“E –Book” on “Good Governance: Ministry of Finance”

Ministry of Finance (MoF) has launched “E –Book” on “Good Governance on “Sushashan Diwas” (Good Governance Day) on 25-12-2014. The e-book contains details of e-Governance initiatives taken together with effective use of IT based applications by the Ministry of Finance. The details of the various initiatives towards good governance by SEBI, CBDT, CBEC etc. as listed in the e-book are as under:

(A) Initiatives taken by SEBI on Good Governance in past seven (7) months:

To strengthen regulatory framework dealing with the insider trading SEBI Board in its meeting held on 19.11 14 approved amendments to SEBI (Prohibition of Insider Trading) Regulations 1992. The amendments provide for strengthening the legal and enforcement framework, align insider trading norms with international practices, clarity in definitions and concepts and facilitate legitimate business transactions

To address these concerns and to make the delisting process less cumbersome, SEBI Board in its meeting held on 19th November 2014 has approved certain proposals to review the existing regulatory framework on delisting for making it more effective by amending the SEBI (Delisting of Equity Shares) Regulations, 2009. The proposals approved, among others, includes conditions for the delisting to be successful, the process of the determination of offer price through reverse book building process, reducing timeline for completing the delisting process etc.

SEBI vide its circular dated 12.11.14 provided for a framework to enable a single consolidated view of all the investments of an investor in Mutual Funds (MF) and securities held in demat form with the Depositories.

SEBI vide circular dated13.10.2014 approved single registration for operating in all stock exchanges and / clearing corporations. This would simplify the registration requirements for stock brokers and clearing members.

SEBI has been taking various measures to create awareness among investors about grievance mechanisms available to them through workshops as well as through print and electronic media. Vide circular dated 28.8.14 provided that all Stock Brokers and Depository Participants shall prominently display basic information about the grievance redressal mechanism available to investors in their offices in a prescribed format.

SEBI vide its circular dated 8.8.2014 expanded the framework of the Offer for Sale of shares through Stock exchange mechanism which inter alia provided that a minimum of 10% of the offer size shall be reserved for retail investors.

ECB / trade credit permission has been digitalized using the on-line application tracking system (ATS) of the RBI. The ATS, which can be accessed via a web browser over the internet, allows applicants to submit and track the status of the submitted application

Government has announced REITs and InVITs – innovative financing instruments for financing real estate and infrastructure projects. REITs have been successfully used as instruments for pooling of investments in several countries. InvITs seeks to facilitate similar structure for infrastructure projects. This will allow original equity investor to exit their investments which is expected to give a fillip to both, cash strapped real estate projects and infrastructure projects. Guidelines/ Regulations issued by SEBI.

(B) Central Board of Direct Taxes (CBDT)

While broadening the tax base and providing an equitable tax regime has been the underlying theme of the tax policy of the government, sustained economic growth continues to be the prime objective. Even in the limited fiscal space several important and path breaking initiatives for reviving the economy, promoting investment in manufacturing sector and measures of rationalising tax provisions so as to reduce litigation were introduced through the Finance (No.2) Act , 2014.

Tax clarity and Dispute Resolution

Introduction of a “Roll Back” provision in the Advanced Pricing Agreement (APA) scheme so that an APA entered into for future transactions is also applicable to international transactions undertaken in previous four years in specified circumstances.

Introduction of range concept for determination of arm’s length price in transfer pricing regulations.

To allow use of multiple year data for comparability analysis under transfer pricing regulations.

Resident taxpayers enabled to obtain an advance ruling in respect of their income tax liability above a defined threshold.

The scope of the Income-tax Settlement Commission enlarged.

High Level Committee has been set up to interact with trade and industry on a regular basis and ascertain areas where clarity in tax laws is required and based on their recommendation the Central Boards of Direct and Indirect Taxes would issue appropriate clarifications in a time bound manner, wherever considered necessary.

Non-adversarial tax regime:

In furtherance of its objective to improve the efficiency and equity of the tax system and to promote voluntary compliance, the emphasis of the government has been for providing a non- adversarial tax regime. Accordingly, the Central Board of Direct Taxes has issued detailed instructions to its field formations to ensure that the dignity of the taxpayers is respected while dealing with them, no frivolous demands are raised and no unnecessary litigation is continued.

Measures to curb Black Money

The Government is committed to take all possible measures to check the menace of black money in the country. These measures include putting in place robust legislative and administrative frameworks, systems and processes with due focus on capacity building and integration of information and its mining through increasing use of information technology. Certain major recent initiatives include the following:

Constitution of a Special Investigation Team (SIT), in May 2014, with two former judges of the Hon'ble Supreme Court as Chairman and Vice-Chairman, inter alia, to deal with issues relating to black money stashed abroad

While focusing upon non-intrusive measures, due emphasis on intrusive enforcement measures in high impact cases with a view to prosecute the offenders at the earliest possible, for creating effective deterrence against tax evasion.

Joining the global efforts to combat tax evasion, including supporting implementation of a uniform global standard on Automatic Exchange of Information on a ful l y reciprocal basis , facilitating exchange of information regarding persons hiding money in offshore centres.

Legislative measures, wherever required, including amendment to section 285BA of the I ncome-tax Act, 1961 vide Finance (No.2) Act , 2014 fac i litat i ng the Automatic Exchange of Information;

(C) Central Board of Excise and Customs (CBEC)

Measures to boost domestic manufacturing sector: A number of changes in the customs and excise duty structure including rectification of inverted duty structure have been made to promote domestic manufacture, attract new investment, increase capacity utilization& enable domestic value addition in sectors, such as electronics & IT, steel, chemicals & petrochemicals, and renewable energy

Trade Facilitation:

24X7 Customs clearance facility is being established in 17 airports and 18 seaports by 31.12.2014. This would cover all exports in the 17 airports and exports involving free shipping bills and factory stuffed exports in the 18 sea ports

Customs Single Window Clearance Project for faster Customs clearance has been initiated and to begin with will be implemented with Plant Quarantine and Food Safety Standards Authority of India

Customs Accredited Client Programme (ACP) has been reviewed with a view to allow a graded re-entry to disqualified ACP clients. This will greatly facilitate major importers.

Guidelines for establishing Air Freight Stations have been approved in consultation with M/o Civil Aviation with a view to encourage international air cargo.

An  integrated  Customs  EDI  –  SEZ  Online  system  would  be  implemented  w.e.f. 31.12.2014 for expediting the paper-less movement of export and import goods between SEZs and Gateway ports.

The dual use of infrastructure created by developers of SEZs in the non-processing areas has been allowed. Thus, such infrastructure can now cater to both SEZ and domestic entities,  which  will  ensure  optimum  utilization  of  existing  infrastructure  as  well  as incentivize development of new infrastructure.

An automated risk management system (Advance Passenger Information System) has been initiated to facilitate genuine passengers at international airports by identifying suspect passengers in a scientific manner.

E-payment of service tax and central excise has been made mandatory for all assessees/taxpayers in order to reduce the cost of compliance for the trade and industry

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