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RBI to Step up Scrutiny of NBFCs

The Reserve Bank of India said it would intensify its scrutiny of nonbanking finance companies to ensure better compliance and financial strength, but did not indicate an asset-quality review like the one carried out on banks.  NBFCs showed high growth taking advantage of the poor financial health of several public sector banks but the recent default by the group firms of non-bank lender IL&FS raised alarm and called for a reality check. Former chief economic advisor Arvind Subramanian suggested asset quality review (AQR) for these lenders to fully measure the extent of the hidden stress in the system.  “Like Raghu (former governor Raghuram Rajan) did an AQR for the banks, we need to an asset quality review for the NBFCs,” he told ETNow in December.  RBI data showed that NBFCs cumulatively had loans assets worth ?3.42 lakh crore at the end of September with industry accounting for more than half of total credit extended by them, followed by retail, services and agriculture. T

RBI Move to Regulate ePayments may Secure, Stabilise Ecosystem

The central bank on Thursday said it is examining the possibility of bringing payment gateway operators under its direct regulatory ambit, a move that industry players said will make the digital payments ecosystem more secure and stable.  “We are considering the feasibility of directly regulating these payment operators…given their growing importance in the payment systems of the country, we deem such a step to be important,” Reserve Bank of India governor Shaktikanta Das said during his monetary policy speech. The RBI said it will soon publish a draft of the regulatory guidelines for stakeholder consultations. Mint Road and New Delhi have been in talks for some time now to come up with a comprehensive regulatory solution for the burgeoning payment systems in the country, which is riding the growth of ecommerce and m-commerce transactions. Meanwhile, issues ranging from the fees that businesses pay for accepting digital payments to grievance redressal for failed transactions and ev

Centre sets up panel to look into angel tax issue

A solution for India’s vexed angel tax may be around the corner, with the industry department setting up a panel comprising startups, angel investors and income tax officials to look into the issue.  Ramesh Abhishek, secretary in the department for promotion of industry and internal trade (DPIIT) who heads the panel, said a solution is expected in the next four-five days.  DPIIT on Monday held consultations with a select group of startups and angel investors at a meeting also attended by officials from the Central Board of Direct Taxes (CBDT).  “We had a round table on the issue of angel tax. We have got a number of suggestions. We will form a smaller working group and try to come with some solution in next four-five days,” Abhishek said after the meeting. India introduced a so-called angel tax in 2012, which counts investments received by startups above their fair market value as taxable income, much to the dismay of angel investors and the startup community.  According to a perso

Tax rebate given to those who need it most, says Goyal

The government opted to announce a tax rebate on annual income up to ~5 lakh instead of raising the exemption limit as it did not wish to tinker with rate slabs in an interim budget, Union finance minister Piyush Goyal said in an interview to Hindustan Times on Monday.  The emphasis of the budgetary exercise was on maintaining the economic reforms road map set over four-and-a-half years by Prime Minister Narendra Modi and Union minister Arun Jaitley so that India could continue to be the world’s fastest growing major economy, Goyal said. “With all exemptions, a person earning even 75,000 a month will not have to pay any tax – provided they make some investments. If I had given this as an exemption, it would have given rise to a debate whether the interim budget should start tinkering with tax slabs and tax rates. That’s why I have not changed any of those. But, as I said, we are clear that the benefits of formalisation of the economy, the larger tax base, more taxes... has to be sh

Simplicity, uniformity take a back seat amid frequent tweaks in GST

While rolling out the goods and service tax (GST) from the central hall of Parliament at midnight of 30 June 2017, Prime Minister Narendra Modi told the nation that the new indirect tax system will unify its divergent state economies with ‘one nation, one tax’ right from  Leh to Lakshadweep. About 18 months later, the biggest tax reform since India’s independence is still in a fluid state of continuous change as businesses, especially the small ones, struggle to cope with the rigours of a technology-driven and transparent tax system that has cast its net far and wide to bring at least 3.4 million new indirect taxpayers. Some of the concessions to small businesses announced earlier this month by federal indirect tax body, the GST Council, ahead of parliamentary polls due by April-May, raise fears about sacrificing some of the basic design advantages of GST over the previous regime— simplicity and uniformity. The changes imply that policymakers are still struggling to make the reform a