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Report: Foreign Service Recipients Account for Majority of Tax Evasion Cases

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Apr. 26 – Local firms receiving services from overseas firms accounted for a quarter of service tax evasion during the period 2008-09, according to a Comptroller and Auditor General (CAG) report.

Current tax regulations dictate that the receiver of services in India must pay service tax for services received from a non-resident with no office in the country.

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Ford to Expand Figo Car Production in India

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Apr. 23 – Ford plans to expand production of the Figo compact car in its Chennai plant in response to strong consumer demand.

The American car company is planning to add 700 more people to its workforce. “We do need to ramp up production to cope with the increasing demand for Figo and so we are starting a second shift from the end of June at our Chennai plant. This will increase our production capacity of the small car by 30-40 percent,” Ford India President and Managing Director Michael Boneham said in a statement.

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India to Impose Minimum 25 Percent Public Holding Rule for Listed Companies

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Apr. 23 – India’s Ministry of Finance said that it will likely implement a minimum 25 percent public holding rule for all listed companies next month.

Currently, only future public issues are required to follow the 25 percent rule but now existing listed companies may be asked to comply as well. The minimum public holding rule will apply for both private and public sector companies. Official sources told The Economic Times that big public issues could be exempted from the requirement as the market may not have an appetite for such big issues.

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IMF: India to Grow by 8.8 Percent, Inventory Demand Growing

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Apr. 22 – The International Monetary Fund (IMF) says strong domestic demand will support recovery in India when total world output increases by 4.2 percent and its  economy grows by 8.8 percent this year.

The agency has revised its January estimates for India by 1.1 points for 2010 and 0.6 points for 2011 in its just released World Economic Outlook entitled “Rebalancing Growth.” In China, GDP growth is expected to exceed government estimates of 8 percent growth for 2009 and is likely to be near 10 percent both this year and next year. Brazil, China and Indonesia are reporting resilient growth in their economies compared to weak recovery in more developed nations.

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India Forecast to Become Largest Direct-to-Home Market by 2012

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Apr. 22 – India is forecast to become the biggest direct-to-home market globally by 2012, based on an annual study made by information services provider Media Partners Asia (MPA).

The Indian market is expected to surpass the U.S. market in terms of size with its projected subscriber base expanding from 17 million last year to 45 million by 2014 and 58 million by 2020. The country’s pay-TV industry sales will be worth US$18.5 billion in 2010 and US$12.1 billion by 2014.

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India Raises Interest Rates

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Apr. 21 – India’s central bank raised interest rates for the second time in a month to curb double-digit inflation spurred on by the economic stimulus plan.

Inflation rates rose to 9.9 percent in March compared to 0.5 percent in September, the highest rate in 17 months. The Reserve Bank of India raised the repo rate, or the rate at which the central bank lends to commercial banks, from 5.25 percent to 5 percent.

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3G License Bidding Reaches US$1.36 Billion

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Apr. 20 – On the eighth day of India’s ongoing auction of third generation (3G) licenses, bids increased by an estimated 73 percent from the original base price set by the government to Rs.60.7 billion, or about US$1.36 billion.

“Earlier, I said the auction could fetch Rs. 30,000-35,000 crore, but now I am optimistic that it may go up,” Communications and IT Minister A. Raja told The Business Standard.  The auction is forecast to bring the government at least US$8 billion with the process lasting several weeks.

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India to Seek Tax Avoidance Agreements with Nine Territories

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Apr. 20 – India is considering negotiating tax treaties in nine territories to help curb tax avoidance.

The nine identified territories include: Cayman Islands; Bermuda; British Virgin Islands; Gibraltar, all British overseas territories; Guernsey; Isle of Man; Jersey, all British crown dependencies; Netherlands Antilles, an autonomous part of the Kingdom of Netherlands; and Macau, a Special Administrative Region of China.

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