Aadhaar: What happens to firms like Jio, Paytm as SC strikes down sec 57?

Finance minister Arun Jaitley on Wednesday indicated that the Centre would examine whether separate legal backing is needed for Section 57 of the Aadhaar Act, a provision which allows private entities access to the core Aadhaar database.

The Supreme Court on Wednesday struck down Section 57 of the Aadhaar Act, which deals with private entities, and read down a few others, stating that they were unconstitutional.

“If it is backed by law, it is not unconstitutional,” Jaitley said when asked about Supreme Court striking down Section 57, which allows ‘any body corporate or person’ or ‘private entity’ to demand Aadhaar.

He added that the Centre would see if the court’s decision arose from a “procedural concern”.

“So let us first read the judgement. There are two-three prohibited areas. Are they because they are totally prohibited or are they because they need legal backing. So my answer in general, the generic answer will depend on what is the rationale… for instance on these private entities, it needs to be backed by law. That’s my understanding. I still have a detailed reading of the judgement to do,” Jaitley said

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Arvind Subramanian resigns as CEA to Modi govt, Jaitley announces in blog

Union Minister Arun Jaitley said on Thursday that Chief Economic Advisor Arvind Subramanian will be leaving the finance ministry because of "pressing family commitments" and will return to the US.

Subramanian was appointed as CEA to the finance ministry on October 16, 2014 for a period of three years. In 2017 his term was extended for a year.

"Few days ago Chief Economic Advisor Arvind Subramanian met me over video conferencing. He informed me that he would like to go back to the United States on account of pressing family commitments. His reasons were personal but extremely important for him. He left me with no option but to agree with him," Jaitley wrote in a Facebook post.

He further said that on expiry of Subramanian's three year term in October last year, he had requested him to continue for some more time.

Arun Jaitley hints no cut in excise on oil, asks citizens to pay taxes

Union Minister Arun Jaitley today urged citizens to pay their due share of taxes "honestly" to reduce dependence on oil as a revenue source, and virtually ruled out any cut in excise duty on petrol and diesel saying it could prove to be counter-productive.

While salaried class pay their due share of taxes, Jaitley said "most other sections" have to improve their tax payment record, which is keeping India "far from being a tax-compliant society".

"My earnest appeal, therefore, to political leaders and opinion makers ...would be that evasion in the non-oil tax category must be stopped and, if people pay their taxes honestly, the high dependence on oil products for taxation eventually comes down. In the medium and long run, upsetting the fiscal maths can prove counter-productive," Jaitley said.

In a facebook post titled 'The Economy and the Markets Reward Structural Reforms and Fiscal Prudence', Jaitley said in last four years, central government's tax-GDP ratio has improved from 10 per cent to 11.5 per cent. Almost half of this, 0.72 per cent of GDP, accounts for an increase in non-oil tax-GDP ratio.

Cashback and discount: Modi govt's mega plan to boost digital transactions

The government is working on a proposal to incentivise digital transactions by providing cashbacks to businesses and price benefits to consumers, a source said.

As per the proposal being worked out by the Revenue Department, consumers paying through the digital mode would be offered a discount over the maximum retail price (MRP). The discount would be capped at Rs 100.

Businesses, on the other hand, could get a cashback based on the quantum of turnover through the digital mode.

The proposals to encourage digital transactions are likely to be placed before the GST Council, chaired by Finance Minister Arun Jaitley and comprising state ministers, on May 4.

According to the source, the issue of providing incentive for digital transaction was discussed at a meeting held in the Prime Minister's Office.

During the meeting, three possible modes of incentivising businesses to go in for digital transactions were discussed. Apart from cashbacks, a proposal to allow businesses to obtain tax credit on the basis of turnover obtained through digital mode was also discussed.

ATM cash crunch: PMO takes stock; Madhya Pradesh hit for 3rd day; updates

A cash crunch at ATMs has hit a dozen states, including Uttar Pradesh, Madhya Pradesh, poll-bound Karnataka, Telangana, Andhra Pradesh, Bihar, Gujarat, Maharashtra, Rajasthan, and Punjab. While the Chhattisgarh Chief Minister said his state, too, was facing a cash crunch, with the crisis expected to pass shortly, bank authorities in Jammu & Kashmir and the government in Maharashtra said their respective states were not facing an ATM cash crunch. With automated teller machines (ATMs) drying up, the central government and the Reserve Bank of India (RBI) stepped in to address the currency shortage.

Finance Minister Arun Jaitley attributed the cash shortage to an unusual spurt in demand during the past three months and described it as "temporary", adding that the ATM cash crunch was being "tackled quickly" and that there was "more than adequate" currency in circulation. To fix the ATM cash crunch, the government said that the printing of Rs 500 denomination notes, about 5 billion of which are printed per day, would be increased by five times. Notes worth Rs 700-750 billion (Rs 70,000-75,000 crore) would be printed in a month.

However, what caused the cash crunch and ATMs running dry in the first place? The suspected hoarding of Rs 2,000 notes was cited as one reason by the government. The RBI, for its part, said that logistics and recalibration issues were limiting cash replenishment at ATMs. Further, Finance Minister Jaitley said that the "temporary shortage" was caused by a "sudden and unusual increase (in demand)" in some areas and that it was being "tackled quickly". With the RBI and banks blaming cash management companies for ATMs running dry, ATM industry representatives said that it was the banks that were unable to meet the demand for cash. They said banks had not been able to meet their indent, the daily calculation of cash required, for the past four-five days.

PMO was aware of the PNB scam almost two years ago: Congress

PNB Scam - The Congress on Thursday said that a whistleblower had alerted the government in 2016 about the Rs 115 billion banking fraud by fugitive diamond merchant Nirav Modi but Prime Minister Narendra Modi and Finance Minister Arun Jaitley ignored the tip.

Congress spokesperson Randeep Surjewala said whistleblower Hari Prasad had written to the Prime Minister's Office as early as July 2016, alerting the government about the "biggest bank loot scam in 70 years" in independent India.

"What does the Prime Minister do? Nothing. What does the Finance Ministry do? Nothing.

What does the Corporate Affairs Ministry do? Nothing. What does the Financial Intelligence Unit of the Finance Ministry do? Nothing," Surjewala told reporters on Thursday.

"You are in power, a fraud is happening under your nose. What were you doing and how did they let the accused escape? Face the truth and answer questions."

He also asked Prime Minister Modi what the fugitive billionaire was doing with him at the World Economic Forum in Davos in January.

GST on gold: Buying and making jewellery to get expensive for customers

The Goods and Service Tax (GST) Council has been kind enough to provide a special 3 per cent  GST to gems and jewellery sector ( the exception being rough diamonds at 0.25 per cent).

Going by the economic survey of India and the hype which was created in the run-up to this meeting, a much higher rate was feared. However, the rate of GST for jewellery is in line with what it was under the old tax regime.

GST has increased paperwork and lot of compliance. Only time will tell if we as a country or an industry are ready for it.

The immediate impact would be on the investment buying of gold by consumers as the resale value will be down by three per cent. Here' an example:

Mr A bought gold worth   Rs 100

Paid GST                                Rs     3
                                                —————
Total cost                                Rs 103

Now, after 6 months he wants to sell this gold and presuming that the gold price remains constant, he will get Rs 100 and the GST amount would be lost at the consumer level.

The transaction impact cost has increased from about one per cent to three per cent.

From the government's point of view, this is in line with their thinking/ planning — don’t invest in physical gold, rather invest in gold sovereign bonds. The consumer will also be better of as there is an interest coupon attached to bonds and it tracks local gold prices.

The exchange business of old jewellery for new ones will also be affected as the cost of 3 per cent will affect the transaction.

Another area which will affect the industry and the consumer is making of gold jewellery out of gold/scrap supplied by the customer. At present, there was no tax impact on the making of jewellery. Labour or making charges of jewellery were exempt from service tax (similar exemption was also under excise rules ). Under GST no such exemptions exist and making charges will be subject to 18 per cent GST.  This is an undesired result.

Export from domestic tariff area (other than SEZ ) will be hit on two counts:

One, there is no exemption from GST for gold procured for export purposes. This would mean a higher blockage of working capital.

Second, the export business will also be harmed. It depends on raw material (gold ) being supplied by oversea buyers and the Indian party makes the jewellery and exports i.e. value addition in the form of design and labour.

Under GST regime, the overseas customer will have to register as a non-resident business person and undertake the required paperwork. This will deter many customers.

Bullion imports system may be disturbed/altered as most international suppliers (including bullion banks)  sending goods on consignment to India will have to register as a non-resident business. This requirement may deter many players operating in India.

The diamond segment, particularly in the home state of Gujarat, had a total exemption from indirect tax. Value-added tax was zero in Gujarat and there is no excise on diamonds.
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Make in India arms too? Jaitley says new defence manufacturing policy soon

The government is in ‘advanced stages’ of formulating a new policy to increase domestic defence manufacturing and reduce dependence on the imported high-tech military, Finance and Defence Minister Arun Jaitley said on Friday.

"India is the world's largest arms importer, spending some 1.8 per cent of its GDP on defence. It imports about 70 per cent of defence equipment, a proposition which the government wants to change,” Jaitley said at an event organised by industry body CII.

"We are in the advanced stages of formulating a policy where we can ensure that instead of just being buyers, on the strength of technological and other tie-ups, India also becomes a manufacturing economy," he said.

Jaitley did not give additional details on the proposed policy. "The response that we have from domestic and international industry has been quite encouraging itself," he added.

Additionally, he stated that there would not be any massive surprises in fixing tax rates under the new GST regime and that new rates under the nationwide tax regime, expected to be rolled out from July 1, not be "significantly different" from current levels.

He, however, added that companies should pass on to consumers the benefit of reduction in taxes under GST which will eliminate the current compounding effect of different central and state levies. The GST Council, headed by Jaitley and comprising representatives of all the states, is scheduled to meet in Srinagar on May 18-19 to finalise tax rates on different goods and services after unifying at least 10 indirect taxes into the Goods and Services Tax (GST).

"We are now in final stages of fixing tariffs for different commodities. The formula under which it is being done has also been explained and therefore nobody is going to be taken by surprise, it's not going to be very significantly different," Jaitley said.
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Note ban: 1.8 mn accounts being probed for large deposits, says Jaitley

Authorities have detected 18 lakh cases after demonetisation where the income profiles of people do not match their account profile, the Lok Sabha was informed on Friday.

Preliminary information has been sought from such people and many have responded. Those who have not given details would be issued with notices as per procedure, Finance Minister Arun Jaitley said during Question Hour.

Responding to supplementaries, he said there was an extended footprint of digitisation in the banking sector. With digitisation, the risk of tampering of technology also increases.

But banks are also hiring experts to develop firewalls around their system to make it increasingly difficult to breach it, Jaitley said, adding that technology has to keep pace with crime.

He also said that risk assessment was a continuous process for banks who do it individually and collectively.

In his written response, Jaitley said as on March 31, 2016, 29 per cent of the savings accounts of public sector banks and regional rural banks sponsored by them were inoperative or lying dormant.

A variety of factors have a bearing on an account being inoperative. These may include factors like opening of a new account with change of residence or office, death of the account holder or the relative convenience of operating different accounts, he said.(READ MORE)

Railways seek reimbursement for IRCTC service charge

With the finance ministry starting the process for listing of Indian Railway Catering and Tourism Corporation (IRCTC), Indian Railway Finance Corporation (IRFC) and Ircon International (Ircon), the loss of service charge for IRCTC has become a cause for concern for railway officials.

The government waived the service charge following demonetisation to encourage cashless transactions.

The railway ministry has written to the finance ministry seeking reimbursement of the loss amounting to over Rs 500 crore on an annualised basis. IRCTC shares half of this service charge revenue with the railways.

Officials said the process for appointment of merchant bankers was under way with ICICI Securities and IDFC making presentations. The Department of Public Asset Management has set March 16 as the final date for submission of requests for quotations in this regard.

The decision to list these companies came as a surprise to the railways when Finance Minister Arun Jaitley made the announcement in his budget speech last month. The railways had written to the finance ministry on the issue of service charge before the budget as well.(READ MORE)

Budget proposal for new rail lines to boost SAIL's order book

The proposal of laying 3,500-km new rail lines by the Indian Railways would boost the order portfolio of state-run Steel Authority of India Ltd (SAIL).

In Budget 2017, proposal has been made to build new rail lines that would be about 25 per cent more than in the current financial year. In 2016-17, 2,800-km new rail lines were proposed.

The Indian Railways would be requiring about 420,000 tonnes of rails for the new lines, which SAIL would be supplying. The state-run steel maker is the sole supplier of rails to the Indian Railways.

The Bhilai Steel Plant (BSP), the flagship entity of SAIL, is the only entity of the company producing rail. Besides new rail lines, India Railways had been procuring steel from the company for track replacement also. The BSP had been supplying about 700,000 tonnes of rail on average annually.

A senior SAIL official said that the company was now equipped to meet the entire demand of the Indian Railways in future. The newly dedicated state-of-the-art Universal Rail Mill (URM), established at a cost of about Rs 1,200 crore in BSP, would take the company’s total rail production capacity to 2.0 million tonnes per annum (MTPA). This would be the largest rail production capacity in any single location for a plant the world over.(Read More)

After note ban, banks flush with cash but India Inc in no shape to borrow

“Demonetisation has made banks flush with funds, and they will lend it to productive sectors.” — Power Minister Piyush Goyal, November 26, 2016.

It won’t be quite as easy as Goyal said.

Rising non-performing assets (NPAs) and sluggish economic growth sparked a 60% decline in corporate borrowing over the last six years, according to an IndiaSpend analysis of Reserve Bank of India (RBI) data, inhibiting the anticipated lending bonanza to companies from banks after demonetisation.

Now, after the government scrapped 86% of India’s bank notes, by value, there are growing indicators of a further slowing.

Automobile companies are witnessing the sharpest fall in deliveries to dealers in 16 years, the Times of India reported, home sales have hit a six-year low, NDTV Profit reported, and bank credit to infrastructure companies declined steadily over the first eight months of 2016-17 and contracted 6.7 per cent in November, the Indian Express reported, quoting RBI data released on January 10, 2017.

So, the Rs 12.44 lakh crore that has now returned to the banking system may be difficult to lend to the corporate sector.

“Deposits can be deployed only if interest rates are cut. Without reducing interest rates, demand won’t rise,” said Nilanjan Ghosh, economist of the Observer Research Foundation, a think tank. “The assumption is that demonetisation has led to higher deposits, resulting in larger cash reserves, allowing banks to advance loans and earn interest. This, in turn, will impact profits, strengthening the core capital of banks.”(Read More)

Higher tax mop up reflects no slowdown post note ban: Jaitley

Latest Business News - Highlighting the impact the 'currency squeeze', as a result of demonetisation, has had on revenue collection in the country in the months of November and December last year, Union Finance Minister Arun Jaitley on Monday said that collection figures have moved up in all states.

"The big picture is that the Direct Tax collections have moved up. The Indirect Tax collections have also significantly increased," Arun Jaitley told a press conference here.

The Finance Minister, who presented the revenue collection data report for the past two months, said the Direct Tax collections are 12.01 percent more than the collections for the corresponding period last year for the first three quarters of the ongoing financial year - from April, 2016, to December, 2016. This collection, the report says, is 65.3 percent of the total Budget Estimates of Direct Taxes for F.Y. 2016-17.

Jaitley said, "The Direct Taxes include the corporation tax, the personal tax and the likes — all taken together."

The collections under advance tax stand at Rs 2.82 lakh crore, which is 14.4 percent higher than the figures for the corresponding period of last year. CIT advance tax is growing at 10.6 percent while PIT advance tax has registered a growth of 38.2 percent.(Read More)

Budget Session likely to begin on Jan 31, Budget to be presented on Feb 1

Economic News - As part of a major overhaul of the budget process, the Cabinet Committee on Parliamentary Affairs (CCPA) on Tuesday recommended advancing the holding of the Budget Session from January 31 followed by the presentation of the Union Budget onFebruary1.

Both the address of the President and tabling of the Economic Survey are likely to take place on January 31. The first phase of the Budget Session will run till February 9.

The CCPA, headed by Home Minister Rajnath Singh, met in the capital and made these recommendations to President Pranab Mukherjee. Parliamentary Affairs Minister Ananth Kumar, Law Minister Ravi Shankar Prasad and Minister of State for Parliamentary Affairs Mukhtar Abbas Naqvi also attended the meeting.

Early presentation of the Budget 2017 would mean that the entire exercise is over by March 31 and expenditure as well as tax proposals will come into effect right from the beginning of the new financial year, thereby ensuring better implementation.

As per the earlier practice, the budgetary exercise was completed only by mid-May and with the monsoon arriving in June, most of the schemes and spendings by states did not take off until October, leaving just half-a-year for their implementation.

In September 2015, ending a nearly a century-long practice, the Cabinet had decided to scrap a separate budget for the railways and merge it with the General Budget, presentation of which was decided to be advanced to spur spending and boost the economy.

Earlier, the Budget approval process usually happened in two parts extending to the second or third week of May, hampering early implementation of schemes and spending programmes.(Read More)

RBI retracts - multiple deposits of demonetised notes allowed till Dec 30

Breaking News - A day after the Reserve Bank withdrew the notification that barred people from depositing old notes in bank accounts more than once, the central bank on Thursday clarified that people are free to make more than one deposit till December 30.

The old Rs 500 and Rs 1,000 notes can be deposited at bank branches or in cash deposit machines more than once till December 30, Reserve Bank of India (RBI) said in the updated Frequently asked questions (FAQ).

The customers should use separate pay-in-slips for making deposits in the mixed bunch of demonetised and legal tender notes, it said.

Anybody depositing more than Rs 50,000 in cash in their bank account needs to submit a copy of the PAN card in case the bank account is not seeded with the information.

The clarification on the part of the RBI comes a day after it took a U-turn on its notification of December 19 after widespread protests from the public.

Finance Minister Arun Jaitley had clarified the same evening on December 19 that one-time deposit would not attract any scrutiny by bankers. However, on Tuesday, he had insisted that only a one-time deposit would be allowed till December 30. On Wednesday, the RBI withdrew its norms on KYC deposits, but left it unclear whether multiple deposits would be allowed.(Read More)

Is it time to end a 150-year-old tradition and move to a Jan-Dec financial year?

With Finance Minister Arun Jaitley all set to present the budget for 2017-18 on February 1, 2017, India will again debate if a 150-year-old colonial-era tradition of a financial year that runs from April-March should be discarded and switched to January-December, in line with the country’s monsoons and agricultural harvests.

The central government adopted the April-March financial year in 1867 to align the Indian financial year with the British government, according to this discussion note on changing India’s financial year released by Niti Aayog. Prior to 1867, a May-April financial year was followed. In July 2016, the finance ministry has constituted an expert committee–chaired by Shankar Acharya, former chief economic advisor–to look at the feasibility of changing the financial year, according to a statement by the ministry to the Lok Sabha (lower house of Parliament) on December 16, 2016. The committee will submit its report to the government on December 31, 2016.(Read More)

Cap on ATM withdrawal to be eased after Dec 30, says MoS Finance

Minister of State for Finance Santosh Gangwar has said that the current restrictions on ATM withdrawals will be removed after December 30 and added that there are sufficient cash to cater to people's needs.
When he was asked about the possibility of easing withdrawal caps, Gangwar said, "Yes, of course, it will happen. It's just a temporary phase."
When we he was asked as to whether the withdrawal limits will be normalised, Gangwar said, "I am also in favour of that, but it is under discussion."
Currently, a maximum of Rs 2,500 can be withdrawn from ATMs in a day, while Rs 24,000 per week can be withdrawn from bank accounts(ReadMore).

30% tax advantage for digital transactions, says Arun Jailtey

Finance Minister Arun Jaitley on Tuesday said small traders and businesses will get a tax advantage of more than 30 per cent for digital transactions.

The government on Monday said small traders and businesses with a turnover of up to Rs 2 crore would pay less tax if they accept payments through banking and digital means.

"There will be a significant tax benefit for small traders if you turn digital. It is a tax incentive to support digitisation of economy," Jaitley told the media.

"If we calculate, many traders will get a tax advantage of more than 30 per cent for transactions in digital mode," he added.(Read More)