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I-T Dept probes Rs 10-bn tax refund fraud by govt and PSU employees I-T wing identifies over 18,000 revised returns, claiming false refunds in Mumbai, Bengaluru With less than a month left for revising income-tax (I-T) returns for 2016-17, the I-T department has unearthed a giant fraud in multiple cities, where government employees allegedly claimed huge tax refunds forging documents, inflating expenses and not revealing complete information In Mumbai alone, around 17,000 revised returns have been filed claiming refunds. Similarly, in Bengaluru, the I-T department has found over 1,000 returns filed with inflated claims on account of payments towards home loans. Since the I-T department is still investigating the matter, the loss to the department could not be ascertained, but it could go up to over Rs 10 billion, sources said. They added most of these refunds were being claimed by employees working for the government or in public sector undertakings (PSUs). “These assessees’

RBI to infuse Rs 1 trn into banking system via special auctions in March Higher tax outgo will fuel cash demand by banks, corporate sectors The Reserve Bank of India (RBI) will infuse up to Rs 1 trillion into the banking system through special auctions this month to manage additional demand for liquidity as activities of banks and corporate entities pick pace before the close of the financial year. The current financial year (2017-18) ends on March 31. Treasury executives said liquidity in the system has been under pressure, with supply falling short of demand on some days. The RBI has maintained its stance to keep liquidity close to neutral. The announcement to conduct special auctions to inject additional resources into the system to tackle the changing situation — high activity and outgo on account of tax payments — will give respite to the market, and prevent any sharp rise in short-term interest rates. Last month, the RBI had indicated that it was prepared to inject adeq

 RBI to inject Rs 1 lakh cr cash into banking system in March  The Reserve Bank of India will inject Rs 1 lakh crore short term money into the banking system ahead of the financial year-end that normally sees cash crunch.  The move is likely to keep short term rates under check benefiting borrowing companies.  “In order to address additional demand for liquidity and with a view to provide flexibility to the banking system in its liquidity management towards March-end, it is prepared to inject adequate additional liquidity….,” RBI said in a release.  The central bank will use a combination of appropriate instruments for such fund infusion, while continuing with its normal liquidity adjustment facility (LAF) operations.  Beginning Tuesday RBI will conduct four variable repo operations of Rs 25,000 crore each.  After reviewing the current and evolving liquidity conditions in the banking system it has been decided to conduct additional variable rate repo operations for longer tenor

 Delhi-Jaipur E-way: Land Prices Rise 40% The long-held theory that infrastructure creation leads to spike in realty rates can find no better demonstration than just outside Delhi. Manesar and Rewari in Haryana, and Neemrana and Ajeetgarh in Rajasthan, are not just the names of semi-urbanised industrial belts en route the proposed Delhi-Jaipur expressway but are the latest hotspots for realtors that are seeing as much as 40 per cent appreciation in land rates. The interesting part, however, is officials in the National Highways Authority of India (NHAI) and the Ministry of Road Transport and Highways say the new alignment has been almost finalised but is yet to be officially notified or announced. Sometimes the source of such challenge for project cost that comes with spike in land rates lies in the ministry itself. Union road transport and highway minister Nitin Gadkari had, in the past, announced development of new projects in some states and the land prices in the area went

Services sector contracts, putting pressure on govt A private survey showed that India’s dominant services sector contracted for the first time in three months, adding pressure on Prime Minister Narendra Modi to undertake reforms to boost growth amid a hawkish turn from the Reserve Bank of India (RBI). The Nikkei India Services Purchasing Managers’ Index slid to 47.8 in February from 51.7 in January, as business conditions deteriorated due to poor demand. A number below 50 indicates a contraction. A dip in the services sector, which contributes about 60% to the Indian economy, could hurt an economy that’s forecast to grow at its slowest pace in four years. Sluggish growth, coupled with a lack of adequate job creation, is building pressure on Modi to jumpstart economic activity before seeking re-election in 2019. RBI, which will review interest rates on 5 April, has flagged risks to inflation from higher crude oil prices and the budget, which widened fiscal deficit goals to boos

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