDI would save both transaction time and costs, as there will be no requirement of application. “There will be reduced documentations once the facility to track status online will be available,” its president Ramu S Deora noted.
He said the government’s continued proactive measures would facilitate exporters to sail through in 2012, when they look set to face numerous challenges.
The idea was first mooted by the committee that was formed under minister of state for commerce and industry Jyotiraditya Scindia in December 2009 with the aim of reducing the transaction cost by 10 per cent of the export value.
Currently, the duty drawback is directly credited to accounts of exporters maintained at customs houses, but exporters have to file claims separately to get service tax refunds. This leads to severe delays in refund and loss of time, as it entails a plethora of complex paperwork.
Facing external adverse conditions, India’s merchandise exports grew just 3.9 per cent in November 2011-12 yearon-year, against a whopping up to 80 per cent rise in the earlier months of this fiscal. Exports reached only 192.7 billion dollars in the first eight months, prompting experts to disbelieve the prospect of meeting a target of $300 billion set for the current financial year.




Promoter-heavy companies allowed placement route

BS Reporter / Mumbai January 04, 2012, 0:50 IST

Promoters holding above 75% can also use exchange window to pare stake.
In a move that will help the government's divestment programme, the Securities & Exchange Board of India (Sebi) on Tuesdasy introduced two new methods— institutional placement programme (IPP) and offer for sale of shares through the stock exchange — to help companies comply with the minimum public shareholding norms
Under the Securities Contracts Regulation Rules (SCRR), all listed companies should have a minimum of 25 per cent of public shareholding.
Using the IPP route, companies can increase public shareholding by as much as 10 per cent either by way of fresh issue of capital or dilution by the promoters through an offer for sale. Under IPP, shares can only be issued to qualified institutional buyers, while 25 per cent of the offer should be reserved for mutual funds and insurance companies. According to the rules, every IPP issuance should have at least 10 allottees and no single investor shall receive allotment for more than 25 per cent of the offer size. Further, companies planning to raise money under IPP will have to file a red herring prospectus with Sebi along with the Registrar of Companies and stock exchanges.
Under the sale of shares through stock exchanges, companies through a separate window offered by the stock exchange will be able to offer at least one per cent of the paid-up capital, subject to a minimum of Rs 25 crore. This facility can be availed by only those promoters who are active and eligible for trading. The promoter or the promoter group of the company will not be permitted to bid for the shares.
These new routes will help the government pare its stake in PSUs. Promoters of private companies like Wipro, DLF and Mundra Port & SEZ will also be able to reduce their stake to 75 per cent through these routes