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Banks to bear extra cost due to 18% GST on priority lending certificate Banks have to give 40% of net lending to priority sector such as agriculture, micro enterprises, weaker sections, etc A recent circular by the indirect tax department to impose 18 per cent goods and services tax (GST) for certificates issued on excess priority sector lending by banks would increase lenders’ cost, as these are not eligible for full input tax credit. The Central Board of Excise and Customs (CBEC) recently clarified that Priority Sector Lending Certificates (PSLCs) would not be treated as securities but as goods. Hence, would draw an 18 per cent tax. PSLCs are a tool for promoting priority sector lending obligations. Banks have to give 40 per cent of net lending to priority sector such as agriculture, micro enterprises, weaker sections, etc. If a bank gives an excessive amount of priority lending, it will earn these certificates. Banks falling short of the target would be required to buy these...

Rent on electricity meter comes under GST, move may draw criticism The department also clarifed that retreading of tyres is a service, against the popular notion that it is both goods and servicesIndirect tax department has clarified that rent on electricity meter draws goods and service tax (GST), a development which is likely to draw criticism from the industry. The Central Board of Excise and Customs (CBEC) said even though electricity is exempted from GST, rent on electricity meter is not. Pratik Jain, partner PwC, said there was a contrary circular under the service tax laws. “Industry is likely to pitch in for an exemption on these ancillary charges else consumers will have to bear the additional burden,” he said. He said industry view is that it should not be taxable and should be treated as an incidental to transmission and distribution of electricity. Besides, GST will also be imposed on application fee for releasing connection of electricity; testing fee formeters, tr...

India To Retain Its Position As Fastest Growing Economy In Coming Decades: Arun Jaitley Finance Minister Arun Jaitley today exhorted confidence that India will retain its position of fastest growing economy in the coming decades like China did in the last three decades."The way the situation in the world is changing there is a great opportunity that has come in the way of India. The world keep facing its challenges and (in) the last  few years India has started leaving its footprints behind. "And when India is leaving its footprints behind, becoming one of the faster economies in the world, it obviously means that the opportunity for India and Indians is going to increase," Mr Jaitley said while addressing the 17th convocation of University of Jammu.The university conferred 185 degrees to candidates, who have qualified for the award of doctor of philosophy in 2015-16 up to December 31, 2016, besides 59 students were awarded gold medals, cash awards and certificates...

RBI gets tough on MNC banks on priority sector lending The RBI move, directed at foreign banks with over 20 branches will impact the likes of Standard Chartered, Citi and HSBC and will come into force from the next financial yearThe Reserve Bank of India (RBI) has further tightened the priority sector lending (PSL) norms for foreign banks by directing them to mandatorily create sub-targets so that they lend a portion of their loans to small and marginal farmers as well as micro enterprises from April. The move, directed at foreign banks with over 20 branches will impact the likes of Standard Chartered, Citi and HSBC, which much higher branch presence, and will come into force from the next financial year. The PSL norms mandate foreign banks to eventually lend 40% of their total loan book to the priority sector, such as agriculture, rural infra, and medium, small and micro enterprises (MSMEs) among others from April 2020.In a notification over the weekend, RBI has said a sub-tar...

RBI to bring interoperability for e-wallets within the promised time frame The Reserve Bank of India (RBI) is likely to stick to its target of making digital wallets interoperable by April despite allowing payment companies two additional months to comply with its customer verification requirement, said two bankers aware of the matter RBI extended its deadline to February for digital wallet providers to meet its full know-your-customer (KYC) norms, which it deems as necessary to eliminate any potential for misuse before allowing people holding different wallets to transact.“Though there are a few details that need to be worked out, the initial timeline promised by RBI should remain the same,” one of the bankers said on condition of anonymity as the matter is still under the purview of RBI. “We could see the regulator clearing wallet interoperability in the coming weeks ”As per RBI’s master direction released in October, digital wallets were to become interoperable within six mo...