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The first such open market operations (OMO) for the fiscal year 2019-20, amounting to Rs 12,500 crore, will happen on May 2 The Reserve Bank of India (RBI) plans to buy Rs 25,000 crore worth of bonds in two installments from the secondary market in May, it has notified.  The first such open market operations (OMO) for the fiscal year 2019-20, amounting to Rs 12,500 crore, will happen on May 2. The date for the second auction has not been given. This would be on top of the dollar swaps that the central bank is undertaking. The system liquidity was short of Rs 1.4 trillion as on Monday. This is despite the central bank buying bonds worth Rs 3 trillion in the last fiscal year and infusing another about Rs 70,000 crore through two dollar swaps.  The OMO plan is in continuation with the central bank’s practice in the last financial year. The RBI had spelt out how much of bonds it would purchase from the market through monthly calendars. In the OMO, the central bank would be buying bon

The three-year forward premium was 775 paise in the morning before the auction The Reserve Bank of India’s (RBI's) second three-year dollar-rupee swap auction was a massive success like the first one, even as it took just five large bids to cover the entire dollor 5 billion on offer.  Market participants bid more than three times the offer, but the five successful bids were closer to the market rates and managed to shoot up the forward premium in the secondary market.  “The aggressive bids most likely came in from a large corporate looking to hedge long-term dollar liabilities, such as external commercial borrowings,” said Abhishek Goenka, managing director of IFA Global. RBI's second 3-year dollar-rupee swap auction too a grand success Since the other participants could not offload their dollar holdings, the central bank offered to buy up to Rs 25,000 crore of bonds from the secondary market in May to help with liquidity. The banking system was running a liquidity defici

A day after it “strongly advised” the finance ministry to ensure that all enforcement agencies under it were “absolutely neutral, impartial and non-discriminatory” while cracking down on illicit money use in elections, the Election Commission (EC) has called a meeting with the chairman of the Central Board of Direct Taxes (CBDT) and the revenue secretary, ET has learnt. Meanwhile, the chief accountant of the Congress party was summoned for questioning by the income tax department on Monday, sources said.  “We expect that senior leaders could be called in for further questioning on Tuesday,” a senior Congress functionary said. Government sources indicated Congress treasurer Ahmed Patel could be called in for questioning on Tuesday. Patel handles all financial matters and the I-T department’s findings on alleged hawala transactions would need to be explained by him. The EC meeting with the CBDT chief and the revenue secretary is expected to be held at Nirvachan Sadan on Tuesday morni

The move by the government to bring warehouses under the Goods and Services Tax (GST) net is likely to have a major impact on players in the organised  sector who take warehouses on rent as part of their collateral management business. They see a huge burden especially when they deal in farm commodities. Agri commodities collateral management business has flourished the past few years as companies in this space help farmers and processors get finance from  banks and non-banking institutions. The new government decision means that they have to pay now 18 per cent GST on the rent they pay for the warehouses in  which their collateral commodities are stored. In many cases, such companies themselves finance farmers or their group NBFCs finance them against collateral  commodities. Hence these collateral management companies cannot get input credit of the GST they pay on rent because the commodities in which they deal are  agri commodities, which do not attract GST. This is a big burden

The disclosure requirement in the income tax return (ITR) forms have been rising in recent years as the income-tax (I-T) department has been using  technology extensively to track tax evasion and process returns. But this year, the number of changes made to the ITR forms notified for the assessment year  (AY) 2019-20 is probably the highest in the recent time.  The changes have been made regarding disclosure of information and computation of income, inter-alia, change in method to disclose salary income, property- wise disclosure of arrears/unrealised rent, and many more for business owners. “Several changes have been made in the forms seeking additional details,  which will help in automatically validating or cross-checking the income and other details that the tax authorities may have from other sources,” says  Kuldip Kumar, partner and leader - Personal Tax, PwC India. He says that the changes will not only improve the processing of tax returns in an automated  environment but als

The Reserve Bank of India (RBI) will, for the time being, leave it to individual banks to decide how best to deal with corporate loan defaulters, and the  government will exercise its majority shareholder rights to nudge staterun banks to take insolvent companies to bankruptcy courts, a government official  said on Wednesday.  The official’s statement came after the Supreme Court on Tuesday quashed a central bank circular instructing lenders to take defaulters to bankruptcy  resolution after 180 days of the default. The government’s approach in the wake of the apex court ruling is to use its ownership rights to ensure that  defaulters are firmly dealt with under the bankruptcy code. The central bank will examine the implications of the Supreme Court decision and come up with a considered response, which may take some time. “These things take time. The RBI may not immediately come up with specific guidelines or comments regarding restructuring of loans,” said the official who  did n

India and US will be signing an information-sharing agreement before the end of the fiscal year. Companies headquartered in the US but having operations and  taxability in India now need not file country-by-country (CbC) reports in India, according to a pact signed between India’s tax department and the US  authorities.  In a press release, the Central Board of Direct Taxes (CBDT) has clarified that for such international companies, filing CbC reports in the US would be  sufficient.  These would then be shared with the Indian tax authority, the CBDT, under an information-sharing agreement which will be signed between the countries before  the end of the fiscal year. This will reduce the compliance burden on firms. The deadline for furnishing the CbC report was earlier extended. The Business Standard, 4th April 2019