Government of India in its efforts to improve the business climate of the country and also improve country’s ranking in the World Bank’s report on Ease of Doing Business; held a meeting yesterday under the chairmanship of the Union Finance Minister Shri. Arun Jaitley. The meeting was also attended by Shri M. Venkaiah Naidu, Minister of Urban Development; Shri Ravi Shankar Prasad, Minister of Law and Justice; Smt. Nirmala Sitharaman, Minister of Commerce & Industry; Shri Piyush Goyal, Minister of Power, Coal and New & Renewable Energy and Shri Arjun Ram Meghwal, Minister of State (Finance). Secretaries of various Departments of Central Government also participated in the meeting including DEA, DIPP, MCA, M/o Justice, M/o UD, M/o Civil Aviation, D/o Revenue, D/o Land Resources, CBEC Chairperson & Chief Secretary of NCT of Delhi and senior officials of Govt. of Maharashtra. Secretary, DIPP informed that Nodal Departments have been identified for each indicator who will lead the reform process ensuring country’s improvement in ranking across the 10 indicators. Departments gave a brief overview of the reforms undertaken recently and agreed to implement the suggested reforms by January, 2017. It was further agreed that the Departments will hold intensive stakeholder consultation to get their feedback on the reforms undertaken and also engage with the respondents to ensure that the reforms are felt at the ground. In this regard, each Department shall review the progress every week for carrying out the necessary reforms.

The major decisions taken during the aforesaid meeting were:

1. eBiz portal shall be mandated for starting a business which shall include three services of Ministry of Corporate Affairs, Registration for PAN and TAN and also for EPFO & ESIC.
2. Ministry of Corporate Affairs, CBDT, Ministry of Labour & Employment will work towards reducing the number of procedures for starting a business to 4 and the number of days to start a business also to 4.
3. Shram Suvidha Portal shall be the only portal for filing returns, challan and making online payment for EPFO & ESIC contributions as well as other filings and payments.
4. Department of Revenue and Ministry of Shipping shall work towards increasing the number of direct delivery consignments to 40 percent by end of this month. The Departments shall also ensure that the cost and time to export and import gets reduced substantially to bring India within top 50 ranks.
5. Ministry of Corporate Affairs shall work with the concerned stakeholders so that the provisions recently enabled under Insolvency and Bankruptcy Code are implemented through NCLT.
6. To further improve the country’s rank in the indicator ‘Getting Credit’, Department of Financial Services and Ministry of Corporate Affairs shall work towards integrating CERSAI database with ROC Registry of Charges to create a single registry of assets.
7. In the indicator ‘Enforcing Contracts’, the Union Commerce and Industry Minister mentioned that country ranks poorly at 172 on this indicator and efforts are required on many reforms to bring the country among the top 50 nations. She also mentioned that the initiative of eCourts should be expedited for electronic filing of complaints, summons and payments especially in the Commercial Courts.
8. On ‘Construction Permit’, Secretary, Ministry of Urban Development mentioned that the procedures shall be brought down to 8 which will be completed within 60 days. However, the Finance Minister desired that the Department should explore the possibility of commencing the construction on architect’s certification and approval being granted only at the time of the occupancy of the building.

The next review of the progress made on reforms shall be done in the end of January to ensure their implementation within the timeframe agreed upon.

Ministry of Finance 20-December, 2016

            A 340 Action points has been circulated to all State Governments and Union Territory Administrations with a request to implement the same by 30^th June 2016 and upload the implementation report by 7^th July 2016 on Ease of Doing Business dashboard of Department of Industrial Policy and Promotion.

            The details of 340 Action points are available on the website of the Department of Industrial Policy and Promotion www.dipp.nic.in

            The Government of Telangana has informed to this Ministry that Government of Andhra Pradesh has uploaded reforms which were not implemented as on 30th June 2016 on the dashboard of Department of Industrial Policy and Promotion. However, the reforms implemented after 30^th June 2016 will not be considered.

This information was given by the Minister of State (Independent Charge) in the Ministry of Commerce & Industry Smt. Nirmala Sitharaman in a written reply in Lok Sabha today.

(a) Enhancement and rationalisation of the threshold limits and reduction of the rates of TDS. TDS rates for individuals & HUFs to be reduced to 5% as against the present 10%.

(b) Simplification & rationalisation of the provisions of Section 197 and Rules for lower or non-deduction of TDS, aimed to improve ease of doing business.

(c) Proposal for certain amendments in rules 28, 28AA and 28AB to resolve practical difficulties faced by persons granted certificates for lower deduction under section 197

(d) Proposal for certain amendments in rule 37BA to obviate hardships arising in relation to claiming of credit for tax deducted under section 199

(e) Proposal for certain amendments in rule 30 and 31 in relation to time and mode of payment of TDS and filing of statement of TDS under the provisions of section 200

(f) Rationalisation of the provisions for maintenance of books of account and tax audit.

(g) A presumptive income scheme for professionals

(h) Deferment of ICDS

(i) Exemption to non-residents not having Permanent Account Number (PAN), but who furnish their Tax Identification Number (TIN) in their country of residence from the applicability of TDS at a higher rate under section 206AA

(j) Amendment to section 234C to provide relief where a new business is started during the financial year

(k) Grant of timely refund with interest and also providing for payment of higher interest in case of delayed refund

(l) Rationalization of the provisions relating to set off of refunds due to an assessee

(m) Release of property attached under section 281B on submission of bank guarantee

DOWNLOAD FULL TEXT OF  COMPLETE REPORT OF INCOME TAX SIMPLIFICATION COMMITTEE

Ease of Doing Business In line with the objectives to facilitate trade and improve ease of doing business, the following measures have been taken by CBEC during last one year:

SERVICE TAX

• Reduction in number of levies: Education Cess and Secondary & Higher Education Cess on taxable services have been subsumed in Service Tax with effect from 01.06.2015. [Sections 153, 159 of the Finance Act, 2015 read with notification No.14/2015-Service Tax, dated 19.05.2015 refers].

• Registration in two days: Registration in Service Tax to be granted within two working days. [ORDER No. 1/2015-SERVICE TAX dated 28.02.2015 refers].

• Time limit for taking CENVAT: Time limit for taking CENVAT Credit of duty/tax paid on inputs and input services has been extended from six months to one year. [Notification No.6/2015-Central Excise (N.T.), dated 01.03.2015 refers].

• Simplification in procedure for availment of Cenvat Credit in certain cases: For availment of CENVAT credit of service tax paid under reverse charge mechanism, the condition of having made the payment of consideration to the service provider has been done away with. [Notification No.6/2015-Central Excise (N.T.), dated 01.03.2015 refers].

• Rationalisation of penal provisions: Penalty provisions in Service Tax have been rationalized to encourage compliance and early dispute resolution. [Sections 113, 114, 115 of the Finance Act, 2015 refer].

• Digital signature and preserving records in electronic form: Service Tax assessees have been allowed to issue digitally signed invoices and maintain other records electronically. [Notification No.18/2015-Central Excise (N.T.), dated 06.07.2015 refers].

• Withdrawal of Prosecution in certain circumstances: Instructions have been issued providing for withdrawal of prosecution where a noticee has been exonerated in the quasi-judicial proceedings and such order has attained finality. [Circular No.998/05/2015-CX dated 28.02.2015 refers].

• If the export proceeds are not received within the prescribed time period, the exporter has to reverse the Cenvat Credit. Re-credit of such reversed Cenvat credit has been allowed, if such export proceeds are received within one year from the specified period. [Notification No.6/2015-Central Excise (N.T.), dated 01.03.2015 refers].

• To bring certainty in the determination of point of taxation in case of reverse charge mechanism, it has been provided that point of taxation will be the payment date or three months from the date of invoice, whichever is earlier. [Notification No.13/2014-Service Tax, dated 11.07.2014 refers]

B. Industry specific measures:

• Uniform abatement of 70% from gross value prescribed for transport by rail, road and vessel. Service Tax in all these cases will now be charged on 30% of the gross value of such service subject to non-availment of Cenvat Credit on inputs, capital goods and input services. [Notification No.26/2012-Service Tax dated 20.06.2012, as amended by the notification No.8/2015-Service Tax dated 01.03.2015 refers].

• To avoid disputes, exemption in respect of services provided to Government or local authority or governmental authority, by way of water supply, public health, sanitation conservancy, solid waste management or slum improvement and upgradation has been made more specific. [Notification No.25/2012-Service Tax dated 20.06.2012, as amended by the notification No.6/2014-Service Tax dated 11.07.2014 refers].

• Categories of works contracts have been rationalized to reduce litigation and improve compliance with a uniform service tax of 14% on 70% of the gross value of service. [Notification No.11/2014-Service Tax dated 11.07.2014 refers].

In line with the objectives to facilitate trade and improve ease of doing business, the following measures have been taken by CBEC during last one year:

CENTRAL EXCISE

• Reduction in number of levies: Education Cess and Secondary & Higher Education Cess on excisable goods have been subsumed in Basic Excise duty. [Notifications No.14/2015-Central Excise and No.15/2015-Central Excise, both dated 01.03.2015 refer].

• Registration in two days: Registration in Central Excise is to be granted within two working days. Verification of documents and premises to be carried out after the grant of the registration. [Notification No.7/2015-Central Excise (N.T.), dated 01.03.2015 and Circular No.997/04/2015-CX dated 28.02.2015 refer].

• Digital signature and preserving records in electronic form: Legal provisions have been amended to prescribe that a manufacturer may use digital signature on invoices and may preserve records in electronic format. Further, a notification and an instruction has been issued to prescribe procedure, safeguards and conditions for using digital signature on invoice and preserving documents in electronic format. [Notification No.8/2015-Central Excise (N.T.), dated 01.03.2015, notification No.18/2015-Central Excise (N.T.) dated 06.07.2015 and instruction dated 06.07.2015 refer].

• Electronic payment of duty: The facility of electronic payment of duty has been extended to all the Central Excise assessees. [Notification No.19/2014-Central Excise (N.T.), dated 11.07.2014 refers].

• Time limit for taking CENVAT: Time limit for taking CENVAT Credit of duty/tax paid on inputs and input services has been increased from six months to one year. [Notification No.6/2015-Central Excise (N.T.), dated 01.03.2015 refers].

• Direct despatch of goods: Facility of direct dispatch of goods by registered dealer from seller to customer’s premises has been provided. Similar facility has also been allowed in respect of job-workers. Registered importer can also send goods directly to customer from the port of importation. [Notification No.10/2015-Central Excise (N.T.), dated 01.03.2015 refers]. To add clarity to the issue – whether a dealer who is not issuing CENVATable invoice needs to take registration and bring goods to his godown, a Circular was issued to clarify that such dealers need not take registration or bring goods to the godown. [Circular No.1003/10/2015-CX, dated 05.05.2015 refers].

• Rationalisation of penal provisions: Penalty provisions in Central Excise have been rationalised to encourage compliance and early dispute resolution. [Sections 93, 94, of the Finance Act, 2015 refer].

• Payment of arrears in instalments: Instructions have been issued to allow Chief Commissioners, Commissioners to allow payment of arrears in instalments. [Circular No.996/03/2015-CX dated 28.02.2015 refers].

• Withdrawal of Prosecution in certain circumstances: Instructions have been issued providing for withdrawal of prosecution with approval of the Chief Commissioner in cases where the adjudication proceeding as well as prosecution were launched on identical grounds and the person concerned has been exonerated in the adjudication proceeding on merits. [Circular No.998/05/2015-CX dated 28.02.2015 refers].

B. Industry specific measures:

• Trade and Industry Associations had represented that the field formations have issued show cause notices to the fertilizer companies seeking to levy excise duty on the subsidy component of price-controlled fertilizers in the light of the judgment of the Supreme Court in the case of CCE, Mumbai v/s/ M/s Fiat India Pvt. Limited [2012-TIOL-58-SC-CX]. It was clarified that in respect of fertilizers for which subsidy is provided by the Government, the excise duty will be chargeable on the MRP and not on the subsidy component provided by the Government. [Circular No.983/7/2014-CX dated 10.07.2014 refers].

• Plants & Equipment supplied / imported prior to 2008 for use in projects financed by the UN or an international organization could not be transferred / sold out /reexported from the project site. Amendments to the notification concerned were made which allowed such goods to be transferred / sold / re-exported from the project site subject to certain conditions. [Notification No.84/97-Customs, dated 11.11.97 as amended vide notification No.22/2014-Customs, dated 11.07.2014 and notification No.108/95-Central Excise, dated 28.08.95 as amended vide notification No.11/2014-Central Excise, dated the 11.07.2014 refers]. • All goods falling under any Chapter supplied against International Competitive Bidding (ICB) are fully exempt from excise duty, subject to the condition that such goods when imported are fully exempt from basic customs duty and additional duty of customs. Doubts were raised whether this excise duty exemption is available to sub-contractors who supply goods to the main contractor who has won the contract under ICB. It was clarified that the said exemption is also available to sub-contractors for manufacture and supply of goods to the main contractor who has won the contract for the project under ICB, subject to compliance of relevant conditions. [J.S. (TRU-I) letter D.O.F.No.334/15/2014-TRU dated 10.07.2014 refers].

• Goods manufactured domestically and supplied against International Competitive Bidding are exempt from excise duty, if such goods when imported attract Nil customs duties. To ensure uniformity in assessment and avoid disputes, it was provided that if imported goods are eligible for Nil customs duites, subject to certain conditions, then the same conditions should also apply, mutatis mutandis, to such goods manufactured domestically and supplied against International Competitive Bidding for excise duty exemption. [Condition No.41 of notification No.12/2012- Central Excise, dated 17.03.2012 as amended by notification No.12/2015-Central Excise, dated 01.03.2015refers].

• Goods for setting up of specified Mega or Ultra Mega Power Projects (MPPS or UMPP) are fully exempt from excise subject to the condition that in case of goods for a Project for which certificate regarding Ultra Mega Power Project status is provisional, the Chief Executive Officer of the Project furnishes a bank guarantee or fixed deposit receipt for a term of 36 months or more. This condition was amended to prescribe furnishing of bank guarantee or fixed deposit receipts for a period of 42 months or 66 months in respect of MPPS or UMPPs respectively. [Condition No.42(b) and 43(b) of Notification No.12/2012- Central Excise, dated 17.03.2012 as amended by notification No.12/2015-Central Excise, dated 01.03.2015 refers].

• Henna powder or paste, not mixed with any other ingredient is fully exempt from central excise duty. Doubts were raised regarding the scope of the phrase “not mixed with any other ingredient”. It was clarified that the exemption is available to henna powder mixed with a liquid, so far that the liquid is a medium to change the form of henna powder into paste but excludes products like henna dye and such other products which are cosmetics. [J.S. (TRU-I) letter D.O.F.No.334/15/2014-TRU dated 10.07.2014 refers].

Ministry of Commerce and Industries

Department of Industrial Policy and Promotion

(v. 11.08.2015)

Major Initiatives on Improving Ease of Doing Business  in India.

The Government of India has taken up a series of measures to improve Ease of Doing Business. The emphasis has been on simplification and rationalization of the existing rules and introduction of information technology to make governance more efficient and effective. The measures taken are

: 1. Process of applying for Industrial License (IL) and Industrial Entrepreneur Memorandum (IEM) has been made online and this service is now available to entrepreneurs on 24×7 bases at the eBiz website. This had led to ease of filing applications and online payment of service charges. Following 14 services are integrated with eBiz portal which will function as a single window portal for obtaining clearances from various governments and government agencies:

a. Industrial Licence (DIPP)

b. Industrial Entrepreneurs Memorandum (DIPP)

c. Employer Registration with ESIC

d. Employer Registration with EPFO

e. Company name availability (MCA)

f. Allotment of Directors’ Identification Number (DIN)

g. Certificate of company’s incorporation

h. Declaration of commencement of business (MCA)

i. RBI’s Foreign CollaborationGeneral Permission Route

j. Advance Foreign Remittance (RBI)

k. Permanent Account Number (PAN)

l. Tax deduction Account Number (TAN)

m. Issue of Explosive licence (PESO)

n. Importer exporter code (IECDGFT)

2. Notification has been issued on 12-03-2015 by DGFT to limit number of documents required for export and import to three.

3. Ministry of Corporate Affairs has introduced an integrated process for incorporation of a company, wherein applicants can apply for Director’s Identification Number (DIN) and company name availability simultaneous to incorporation application [Form INC-29].

4. The Companies Amendment Act, 2015 has been passed to remove requirements of minimum paid-up capital and common seal for companies. It also simplifies a number of other regulatory requirements.

5. A comparative study of practices followed by the States for grant of clearance and ensuring compliances was conducted through M/s Accenture Services (P) Ltd. and six best practices were identified. These were circulated among all the states for peer evaluation and adoption. The study has also identified important bottlenecks faced by industries and important steps required to improve the business environment in States.

6. Application forms for Industrial Licence (IL) and Industrial Entrepreneur Memorandum (IEL) have been simplified.

7. Vide Press Note 3 (2014), Defence products’ list for industrial licensing has been issued, wherein large number of parts/components, castings/forgings etc. have been excluded from the purview of industrial licensing. Similarly dual use items, having military as well as civilian applications (unless classified as defence item) will also not require Industrial License from defence angle. For these items only an Industrial Entrepreneur Memorandum (IEM) has to be filed.

8. Vide Press Note 5 (2014), initial validity period of Industrial License has been increased to three years from two years. This will give enough time to licensees to procure land and obtain the necessary clearances/approvals from authorities.

9. MHA has stipulated that it will grant security clearance on Industrial Licence Applications within 12 weeks. In matters other than Explosives and FIPB cases, security clearances are valid for three years unless there is a change in composition of management or shareholding.

10. Partial commencement of production is being treated as commencement of production of all the items included in the license. This has obviated the hardship of licensees to get their Industrial License extended even though they have started production.

11. To facilitate investors and to reply to their queries, Frequently Asked Questions (FAQs) by applicants for grant of industrial license have been developed and uploaded on DIPP website.

12. Vide Press Note 4 2014), the NIC Code NIC 2008 has been adopted, which is the advanced version of industrial classification. This code will allow Indian businesses to be part of globally recognized and accepted classification that facilitate smooth approvals/registration.

13. Vide Press Note 6 (2014), the ‘Security Manual for Licensed Defence Industry’ has been issued. This has obviated the requirement of affidavit from applicants. Earlier, an affidavit signed before Judicial Magistrate was required from the applicant to confirm that they will comply with the safety & security guidelines/procedures laid down by the Ministry of Defence and Ministry of Home Affairs in Government of India. The applicants were facing difficulties in obtaining such affidavit and this was severely delaying the issue of License even after approval of Licensing Committee.

14. A checklist with specific time-lines has been developed for processing all applications filed by foreign investors in cases relating to Retail/NRI/EoU foreign investments. This has been placed on the DIPP website.

15. An Investor Facilitation Cell has been created in ‘Invest India’ to guide, assist and handhold investors during the entire life-cycle of the business.

16. SEZ Units allowed removing goods for repair, replacement, testing, calibration, quality testing and research and development on self-attestation.

17. Process of applying for Environment and Forests clearances has been made online through Ministry of Environment and Forests’ portals http://environmentclearance.nic.in/ and http://forestsclearance.nic.in/ .

18. Requirement for Environment Assessment Report is required for industrial shed, school, college, hostel for education institution above 20,000 square meters of build-up area up to 150,000 square meters of build-up area.

19. The issue of time taken in registration with Employees Provident Fund Organization (EPFO) and Employees State Insurance Corporation (ESIC) was taken up with the Ministry of Labour and Employment, Director General, ESIC and Central Provident Fund Commissioner. Both the processes have been automated and ESIC registration number is being provided on a real-time basis.

20. An order facilitating revival and rehabilitation of MSMEs through banker’s committee has been issued by Ministry of MSME.

21. A unified portal for registration of Units for LIN, reporting of inspection, submission of returns and grievance redressal has been launched by Ministry of Labour and Employment.

22. DIPP has requested all Secretaries of Government of India and Chief Secretaries of the States/UT to simplify and rationalize the regulatory environment. In order to improve the regulatory business environment they have been requested to take the following measures on priority: a. All returns should be filed on-line through a unified form; b. A check-list of required compliances should be placed on Department’s web portal; c. All registers required to be maintained by the business should be replaced with a single electronic register; d. No inspection should be undertaken without the approval of the Head of the Department; and e. For all non-risk, non-hazardous businesses a system of selfcertification should be introduced.

23. Registration process of VAT and Professional tax has been merged into a single process with single ID on 1st January, 2015 by the Government of Maharashtra.

24. Registration for VAT in Delhi has been made online. TIN allotment is done real-time and business can start immediately on receipt of TIN number.

25. The time required for giving a new electric connection in Mumbai has been reduced to 21 days from 67 days. The number of procedures involved has been cut down to 3 from existing 7.

26. Simplified procedure for new electric connection in Delhi with reduced procedures and time.

27. Municipal Corporation of Delhi has launched online application process for grant of construction permits for residential and industrial buildings on 16th March, 2015 and commercial buildings in May, 2015.