The Government on Friday said as many as 77.5 lakh traders are registered on GSTN and help desks have been set up in every commissionerate to facilitate filing of tax return. “Till July 18, 2017, the total number of GSTIN (Goods and Services Taxpayer Identification Number) registration is 77,55,416,” Minister of State for Finance Santosh Kumar Gangwar said in a written reply to the Lok Sabha.
He further said Internet is not required for doing or conducting business, but it would be required only for the purpose of filing of returns under the GST. “The Government has ensured that the return filling process is made convenient for all taxpayers by setting up help desks in every commissionerate and by appointing GST Suvidha Providers,” he said.
Gangwar in another reply said it is difficult to predict whether corruption will be wiped out, but the implementation of GST will definitely bring about transparency in business operations related to taxation. The implementation of GST in itself is expected to have a positive impact on the overall growth of the economy, he said, adding that it is also expected to have a positive impact on the ease of doing business and making India an even more attractive destination for foreign investments.
Various studies, including that from NCAER, have estimated that growth in GDP to be around 1-2 per cent due to the implementation of GST.Replying to another question, Gangwar said, since GST has been implemented only with effect from July 1, it cannot be stated that it helps to bring out black money at this moment.However, he said, the provision in SGST, CGST, UTGST and IGST have a self policing mechanism.
The Central Bureau of Investigation (CBI) is probing if any government officials were involved in misusing stock exchange platforms to benefit from the long-term capital gains tax (LTCG) exemption.
According to sources, CBI officials visited the headquarters of the Securities and Exchange Board of India (SEBI) in Mumbai to get relevant files pertaining to LTCG cases probed by the markets regulator.
This comes at a time the income tax (I-T) department is probing the entities which had allegedly misused capital gains provisions to evade taxes worth Rs 34,000 crore.
Gains made from the sale of shares held for more than a year are exempt from taxes.
According to sources, the CBI is trying to gather information if any government official made any undue gains by being the end-beneficiaries. “We have collected some relevant documents along with transaction trails with regard to the companies that appeared to have misused the trading platforms to evade taxes. We suspect that there are high chances of government officials being involved, especially as end-beneficiaries,” a CBI source said. “The undue advantage could be hidden and may have been done in a multi-layered arrangement, which needs to be identified.”
Sources said the central agency was in the process of vetting the documents and would accordingly take a call on registering a case against the suspected beneficiaries.
The issue is critical as a few instances of abuse have been reported despite several measures taken by the regulator and the bourses. The intensity of the matter has raised the probability of revocation of capital gains benefits.
So far, investigations by the SEBI revealed that 11,000 entities have bought shares of more than Rs 5 lakh each in the past three years in listed firms that might not have any business operations. The SEBI has identified these entities using data analytics and trading and surveillance data.
The probe suggests that such deals were aimed at evading capital gains tax by showing the source of income as legitimate from stock markets. The so-called losses, actually bogus losses, are showed in the books to offset the same against capital gains.
The modus operandi is thus: Operators advise beneficiaries to invest in the listed companies, which allot shares on preferential basis at a nominal rate. These shares are under a lock-in period for a year.
Subsequently, these operators manipulate the scrip. They also rope in entities to provide the “last traded price” to book LTCG and also to buy shares at a higher price. The beneficiary pays cash to the operator through a multi-layered structure from the gains made by evading taxes.
The markets regulator had reservations that the cases were about tax evasion, which do not fall under its purview. However, if share prices were manipulated, it could proceed under section 11B of the SEBI Act, which allows it to impound the sale proceeds.
It also pointed out that the evidence provided by the tax department was not sufficient to establish connections between promoters of companies, beneficiaries and the “last traded price” and “exit” providers.
The resolution of the vexed issue of massive non-performing assets (NPAs) in the banking system is a work in progress and some “visible action” will be initiated over the next few days under the NPA ordinance promulgated recently, finance and defence minister Arun Jaitley said.
The resolution of the vexed issue of massive non-performing assets (NPAs) in the banking system is a work in progress and some “visible action” will be initiated over the next few days under the NPA ordinance promulgated recently, finance and defence minister Arun Jaitley said on Thursday.
“The RBI was taking measures under the existing mechanism. We have now taken other steps and there would be visible action taken under the new mechanism in the next few days,” Jaitley said, addressing media on achievements of the ministries under him over the past three years. The Centre won’t provide any special package to any state to waive farm loans but the states are free to spend from their own budgets should they take any such decision, the minister said.
Here are few excerpts from FM’s media briefing:
On NPAs and other things constraining private investments
Massive toxic assets impact the ability of banks to support growth, although record levels of foreign direct investments (gross FDI inflows touched $60 billion in 2016-17) and higher government spending have offset inadequate private investments to a certain extent. Linked to it (NPAs) is the challenge of wanting to increase private sector investment, even though our FDI and public investments have significantly increased. And of course there is a significant (adverse) impact of the global situation also (on private investments).
“Note ban not sole reason for Q4 GDP slowdown”
Demonetisation could be one of the several factors, and not the sole reason, that contributed to the slowdown of GDP growth to an 8 quarter-low of 6.1% in Q42016-17. What you think is very clear (that note ban dragged down Q4 growth) isn’t very clear. There are several factors which can contribute to GDP in a particular quarter. There was some slowdown visible, given the global and domestic situations, even prior to demonetisation in the last year. Financial services, which used to have 9-10% growth, has come down (to 2.2% in Q42016-17). Under the current global situation, 7-8% growth, which is at the moment the Indian normal, is fairly reasonable by our own standard and very good by global standards.
And I am sure as the impact of all these policies (taken by the government) holds out, growth will gather momentum. There won’t be any adverse impact of GST on GDP growth. The GST by itself should normally add to growth.
(Chief economic adviser Arvind Subramanian pointed out that under the GST, the incidence of tax is going to come down. While there could be some teething problem in implementation, at the most, initially, the tax cut would be positive to both reduce inflation and stimulate consumption).
On Pradhan Mantri Garib Kalyan Yojana
PMGKY wasn’t an isolated scheme in last financial year. First we introduced the Income Disclosure Scheme; after the IDS, there was a (post-demonetisation) phase of people depositing cash in the banking system. And the PMGKY was over and above these. To assess the total amount of (black money) disclosures made, you have to look at all the three collectively.
Revenue secretary Hasmukh Adhia said the response to PMGKY hasn’t been very good; only Rs 5,000 crore has been declared under the scheme. There are mainly two reasons for it. First, even before the scheme was announced, people had tried to deposit their cash in different accounts and tried to “adjust their money”. Secondly, many people found the (PMGKY) rate – 50% tax plus 25% as interest-free for four years – too high).
No central funds for farm loan waiver by states
The Centre won’t provide any special package to any state to waive farm loans but states are free to spend from their own budgets should they take any such decision. The Centre will continue to provide the states funds in accordance with the latest Finance Commission suggestions, and not more to waive farm loans (clarified that states are free to take decision on farm loan waivers from their own budgets but they have to stick to the 3% fiscal deficit target, as stipulated under the fiscal responsibility legislation).
On Air India
As far as AI is concerned, Niti Aayog has given its suggestion to the civil aviation ministry and the ministry will have to explore all the options for divestment or privatisation of the airline. The civil aviation minister will now devise the methodology ( for disinvestment / privatisation). As far the merger of oil PSUs are concerned, the petroleum ministry will have to take a call.
On “jobless growth”
Jobs aren’t created outside the economic structure. If the economy grows then it’s only natural that the formal sector would create jobs and in this country job creation is even faster in the informal sector. Since there is no firm statistics available on job growth in the informal sector, the term ‘jobless growth’ is being bandied about.
On the amount of demonetised currency
On the total currency given to the banks, the RBI used to give the figures frequently during the process of demonetisation, but now that the exercise is complete, as a responsible institution it can’t give an approximation. Today, every currency note is to be counted and if there are counterfeits these also need to be counted before arriving at the real count. The exercise is enormous and large but the RBI will give the accurate figure when it is complete.
Income Tax department warns against cash dealings of Rs 2 lakh.
Income Tax department today warned people against indulging in cash transaction of Rs 2 lakh or more saying that the receiver of the amount will have to cough up an equal amount as penalty.
It also advised people having knowledge of such dealings to tip-off the tax department by sending an email to ‘ blackmoneyinfo@incometax.gov.in ‘.
The government has banned cash transactions of Rs 2 lakh or more from April 1, 2017, through the Finance Act 2017.
The newly inserted section 269ST in the Income Tax Act bans such cash dealings on a single day, in respect of a single transaction or transactions relating to one event or occasion from an individual.
“Contravention of Section 269ST would entail levy of 100 per cent penalty on receiver of the amount,” the tax department said in a public advertisement in leading dailies.
In the 2017-18 Budget, Finance Minister Arun Jaitley had proposed to ban cash transaction of over Rs 3 lakh. This limit was lowered to Rs 2 lakh as an amendment to the Finance Bill, which was passed by the Lok Sabha in March.
The restriction is not applicable to any receipt by government, banking company, post office savings bank or co- operative bank, the tax department said.
The move to ban cash transaction above a threshold was aimed at curbing black money by discouraging cash transaction and promoting digital economy.
The tax department had started the email address ‘ blackmoneyinfo@incometax.gov.in ‘ in December last year post the demonetisation of 500 and 1000 rupee notes.
It had then asked people having knowledge about conversion of black money into black/white to inform the government through this mail id.
Post the demonetisation of 500 and 1,000 rupee notes, people with unaccounted wealth had illegally converted their black money held in old notes to new 500 and 2,000 rupee notes.
The government had come out with a tax amnesty scheme PMGKY (Pradhan Mantri Garib Kalyan Yojana) under which people holding unaccounted cash could come clean by declaring their wealth and pay 50 per cent as tax and penalty. Also, a mandatory deposit of 25 per cent of the black money was to be made in a zero-interest bearing account for four years.
The Central Board of Direct Taxes (CBDT), the policymaking body of the income tax department, on Friday said that various law enforcing agencies have unearthed tax evasion of R1.37 lakh crore during the last three years as a result of over 23,000 searches and surveys. This led to criminal prosecution in 2,814 cases and arrest of nearly 4,000 persons.
The CBDT’s performance appraisal report comes after the expiration of government’s second scheme for income disclosure called Prime Minister Garib Kalyan Yojana (PMGKY).
Although the finance ministry is yet to announce the amount declared under the scheme, an analysis of tax collection numbers done by FE earlier this week showed that PMGKY may have garnered only a fraction of its predecessor scheme, under which a declaration of R55,000 crore of unaccounted money was made and close to R13,000 crore was collected as taxes and penalties in 2016-17.
This first scheme expired on September 30 last year while PMGKY came into effect in December and expired on March 31.
Explaining the actions taken over last three fiscals, the CBDT said that the Enforcement Directorate intensified its anti-money-laundering actions by registering 519 cases and conducting 396 searches culminating in arrests in 79 cases and attachment of properties worth Rs 14,933 crore.
Additionally, the government identified more than 245 benami transactions with provisional attachments of properties worth Rs.55 crore in 124 cases, the CBDT statement said. It added that the benami prohibition law which remained inoperative for last 28 years was made operational through a comprehensive amendment with effect from November 2016.
During 2013-14 to 2015-16, income tax investigations led to the detection of more than 1,155 shell companies used as conduits by over 22,000 beneficiaries. The amount involved in non-genuine transactions of such beneficiaries was more than Rs 13,300 crore, the CBDT said in a statement. It added that the ministry of corporate affairs issued more than 1 lakh notices for striking off names of defunct and non-compliant companies.
“A high-powered group has been set up for coordinating and monitoring the actions taken by departments concerned with the objective of eliminating the conduits of black money generation and application,” the CBDT said.
The board said that various steps have been taken to curb cash transactions including penalising cash transaction of more than Rs 2 lakh, limiting allowable cash expense up-to Rs 10,000 only, making Aadhaar mandatory for obtaining PAN and filing of income tax returns, and making PAN mandatory for cash deposits above Rs 50,000.
“The relentless crusade against black money will get further intensified in the coming days making the tax evaders and money launderers realise that they have to pay a heavy cost for their deviant behavior,” CBDT said.
I-T department gathered a huge amount of data as part of Operation Clean Money, which followed demonetisation, and is subjecting it to analytics to detect patterns and discover attempts at tax evasion.
If you splurged on something really expensive or made an enormous investment recently, rest assured your accounts won’t be opened up for scrutiny by the income tax department as long as these can be squared with your declared income.
“Scrutiny will be based on specific information,” a senior income tax official told ET. In other words, big transactions will no longer automatically qualify a person for scrutiny. The income tax department will only start asking questions if it has clear information that calls for an investigation, sparing honest taxpayers.
This was the outcome of a high-level meeting held by the Central Board of Direct Taxes (CBDT) last week to review the conditions for scrutiny. Such cases are currently picked up through computer-based criteria related to transactions above a certain ceiling. This idea is to ensure that regular taxpayers such as salaried employees don’t face unnecessary hassle and to allow tax authorities to focus their energies on high-risk individuals or entities where information of possible wrongdoing is available.
The department’s multiple data sources include the tax authorities of other countries and high-value transactions in India that will likely be the basis of any scrutiny.
Those identified under the department’s Operation Clean Money as having made large cash deposits in banks and bought costly items after demonetisation was announced could also face scrutiny if they have not explained their transactions satisfactorily.
The department gathered a huge amount of data as part of Operation Clean Money, which followed demonetisation, and is subjecting it to analytics to detect patterns and discover attempts at tax evasion. It has already identified 60,000 individuals, who will now face closer investigation.
But there is a conscious effort to make a shift towards quality rather than quantity to ensure the effectiveness of the exercise. The focus will be on limited scrutiny based on information with the department rather than a general one. Roving enquiries won’t be permitted and a limited scrutiny can only be converted to a general one after following adequate procedures.
Govt’s plan to make Aadhaar mandatory for key managerial personnel in filings under Companies Act is aimed at tackling issues of bogus identities, shell companies and money laundering
The government will soon make quoting of Aadhaar number compulsory for key managerial personnel and directors in regulatory filings under the Companies Act.
The move, primarily aimed at tackling the issue of bogus identities, comes at a time when authorities are bolstering measures to deal with the menace of shell companies, suspected to be used for laundering illicit funds.
Moving towards implementation of the Aadhaar requirement under the companies law, the corporate affairs ministry has already asked individual stakeholders to obtain Aadhaar at the earliest for “integrating their details with MCA21”. MCA21 is the portal through which filings required under the Companies Act are submitted to the ministry.
An official said the ministry has started work for implementing a framework to make quoting of Aadhaar compulsory in the filings made under the companies law. “We will roll it out pretty fast. It will be done in a phased manner,” the official said.
The idea is to have a system in place which would help in identifying the stakeholders whose name come up in the filings made through MCA21. The move also assumes significance against the backdrop of instances where authorities have found discrepancies in personal details provided by individuals in the regulatory filings.
According to the official, having Aadhaar number along with the filings would help ascertain the authenticity of the individuals. With respect to foreign entities, a separate system would be worked out by the ministry. There are more than 16 lakh registered companies.
While asking individual stakeholders to obtain Aadhaar at the earliest, the ministry had emphasised that information in Aadhaar should be in harmony with PAN (permanent account number).
“When implemented, all MCA21 services shall be available based on Aadhaar-based authentication only,” the notice, issued earlier this month, said.
Individual stakeholders, including “DIN (director identification number) holders/directors/key managerial personnel” as well as certain professionals have been asked to obtain Aadhaar.
Professionals of the institutes of chartered accountants, company secretaries and cost accountants have been asked to get Aadhaar as early as possible. This would be applicable irrespective of whether the individual is in “employment or in practice”.
As many as 8-9 lakh registered companies are not filing annual returns with the ministry and are a potential source of money laundering, revenue secretary Hasmukh Adhia said on Saturday.
The Government on Friday said as many as 77.5 lakh traders are registered on GSTN and help desks have been set up in every commissionerate to facilitate filing of tax return. “Till July 18, 2017, the total number of GSTIN (Goods and Services Taxpayer Identification Number) registration is 77,55,416,” Minister of State for Finance Santosh Kumar Gangwar said in a written reply to the Lok Sabha.
