Changes after PWC Alert

Thursday, September 24, 2009 11:57 PM By Livemail

September, 24th 2009

New EC Regulations will make a number of changes to the way in which the social security contribution position of an internationally mobile worker within the EU will be determined. PricewaterhouseCoopers summed up the key points in its latest Tax & Legal Alert as follows.

The social security contribution position of internationally mobile workers within the 27 countries of the European Union (EU), Iceland, Liechtenstein and Norway, together comprising the European Economic Area (EEA), and Switzerland; is currently determined by EC Regulation 1408/71.

In addition, this regulation currently determines the eligibility of such individuals and their families for State benefits entitlement. EC Regulation 1408/71 (and its Implementation Regulation 574/72) is to be replaced by EC Regulation 883/2004 (and its Implementation Regulation) in respect of all internationally mobile workers within the EU who fall within personal scope of the new Regulation.

It is expected that Regulation 883/2004 should enter into force from May 1, 2010.

However, Regulation 1408/71 will initially continue to apply to the EEA countries of Iceland, Liechtenstein and Norway as well as Switzerland until the new Regulation is adopted by these countries.

The main purpose of the new Regulation is to modernize, simplify and clarify existing rules. However, Regulation 883/2004 makes a number of changes to the way an internationally mobile worker's social security contribution position within the EU will be determined.

There are new requirements for remaining insured in the home country for social security purposes, notably where an individual works simultaneously in two or more member states.

There is also a new electronic administrative process being introduced which will ultimately replace the existing system of E101 certificates (certificates of coverage).

Technical changes

The new Regulations, as currently drafted, do not apply to non-EEA (third country) nationals working cross-border within the EU. In the interim, the current rules under Regulations 1408/71 and 859/2003 will continue to apply to this population.

Individuals posted to another EU member state for a period not exceeding 24 months shall continue to remain insuredin their home social security scheme provided they are not replacing another worker. Currently this only applies for a period of up to 12 months.

However, as is the case currently, it is expected that posted workers may remain insured in their home country social security scheme for up to 5 years (depending on the practice of the countries involved) under a special exception, provided that both the home and host authorities agree.

Multi-State workers are insured in the social security scheme of the member state in which they are habitually resident under Regulation 1408/71, provided they perform regular employment duties there. The new Regulations introduce a requirement for substantial employment duties in the home country if this social security contribution position is to be maintained. Substantial is defined as being no less than 25 percent of time and/or remuneration, or turnover.

The new Regulations also seek to strengthen the principle of unity of applicable legislation; in other words there should be no exceptions that would allow an individual to be insured in more than one member state at the same time. In particular, this change may affect individuals who are simultaneously employed in one EU member state and self-employed in another EU member state.

For the first time EU member states will have the power to enforce social security liabilities and debts against individuals and employers in other member states.

Administrative changes

Employees currently engaged in cross-border assignments will continue to be subject to the processes specified under the existing Regulation 1408/71 for a transitional period. Parallel compliance and tracking systems may be required during the transitional phase.

E101 certificates will not be issued under the new Regulations. These will eventually be replaced by an electronic system of “attestations". A provisional system of paper attestations will be in place until such a time that the electronic system is introduced.

Bottom line

The new Regulations will provide both challenges and opportunities. Employers with cross-border employee populations should consider:

1.How the changes will impact the current and future assignee populations in terms of contributions and benefits.

2.Whether any modifications to employer compliance and tracking procedures are required given old and new regimes will exist in parallel.

3.Any tax implications arising from changes to fact patterns that employees may wish to implement as a result of these changes should also be assessed.

4.How the changes to social security contribution positions will impact assignment structures and how assignments may be designed to benefit from reduced social security liabilities.

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Effective-dates-of-various-provisions

Friday, August 7, 2009 5:53 PM By Livemail

INCOME TAX

1. 01-04-2009 - Advance Tax Limit Increased to 10000 from 5000.

2. Wealth Tax Limit Increased: The recommended amendment will apply for the value of net wealth as on 31st March, 2010 and will apply in relation to assessment year 2010-11.

3. 01.04.2011 - Amendment to Section 44AA – Maintenance of Accounts

4. 01.04.2011 - Amendment to Section 44AB – Audit of Accounts

5. 01.04.2011 - Section 44AD Substituted – Presumptive Income

6. 01.04.2011 - Amendment to Section 44AE – Income from goods Transport.

7. 01.10.2009 - Amendment to Section 50C – Value of Capital asset transferred

8. 01.10.2009 - Amendment to Section 56 – Transactions without consideration of more than Rs. 50,000/-

9. 01.04.2003 - Amendment to Section 80A – Deductions

10. 01.10.2009 - Amendment to Section 80G – Charitable Institutions

11. 01.04.2008 - Amendment to Section 80IA – Power Generation

12. 01.04.2000 - Section 80IB – Tax Holiday

13. 01.10.2009 - Section 90 Substituted – DTAA –

14. 01.10.2009 - Amendment to Section 92C – Transfer Pricing – Arm's Length Price

15. 01.04.1998 - Amendment to Section 115JA – Deemed Income

16. 01.04.2001 - Amendment to Section 115JB

17. 01.10.2009 - Amendment to Section 131 – Discovery, Inspection etc – “Dispute Resolution Panel” included

18. 01.06.1994 - Amendment to Section 132 – Search and Seizure – Additional Commissioner Empowered

19. 01.10.2009 - Amendment to Section 139A – PAN – “Quarterly” removed

20. 01.04.1989 - Amendment to Section 147 – Reassessment – Scope enhanced

21. 01.10.2009 - Section 194C Substituted – TDS – Payment to Contractors

22. 01.10.2009 - Amendment to Section 194I – TDS – Rent

23. 01.10.2009 - Amendment to Section 200 – Quarterly Returns gone – Periodicity to be prescribed

24. 01.10.2009 - Amendment to Section 201 – TDS failure

25. 01.10.2009 - Amendment to Section 203A – Quarterly Statement is no more quarterly

26. 01.10.2009 - Amendment to Section 206A & 206C – Quarterly to unspecified period

27. 01.10.2009 - Amendment to Section 246A – Dispute Resolution Panel

28. 01.10.2009 - Amendment to Section 253 – Appeal to ITAT – Dispute Resolution Panel

29. 01.06.2007 - Amendment to Section 271 – Concealment of Income

30. 01.04.1988 - Amendment to Section 271B – Provisional Attachment

31. 01.10.2009 - Substitution of Section 282 – Service of Notice – Courier and Email recognized

32. 01.10.2010 - New Section 282B – Allotment of Document Identification Number

33. 01.10.2009 - New Section 293C – Power to Withdraw approval

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What is Special in RBI Credit Policy.....?

Monday, August 3, 2009 10:23 AM By Livemail

RBI didn’t bring any changes in the key policy rates. By considering the economic recovery from the global downturn, it kept its short-term rates and cash reserve requirement unchanged. The RBI said it would continue with a policy of easy money while the outlook remained uncertain, reassuring a bond market that must absorb a record 4.51 trillion rupees ($94 billion) in government borrowing this year as we expect fiscal deficit to reach 6.8 percent of GDP. It said once a recovery had happened, it would be ready to reverse some expansionary measures to keep a lid on inflation. The central bank (RBI) said it would actively manage liquidity to prevent government borrowing from increasing private demand for credit.

RBI left its lending rate (Repo) unchanged at 4.75 percent, its lowest in nine years, and its reverse repo rate at 3.25 percent (this is the rate at which RBI absorbs surplus cash from the banking system). Both rates were last cut by 25 basis points in April 2009.
 
The RBI kept the cash reserve ratio (CRR), the amount of funds banks have to keep on deposit with it, unchanged at 5.0 percent. It was last cut by 50 basis points in January 2009. At the same time Statutory Liquidity Ratio (SLR) also kept stable at 24%
 
Key Policy Rates

Particulars
Rates
Bank Rate
6%
Repo Rate
4.75%
Reverse Repo Rate
3.25%
Cash Reserve Ratio (CRR)
5%
Statutory Liquidity Ratio (SLR)
24%

Highlights of RBI credit policy
Following are the highlights of RBI Credit Policy.
 
·         Bank rate retained at 6%
·         Repo rate unchanged at 4.75%
·         Reverse repo rate unchanged at 3.25%
·         Cash reserve ratio unchanged at 5%
·         Statutory liquidity ratio (SLR) unchanged at 24%
·         Inflation is forecast at 5%
·         Negative inflation only a statistical phenomenon
·         Main concern on balance between liquidity and inflation
·         GDP is forecasted at 6%
·         More scope for cutting rates by commercial banks
·         Money supply may grow 18% this fiscal
·         Policy will help to ensure enough commercial credit
 
Asia's third-largest economy grew 6.7% in the last fiscal. In previous three years the growth was 9 percent and more. Private sector economists expect growth between 5.8 and 7.2 percent this year. Wholesale prices are below last year's levels, it is largely because of the huge fall in oil prices. In July 2008 it was at all-time peaks. But consumer price inflation floats near 8 percent. The central bank said it was unlikely that growth momentum would pick up before the middle of the current fiscal year, but said it expected fiscal and monetary stimulus measures to boost domestic demand in 2009/10.

RBI’s main concern is on balance between liquidity and inflation. To make sure the liquidity RBI is going to increase money supply by 18% in this fiscal. The projected inflation for the year is 5%. This policy will also help to ensure enough commercial credit. The central bank said that commercial banks have scope to lower deposit and lending rates. This will help the borrowers to gets loans with reduced rates.
 
RBI has mentioned that there is more scope for cutting rates by commercial banks. But this might adversely affect the private sector banks because from the last few months the gap between the deposit rates and the lending rates continue to be far higher and increasing. Banks which have relatively smaller operations may face pressures from the deposit side. Most of the banks believe that the rate cut cycle is over and RBI will hint at an exit strategy by the end of 2009.

As all the rates have kept unchanged stock market didn’t have much effect from the new RBI policy. It does not change anything really for the stock market to look forward to or feel disappointed.
 
RBI’s decision to keep the interest rates unchanged is a big boon for Real Estate sector since interest rates are at an all-time low. There is enough liquidity in the market, the credit off-take lending is slow, so the bankers will definitely look at providing ways and means to provide stimulus to the economy.
 
 

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Financial Planning

10:18 AM By Livemail

Financial planning is the process of meeting life goals through a proper planning and management of finances. Financial planning helps us to translate our dreams and aspirations in to reality.    
 
It also helps us to provide meaning and direction to our financial decisions.
Financial planning has to be done in a proper way, so that it can be implemented effectively.The important steps to be followed while planning our finances are,


-Analyse your dreams and aspirations

-Establish the goals

-Analyse your financial status

-Analyse your emotional status

-Develop a plan for achieving the goals

-Implementing the plan

-Monitoring the plan

Analyse your dreams and aspirations
All of us have got lot many things to do in life, Moreover we are all dreaming of doing the same at the earliest .But normally we do not realise the possibilities of these dreams. In India most of the people have not analysed these dreams and the ways of realising the same.

Establish the goals
Now you have to translate your dreams and aspirations in to money. Define the time frame within which you should be able to realize your dreams. The time frame may depend on your personal goals or family goals or both together. If you think, it is difficult to meet all your goals within the specified time frame, prioritize your goals based on urgency and importance. All goals need not necessarily relate to wealth accumulation only. There could be protection goals as well.

Analyze your financial status
Analyzing financial status includes,
- An inventory of assets and liabilities (including securities holding, debts, insurance, etc)
- A description of the present arrangement for distribution of assets at death
- Estimates of your income and expenditure
- Details of your insurance coverage
Once you analyze all these relevant information of your own, you will come to know where you do stand and what your needs are.

Analyze your emotional status
Emotional status is very important, while designing a financial plan for you. It will decide your strength to take risk or not. It will throws light on your hopes, fears, values, attitudes, preferences, biases and non-financial goals.

Develop a plan for achieving your goals
The plan, which you design, should take your present financial situation to the achievement of the objectives. A comprehensive financial plan should contain an analysis of all pertinent factors relating to your financial status.

Components of a good financial plan
- your personal data
- your goals and objectives
- identification of issues and problems
- assumptions
- your balance sheet/net worth for the financial year
- cash flow management
- income tax planning
- risk management/insurance planning
- investments planning
- estate planning

A well drawn plan must be tailored to you specific goals, situation and circumstances. If additional expertise is required, you should consult with a specialist in that field to help you design the overall plan. There is more than one more way for your financial goals to be achieved. If you want to try with other ways, you can first analyze the advantages and disadvantages of each strategy. The plan should be specific. It should list what you have to do? When and with what resources?

The plan format should be such that you can easily understand and evaluate. Only once you decide that the plan well suits to your needs, you can go to the next step.

Implementing the plan
Merely designing a plan, no matter how sound, does not constitute financial planning. A financial plan is useful to you only if it is put in to action. You have to ensure that the implementation is carried out in the manner and in accordance with the plan designed.

Monitoring the plan
Periodic reviews are the best form of monitoring. Of course, you should keep flexibility for a review if circumstances warrant. Following are three aspects to look at in a review:-
- the performance of what has been implemented,
- changes in the personal and financial situation and objectives,
- changes in the environment (regulations, financial, economic)
If you are on track to meet your financial goals nothing else needs to be done. If that is not the case, a revision is necessary. Revision process will involve the same above discussed steps but will take lesser time.

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