India Regulatory Brief: New Income Tax Rules to Track Cash Post Demonetization and India, Qatar Sign Cooperative Pacts

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New Income Tax Reporting Rules to Curb Unaccounted Cash

The Central Board of Direct Taxes (CBDT) recently amended certain income tax rules to track the money deposited into bank and post office accounts post the government’s move to demonetize high-value currency. The CBDT has modified Rule 114E of the Income-tax Rules, 1962, under which specified persons under section 285BA of the Income-tax Act, 1961, have to report high-value financial transactions. These specified persons include banks, mutual funds, institutions issuing bonds, and registrars or sub-registrars. They are required to file the Annual Information Report (AIR), containing the details of their high-value transactions, by May 31 of the following year.

Considering the current demonetization, Rule 114E has been amended with effect from November 15 such that cash deposits made during the period from November 9, 2016 to December 30, 2016 –  aggregating to US$ 3662.71 (Rs 250,000) or more – in one or more accounts (other than a current account) of a person shall be reported by a bank and post office. Besides that, reports related to cash deposits during the aforementioned period will need to be provided by banks and post offices by January 31, 2017, instead of the usual AIR filing date, which is May 2017. 

The government has also amended rules related to mentioning the permanent account number (PAN) while depositing cash; individuals have to mention their PAN if their deposits exceed US$ 732.54 (Rs 50,000) in a day or US$ 3662.71 (Rs 250,000) in aggregate, during the period November 9, 2016 to December 30, 2016.

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Government Announces No Tax on Gold Bought from Legal Income or Inherited

The finance ministry announced on December 1 that no tax will be imposed on jewelry or gold purchased out of disclosed income. Nor will it be the case if the jewelry or gold is purchased out of exempted income like agricultural income or out of reasonable household savings or if it is legally inherited. Furthermore, the Taxation Laws (Second Amendment) Bill, 2016 has no new provision for levying tax on jewelry.

The government also communicated that while the existing rules will continue to apply during search operations, there will be no seizure of gold or jewelry assets to the extent of 500 grams per married woman, 250 grams per unmarried woman, and 100 grams per male member of the family. Finally, legitimate holding of jewelry up to any extent will remain fully protected.

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India, Qatar Sign Five Cooperative Pacts, Negotiate e-Visas for Indian Businessmen

Five agreements were signed between India and Qatar on December 3 on the occasion of Prime Minister Sheikh Abdullah bin Nasser bin Khalifa Al Thani’s visit to India. These collectively seek to enhance bilateral relations across economic, political, and security concerns.

Notable among the agreements is an MoU between Qatar’s Supreme Committee for Delivery and Legacy and the Confederation of Indian Industry (CII) that will provide the legal framework for project experts of Indian companies in Qatar, particularly in the infrastructure sector. Additionally, PM Thani also announced the establishment of the Qatar-India Business Council for the private sector so as to promote trade and investment relations between the two countries. Other initiatives by Qatar to strengthen its business environment include easing of work visa procedures and the granting of tourist visas to nationals of an expanded number of countries including India. Towards this, a Letter of Intent was inked between the Minister of State in the External Affairs Ministry M.J. Akbar and Qatar’s Finance Minister Ali Sharif Al-Emadi regarding negotiations on an agreement granting e-Visa for Indian businessmen and tourists.

Lastly, in the sector of ports management, the Qatar Ports Management Company (Mwani Qatar) and the Indian Ports Global Private Limited signed an MoU to facilitate greater collaboration.

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