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The Union cabinet on Wednesday approved a draft ordinance to additionally empower states and allow industries to pay wages digitally, through direct bank transfers or by cheque. At present, the 80-year-old law only permits cash payments. “The government proposes to bring an amendment to Section 6 of the Payment of Wages Act, which will further provide crediting the wages in the bank account of the employees or payment through cheque along with the existing provisions of payment in current coin or currency notes,” a cabinet statement read. A government official said on condition of anonymity that the cabinet has forwarded the draft ordinance to President Pranab Mukherjee for his assent. The draft ordinance proposes changes to Section 6 of the Payment of Wages Act of 1936. The section sought to be amended says that “all payment of wages should be made in cash, with a provision enabling employers to obtain written permission of the worker to pay either by cheque, or by crediting the wage...

Mumbai: Amid rising decibels of the demonetisation debate banks are silently preparing for an upcoming event: Ind AS 109 or Indian Accounting Standard, a global accounting practice that lenders are mandated to adopt that may lead to initial credit losses. Banks including private sector ones like ICICI, HDFC and Axis are actively working on this as they have submitted estimates for such losses to Reserve Bank of India, which is now expected to come out with fresh guidelines on computation of expected credit losses (ECL), a key to banks’ future earnings, three sources familiar with the matter told ET. “The provisioning requirements under IFRS 9 (International Financial Reporting Standard) may be higher than what you are seeing today because we derive numbers on incurred losses rather than expected losses,” said Jairam Sridharan, CFO, Axis Bank. “There will be an incremental provisioning requirement which will result in higher capital necessity or banks capital ratios will go down becaus...

NEW DELHI: Niti Aayog vice-chairman Arvind Panagariya called for a simpler tax regime, elimination of exemptions and precise taxation rules to minimise discretion to prevent the accumulation of black money and build on the benefits that will accrue from demonetisation. “To discourage the creation of black money and curb corruption, we will also need to tackle election funding,” Panagariya told ET in an interview, backing the Election Commission’s call for a cap on anonymous donations at Rs 2,000.  “There is also a proposal for state funding of elections, which may be considered.” Tax reforms will also help lower rates, encouraging savings and boosting revenue through greater compliance. He said demonetisation is likely to bring significant gains in tax revenue, which may allow the government to raise expenditure without violating any of its fiscal goals. Panagariya said without data it may be difficult to estimate impact of demonetisation on the economy in current year but “we wil...

RBI withdrew rules that required bank customers to make deposits of above Rs 5,000 in old notes Facing intense criticism, the Reserve Bank of India (RBI) on Wednesday withdrew rules that required bank customers to make deposits of above Rs 5,000 in old currency notes at one go and only after satisfying officials with reasons for not doing so earlier. In the modified circular on its website on Wednesday afternoon, the central bank said two sub-paragraphs of the original circular “will not apply to fully KYC compliant accounts.” This means there would be no restriction on cash deposits — neither on the amount, nor on the number of times money could be deposited. The latest notification is the 60th from the North Block-Mint Road combine in the past 43 days. The central bank faced a barrage of criticism on social media throughout the day, while many said they had trusted the prime minister and the finance minister, who had advised them to not extend queues outside banks and ATMs, as they ...

The Goods & Services Tax (GST) Council will meet on Thursday and Friday to take up drafts of the model GST, integrated GST and states' compensation Bills.   The aim will be to address the contentious issue of administrative turf  between Centre and  states.  Tax experts say this will be difficult. The Centre might push a cross-empowerment model of random choosing and division of five% of the assessees between Centre and the states, using a computer programme. The parameters on which the assessees could be chosen would be in-built in software written for this purpose.   However, states want sole control over assessees up to Rs 1.5 crore of annual turnover.   Naveen Wadhwa of Taxmann thinks a solution could be found outside the suggested models. He says states could have sole control over assessees up to Rs 1.5 crore of turnover if their supplies are intra-state; above that, the Centre should. If supplies are inter-state, the Centre should have control o...