CA Online

India's exports hit 6-month high; trade deficit widens as imports up 14.85% The aftershocks of the Rs 140-billion Nirav Modi scam continued to affect the gems and jewellery sector A rise in receipts of petroleum, engineering and pharmaceutical products boosted May’s export growth figures to a six-month high of 20.18 per cent, up from 5.71 per cent in April. Even then the trade deficit widened to a four-month high of $14.62 billion, compared to the Dollar 13.7 billion deficit in April as imports rose by 14.85 per cent during the month, compared to the 4.60 per cent rise in April. This could pressurise the current account deficit in the first quarter of the current financial year after it stood at 1.9 per cent of GDP in the fourth quarter of 2017-18, compared to 2.1 per cent in the third quarter. However, within exports, major labour-intensive sectors, such as gems and jewellery and ready-made garments, continued to see declines, which might affect jobs. The export growth r...

PSU Bankers’ Union Challenges RBI’s Feb 12 Bankruptcy Circular Petition says provision will cause a loss of Rs 1 L cr, threatening viability of banks The biggest union of state-run banks has filed a writ petition in the Delhi High Court challenging the Reserve Bank of India’s (RBI’s) controversial February 12 circular that bankruptcy proceedings will kick in 180 days after a borrower misses a payment without allowing even a day’s extension. The All India Bank Officers’ Confederation (AIBOC), which represents 3 lakh supervisory staff and officers in public-sector banks, said the provision will cause a loss of Rs 1 lakh crore, threatening the viability of banks and consequently the livelihood of its members. AIBOC wants the high court to quash the circular. Members of the AIBOC said the court has issued a notice to the RBI after admitting the petition that was filed recently against the central bank and the government. In its petition, the union has alleged the circular violates...

 ICAI opposes move to exclude CAs from carrying out valuation Rule 11UA provides for determining the fair market value of various specified assets under Section 56 of the Income-tax Act, 1961 The Institute of Chartered Accountants of India (ICAI) and four other accounting associations have written to the Central Board of Direct Taxes (CBDT) opposing the latter’s move to amend Section 11 UA of the Income Tax (I-T) Act. The step will pave the way for excluding chartered accountants from carrying out valuation of unquoted shares. Rule 11UA provides for determining the fair market value of various specified assets under Section 56 of the Income-tax Act, 1961. One of its sub-rules provides an option to the assessee to determine the fair market value (FMV) of unquoted shares with the help of a merchant banker or an accountant. The recent amendment has excluded the term ‘accountant’. ICAI believes the paucity of available merchant bankers could jack up costs of determining the F...

  Fed hikes rates amid stronger inflation, shifts from crisis-era stance Policymakers projected a slightly faster pace of rate increases in the coming months The Federal Reserve raised interest rates on Wednesday, a move that was widely expected but still marked a milestone in the US central bank's shift from policies used to battle the 2007-2009 financial crisis and recession. In raising its benchmark overnight lending rate a quarter of a percentage point to a range of between 1.75 per cent and 2 percent, the Fed dropped its pledge to keep rates low enough to stimulate the economy "for some time" and signalled it would tolerate above-target inflation at least through 2020. The Fed has raised rates seven times since late 2015 on the back of the economy's continuing expansion and solid job growth, rendering the language of its previous policy statements outdated Inflation is also snapping into line, with fresh projections from policymakers on Wednesday indi...

  Visa cuts fee on card transactions, industry says business as usual The company hopes that the rate cut will drive greater digital adoption, both for consumers and merchants The steep cuts in data processing charges by leading card network Visa recently will have little impact in improving card acceptance in India as the economy is mainly cash dependent, said industry executives. Visa cut its fee per transaction by up to 95 per cent for transactions below Rs 2,000 and the company also reduced its charges for higher-value payments to Rs 1.5 from Rs 2.99 per transaction Usually, these charges along with banks’ fee as issuers and merchant acquirers are borne by the merchants. The company hopes that the rate cut will drive greater digital adoption, both for consumers and merchants. Over the last 18 months, debit card has rapidly evolved from being a mere ATM cash withdrawal tool to a powerful digital payment means for Indian consumers across segments. This further reinforces ...

  RBI again seeks more power to rein in PSBs The RBI has yet again made a strong case for more power to regulate public sector banks (PSB) effectively. RBI Governor Urjit R Patel, who appeared before the Standing Committee on Finance on Tuesday, also submitted a detailed written response to questions that the members had raised. The meeting was called to record the Governor’s evidence on ‘Banking Sector in India: Issues, Challenges and the Way Forward, Including Non-Performing Assets/Stressed Assets in Banks/Financial Institutions.’ Sources said the RBI, in a written submission, said Section 5(C) of the Banking Regulation (BR) Act defines a banking company as ‘any company’ which transacts the business of banking in India. PSBs are not companies, but corporations formed by statutes. They are, therefore, not ‘banking companies’ and the BR Act does not apply to them in full. “Only those provisions of the BR Act specifically enumerated in Section 51 of that Act or elsewhere...

  Cabinet hikes carpet area for affordable housing, higher demand seen The decision could help homebuyers access bigger, ready-tomove-in houses at lower costs. In some good news for builders and middle-class homebuyers, the Union cabinet increased the carpet area of houses under the government’s affordable housing scheme on Thursday. The decision could help homebuyers access bigger, ready-to-move-in houses at lower costs, while developers with large inventories could look forward to renewed demand, triggering a virtuous cycle of employment generation and economic growth. The tweaks to the NDA government’s flagship housing programme—pradhan Mantri Awas Yojana (Pmay)—follows requests from the industry which was saddled with thousands of flats that had margin- ally bigger carpet areas than allowed under the scheme. In the first middle income category (Rs6-12 lakh/annum), the carpet area was raised from 90 to 120 sq. m (968 sq. ft - 1184 sq. ft). In the income category of R...

 NIIF may Lend a Hand to Resolve Stressed Assets Infra fund could be roped in as investor to set up ARC to take over stressed loans The National Investment and Infrastructure Fund (NIIF) may be roped in as an investor to set up an asset reconstruction company (ARC) that will take over the stressed loans of state-run banks, said a senior government official. “Bankers are thinking to get NIIF as a sponsoring agency. They (banks) themselves can pitch in some capital,” the official said, adding that Asset Reconstruction Company of India Ltd, sponsored by public sector banks (PSBs), has legacy issues. Acting finance minister Piyush Goyal had last week announced a committee under the chairmanship of Sunil Mehta, non-executive chairman of Punjab National Bank, to examine the idea of an ARC and/ or asset management company (AMC) for faster resolution of stressed assets involving multiple state-owned lenders. The committee is to give its recommendations in two weeks. The governm...

Our Target is to Turn Railways Profitable, Double Its Revenue’ Railway minister Piyush Goyal tells ET his focus is to improve signalling, expand electrified network & add more lines Railway minister Piyush Goyal has set a target of doubling the national transporter’s revenues to Rs 4 lakh crore by 2025 to make it profitable by then. Over this period, the total investment by the railways would be about Rs 9 lakh crore, he said. Our target is to turn the railways profitable so that it doesn’t have to take any gross budgetary support from the government,” Goyal told ET in an interview. “We intend to double revenues by 2025.” The minister said his focus was to increase capacity by improving signalling, expanding the electrified network, adding more lines in congested stretches and enhancing utilisation of assets. “Reducing cost is the most important thing. If we were to electrify large parts of our network, we can easily save around Rs15,000 crore in fuel bill itself,” the mi...

Dealers of Imported Sports Goods Under Taxman’s Lens DRI probes whether marketing spends like sponsoring events and roping in brand ambassadors be added to total import cost Does getting a sport star to endorse a brand or sponsoring a sports event be treated as imports? The intelligence arm of the tax department seems to think so. They content many dealers of imported sports goods and equipment unvalued their imports and sign contracts that obligates them to plough a sizeable amount of the value into endorsements and sponsorship deals. Revenue sleuths are investigating whether Indian dealers who import golf kits, table tennis rackets, badminton rackets and shuttlecocks must treat any marketing spend like sponsoring events and roping in brand ambassadors as imports. Directorate of Revenue Intelligence (DRI) has initiated investigations against dealers of imported golf kits, badminton and table tennis goods of brands like Callaway, Ping, Yonex, Donex, Li Ning and Tietlist. In s...

  IIP rises by 4.9% in April; retail inflation inches up to 4.87% in May The industrial growth, measured on the Index of Industrial Production (IIP), was 3.2 per cent in April last year Industrial output expanded by 4.9 per cent in April this year, spurred by higher growth in manufacturing and mining sectors. The industrial growth, measured on the Index of Industrial Production (IIP), was 3.2 per cent in April last year In March this year, industrial production had grown at 4.4 per cent.  As per the data released by the Central Statistics Office (CSO), the manufacturing sector, which constitutes more than 77 per cent of the index, recorded a growth of 5.2 per cent in April, up from 2.9 per cent in the year ago month. The mining sector too expanded by 5.1 per cent, up from 3 per cent in April 2017. The growth in power generation, however, slipped to 2.1 per cent in April this year, from 5.4 per cent in the year-ago month.  Meanwhile, retail inflation inched up to 4...