TMI Tax Updates - e-Newsletter
April 24, 2012

Summary: The Finance Act, 2012 introduced a negative list for Service Tax, making all services taxable unless listed as exceptions. This shift aims to ensure constitutional validity by avoiding taxation of services exclusively under state jurisdiction, as outlined in the Seventh Schedule of the Constitution. Until the Goods and Services Tax (GST) is implemented, services within the state domain should remain in the negative list to prevent constitutional breaches. The inclusion of "declared services" like renting, hire purchase, and food supply in the taxable category raises concerns about jurisdictional overreach and potential legal challenges, emphasizing the need for clear legislative demarcation.

Summary: The Union Minister of Commerce, Industry, and Textiles of India emphasized the importance of maintaining a development focus amid global financial challenges. Addressing the UNCTAD General Debate in Doha, the Minister urged developed countries not to use their financial crises as an excuse to withdraw from their commitments. He highlighted the adverse impacts of global crises on developing nations, particularly LDCs, LLDCs, and SIDS, and called for a swift conclusion to the Doha Round of WTO negotiations. He advocated for enhanced international financial regulation and equitable participation of developing countries in decision-making processes.

Summary: The Indian Minister of Commerce, Industry, and Textiles has requested an urgent supply of 3 million tonnes of LNG from Qatar, with plans to increase this to 15 million tonnes in the next few years. Qatar is interested in collaborating on upstream projects with ONGC. Currently, India imports 7.5 MMTPA of LNG from Qatar under a long-term contract. Both nations are negotiating further agreements, and Qatar is eager to expedite these discussions. Additionally, there is interest in advancing the India-GCC Free Trade Agreement. Bilateral trade has significantly increased over the past five years, with major exchanges in petroleum, chemicals, and manufactured goods.

Summary: The Union Finance Minister of India addressed concerns about the rising and volatile prices of commodities, particularly oil, at the G-20 Finance Ministers and Central Bank Governors' Meeting in Washington D.C. The minister highlighted that these price fluctuations are not aligned with economic fundamentals and contribute to inflation in developing countries like India. The volatility is attributed to factors such as financialization of markets, monetary policy actions, political uncertainties, and demand-supply imbalances. The minister emphasized the need for improved transparency and information in commodity markets, advocating for mechanisms to gather market data and enhance production and productivity to stabilize prices.

Summary: India's Finance Minister emphasized the importance of addressing green growth and climate change at the G-20 Finance Ministers and Central Bank Governors Meeting. He supported Mexico's initiatives and called for discussions that integrate economic, social, and environmental sustainability, aligning with UNFCCC principles. The Minister highlighted the absence of a global definition for green growth and advocated for a transparent process in forming a study group on climate finance commitments. He stressed that progress reviews on climate finance should be conducted by the UNFCCC Conference of Parties, suggesting the study group focus on contentious areas like sustainable development financing.

Summary: The Union Finance Minister addressed the G-20 Finance Ministers and Central Bank Governors, emphasizing the need for cohesive global financial regulation. He highlighted the risks of regulatory arbitrage if standards like Basel III are not uniformly implemented. The Minister stressed the importance of international collaboration to strengthen financial systems and prevent future crises. He advocated for financial inclusion, consumer protection, and addressing unintended impacts on emerging economies. The Minister also called for enhanced tax compliance through the Automatic Exchange of Information and suggested country-by-country financial reporting to combat tax evasion. Regular reviews by the Global Forum were recommended for ongoing effectiveness.

Summary: The Union Finance Minister of India addressed the Joint IMFC-G20 Session, emphasizing the need for augmented IMF resources amid global economic changes. The Minister welcomed the EU's efforts to strengthen its financial firewall and stressed that IMF assistance should support, not replace, these efforts. Contributions to IMF resources should be voluntary and not tied to quota reforms. The Minister highlighted the importance of protecting low-income countries affected by the crisis and expressed disappointment at the slow pace of quota and governance reforms. India supports new funding initiatives and advocates for a quota formula prioritizing GDP, particularly GDP-PPP, for fair voting power distribution.

Summary: The Union Finance Minister of India emphasized the importance of the Financial Action Task Force's (FATF) new international standards to combat money laundering, terrorist financing, and proliferation financing during a ministerial meeting in Washington, D.C. He highlighted the need for international cooperation due to the global integration of economies and threats. The Minister stressed the importance of transparency in legal entities and urged for stronger international cooperation, especially in terrorist financing cases. He assured India's commitment to implementing these standards and contributing to the global effort to maintain financial system integrity.

Summary: The G-20 Finance Ministers and Central Bank Governors met in Washington D.C. to address economic challenges and promote growth. They noted a modest global recovery but highlighted ongoing risks such as high indebtedness and unemployment. The group reaffirmed commitments to structural reforms and fiscal sustainability, and agreed on enhancing IMF resources for crisis prevention. Progress was made on financial regulatory reforms, transparency, and financial inclusion. The meeting also addressed energy market transparency, commodity price volatility, and climate finance. The ministers emphasized the importance of job creation and infrastructure financing as central to their initiatives.

Summary: The Union Finance Minister discussed India's economic prospects in a globalized world at the Peterson Institute of International Economics. He highlighted the structural changes in the global economy, notably the rise of emerging economies like India and China, which now account for nearly half of the world's output. The Minister emphasized the need for advanced economies to engage with emerging markets through trade and policy cooperation. He addressed challenges such as the eurozone crisis and India's own economic hurdles, including inflation and fiscal deficits. India aims to sustain growth through reforms, infrastructure investment, and leveraging its demographic dividend.

Summary: The Government of India, through the Ministry of Finance, has issued Notification No. 34/2012 to amend Notification No. 12/97-Customs (N.T.) concerning Inland Container Depots. The amendment specifically pertains to the State of Orissa, where the entry for Balasore in the notification's table is renumbered as item (i). Additionally, a new entry for Kalinganagar is added as item (ii), designating it for the unloading of imported goods and loading of export goods. This change is authorized under the Customs Act, 1962, and is documented in the Gazette of India.