GST Council: Tax exemption threshold fixed at Rs 20 lakh

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The first session of the GST Council that concluded here on Friday made good progress in ironing out some of the contentious issues between the Centre and states: The exemption threshold for the goods and services tax (GST) has been fixed at Rs 20 lakh for all states except the northeastern ones and the three hill states of Jammu and Kashmir, Uttarakhand and Himachal Pradesh, in whose case this limit would be Rs 10 lakh; states will have the assessment powers for units with annual turnover up to Rs 1.5 crore while in the case of bigger businesses too, the one-taxpayer-one-authority principle will be retained and either the Centre or the state concerned will be accorded the assessing power based on risk profiling.

Importantly, the Centre agreed to the states’ demand for including the proceeds from sundry cesses levied by them in the definition of “revenue”, a step that could increase its compensation payouts. This would also mean that the states would cease to levy the cesses, the proceeds from which stood at close to Rs 40,000 crore in FY16.

The council decided to take 2015-16 as the base year to compute compensation to states for any future revenue loss, but left open the question of projecting the business-as-usual rate of increase in revenue, crucial for quantifying compensation. Finance minister Arun Jaitley said three options were under consideration for projecting the revenue growth rate: A mutually agreed-upon fixed rate; the average of the three best (high-growth) years in the past five years; and the average of median three of the last five years. States had earlier turned down the Centre’s proposal for taking the average of the last three years for projecting future revenue growth, saying these years haven’t been particularly good due to the economic slowdown.

Jaitley said the Centre will continue to assess the 11 lakh service tax assessees (even those below Rs 1.5 crore) but added that states will be given training to assess them and once they acquire competence, the future addition to this taxpayer base will be shared with them for the purpose of assessment.

Regardless of whether the Centre or the state has control on an assessee, the tax proceeds will be shared between the two — the central GST component will go to the Centre and the states will appropriate the state GST, which could be slightly higher than central GST. As far as integrated GST — to be levied on interstate transactions and imports — is concerned, the place of supply rules will decide who the appropriating authority will be; of course, the basic principle is that tax needs to be paid where the consumption takes place.

The council, Jaitley said, would meet again on September 30 to finalise the draft rules on the council’s functioning and the exemption thresholds and decide how the grandfathering of tax sops (like the area-based excise exemptions) will be carried out. The crucial question of the GST slab structure, the revenue-neutral rate (RNR) and actual GST rates would be discussed by the council between October 17 and 19. The Arvind Subramanian panel that had estimated a RNR of 15-15.5% had said if the standard rate is 17%, it could comprise central GST of 8% and state GST of 9%.

Tax experts welcomed the outcome of the first meeting of the council. Harishanker Subramaniam, national leader, indirect tax, EY India, said: “It is interesting is that for GST on services, the Centre will have administrative control irrespective of threshold at least in the initial years till states are trained to handle services. This may be a good news for industry as many were worried as to how states will handle complexity of services.”

According to Pratik P Jain, leader, indirect tax, PwC India, enhancing the annual turnover for exemption to Rs 20 lakh from Rs 10 lakh contemplated earlier would be administratively easier for the government as several small businesses would be out of the GST ambit. “Industry would also welcome the move to have a single assessing authority, instead of having a dual system of assessment and scrutiny, which was a major concern for businesses,” he said.

Source: http://www.financialexpress.com/economy/threshold-for-gst-fixed-at-rs-20-lakh/389350/

FinMin revises criteria for recapitalisation of PSBs

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State-owned banks looking forward to the next round of capital infusion will need to fulfill a new set of criteria, including credit recovery, as the finance ministry has revised the recapitalisation norms.

The second tranche of capital allocation for the current fiscal would be based on cost of operations as well as recovery and quality of credit on the basis of risk weighted assets, sources said.

Only those lenders that fulfil the criteria post third quarter (October-December) results of the current fiscal will be eligible for the second round of funding, sources added.

The money was allocated last fiscal on the twin principles of ensuring 7.5 per cent common equity tier 1 (CET 1) at the end of the 2016 and growth capital to five major banks.

The government in July had announced the first round of capital infusion of Rs 22,915 crore for 13 banks.

“75 per cent of the amount (Rs 22,915 crore)…Is being released now to provide liquidity support for lending operations as also to enable banks to raise funds from the market,” the finance ministry had said in a statement.

“The remaining amount, to be released later, will be linked to performance with particular reference to greater efficiency, growth of both credit and deposits and reduction in the cost of operations,” it had said.

The first tranche was announced with the objective to enhance their lending operations and enable them to raise more money from the market.

Out of the Rs 22,915 crore, State Bank of India (SBI) was provided Rs 7,575 crore followed by Indian Overseas Bank (Rs 3,101 crore) and Punjab National Bank (Rs 2,816 crore).

The other lenders, which have got commitment of capital infusion are Bank of India (Rs 1,784 crore), Central Bank of India (Rs 1,729 crore), Syndicate Bank (Rs 1,034 crore), UCO Bank (Rs 1,033 crore), Canara Bank (Rs 997 crore), United Bank of India (Rs 810 crore), Union Bank of India (Rs 721 crore), Corporation Bank (Rs 677 crore), Dena Bank (Rs 594 crore) and Allahabad Bank (Rs 44 crore).

The capital infusion exercise for the current fiscal is based on an assessment of need as per the compounded annual growth rate (CAGR) of credit growth for the last five years, banks’ own projections of credit growth and estimates of the potential for growth of each PSB, it had said.

Finance minister Arun Jaitley in his budget speech for 2016-17 had proposed to allocate Rs 25,000 crore towards recapitalisation of PSU banks. “If additional capital is required by these banks, we will find the resources for doing so. We stand solidly behind these Banks,” he had said.

 

Source: http://www.mydigitalfc.com/economy/finmin-revises-criteria-recapitalisation-psbs-539

Tax resolution scheme: CBDT to write to 2.59 lakh taxpayers

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Keen to bring down the number of tax litigations, the Income Tax Department will soon write to over 2.59 lakh taxpayers asking them to avail the one-time dispute resolution scheme to settle their cases.

And to cut down on communication time, the Central Board of Direct Taxes (CBDT) will use email to communicate with the appellants.

“We have estimated that each Commissioner of I-T (appeal) would have about 300-400 litigations pending before them. We will send these assessees emails informing about the benefits of the dispute resolution scheme,” an official told PTI.

The direct tax dispute resolution scheme, introduced from 1 June, seeks to address the issue of pending litigation before commissioner of I-T (appeal). The scheme is open till 31 December.

As per I-T department data, there were 73,402 appeals with tax effect above Rs.10 lakh and 1,85,858 appeals with tax effect below Rs.10 lakh which are pending before commissioner of I-T (appeal) as on 29 February.

Thus, 2,59,260 appellants are eligible for the benefit of this scheme. “The publicity drive will not be as massive as the IDS. Since we know who our target assessees are, we will send them pamphlets and also emails. Also we will paste some pamphlets outside the CIT (appeals) office,” the official added.

Armed with a Rs.100 crore budget for advertisement of income disclosure scheme (IDS) and disputes resolution scheme, the tax department will now launch a publicity drive for entities which are locked in a litigation. Besides, the CBDT will soon come out with over two dozen FAQs based on the queries it has received from various stakeholders, including chartered accountants and industry chambers.

As per the scheme, a taxpayer who has an appeal pending before the CIT (appeals) can settle his/her case by paying the disputed tax and interest up to the date of assessment. No penalty in respect of cases with disputed tax up to Rs.10 lakh will be levied. For cases exceeding Rs.10 lakh, 25% of penalty would be levied and any pending appeal against a penalty order can also be settled by paying 25% of the minimum of the imposable penalty.

“Litigation is a scourge for a tax-friendly regime and creates an environment of distrust in addition to increasing the compliance cost of the taxpayers and administrative cost for the government,” finance minister Arun Jaitley had said in his budget speech.

In a first-of-its-kind nationwide publicity drive, the I-T department had tied up with seven airlines including Air India and Vistara to publicise one-time black money compliance window by printing the scheme’s details on the back of boarding passes.

Source: http://www.livemint.com/Politics/s28nm7vx4fQrNG3ldoqm0L/Tax-resolution-scheme-CBDT-to-write-to-259-lakh-taxpayers.html

Parliament passes bill for easier debt recovery

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Parliament today passed a bill which empowers banks to confiscate security in the case of loan default, a development that assumes significance in view of the episode surrounding industrialist Vijay Mallya.
The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill, 2016, will not, however, apply to loans for agricultural land as well as student loans.
The bill, approved by Lok Sabha last week and cleared by Rajya Sabha today, amends four laws — Sarfaesi Act, DRT Act, Indian Stamp Act and Depositories Act. Replying to a debate on the bill, Finance Minister Arun Jaitley emphasised the need for “firmness coupled with fairness” in recovering bad loans. He said the banks must be empowered to take effective legal action against defaulters and the insolvency law, securitisation law and DRT law are steps in that direction.
“So far the laws were in favour of the defaulters. We tried to correct the balance. There should be firmness, coupled with fairness in recovery of loans,” he said. He said banks should take a “compassionate view” on education loan defaults but there will be no waiver and somebody will have to pay. The Minister further said that fears regarding farm and education loans are “exaggerated”.
Jaitley said banks are supposed to give loans and “if banks start squeezing loans”, there will be no economic growth.
“The cause of worry is when loan becomes either NPA or stressed asset or the activity in which the loans are invested is not generating money,” he said adding in some cases there will be willful default.
The development assumes significance as it comes against the backdrop of the episode involving Mallya, who owes Rs 9,000 crore to banks, but has left the country to take refuge in England.
Jaitley said if loan has been taken it must be repaid. The Minister said stressed assets were mostly in sectors such as steel, power and textile.
The law simplifies the procedure which ensures quick disposal of pending cases of banks and financial institutions by Debt Recovery Tribunal (DRT). DRTs will have to dispose a case in 180 days and the affected party will have to deposit 25 per cent of the amount if he or she chooses to appeal against the order.

There are around 70,000 loan related cases pending in the DRTs. To further stress his point, he said 20 people sitting on bank money prevent the lender from giving credit to another 20,000 people. It should not happen that a bank manager has to keep awake all night after he clears a loan, he said.

Source : http://www.moneycontrol.com/news/economy/parliament-passes-bill-for-easier-debt-recovery_7238101.html?utm_source=ref_article

CBDT to issue refunds less than Rs. 5,000 by month-end

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In a bid to spruce up its tax-payer-friendly image, the Central Board of Direct Taxes has asked its officers to ensure that refunds less than Rs. 5,000 are issued by the month-end.

“It has been decided that refunds up to Rs. 5,000, as also refunds in cases where arrear demand is up to Rs. 5,000 in non-computer aided scrutiny selection (CASS) cases, may be issued expeditiously without any adjustment of outstanding demand,” it said in a recent directive to field formations, asking them to complete the exercise by July 29.

Sources said the CBDT wants to ensure that all refund backlogs from previous years for small amounts should be fully cleared this fiscal. “With more returns being filed online and processed electronically, the department wants to ensure that refunds are also given out on time,” said an official.

The CBDT directive also noted there is a large pendency of refunds of small amounts relating to non-CASS cases that are pending for the assessment years 2013-14, 2014-15 and 2015-16.

The CBDT has also called for “expeditious” clearing of refunds where notices were issued for adjustment but there was no response from the tax payer. “Such cases be treated as though the taxpayer had “no-objection”…,” it said. The reminder to field offices comes at a time when the CBDT is trying to clear a backlog in processing of refunds as well as income tax returns. In 2015-16, the CBDT had issued 1.61 crore refunds worth Rs. 1.71 lakh crore.

Finance Minister Arun Jaitley too has stressed on the need for faster refunds to ensure that taxpayers are not put to inconvenience.

 

Source: http://www.thehindubusinessline.com/todays-paper/tp-news/cbdt-to-issue-refunds-less-than-rs-5000-by-monthend/article8883185.ece

Black money window: CBDT issues notification to ensure secrecy

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CBDT today issued a notification making it clear that information about those who declare their black money under the compliance window, ending September 30, will be kept secret.

The notification states that “no public servant shall produce before any person or authority any such document or record or any information or computerised data or part thereof as comes into his possession during the discharge of official duties in respect of valid declaration under the Income Declaration Scheme, 2016.”

The notification also quotes provisions of section 138 of the Income Tax Act which states that taxpayer related information is confidential and cannot be shared.

The fresh notification was issued by the Central Board of Direct Taxes (CBDT), a senior official said, as the department was getting a number of queries with regard to the confidentiality under the Income Declaration Scheme (IDS) or the one-time domestic black money compliance window.

Trade associations and industry bodies had also taken up the issue during their meeting with Finance Minister Arun Jaitley recently.

“The notification now gives legal sanctity to the word of the government that all information related to IDS will be kept confidential. It is aimed to end apprehensions in the minds of potential declarants that their information will find its way in the hands of other probe agencies or will reach the public domain,” the official said.

The IDS is open for four months, between June 1 and September 30 and the CBDT and the IT department have introduced a number of measures to make it a success.

CBDT has so far issued three sets of clarifications on Frequently Asked Questions (FAQs) to clear doubts and answer queries about the IDS.

The department has also published a country-wide list of registered asset valuers for those who wish to declare their untaxed funds and properties under this window.

The CBDT has also directed the taxman to step up publicity by advertising about the IDS at posh markets, clubs and showrooms. Besides, it has promised full privacy would be ensured for those making disclosures for better collections.

Under the scheme, the declarants will have to pay a total of 45 per cent in tax and penalty by November this year. Individuals and entities making disclosures will have immunity from prosecution.

IDS was announced with an aim to flush out black money from the domestic economy. It will apply to undisclosed income whether in the form of investment in assets or otherwise, pertaining to financial year 2015-16 or earlier.

Declarations under IDS can either be made online on the official e-filing website of the tax department or before various regional Principal Commissioners of I-T department.

Source : http://economictimes.indiatimes.com/articleshow/53155906.cms

Indian solar energy to get $1 bn from World Bank

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The World Bank Group signed an agreement with the International Solar Alliance (ISA), consisting of 121 countries, led by India. It has committed to provide $1 billion support to Indian solar energy projects.

The World Bank-supported projects include solar rooftop technology, infrastructure for solar parks, bringing innovative solar and hybrid technologies to market and transmission lines for solar-rich states. The cumulative investment in solar would be the World Bank’s largest financing in this sector for any country.

ISA was launched at the UN Climate Change Conference in Paris at end-November last year, by Prime Minister Narendra Modi and French President François Hollande. Through ISA, India aims to collaborate with global agencies and mobilise around $1 trillion of investment in solar energy by 2030.

The agreement was signed for India by Arun Jaitley and Piyush Goyal, the minister of finance and coal, power & renewable energy, respectively, and World Bank Group President Jim Yong Kim.

“India’s plans to virtually triple the share of renewable energy by 2030 will both transform the country’s energy supply and have far-reaching global implications in the fight against climate change,” said Jim Yong Kim. He hopes this agreement would spur a global movement.

The World Bank Group will develop a road map to mobilise financing for development and deployment of affordable solar energy, and work with other multilateral development banks and financial institutions to develop financing instruments in this regard.

The World Bank also signed an agreement to give close to $625 million for the Grid Connected Rooftop Solar Programme under the National Solar Mission. The project will finance the installation of around 400 megawatt of solar photovoltaic power projects. The development of a $200-million shared infrastructure for the Solar Parks Project under a public-private partnership model, is also under preparation, said the Bank.

Source:   hhttp://www.business-standard.com/article/economy-policy/indian-solar-energy-to-get-1-bn-from-world-bank-116063000413_1.html