CA Online

A seemingly missing provision from the fine print in the amendments to the central GST law approved by Parliament in the monsoon session has led to a furore in the industry,  A seemingly missing provision from the fine print in the amendments to the central goods and services tax (GST) law approved by parliament in the monsoon session has led to a furore in the industry.  Tax practitioners say the latest changes deny carryforward of credit for cesses, as intended, but credit for service tax has also been done away with. A government official, however, played down the concerns saying the interpretation being drawn is erroneous. He told ET that the government will issue a clarification if it is so needed as the intent of the law is very clear.  The issue, experts say, stems from the retrospective amendment to Section 140 (1) of the CGST Act 2017 that empowers assessees to transition the closing balance of cenvat (central value added tax) credit in the erstwhile indirect tax regime to

DIVERSIFYING ITS ASSETS Investing in gold is a prudent treasury move by the central bank at a time of rising yields.  The Reserve Bank of India (RBI) has bought gold for the first time in nearly a decade, signalling that the metal could be in demand as a store of value when returns and capital values of fixed-income bonds are declining in a rising rate environment. The RBI added 8.46 metric tonnes of gold to its stock of holdings during the financial year 2017-18 that ended June 30, taking the level of gold reserves to 566.23 metric tonnes, according to its latest annual report.  It last bought 200 metric tonnes from the IMF to boost its reserves in November 2009.  Over the past nine years, the gold stock in RBI reserves was stable at 17.9 million troy ounce. But RBI has started adding to its stock since December 2017, data submitted to the IMF indicate. Stock of gold, as of June 30, amounted to 18.20 million troy ounce or equivalent to 566.23 metric tonnes, up from 17.9 million

Officials said the tax department refunds Rs 750 bn in the first four months of the current financial year, half of what was refunded in the entire FY18. The government might be talking about the surge in filing of Income Tax returns till the August 31 deadline, but direct tax collection data available so far are unlikely to bring a loud cheer.  The numbers released by the Controller General of Accounts (CGA) on Friday revealed that direct tax collections grew by a meagre 6.6 per cent during April-July of the current financial year against the Budget target of 14.4 per cent for 2018-19. The growth was in comparison with the corresponding period of the last three years. Corporation taxes, in particular, disappointed the exchequer. These collections grew at just 0.57 per cent, the lowest in the first four months in at least seven years. Corporation taxes are budgeted to yield 10.15 per cent more revenues to the coffers at Rs 6,210 billion in FY2019 against Rs 5,637.45 billion in the

This is the first time that the central bank is discussing its possible use in India.  RBI has constituted an inter-departmental group to explore the feasibility of introducing a rupee-backed digital currency to battle rising costs of managing paper currency. This is RBI’s first take on the possible use of digital currency.  “In India, an inter-departmental group has been constituted by RBI to study and provide guidance on the desirability and feasibility to introduce a central bank digital currency,” the RBI report stated.  “(Globally), the rising costs of managing fiat paper/metallic money, have led central banks …to explore the option of introducing fiat digital currencies”. For FY18, total cost of printing paper notes in India was Rs 636 crore, according to RTI response to India Today. It cited rapid changes in the payments industry and emergence of private digital tokens as the possible factors.  Digital currency, backed by an asset such as gold or fiat is known as stable coin

The Reserve Bank of India (RBI) has said that it would review guidelines on the marginal cost of funds based lending rate (MCLR), potentially preparing to do away with the system for lending rate calculation less than three years after it was introduced.  In its 2017-18 annual report, RBI said it would review the MCLR guidelines as well subsidiarisation of foreign banks “for the purpose of fostering competition and re-orienting the banking structure in India.” It did not give more details. Bankers said a review was imminent because the MCLR system had not reflected the changes in rates. “World over, the bank rates have moved to an external benchmark which leads to uniform pricing. Currently banks in India calculate based on their internal benchmark which can be disputed and leads to a difference in rates between banks. This is likely to be changed,” said PK Gupta, managing director at SBI. The new MCLR regime was implemented in the fiscal year starting April 2016 and is closely l

The committee has criticised RBI’s revised definition for recognising NPAs that saw a spike in the bad loans on the books of banks and said this could hit economic growth.  A committee of lawmakers thinks the Reserve Bank of India’s policies have accentuated the problem of non-performing assets of state-owned banks, and reduced amount at their disposal to lend; that banks do not have what it takes to fund long-gestation projects; and that it is important to remove the environment of fear in which bankers operate today, worrying that even a legitimate loan approval could engender an investigation. According to a senior lawmaker who spoke on condition of anonymity, the committee is likely to recommend in its report that India’s central bank relax some of these rules, thereby increasing the amount at the disposal of some state-owned banks to lend by around Rs5 lakh crore, and earning them additional interest income of around Rs45,000 crore.   Specifically, the committee has criticised

The new unit will research, draft rules and supervise new emerging technologies in the future.  The Reserve Bank of India (RBI) has formed a new unit within the central bank to beef up its own intellectual capital in the face of emerging technologies like cryptocurrency, blockchain and artificial intelligence.  This new unit will research and possibly draft rules and supervise new emerging technologies in the future, two people familiar with the central bank’s plans said.  “As a regulator, the RBI also has to explore new emerging areas to check what can be adopted and what cannot. A central bank has to be on top to create regulations. This new unit is on an experimental basis and will evolve as time passes,” said one of the people cited above. The unit is just about a month old as of now and though a chief general manager is identified to lead it, a formal announcement internally has not been made yet.  An RBI spokesperson did not reply to an email seeking comment. Analysts said RB