Informal Guidance - SEBI

Who can request for Informal Guidance?	Intermediary registered with SEBI
	Listed Company
	Company intending to get its shares listed and who has filled listing application or draft offer
	Mutual fund trustee company
	Asset Management Company
	Acquirer or Prospective Acquirer
Forms of Informal Guidance	No Action Letters: SEBI indicates that the Department would or would not recommend any action under any Act
	Interpretive Letters: Department of SEBI provides an interpretation of a specific provision of any Act, Rules, Regulations, Guidelines
Fees for Informal Guidance	Every application shall be accompanied with a fees of Rs. 25,000
Disposal of Request	Request is to be disposed off within 60 days. Department may give a hearing or conduct an interview if it feels necessary to do so.
Rejection of Application	Application may be rejected if any condition is not complied with
	Application money will be refunded after deducting Rs. 5000 as processing fees
Confidentiality of Request	Request to give the application a confidential treatment can be made by the applicant
	The period of confidential treatment will not exceed 90 days
	Department will communicate the applicant if no special treatment can be given
	In case of such communication applicant may withdrew the application within 30 days of communication

Advance Pricing Agreement (APA) Provisions under I.T. Act

APA provisions have been introduced under the Income Tax Act, 1961 through Finance Act 2012. This provision was initially under the Direct tax Code but now has been incorporated under I.T. Act. This was one of the steps taken by the ministry to incorporate some of the provisions of Direct Tax Code under the Income Tax Act 1961.  

APA is nothing but the determination of arms length price between the assesse and the income tax authority in advance for a specified period of time. This scheme was first introduced in Japan and was then followed by various other countries including United States. Currently transfer prices are determined by the associated parties though various given methods which lead to large number of litigations. Entering into APA will certainly reduce the number of transfer pricing litigations. There will be three forms of APA –

A Unilateral APA is the one which is entered into between the tax assesse and government of a country with respect to taxability of particular cross-border transfer pricing transaction(s) in that country.

A Bilateral APA is the agreement entered into between two countries having a Double Tax Avoidance Agreement (‘DTAA’) between them, in accordance with article of Mutual Agreement Procedure therein; with respect to taxability of transfer pricing transactions affecting both.

A Multilateral APA is an extension of Bilateral APA, whereby more than two countries involved in certain transfer pricing transaction(s)  – under their respective DTAA with each other – decide on the tax sharing thereof.

The key difference between the APA in India and the other parts of the world is that APA is applicable to all persons and is not restricted to legal entity, business, etc as specified in APA provisions in other parts of the world.

The provisions, contained in the proposed section 92CC of the Income-tax Act, 1961, (‘the Act’) provide that the CBDT, with the approval of Central Government, may enter into an APA with any person, determining the arm’s length price or specifying the manner (including the TP Method to be applied) in which the same would be determined, with respect to an international transaction to be entered into by that person

Government has also secured the power to declare any APA to be void ab initio if it is found that the agreement was obtained by fraud, misrepresentations, etc.

The most sophisticated APA provisions is said to be in Australia where the authority set to deal in these matters are working efficiently and this is one of the key draw back which is argued by many learned people. It is argued that whether bring such provisions with no adequate infrastructure will serve its purpose. 

SEBI’s intervention in SREI v FITCH case

SEBI has recently filed a petition in the Calcutta HC stating that it want to intervene in the SREI v FITCH case. FITCH credit rating agency has downgraded the credit rating of SREI from AA- to A+ against which SREI Infrastructure finance has obtained a stay order from the Calcutta HC this April stating that they have already terminated the contract with FITCH and in the absence of any contract the credit rating agency cannot public its credit rating. Calcutta HC granted stay to SREI restraining FITCH to make the new credit rating public. In the mean time SREI has obtained an upgraded credit rating from another credit rating agency CARE.

                Now, SEBI has filed a petition to Calcutta HC seeking its permission to intervene into the case. SEBI has also asked court to remove its stay order stating the credit rating agency has a right to rate a security throughout its life even though the contract is terminated. It is pertinent to note that under SEBI (Credit rating agencies) Regulation a credit rating agency is bound to publish the credit rating of an issuer in print media and its own website failing which his license may be terminated.

                This kind of “Rating Shopping” has been very frequent these days in the absence of any regulatory protection for the credit rating agency and cash significant doubt on the future of credit rating agencies. In order to protect the business companies often switch to another credit rating agency which provides a higher credit rating than those which downgrades its credit rating. In India the companies can decide whether to accept or not the credit rating of an agency when they first apply for service but after its initial acceptance the agency can unilaterally modify the credit rating.

Congress Governed States likely to move with FDI in retail

The UPA2 is all set to move with FDI in multi brand retailing in congress led states. This seems to be a welcome move for a government which is suffering from an image of policy paralysis. Since FDI in retail does not require any parliamentary approval and is more state subject thus it seems to be the correct move from the government. But the million dollar question is it politically correct? Commerce Minister Anand Sharma has been making it very clear, as have other members of this government, that they are keen to push forward with FDI in multi-brand retail.

With West Bengal Chief Minister Mamta Banerjee giving a brain storming session to UPA 2 it is clearly evident that she acts as a NATURAL ally to NDA. Especially after a recent setback on presidential election candidature won’t this step of UPA provoke her? Who single handedly fought the battle against FDI in retail that led to rollback of FDI.

With monsoon session of parliament knocking on the door this could be a big issue. Especially when the Indo-Bangladesh constitution amendment bill has to be table by the UPA and for which Mamta Banerjee has already shown its distrust. Passing of constitutional amendment bill requires approval of 2/3 of the members. UPA -2 has already lost the last constitutional amendment poll in relation to giving lokpal a constitutional status and if this time also the result is same it could be a big trouble for the government. 

Post on Companies Bill

Please check my post on taxguru.in here is the link of the post -

http://taxguru.in/company-law/companies-bill-2011-higher-level-transparency-accountability.html#comment-510205

You may leave your comment here or at taxguru.in

Petrol Price

Petrol Price Analysis (Rs 2 roll back possible)



Govt and petrol cos are forcing there inability to reduce petrol price although the prices in international market is at 18months low due to weak rupee, but the fact is something different. Petrol cos can still reduce the prices by Rs. 2.37

Particulars	Basis when hike of Rs 7 was made	Current situation
1$ equal to	52	57
cost of 1 barrel ($)	107	91
cost of 1 barrel (Rs)	5,564	5,187
Cost per liter (1barrel = 159 lt)
	34.99	32.62
	Reduction Possible	2.37

Education in India - Opportunity or threat?

Introduction:

As per Webster’s 1828 dictionary Education means the bringing up, as of a child, instruction; formation of manners. Education comprehends all that series of instruction and discipline which is intended to enlighten the understanding, correct the temper, and form the manners and habits of youth, and fit them for usefulness in their future stations.

The quality of education plays a significant role in everyone’s life. In India we have large number of professionals passing out every year after a having the best of education. But is that the kind of education that will make a professional competitive in the corporate world? My opinion will not be affirmative.

Education structure in India:

The real difficulty is that people have no idea of what education truly is. We assess the value of education in the same manner as we assess the value of land or of shares in the stock exchange market. We want to provide only such education as would enable the student to earn more. We hardly give any thought to the improvement of the character of the educated. The girls, we say, do not have to earn; so why should they be educated? As long as such ideas persist there is no hope of our knowing the true value of education. (M. K. Gandhi True Education on the NCTE site)

The entire picture of prevailing education has been beautifully incorporated in the above words. The education teaches student how to score marks but does not teach him how to implement it.

The second part of the extract deals with ignorance of woman being educated. Many people contest that this thing has changed and now women are getting equal opportunity to be educated as the men’s are but is that really true? I would say it is true but not exhaustively. When we talk about metropolitan city these things stand true but when we talk about urban areas it’s still the same. As per a research conducted only 3% of woman’s in urban areas are educated.

The key thing about Indian education system is that education structure here does not make a student prudent about how to apply the things which they have learnt in his area of work.

Infosys Technologies has its training campus at Mysore specially formed to fill the gap left inadequate college education.

It is not the only one: Tata Consultancy Services has a faculty development programme in 150 engineering colleges,

Problems of Education Structure:

The education structure prevailing in India creates a number of problems for a professional who enters into the corporate field after obtaining his qualifications. In India a student is more indulged with his course module till the age of twenty or twenty one which in turn makes him little aware about real world. Recently Goldman Sachs has counted the lack of quality education as one of the 10 factors holding India back from the rapid economic growth.

Total educated population	1,776,654
Without any specific level	353,224
Below Primary	239,962
Primary	461,505
Middle	291,362
Metric / Higher Secondary / Diploma	347,664
Graduate and above	82,913

Statistics from Madurai

In addition to that very few people turn up in our society from primary level education to higher level education. Nearly 45% of the population are without any specific education.

In most of the Schools/ colleges the curriculum has not changed since decades. Most of the things which are thought in school levels have either been abolished from real world or has little significance.

Education in India vs. Education in other Countries

The fundamentals of education does not change with the change in country what changes is how they are being taught. If we compare the education system between India and U.K. / USA we can feel the level of difference. In the B-schools of USA like Harvard Business School, Stanford Graduate School of Business, Yale School of Management and others, the curriculum is designed in a way that would prepare students to handle practical situations in the ever-changing corporate world. Hands on training and plenty of practical classes are included in the education pattern at US management schools.

In B-schools of India, equal emphasis is given on theory as well as practical sessions. The IIMs offer the highest quality of education. Other institutions like XLRI, IIFT, Institute of Management Sciences and Institute of Finance & International Management offer a good quality of education so as to make the students industry ready

What about high schools? The condition is pathetic. Things are taught which has abolished long back. On the other hand western countries give more emphasis on goal oriented teaching.

The flexibility of the American education system is its greatest strength and also its greatest weakness. Students there can change their major (i.e. field of study) midway through college. This usually means that students in the US receive more exposure to a variety of subjects and hence, are more aware of their career options and opportunities. However, the downside is that they can avoid taking courses which are hard in their major.

“Of all the big issues challenging corporates, education is the starting point,” said Dilep Rajnekar, chief executive of Azim Premji Foundation

Education in India – Opportunity or Threat?

The answer to this question cannot be a simple one. Education in India is a threat to certain extent if the present system of education continues to be the part of our society at the same time it can turn out to be an opportunity if necessary gaps are filled in.

Opportunity here lies in the students who are keen towards education. As per a survey conducted there has been a nearly 80% rise in the number of enrollment in the primary school between 1995 and 2005.

When it comes to threat of education in India the point is very clear, if the same structure of theoretical education continues the education will turn up a real threat for India. And as stated earlier education is the heart and soul of the entire economy thus it will not only affect the student’s fraternity but also the entire nation will come under its umbrella.

So what can be done?

Instead of completely changing the education system we need to revive the education system by incorporating more of the practical oriented education right from the secondary level so that a student can cope of with the change environment in the near future. The following things can be incorporated –

ü Interactive teacher and student environment

ü Classroom seminars or debates on topics beyond course

ü Assignments on current issues

ü Proper technological guidance.

Recently it was announced by the education minister that he will change the education pattern to make it more life oriented. In addition there is a target of granting autonomy to nearly 10% of the colleges by the end of 11^th plan).

Impact of Education in the skills of professional in the corporate world:

Every year large number of professionals enters the corporate world through various stream but very few gets the desired level of success and skill. What’s the reason? Are the provided with different education? No. Then why is it that only 20-22% people get the desired level of success. The answer is the gap between learning and implementing. The skill can be attained by the professional only if they are passed through a balanced education system which gives them the platform of both practical and theoretical education.

Conclusion:

Thus education being the foundation of our society should be more structured and life oriented. If proper education complimented with proper training will make a person adaptive to ever changing situations. This will not make them like a “tool box” which has all the tools (education) but is incapable of being without the master (skill).