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Fiscal deficit target of 3.2% realistic,he says Finance Minister Arun Jaitley on Friday said an institution to tackle non-performing assets (NPAs) of banks and over-leveraged companies could not be funded by the government alone through budgetary support.He,however,did not dismiss the idea of the body mooted by the Economic Survey. Interacting with representatives of industry chambers,two days after he tabled the Budget in the Lok Sabha, Jaitley said he would not like to get into a situation where eventually NPAs become a government issue and the whole thing has to be supported out of the Budget. The Economic Survey for 2016-17 stated the country has been trying to solve its‘Twin Balance Sheet’problem — overleveraged companies and bad-loan encumbered banks,alegacy of the boom  period around the Global Financial Crisis.So far,there had been limited success,it said. It suggested a centralised Public Sector Asset Rehabilitation Agency (PARA),which could take charge ofthe largest, mos...

Airtel payments bank charge a fee of 0.65% on all cash withdrawals above Rs 4,000 from the account The Narendra Modi government is considering a cap on service charges levied on online transactions, as it looks to encourage further digital means of payments  for goods and services. According to a senior government source, rules are to be amended to put a limit on service charge as volume of transactions increase. "The government has received feedback from consumers and stakeholders on how high rates of service charges are disincentivising them to shift to a less cash economy." said the person, and added that there would be notification on the matter soon.   Some of the mobile wallets charge around one per cent service charge for KYC (know your customer) and around four percent service charge for non-KYC account holders for using their services, said shopkeepers using mobile wallets.   Airtel payments bank charge a fee of 0.65 per cent on all cash withdrawals above Rs 4,0...

POLITICAL FUNDING Move to ensure that the proposed instrument is not misused as a parallel currency Precautions will be built in to ensure the anonymity of the donors' contribution The government is plan ning to impose a time limit for redeem ing the electoral bonds announced in the Budget to ensure that the proposed instrument of political funding is not misused as a parallel currency . A senior government official in volved in framing of the new mechanism told ET on condition of ano nymity that the bonds will have to be redeemed within a specified number of days to ensure the bonds are credited into the designated banks ac counts of political parties at the earliest. “There will be a fixed time window for redeeming the electoral bonds. In fact, this time window will be in terms of days, not months or years,“ the official said. This will ensure that the proposed electoral bonds do not become a par allel currency for exchange between multiple entities, a prospect that could def...

Revenue secretary says GST on schedule for implementation later this year Revenue secretary Hasmukh Adhia said the goods and services tax is on schedule for implementation later this year and that there would be no harassment of genuine taxpayers over deposits of old notes in the wake of demonetisation. The government has been able to mine data following the currency swap announcement on November 8 and match deposits to inco me profiles. But enough safeguards have been built into the system to prevent persecution. “First of all, we have never gone beyond our mandate of taking up more than 1% of cases for scrutiny,“ Adhia said. “The question is that because of demonetisation there is a large amount of data which we have got and that data people are fea ring will be mi sused for haras sing people.“ The 18 lakh acco unt holders that have come to attention as a result of this data mining will be given a chance to explain their sources of income. “We have not allowed this data to be sent d...

Anonymous Individuals Cash Donations Capped at Rs 2K, No Check On Cheque Seeking to arrest the flow of unaccounted cash into the coffers of political parties, the Budget has proposed a Rs 2,000 cap on anonymous individual cash donations and has introduced a new mechanism for making political contributions through bonds for those who want to remain incognito. The Election Commission had sought to bring down the limit on anonymous cash contributions from Rs 20,000 to Rs 2,000 as parties were often accused of  "breaking up" donations to go below the sanctioned limit. This process will now become much more tedious and complicated if a party does look to fudging its ledger. There is, however, no such restriction on contributions to political parties by cheque or the digital mode. Going a step further, the government has also facilitated contributions from donors reluctant to adopt transparent methods for fear of being identified. Such donors can now maintain anonymity by  purchas...

'Soak-Up-Rich Budgets Helps Build Case That Demonetisation Was A Wealth-Transfer Scheme Budgets are as much about politics as about economics and a good finance minister blends clever politics with sound economics. By that yardstick,  Arun Jaitley has pulled off a feat of sorts. He has presented a politically suave Budget, but without disturbing the markets or junking fiscal prudence. Jaitley has used the instrument of  Budget to send out a clear signal that the Centre does not see big industrialists, rich businessmen and the upper middle class — who loudly rooted for Narendra Modi in 2014 — as its constituency. The proposals make it clear that the Modi government's sights are set on the poor, the farmers, the middle class, the rural population and the  small/middle-level businessman/entrepreneur. In short, the voting classes who decide poll outcomes. Nothing illustrates this better than the proposal to slash income tax rate by half for those earning between Rs 2.5 lakh ...

Spurred by the adverse publicity over liquor baron Vijay Mallya and former cricket administrator Lalit Modi leaving the country to evade legal  proceedings, the government announced that it will bring a new law or amend the existing ones to confiscate the assets of such individuals. "In the recent past, there have been instances of big-time offenders, including economic offenders, fleeing the country to escape the reach of law... The government is considering introduction of legislative changes, or even a new law, to confiscate the assets of such persons located within the  country till they submit to the jurisdiction of the appropriate legal forum," finance minister Arun Jaitley said. When enacted, the move to confiscate assets could lead to the government attaching the assets of fugitives like Mallya, including shares controlled by him in companies like United Breweries Ltd and United Spirits Ltd.  However, it's not clear what happens if third party rights are already ...

In a move that will facilitate ease of business, domestic transfer pricing provisions will apply only if one of the parties to a deal is availing of tax benefits.  Traditionally, transfer pricing applied to international transactions entered into by a company in India with related parties, such as its foreign parent company or overseas group companies. Pricing of the transaction had to be at arm's length — which refers to a true unbiased value — to  ensure that India got its due share of tax. However, the Finance Act, 2012 expanded the ambit to cover domestic transactions (which included payment to directors) entered into by a company  with related parties if the aggregate of such transactions in a year was over Rs 5 crore.  The top-most challenge of India Inc was substantiating that directors' fees paid by it was at an arm's length. A director fee would depend on many factors, including size of the company, industry sector. Even Mukesh Ambani and Azim Premji were u...

With a tweak in definition, finance minister Arun Jaitley has made affordable housing more affordable. Henceforth, instead of built-up area, carpet area will be considered for low-cost housing. This will broadly increase house sizes by 30%. While a 30sqm (300sqft) cap will apply to municipal limits of the four metropolitan cities, for rest of the country, including in peripheral  areas of the metros, a limit of 60sqm (600sqft) will count. This should cheer people in Noida, Gurgaon and Ghaziabad in NCR-Delhi; Navi Mumbai, Basai, Thane and Kalyan around Mumbai; and Chandan Nagar and Howrah near Kolkata. Two-bedroom flats of 800sqft in most parts of the country will now come under affordable housing category as builders generally set aside 25% of built-up area to arrive at carpet area.  Credai president Getamber Anand said this would come as a shot in the arm for a struggling real estate sector. With FM giving an infrastructure  status to low-cost housing, firms will now be...

Parity between salaried and self employed MUMBAI: Early withdrawals from the National Pension System (NPS) will not attract tax, the Budget has clarified, and experts suggest using this route to increase the tax-free component of your retirement corpus.  An NPS subscriber can withdraw 25% of his contribution to the corpus for emergencies before retirement. For instance, let us assume  that your corpus now is Rs 2 lakh -- Rs 1 lakh contributed by you and the remaining by your employer. Instead of withdrawing the entire  amoun at retirement, you can withdraw Rs 25,000, or 25% of your contribution, earlier, without any tax incidence. The remaining Rs 1.75  lakh is withdrawn on retirement.  Since 40% of this Rs 1.75 lakh or Rs 70,000 is tax-free at retirement, the total tax-free amount goes up to Rs 95,000 (Rs 25,000 + Rs 70,000). Had the entire amount been withdrawn at retirement, the tax-free component would have been Rs 80,000.  Moreover, till now salaried ...

Finance Minister Arun Jaitley chairing the ninth GST Council Meeting, at Vigyan Bhawan in New Delhi on Monday. (PTI) The central government today formally accepted that it will not be able to meet the April 1 deadline for implementing the Goods and Services Tax (GST). The new deadline has been set for July 1, 2017. At the end of the ninth GST Council meeting, finance minister Arun Jaitley said: “The broad consensus among states is that July 1 seems more realistic”. But many states hinted that even the new deadline looks difficult to meet. “A lot of work is left, in fact, thirteen things need to be done before we even consider implementing GST. So I don’t want to comment want to on whether the July 1 deadline can be met,” said West Bengal finance minister, Amit Mitra. Jaitley said that Monday say consensus on tax on territorial waters and dual control, which deals with who taxes whom between the states and the centre. 90% of taxpayers with up to Rs 1.5 cr annual turnover will be assess...