To reduce tax-related litigation and clarify the tax impact arising from convergence to International Financial Reporting Standards (IFRS), the Central Board of Direct Taxes shall issue guidelines in the form of Tax Accounting Standards. In December 2010, the CBDT had constituted the Accounting Standard Committee to formulate the standards, which will be notified under Section 145(2) of the Income-tax Act, 1961. The committees final report and the draft TAS have been put out for comments from stakeholders and the public.
Some of the provisions in TAS represent a clarification or change in tax position from prevailing practices. They are broadly meant to cover aspects that have historically attracted litigation and address them through uniform principles.
More time for XBRL filings
The Ministry of Corporate Affairs has extended the deadline for XBRL filings for the current year (2011-12) to December 15, 2012, or 30 days from the annual general meeting date, whichever is later.
The extension was widely anticipated for the following reasons:
For FY 2011-12, detailed tagging has been mandated for all notes in financial statements. Accordingly, the time taken to process an XBRL document has substantially increased compared to the previous year.
In order to verify the accuracy of XBRL filings, high-quality validation checks have been incorporated. The ministry has released an updated version of its validation tool.
The ministry emphasised the need to improve the quality of XBRL filings in a letter to the presidents of the Institute of Chartered Accountants of India and the Institute of Company Secretaries of India, calling on them to conduct training for members and issue guidelines to resolve quality-related issues.
A random scrutiny of XBRL filings for FY 2010-11 showed many instances of incorrectly mapped disclosures, inappropriate use of block text tagging when appropriate elements were available in the taxonomy and so on. Such erroneous filing would be considered misleading and ineffective for stakeholders use.
Companies should use the additional time to enhance their understanding of the final XBRL taxonomy, business rules and validation tool. They should review filings and ensure the mappings mirror the audited financial statements.
Right signal for broadcast FDI
The Government has raised the foreign direct investment limit from 49 per cent to 74 per cent in various broadcast services, including direct-to-home (DTH), teleports and cable TV. It has introduced 74 per cent FDI in mobile TV. FDI up to 49 per cent will be approved through the automatic route, anything above that up to 74 per cent will be allowed through the government route. There has been no change in the policy for Headend-in-the Sky (HITS) and television news channels/FM radio, with FDI limits at 74 per cent and 26 per cent respectively.
To level the playing field for content carriers across the broadcast and telecom sectors, the Government has decided to rationalise the methodology of calculating FDI. Accordingly, foreign investment in broadcast sector shall include, in addition to FDI, investment by foreign institutional investors (FIIs), non-resident Indians (NRIs), foreign currency convertible bonds (FCCBs), American depository receipts (ADRs), global depository receipts (GDRs), and convertible preference shares held by foreign entities.
Game changer for insurance
Key proposals to revive growth in the insurance and pension sectors include:
Increase the foreign equity cap in insurance industry and pension fund management from 26 per cent to 49 per cent;
Ease of insurance product approval with Use and File system for the introduction of simple and easily understood products;
Bank to become brokers for offering insurance products from multiple insurers, subject to conditions;
Easing investment guidelines by allowing investment in infrastructure SPVs (special purpose vehicle) floated by any company where the SPV is a wholly-owned subsidiary and the debt instrument is guaranteed by the parent company;
Increasing income-tax exemption for insurance by including some pension products under a separate limit exceeding Rs one lakh;
Capital requirement of health insurance companies at Rs 50 crore, as against Rs 100 crore for general insurance companies.