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    December 31, 2013
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    Service tax seminars offering direct clarification from senior tax administrators, covering compliance, cenvat, reverse charge; register with fee.
    ASSOCHAM is organising national seminars in New Delhi, Chennai and Chandigarh to clarify operational service tax issues through direct interaction with senior tax administrators and experts. Sessions will address definition of service, Cenvat Credit Rules, prosecution and arrest powers, negative list and declared services, place of provision, reverse charge mechanism, audits and Point of Taxation issues. Single-day events have specified fees (inclusive of refreshments and lunch), a 10% group discount, mandatory prior registration, payment details and limited seating.
    December 26, 2013
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    Coal supply allocation extended for delayed power project units, with additional MoU-based deliveries subject to periodic review.
    Approval continues coal supplies to nine thermal power units delayed in developing linked coal blocks: admissible tapering linkage quantities will be supplied under Fuel Supply Agreements while additional interim quantities will be supplied on Memorandum of Understanding basis subject to availability, limited to the affected period or until block production starts, and subject to annual reviews by the ministries and planning authority.
    December 25, 2013
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    Border trade facilitation: land customs stations to operate daily with extended hours and aligned holidays easing cargo flow.
    Land Customs Stations at Petrapole and Benapole will operate seven days a week with extended Customs hours and aligned weekly holidays to facilitate export cargo movement, permitting trucks to reach the importing country's LCS for discharge. Coordination between Commissioners of Customs and trade stakeholders will address congestion causes-road conditions, traffic, and parking-while construction of an Integrated Check Post at Petrapole aims to upgrade infrastructure and streamline cross-border trade.
    December 23, 2013
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    Increase in basic customs duty on natural rubber to protect growers by curbing import-driven price declines.
    Increase in basic customs duty on natural rubber instituted to protect growers by raising the import charge applicable to imported rubber, thereby seeking to check import driven domestic price declines through amendment of the customs duty schedule via formal notification.
    December 20, 2013
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    Continuation of sugar export without quantitative restriction signals a stable, long term export policy for agricultural trade.
    The Cabinet Committee on Economic Affairs approved the continuation of sugar export without quantitative restriction due to surplus domestic availability; the decision imposes no financial obligation on the Government and is intended to signal a stable, long term export policy while removing quantitative controls on sugar shipments to facilitate exporter access.
    December 19, 2013
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    Minimum export price reduction for onions restores export competitiveness and helps stabilise domestic market prices.
    Reduction of the Minimum Export Price (MEP) for onions to USD 350 per metric tonne is an IMC determined regulatory adjustment taken to balance domestic supply and export competitiveness. The IMC, constituted under the Cabinet Committee on Prices and chaired by the Joint Secretary, Department of Commerce, sets MEPs by assessing arrivals and modal wholesale prices in key markets. After prior increases to restrict exports during a supply shock, the IMC reduced the MEP in response to improved arrivals and falling wholesale prices to stabilize domestic prices while supporting farmers and making exports more competitive.
    December 18, 2013
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    Extension of validity for SEZ approvals granted to address project delays and adverse business conditions.
    The Board of Approval for SEZs granted discretionary extension of validity of Letters of Approval to SEZ developers after case-by-case consideration of delays attributed to adverse business climate, statutory and state approval delays, environmental clearance delays, weak demand for space, and changes in fiscal incentives. The release records 574 formal approvals, 391 notified SEZs and 175 operational SEZs, and states that 115 developers were granted extensions between 1.4.2012 and 30.11.2013.
    December 18, 2013
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    Export market diversification via the Focus Market Scheme as European exports recover and US trade remains stable.
    The Government advances export market and product diversification via the Focus Market Scheme targeting Africa, Latin America, CIS and ASEAN; reported exports show stable shipments to the USA while European exports fell in 2012-13 due to global economic slowdown and sovereign debt pressures but improved in 2013-14, with the first seven months of 2013-14 exceeding the corresponding period of the prior year.
    December 18, 2013
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    Customs protection for poppy seed cultivators maintained through duty and tariff floor, shaping import costs and valuation.
    The Government protects domestic poppy seed cultivators by imposing an ad valorem customs duty and by prescribing a minimum tariff value for imports; these concurrent measures raise the cost of imported white poppy seeds and establish a valuation floor for tariff assessment. The Ministry reports current applied rates and records recent import quantities and values, with the latest year-to-date figures marked provisional.
    December 18, 2013
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    Monetary policy stance: repo rate unchanged, conditional intervention if persistent headline inflation or food-price pass-through continues.
    The Reserve Bank left the policy repo rate and cash reserve ratio unchanged while underscoring a data-dependent, conditional policy stance to address persistent headline inflation driven chiefly by food and housing components. Liquidity management measures-term repos, swap facilities and targeted refinance lines including support for small industry finance-were used to ensure credit flow. The Bank noted improving external resilience from swap inflows and narrower trade deficits but warned that if food-price moderation and other disinflationary signals do not materially reduce headline inflation or inflation excluding food and fuel, it will act, including on off-policy dates, to stabilise inflation expectations.
    December 17, 2013
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    Per Capita Income measures combine investment, manufacturing policy and inflation controls to protect and raise household incomes.
    Per Capita Income is to be increased through coordinated growth and income-support policies: investment facilitation, infrastructure financing, FDI liberalisation, financial sector and fiscal reforms, implementation of a National Manufacturing Policy, and employment and rural development schemes; concurrently inflation-control measures - monetary tightening, fiscal consolidation, trade and supply interventions, commodity controls and targeted foodgrain distribution - are employed to stabilise prices and protect real incomes.
    December 17, 2013
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    Public stockholding protection: interim WTO mechanism preserves developing countries' flexibility for food security and procurement policies.
    India contested treatment of procurement for public stockholding under the WTO Agreement on Agriculture, arguing that administered price purchases from subsistence farmers should not be treated as unlawful support given the outdated reference price calculation. Through coalition building, India secured an interim protection from WTO challenges for public stockholding programmes for food security until a permanent solution is negotiated, insisted this protection be non country specific and enduring until a permanent agreement is reached, and obtained commitment by Members to continue work toward a permanent solution.
    December 13, 2013
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    Inflation-indexed bonds proposed to protect household savings from inflation and promote channeling into financial instruments.
    Household gross domestic savings rose in absolute terms but declined as a share of GDP due to high inflation reducing real returns; the Government has used fiscal, administrative and monetary measures-including trade and tariff adjustments, stock limits, suspension of certain futures trading, targeted domestic food allocations, the RBI's anti-inflation stance-and proposed inflation indexed bonds to protect savers and channel household savings into financial instruments.
    December 12, 2013
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    Trade facilitation: DRI urged to adopt modern technology and interagency information sharing to strengthen intelligence outcomes.
    The Finance Minister directed the Directorate of Revenue Intelligence to prioritise trade facilitation by adopting the latest technology for intelligence gathering and analysis, reforming recruitment, training and deployment to obtain suitably skilled personnel, and eliminating silos through active information sharing with other agencies using existing data platforms such as PAN, excise and service-tax registries, capital market depositories and insurance records to improve targeting and investigative effectiveness.
    December 11, 2013
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    Trade policy vision aims to position India in global trade through targeted strategies and export facilitation.
    The government sets a long-term Trade Policy Vision employing a Strategy Paper, Strategic Plan and Foreign Trade Policy to boost export competitiveness through schemes for export infrastructure, market assistance, export risk coverage, and institutional capacity building, while engaging private stakeholders and addressing infrastructure, cost, technology and skill constraints.
    December 11, 2013
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    Trade deficit reduction with China through export diversification, market access negotiation, and exporter promotion initiatives.
    Policy to reduce the trade deficit with China focuses on diversifying exports toward manufactured goods, addressing non tariff barriers through market access negotiations at ministerial and technical fora, and promoting exporter engagement in Chinese trade fairs and B2B links. Export promotion schemes such as the Market Access Initiative and Market Development Assistance support these efforts, set against ministerial coordination in a Joint Group and statistical evidence of a large bilateral deficit with a marginal recent decline.
    December 9, 2013
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    Trade promotion: India targets expanded exports to Africa through sectoral outreach and institutional business engagement.
    India aims to expand bilateral trade with African countries by promoting identified high potential export sectors-transport equipment, pharmaceuticals, machinery, plastics and linoleum, and textiles-using trade promotion events (India Show exhibitions, trade fairs, buyer-seller meets), joint trade committee meetings and bilateral dialogues, supported by the India Africa Forum Summit framework and the India Africa Business Council to advance trade, investment, technology transfer, capacity building and SME development.
    December 9, 2013
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    Relaxation of SEZ norms permits extended subcontracting to domestic units and eases area requirements to boost investment.
    Amendments to the SEZ Rules relax operational requirements: large manufacturing SEZ units (except gems and jewellery) may subcontract production to the Domestic Tariff Area for up to three years subject to conditions; clarification of asset-transfer norms on unit exit; reduced minimum area requirements, reformed vacancy norms, sectoral broad-banding and a graded minimum land scale for flexibility and optimal land utilisation; and removal of minimum land area for IT/ITES SEZs coupled with graded built-up area requirements based on city IT density.
    December 9, 2013
    Show AI Summary
    Extension of SEZ approval validity available where implementation delays arise, with the Board granting extensions after case-by-case review.
    Rule 6(2)(a) of the Special Economic Zones Rules, 2006 fixes a three-year validity for letters of approval to SEZ developers, subject to extension by the Board of Approval on application. Developers requested extensions due to adverse business conditions, statutory or environmental clearance delays, low demand for SEZ space, and changes in fiscal incentives; the Board granted extensions after case-by-case consideration, as reflected in a state-wise tally of approvals extended.
    December 6, 2013
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    Capital account management: regulatory complexity under FEMA requires consolidation to clarify permissible transactions and authorised persons' duties.
    The regulatory regime under FEMA focuses on facilitating external trade and payments while concentrating regulatory attention on capital account transactions; successive notifications and capital account measures used to manage exchange rate volatility have produced complexity and time inconsistency. Authorised persons bear substantial responsibility to judge transaction permissibility, creating compliance burdens amid frequent amendments. Key issues include clarifying treatment of FDI versus portfolio investment, addressing financial innovation and offshore derivatives (including NDFs), and considering consolidation or a shift toward principle based regulation to provide clearer, predictable rules without compromising stability.

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      Customs, DGFT & SEZ

      Statement of Shri Anand Sharma, Minister of Commerce and Industry in Parliament on the 9th Ministerial Conference of WTO at Bali

      December 17, 2013

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      I attended the 9th WTO Ministerial Conference at Bali from 3 to 7 December 2013. The 2001 Conference at Doha had mandated a comprehensive development agenda for multilateral trade negotiations. Ever since the WTO was established in 1995, Member States were unable to arrive at a consensus on any multilateral agreement. The Bali meet was the first occasion where members were able to reach an agreement.

      In the backdrop of the global economic downturn of 2008 and the inability of the membership to reach consensus on the full Doha Development Agenda, it was decided at the 8th Ministerial Conference in 2011 to focus on areas where convergence was possible. Accordingly, after deliberations amongst members in 2012, it was agreed that members would strive for an agreement on Trade Facilitation, a few areas in agriculture, development issues and issues of relevance for Least Development Countries (LDCs). Considering the limited sectoral agenda set out for the Bali Conference, India decided to bring the issue of procurement of food grains from subsistence farmers for public stockholding for food security firmly on the negotiating table.

      The existing Agreement on Agriculture does not bar public stockholding programmes for food security. However, if food for such programmes is acquired at administered prices and not at market prices, then it is deemed as support to farmers. WTO rules negotiated in the Uruguay Round provided that all such support has to be kept within a limit of 10% of the value of production of the product in question. However, rules for calculating the support are based on a reference price of 1986-88, without taking inflation into account. India, as part of a G-33 coalition of developing countries proposed an amendment of the WTO’s Agreement on Agriculture to change these rules. The proposal is not new. Similar suggestions were tabled by other groups of developing countries. It was also a stabilized part of draft agricultural negotiating text of December 2008.

      The G-33 proposal met with strong resistance. India, however, stood firm and through sustained efforts, managed to bring the US, EU, Australia, Canada and others to the negotiating table. The G-33 suggested several alternatives including inflation adjustment of administered prices. However, the developed countries effectively blocked any discussion on such proposals.

      The counter proposal made to the G-33 was a two year due restraint mechanism to provide temporary protection from challenge through the WTO Dispute Settlement Process, with a number of conditions attached. This would have rendered the mechanism entirely ineffective and have implications for India’s policies on procurement and public distribution including the implementation of National Food Security Act passed by Parliament.

      India’s consistent position in the WTO has been that matters pertaining to livelihood, food security and rural development are of vital importance. Special and differential treatment is a must for developing countries.

      In accordance with the decision of the Cabinet, in my plenary statement, I made it clear that the issue of food security was non-negotiable for India as it directly relates to the livelihood concerns of millions of subsistence farmers and food security of the poor and vulnerable sections of the society. I underscored that an interim solution cannot be a temporary solution nor be terminated and must remain in place till such time that a negotiated permanent solution is in place. I also stated that without a satisfactory decision on food security, we considered the Bali Package as lacking in horizontal balance and would, therefore not be able to lend our support to it.

      Though a concerted bid was made to isolate India at Bali, our principled position resonated with the developing countries of Africa, Asia and Latin America including South Africa, Mauritius, Brazil, Egypt, Nigeria, Kenya, Zimbabwe, Namibia, Uganda, Argentina, Tanzania, Cuba, Bolivia, Ecuador, Venezuela, Nicaragua, Sierra Leone and Nepal. The African Caribbean Pacific (ACP) Group, the LDC group and the African Group of countries also lent support to India’s view that a solution had to be found to the problem raised by India.

      We were able to build a broader coalition of support forcing US and EU to cede ground. India declined a country specific carve out and insisted that protection must be available to all developing countries. After intense negotiations over 3 days, a few hours before the Conference was scheduled to end, a revised draft text was placed before the membership, which addressed our core concerns. It provides for an interim mechanism to be put in place and to negotiate for an agreement for a permanent solution for adoption by the 11th Ministerial Conference of the WTO. In the interim, until a permanent solution is found, Members will be protected against challenge in the WTO under the Agreement on Agriculture in respect of public stockholding programmes for food security purposes. It unambiguously stated that the interim solution shall continue until a permanent solution is found. By implication, India will have the flexibility of providing support to its farmers without the apprehension of breaching its WTO entitlements. It has also effectively led to a commitment from Members of the WTO to work on a permanent solution as part of a post-Bali work programme. Now we will be preparing for negotiations for arriving at a permanent solution. Countries which donot run such public stockholding programs also retain the flexibility to introduce them if they so wish to.

      I would also like to make it clear that nothing in the aforesaid agreement impinges on our food security program for the poor and vulnerable sections of society, which is very much part of our sovereign space. This has never been part of negotiating agenda in WTO nor can ever be allowed to be.

      On Trade Facilitation, our proposals on Customs Cooperation and those relating to agricultural exporters found acceptance amongst the membership. The Trade Facilitation Agreement which was also endorsed by India is basically aimed at greater transparency and simplification of customs procedures, use of electronic payments and risk management techniques and finally faster clearances at ports, all of which would reduce transaction costs and bring about enhanced trade competitiveness. Many of these have already been implemented by India as part of our broader efforts for liberalization and simplification of procedures.

      I would like to conclude by saying that the Bali Ministerial meeting was a landmark one in the history of WTO. It re-affirmed India’s leadership role amongst the developing countries and also demonstrated our diplomatic ability to build consensus. We were able to arrive at a balanced outcome which secures our supreme national interest. India was key to arriving at a breakthrough and shaping the first agreement since the creation of the WTO 18 years ago. India’s constructive approach in negotiations was acknowledged by all member states. We have managed to retain the centrality of the development dimension in the Doha Round.

      A positive outcome at Bali has also strengthened the credibility of the WTO as an institution. We have been able to give a clear signal to the world that while India is prepared to engage, it will not accept an un-balanced agreement. It will under no circumstances compromise the fundamental issues pertaining to food security, livelihood security and the welfare of its subsistence farmers and poor.

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