Last fortnight, the finance minister unveiled the much talked about new Income Tax code. Since a lot has been written about the code, I wanted to focus on the findings of a survey that BMR Advisors initiated in partnership with CNBC Network 18 and Mint. Pleasantly, almost 500 respondents spanning across individual taxpayers, businesses representing Indian companies, multinational groups and public sector undertakings responded, suggesting the level of interest. Initial findings reveal that the tax code has received an overwhelmingly positive feedback, particularly in the area of moderate corporate tax rate, probability of reduced litigation, pass through tax status for venture capital investments and overall, a stable and less complex tax regime. Whereas, the feedback doesn&rsquo;t surprise me given the level of effort and commitment that North Block has demonstrated, I would focus on a few soft spots, which necessitates deliberation and possibly review.

Anti-tax avoidance: Made in India

Business Standard

Even as the government accepts the revised report of the technical expert group on patent law issues, headed by RA Mashelkar, a key conclusion of the group has run into fresh controversy over the reasoning on which it is based. A globally-acknowledged Argentine patent expert, Carlos M Correa, who has been quoted in the report to support the group&rsquo;s contention that patenting cannot be limited to new chemical entities, has disclosed that his views have been misinterpreted.

Dump the Mashelkar report

India has entered into various agreements (also called conventions or treaties) with different countries for avoidance of double taxation and prevention of fiscal evasion. Such agreements also aim to encourage mutual trade and investment between the two countries, besides bringing an environment of certainty in matters of tax affairs in both countries.

Tax code hits at tax treaties

Budget 2009 has effected fundamental changes in the provisions relating to service tax on activities carried out beyond the Indian landmass but within the limit of 200 nautical miles therefrom, which comprises the Exclusive Economic Zone (EEZ) of India. Certain residual issues remained even thereafter and these have very recently been addressed through appropriate amendments last week in the relevant provisions. This article addresses these matters in some detail.

Taxation of services in the Exclusive Economic Zone

The Supreme Court last week stated that litigation on interpretation of CENVAT Credit Rules had arisen on account of conflicting decisions given by various benches of Customs, Excise and Service Tax Appellate Tribunal, the reason being that the rules had not been properly drafted. The court said so while allowing the appeals of Commissioner of Central Excise in several cases, led by Gujarat Narmada Fertilisers Ltd. In this case, fuel was in captive use for fertiliser production.

Confusion in CENVAT Credit Rules

In the last few columns, I had put forward a number of suggestions that can be considered while formulating the new Foreign Trade Policy. Now that it has been announced that the commerce minister is expected to unveil the new Foreign Trade Policy on August 27, 2009, here are a few more suggestions.

Remove DTA restrictions to counter slowdown

Borrowers can move civil courts to stall recovery proceedings as they have few other choices.

M J Antony: Debt collection pangs

When paint companies were asked about their plans to phase out lead, three responded by doing so in months.

Sunita Narain: New coat of paint

Sugar barons ought to be a happy lot. Sugar prices have risen steadily to over Rs 30 a kg as demand threatens to outstrip supply by a huge margin. It is more or less certain that the shortage will persist for at least one more year. Most of them have mills in Uttar Pradesh where there are no arrears of past payments to sugarcane farmers. Consequently, share prices of sugar companies have shot up in the last six months. Most promoters have seen their wealth climb 50 to 60 per cent.

Bhupesh Bhandari: Bitter-sweet times

Viv Richards in his autobiography complains of an Indian peculiarity that many foreigners visiting the country are rather foxed by. It has to do with our concept of &ldquo;cocktails and dinner&rdquo;, at least as prevalent in north India. Unlike in the West, where formal sit-downs involve civilised drinking with dinner (and conversation), in India, these affairs are known to stretch on and on, with the gentlemen downing copious quantities of &ldquo;Scotch&rdquo;, stuffing themselves silly with cardiologist-phobic snacks, before the dinner is finally brought out. By then it is usually past the witching hour and no one can taste anything. As Richards vividly notes, in one instance, his hosts, having tanked up, clearly forgot their duties and rushed to the buffet table as soon as dinner was announced, quite forgetting that there were starving guests too to take care of! The West Indies team was left to fend for itself.

Be polite, have a bite

Economists can serve their profession (and the policy world) better if they don&rsquo;t take their findings and formulae too seriously or lose sight of the big picture.

Pranab Bardhan: Economics to blame?

The Battle of Tannenberg in August 1914 saw two Tsarist Russian armies destroyed by a German force about half as large. The credit for brilliant German tactics is generally apportioned to staff officers Erich Ludendorff and Max Hoffman, rather than to the commander, Field Marshall Paul Von Hindenberg. Years later, Hindenberg said, &ldquo;I don&rsquo;t know who was responsible for the victory but I would have been the one responsible for defeat.

Devangshu Datta: Institutionalised ignorance

A toxic brew of subsidies and loan waivers has ensured farmers become dependent upon government dole instead of reacting to market forces, says Shreekant Sambrani.

Shreekant Sambrani: Drought of agricultural policies

Assam has another serious health concern to tackle. More than 40 people have died and more than 100 have been affected in the last two months due to encephalitis. Worst hit are some of the districts in Upper Assam. Two types of the disease &mdash; Japanese encephalitis (JE) and Acute Encephalitis Syndrome (AES), have been doing the rounds in the north-eastern state since July. The outbreak, most likely, is a result of stagnant rainwater, which allows the culex mosquito, the carrier of the disease to breed. JE, a major health problem in Assam, spreads through water bodies, and pigs are also said to be carriers. Fields are flooded with water for rice cultivation during the monsoon, which helps the disease to spread rapidly. In 2007 and 2008, in Assam, the disease caused more than 100 deaths each year.

Fighting encephalitis

The prolonged fasting during the holy month of Ramzan sees many participants refrain from eating or drinking anything between dawn and dusk.

Fit and fast, spiritually

In the last few weeks, several of the greats in the creative arts have passed away, leaving not just a strange vacuum but also the question of whether the next generation has people of similar stature to replace those that have gone. Habib Tanvir, the doyen of Indian theatre, Gangubai Hangal, the legendary vocalist, Ali Akbar Khan, the greatest sarod player, Tyeb Mehta, most admired painter, and now Bhaskar Chandawarkar, a leading personality of theatre music: each one has been a pioneer in his or her field and lived a lifetime devoted totally to their art.

Music that provoked

What Dharamsala is to north India, Bylakuppe is to the south of the country. A heady mass of green, the four-decade-old Tibetan settlement of Bylakuppe is a little place, fortunately quite removed from the touristy frills of commercial enterprises, motels and eateries. Instead, what you get to savour are fresh, lush greens and a number of pretty monasteries.

Another Little Tibet

Stock prices are leading indicators. They bottom and start rising before the real economy does. Markets also peak earlier than the gross domestic product (GDP) growth rate. A recent example is India in 2008-09. The stock market peaked in January 2008 (last quarter 2007-08) but GDP growth declined only in the second half of 2008-09. Of course, different sectors led and lagged by different amounts. Auto stocks peaked before the Nifty. Real estate peaked after the Nifty.

Going against the crowd

Having decided to present a non-reformist Foreign Trade Policy (FTP), Commerce Minister Anand Sharma has managed to get quite a few incentives for exporters from the finance ministry. The major one among these is the zero-duty Export Promotion Capital Goods (EPCG) scheme.

Quite a few incentives for exporters under FTP

A strong derivatives carryover trend and short-covering from FIIs triggered an upside breakout during settlement week. Sentiment seems to be quite bullish. But a short-term correction could be around the corner.

Bullish within a narrow range

Emerging-market equity funds received net inflows in the past week, rebounding from the biggest weekly outflow of the year, on speculation a global economic recovery will boost demand for commodity exports.

Growth prospects lure EM funds

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