Notification And News

GST
 FM may clear sales tax compensation if states support GST
Finance Minister P Chidambaram is likely to drive a hard bargain while deciding on central sales tax (CST) compensation to states. After the empowered committee of state finance ministers returns from its study tour of Canada and Japan this week, Chidambaram is likely to seek states’ support for the Goods & Services Tax (GST) in return for a CST compensation package from the Centre. Finance ministry officials told Business Standard the Centre would provide the compensation to states only after an assurance that they would cooperate in rolling out GST. They added the Centre didn’t have the fiscal space to provide thousands of crores of rupees as CST compensation; if it was willing to accommodate states’ demands, they should reciprocate.

Finance
Can't use Kingfisher brand as collateral, RBI tells banks
The Reserve Bank of India (RBI) has asked banks not to treat Kingfisher Airlines’ brand as collateral since it is intangible. This is because the loan has turned non-performing for most of the banks. The RBI’s rejection means lenders will have to treat their exposure to Kingfisher as unsecured, for which the provisioning requirement will go up substantially.Loans to the airline have become non-performing for a host of banks, including State Bank of India, Punjab National Bank, Bank of Baroda, Bank of India and Central Bank of India, among others. Since the loan became sub-standard — the first category of NPA — banks had provided for 15 per cent of the loan value, assuming the asset was secured with the brand being treated as collateral. According to bankers, the RBI has reminded them that for provisioning purposes, assets backed by intangible securities cannot be treated as secured. For unsecured assets, the provisioning requirement is 25 per cent in the sub-standard category.

Acoounting Standard

 From 2012-2013 onwards, companies may have to file their income-tax return as per the standards laid down by the Central Board of Direct Taxes (CBDT). The new standards will reduce the discretion which is currently available with the taxpayers under the standards prescribed by the Institute of Chartered Accountants of India (ICAI), thus bringing down chances of litigation with the tax department. The Tax Accounting Standards, however, will be applicable only to computation of taxable income under the Income Tax Act. A CBDT committee, in its draft report submitted recently, has suggested that separate books of account are not required to be maintained under the Tax Accounting Standards, thus reducing the compliance burden on businesses