TARC Recommends CBEC Should Immediately Commence Work on the Development of a Customs Vision and Strategic Plan

Recommends that there is an Imminent Need to Institute a Robust Framework Which will Address Data and Information Exchange-Second Report of TARC Submitted 

Tax Administration Reforms Commission (TARC) submitted its second report yesterday. TARC in its Second Report addresses two important aspects of tax administration i.e. capacity building of customs department and data and information exchange. In its First Report, TARC had addressed four terms of reference. These terms of reference were related to customer focus, structure and governance, people's function, dispute management and key internal processes and ICT. 

In the face of the increasingly globalized world, customs today face multidimensional challenges. One the one hand, globalization, while affording opportunities for economic growth also provides opportunities for trans-border crimes. Customs, being at the frontline of the border have to play an important role in the country's physical as well as economic security. At the same time, they have to facilitate legitimate trade so as not to impair the country's competitiveness and attractiveness as an investment destination. The steady growth of international trade leading higher volumes and the emerging trends such as increase in regional trading arrangements etc., e-commerce, changing supply chain dynamics etc. are adding to the challenges faced by customs. These trends necessitate creation of new capacities in diverse areas without necessarily increasing the human resources. The demand on customs, therefore, is to do more with less. 

To face this challenge, Indian customs would need to move away from their traditional administrative approach towards a more proactive and wholesome compliance management approach. They would need to transform their governance, change their control paradigm and become a highly technology driven organization with a robust and reliable risk management based approach to governance. They will have to move away from excessive revenue orientation to be able to fulfil their mandate in relation to areas such as supply chain security, effective implementation of their responsibilities in trade related areas, IPRs, OGA requirements etc. and play a much more proactive and prominent role in trade facilitation. 

Hence their compliance philosophy needs to be oriented towards promotion of voluntary compliance based on a trust based approach towards the compliant trade coupled with very effective enforcement against noncompliance. This will require large investments in capacity building in human capital as well as physical and technological infrastructure. Trade facilitation in particular will need capacity building not only in customs but also in other regulatory agencies. By virtue of their strong background in cargo processing and high international alignment of customs processes, customs need to be given a lead role to achieve inter agency harmonisation and coordination in this area. 

To enable the transformative changes that are required, the government needs to empower and enable customs by according the CBEC functional and financial autonomy as recommended in the TARC's first report, subject, of course, to the restructuring and accountability as also recommended in that report. 

Due Date for filing of return of Income for Assessment Year 2014-15 Extended from 30th September, 2014 to 30th November, 2014 in Specified Cases

As per the provisions of the Income-tax Act, 1961 (‘the Act'), for an assesse, who is required to obtain Tax Audit Report (TAR) under section 44AB of the Act, the due date for furnishing his return of income is 30th September of the Assessment Year. 

The Central Board of Direct Taxes (‘the Board') vide order dated 20th August, 2014 extended the due date for obtaining and furnishing of Tax Audit Report under section 44AB of the Act for Assessment Year 2014-15 from 30th September, 2014 to 30th November, 2014. Subsequently, a number of representations were received in the Board requesting for extension of the due date for furnishing of return of income also. Writ petitions were also filed in various High Courts for directing the Board to extend the due date for furnishing of return of income from 30th September, 2014 to 30th November, 2014 in conformity with the extension of the due date for filing of Tax Audit Report. 

The Gujarat High Court vide judgement dated 22 September 2014 directed the Board to extend the due date for furnishing the return of income to 30th November, 2014, except for the purposes of charging of interest under section 234A of the Act for late filing of return of income. Other High Courts also directed the Board to look into the practical difficulties of the petitioners and take a just and proper decision in this matter. 

In compliance to the judgments of various High Courts and after considering the representations received for extension of the due date, the Board, in exercise of its power conferred by section 119 of the Act, has extended the `due-date' for furnishing return of income from 30th September, 2014 to 30th November, 2014 for the Assessment Year 2014-15 for all purposes of the Act in the case of an assesse, who is required to file his return of income by 30th September, 2014, and is also required to get his accounts audited under section 44AB of the Act or is a working partner of a firm whose accounts are required to be audited under section 44AB of the Act. 

There shall be no extension of the “due date” for the purposes of charging of interest under section 234A of the Act for late filing of return of income and the assesses shall remain liable for payment of interest as per the provisions of section 234A of the Act. 

For removal of doubt, it is clarified that for an assesse (other than working partner of a firm which is required to obtain and furnish Tax Audit Report), who is required to file its return of income by 30th September, 2014 but not required to obtain and furnish Tax Audit Report under section 44AB, the due date for furnishing of return of income for assessment year 2014-15 remains as 30th September, 2014. 

Ind-Ra: Government's Role Pivotal to ensure Minimal Disruption in Power Sector

The Supreme Court's (SC) judgment would bring in the much-needed transparency in the coal sector which has been marred with non-transparent ad-hoc allocations, India Ratings & Research (Ind-Ra) believes. Over the long-run, this will boost investments in the sector and lower India's dependence on imported coal, leading to energy security. However, the government must act promptly to ensure minimal operational disruption for the existing operational projects to further build investor confidence. 

Judgment in line with Expectations: The judgment is in line with our expectations expressed in the commentary Government Action Key Post Supreme Court's Coal Block Ruling dated 27 August 2014. Ind-Ra stated the possibility of a penalty linked to the total quantity mined. The agency had also highlighted the possibility of the government considering means to provide coal through the linkage route for operational plants if captive coal blocks (CCBs) were to be de-allocated. 

Government Action Key for Operational Mines: Ind-Ra expects the government to play a pivotal role in the resolution of coal supplies linked to operational end use projects (EUP). There exist three possibilities which could mitigate the impact of the de-allocation for operational EUPs. Firstly, the government could consider assigning coal linkages to EUPs through Coal India Limited (CIL). However, the ability to obtain coal linkage from CIL remains limited as the company is already struggling to increase its output. Even if the output is increased, CIL will prefer to supply to the existing plants to avoid penalty due to under-supply. 

Secondly, if the cost economics of the EUP allow, the developers could look at sourcing imported coal. Lastly, fast track auctioning of the de-allocated mines could alleviate the concerns. The agency opines that these players would try to bid aggressively in the auction to regain the same mines. However, the amount paid to get these mines through the auction route would alter the project economics. The outcome could also be a mix of these three possibilities. 

SC has refrained from immediate de-allocation of the operational CCBs with linked EUP. It has allowed a breathing period of six months ending 31 March 2015 to developers. Also, SC has imposed a levy of INR295/tonne for coal extracted by the developers till date. Ind-Ra expects that till March 2015, these operational projects would have to develop an interim arrangement to source coal through government support. 

Investments at Risk for Non-operational Mines: Mine allottees with non-operational CCBs face the risk of investments towards mine development as well as EUP being written down. Once the CCB auction begins, there remains limited possibility for the same mine to be re-allocated to the respective developer. Therefore, the investment made towards the mine will largely have to be written off, in the absence of any compensation from the new bidder of the said mine. Additionally, the investments made in EUP could be written off if the developer is unsuccessful in bidding for mines under auction mechanism or imported coal does not support economical operations of the EUP. 

The non-operational CCBs have been de-allocated with immediate effect. For such CCBs, there has been no explicit penalty on allottees in the judgment. However, some of the developers had already borne penalties in the form of bank guarantee invocation during the review by inter-ministerial committee in 2013 based on the progress of the CCBs. 

Merchant Power Plants Worst Impacted: Independent power producers (IPP) with merchant sales are likely to see significant profitability erosion FY16 onwards in the absence of coal linkage beyond March 2015; they will have to rely on imported coal or pay higher for the coal obtained under the auction mechanism. FY15 would see a one-time cash flow hit on such IPP's due to the penalty to be paid for coal extracted till date. The ability of these merchant IPPs to tie up for domestic coal under linkage route remains remote. 

PM meets Israeli PM Benyamin Netanyahu

Israeli Prime Minister extended an invitation to Narendra Modi to visit Israel 

The Prime Minister Narendra Modi met the Israeli Prime Minister Benyamin Netanyahu on Sunday. The two leaders reviewed the robust relationship, and rapidly growing trade. They also discussed how ties could be further expanded. The Israeli side briefed the Prime Minister on their perception of the situation in West Asia. 

Defence ties and cooperation in the field of computer software, and cyber security were also discussed. 
 
Issues of water management and agriculture in arid areas came up for discussion, with Israel offering to share its technology in this regard. The Prime Minister also outlined his vision of waste water management and solid waste management in 500 towns across India. 
 
The Israeli Prime Minister extended an invitation to Narendra Modi to visit Israel.

Kharif crop sowing touches 1019.26 lakh hectares as on 26 September

Area under cotton crop was higher at 126.55 lakh hectares as on 26 September 

As per the latest reports of sowing of kharif crops, kharif crop sowing area touched 1019.26 lakh hectares as on 26 September, compared with 1044.69 lakh hectares touched same time of the last season. 

The revival of southwest monsoon rainfall helped the kharif crops sowing to pick up and shorten the gap with the sowing in the last season. 

The rice crop was sown in 374.87 lakh hectares, which was marginally higher than the coverage of 374.27lakh hectares same time last year. Meanwhile, the pulses sowing at 101.05 lakh hectares and coarse cereals sowing at 182.34 lakh hectares was below last year's coverage of 108.13 lakh hectares and 196.05 lakh hectares as on date. 

The area under oilseeds crops at 177.56 lakh hectares as on 26 September 2014 was below the coverage of 193.22 lakh hectares same time of last season 

Sugarcane has been planted in 48.74 lakh hectares as on 26 September compared to 50.32 lakh hectares same time last season. 

The area under cotton was higher at 126.55 lakh hectares as on 26 September compared to 114.37 lakh hectares same time last year. 

Further, the area under jute and mesta stood at 8.15 lakh hectares as on 26 September 2014 compared to 8.34 lakh hectares a year ago.