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Banks to remain open this weekend Black money holders will not get any relief from the existing provision of up to 90 per cent tax on unaccounted income for cash deposits above Rs 2.5 lakh. The finance ministry on Wednesday warned that any mismatch between the deposited sum and income declared would attract up to 30 per cent income tax and 200 per cent of tax liability as penalty. Also, jewellers not furnishing the permanent account number (PAN) of buyers would face action, the ministry cautioned, even as there was rush to buy gold on Wednesday. “It should be clear that it’s no immunity scheme. This (deposit) does not provide any relief from taxation. The law of the land will apply (on source of fund),” Finance Minister Arun Jaitley said.  Explaining it further, Revenue Secretary Hasmukh Adhia tweeted: “We would be getting reports of all cash deposited during the period of November 10 to December 30, 2016, above a threshold of Rs 2.5 lakh in every account. The (tax) department wou...

Robust collections in personal income tax and excise duty The government’s revenue collection in April to October saw indirect tax-mop up growing at an impressive 26.7 per cent while that of direct tax came in at 10.6 per cent.   The total direct and indirect tax collections at the end of October stood at Rs 8.62 lakh crore, more than half the Rs 16.26 lakh crore target for 2016-17. The government is eyeing 12.64 per cent growth in direct tax at Rs 8.47 lakh crore for the current fiscal and 10.8 per cent in indirect tax at Rs 7.79 lakh crore. Direct tax mop-up touched Rs 3.77 lakh crore and indirect tax revenue stood at Rs 4.85 lakh crore during April-October, led by robust collections in personal income tax and excise duty, respectively.   Direct tax revenue includes corporate and personal income tax. Indirect tax takes into account mobilisation from excise, service tax and Customs duty. The gross collection of corporate income tax (CIT) grew at 11.6 per cent while under per...

Pure play e-commerce ,which implies sale of products by an online retailer directly to consumers,would be permitted to have up to 100 percent foreign direct investment(FDI),if a latest proposal of NITI Aayog is accepted by the Union government.But a rider,that products sold through e-commerce must be manufactured in India to gain from the liberalised regime,could play a spoil sport,said analysts.The idea behind such a condition is promoting Make In India,a signature campaign of the Narendra Modi government. At present,FDI is not allowed in ecommerce,but there’s no baron foreign investment in the online market place format.There striction forced American major Amazon totweak its inventory-ledglobal business model and operate a market place platform instead in India.Even home-grown Flipkart,funded by marquee foreign investors,switched from inventory model to market place format to comply with the policy guidelines. In case FDIine-commerce is permitted,as visualised by Niti Aayog and dis...

People with unaccounted cash in Rs 500 and Rs 1,000 currency notes will find it difficult to exchange them at the banks and post offices even though it is allowed, because they would require a valid identity proof and would be caught on camera. “Valid ID would be required to deposit money in bank accounts.Banks would also have video recording of those making deposits,” department of economic affairs secretary Shaktikanta Das said on Tuesday at a joint press conference with RBI governor Urjit Patel. There is a limt of Rs 4,000 on conversion of Rs 500 and Rs 1,000 notes till November 24. Das said this measure was needed for integrity of the economy. “For long, shadow of ghost economy has been a problem. If you want the real economy to grow then the shadow economy has to be wiped out,” he said. “This decision of the government is very bold and decisive,” Das said, adding that the measure was necessary both in medium and long-term. Urjit Patel said the government had observed use of hi...

With demonetisation of Rs 500 and Rs 1,000 currency notes, the government has directed Income-Tax Department to coordinate with all banks and furnish details of individuals who exchange cash amount of Rs 2 lakh and above. “A key reason for scrapping these two currency denominations is to curb the huge menace of fake currency, tackle black money and make India a cashless economy,” said a senior I-T department official. The object was also to make Indians tax complaint, which will eventually lead to higher revenues for government, he added. The tax department has been asked to keep record of every individual along with his/her PAN card details and tally it with the tax filing. Accordingly, the department will impose penalty, which could be between 30 per cent and 120 per cent, depending on the source of income. India has physical cash circulation of Rs 17 lakh crore, of which 88 per cent is Rs 500 and Rs 1,000 notes. Official data suggest that 40 per cent of black money is genera...

Currency notes of Rs.500and Rs.1,000 denomination that are currently in circulation will no longer be legal money and cannot be used as medium of exchange from Tuesday midnight,as Prime Minister Narendra Modi in a surprisemoveclampeddownonblackmoney as well as counterfeit notes in circulation.Instead,the Reserve Bank of India(RBI)will issue new Rs.500 and Rs.2,000 currency notes on Thursday.“The arrangement of buying and selling through existing Rs.500 and Rs.1,000 notes will not be available.These will be just worthless piece of paper,”Modi said in his hurriedly announced address to the nation on Tuesday evening. Existing currency notes of Rs.1,2,5,10 and 100 denomination as well as coinscontinue to be legal and could be used for buying and selling. Economists said the move would immediately press a pause button on transactions that were planned in black money.On the other hand,ordinary transactions such as buying of vegetables from the local market might be hit for a month, the...

Make Advance Rulings binding on Centre, states The GST Council has come up with multiple rates for the goods and services tax — zero per cent, five per cent, 12 per cent, 18 per cent and 28 per cent — and also cess. The burden of commodity taxation, such as GST, will have to be ultimately borne by the consumers. Those who profess simplicity in tax administration will vote for single or dual rates, avoiding disputes. This may be workable in developed countries where population of the poor is small, but not in India. Simplicity in tax administration should not burden the poor and the rich alike. Therefore, there is a need for multiple rates. Different rates of taxation in GST will raise classification disputes, which is unavoidable. We need to look at the following measures to minimise litigation: Adopt HSN (Harmonised System of Nomenclature) classifications for commodities, including Interpretative Rules and Explanatory Notes, as binding. Classification opinions of the CCCN (Customs Co...

Leading banks and housing finance companies are beginning to cut interest rates on home loans. State Bank of India (SBI)’s special rate for women now stands at 9.10 per cent for a loan up to ~75 lakh, while others can get the same for 9.15 per cent. Housing Development Finance Corporation and ICICI Bank have brought their rates (for up to ~75 lakh) down to 9.15 per cent for women borrowers and 9.20 per cent for others. For a new (woman), who plans to take a loan of ~75 lakh for 20 years from SBI, the new rate will translate into a lowering of equated-monthly instalment (EMI) by ~727. The total saving in interest outgo over the entire 20 years will be ~1,74,591 ( see table ). Are you feeling left out? When interest rate cuts are announced, existing borrowers on base rates need to check if they have got the entire of benefit. “If they haven’t, they should reach out to the bank and negotiate. If they do so, the entire benefit usually gets passed on to them. Alternatively, they should get...

Sebi's recent circular plugs many loopholes but some lacunae remain In less than a decade, the Securities and Exchange Board of India (Sebi) has completely changed its position on the importance of credit rating for both equity and debt instruments. In 2007, Sebi had made grading of initial public offerings (IPOs) mandatory. Six years later, in 2013, it made it voluntary. During the past year, it has mandated that fund houses do their own research when investing in debt papers. Ratings from credit rating agencies can only be used as secondary support — a move many chief executive officers (CEOs) of fund houses have applauded. Says the CEO of a leading fund house: “Since we are in the business of making investment decisions, research is the backbone of that. And, if a fund house does not have capability to do so, it should get out of that product line completely.” What led to these decisions? According to Sebi’s observations, IPO grading had not served the intended purpose as inves...

onflicting demands of different stakeholders make tax reform the art of the impossible. While the gainers are silent, the vociferous cacophony of the opponents drowns the voice asking for bold and imaginative reform. It therefore comes as no surprise that the Union finance minister has had to abandon most essential features of the transformational goods and services tax (GST) reform. Bound by the constraint of his 30 colleagues in the GST Council wedded to the legacy system, he is forced to follow the path of mediocrity. The unanimous passage of the Constitution Bill in Parliament had revived the hopes that Prime Minister Narendra Modi could well make impossible possible and deliver a GST that met the triple objectives of fairness, simplicity, and economic growth. However, the proposals of the GST Council meet none of these objectives. The positive impact of GST on economic growth will be a result of the removal of cascading of taxes, i.e., noncreditable taxes on investment and produ...

NEW DELHI: Regulator PFRDA has created a separate asset class under which private sector National Pension System (NPS) sub scribers can invest up to 5% in AIFs and REITs.The new class is in addition to the existing three categories -equity, corporate bond and government debt. With creation of a separate class, private sector subscribers can now nvest up to 5% of funds in commercial mortgage-based securities or residential mortgaged based securities and units issued by Real Estate Investment Trusts (REITs), and asset backed securities regulated by SEBI. They can also invest in units issued by Infrastructure Investment Trusts and Alternative Investment Funds (AIF). The Economics Times New Delhi,07th November 2016