Notifications & Circulars

Press Information Bureau

31.01.2017

Municipal Tax

Property Tax can be tapped to generate Additional Revenue at City Level

MANU/PIBU/0068/2017

The Economic Survey 2016-17, presented today in the Parliament by the Union Finance Minister Shri Arun Jaitley, stated that Urban Local Bodies (ULBs), having primary responsibility for the development and service provisioning of cities, face major and inextricably linked problems: large infrastructure deficits, inadequate finances, and poor governance capacities. Every Indian city faces serious challenges related to water and power supply, waste management, public transport, education, healthcare, safety, and pollution.

The analysis carried out for the Survey has found that greater service delivery is correlated with more resources, own revenue, staffing and capital spending per capita (Figure 1a,1b) Analysis indicates no clear relationship between service delivery and governance.

Figure 1a: Urban Capacities, Resources & Services Figure 1b: Own Revenue & Services Currently, tax revenues are not constrained by inadequate taxation powers of ULBs. One promising source is property tax. The study done for the Survey shows that property tax potential is large and can be tapped to generate additional revenue at city level. Satellite imagery can be a useful tool for improving urban governance by facilitating better property tax compliance. The study has shown that Bengaluru and Jaipur are currently collecting no more than 5-20 per cent of their respective potentials for property tax (Figure 2).

Competition between States is becoming a powerful dynamic of change and progress, that dynamic must extend to competition between States and Cities and between cities. Cities that are entrusted with responsibilities, empowered with resources, and encumbered by accountability can become effective vehicles for competitive federalism and, indeed, competitive sub-federalism to be unleashed.

Tags : Tax Additional Revenue

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Press Information Bureau

31.01.2017

Direct Taxation

Income Tax Department (ITD) launches Operation Clean Money

MANU/PIBU/0069/2017

Income Tax Department (ITD) has initiated Operation Clean Money, today. Initial phase of the operation involves e-verification of large cash deposits made during 9th November to 30th December 2016. Data analytics has been used for comparing the demonetisation data with information in ITD databases. In the first batch, around 18 lakh persons have been identified in whose case, cash transactions do not appear to be in line with the tax payer's profile. ITD has enabled online verification of these transactions to reduce compliance cost for the taxpayers while optimising its resources. The information in respect of these cases is being made available in the e-filing window of the PAN holder (after log in) at the portal https://incometaxindiaefiling.gov.in. The PAN holder can view the information using the link "Cash Transactions 2016" under "Compliance" section of the portal. The taxpayer will be able to submit online explanation without any need to visit Income Tax office.

Email and SMS will also be sent to the taxpayers for submitting online response on the e-filing portal. Taxpayers who are not yet registered on the e-filing portal (at https://incometaxindiaefiling.gov.in) should register by clicking on the 'Register Yourself' link. Registered taxpayers should verify and update their email address and mobile number on the e-filing portal to receive electronic communication. A detailed user guide and quick reference guide is available on the portal to assist the taxpayer in submitting online response. In case of any difficulty in submitting on line response, help desk at 1800 4250 0025 may be contacted. Data analytics will be used to select cases for verification, based on approved risk criteria. If the case is selected for verification, request for additional information and its response will also be communicated electronically. The information on the online portal will be dynamic getting updated on receipt of new information, response and data analytics.

The response of taxpayer will be assessed against available information. In case explanation of source of cash is found justified, the verification will be closed without any need to visit Income Tax Office. The verification will also be closed if the cash deposit is declared under Pradhan Mantri Garib Kalyan Yojna (PMGKY). The taxpayers covered in this phase should submit their response on the portal within 10 days in order to avoid any notice from the ITD and enforcement actions under the Income-tax Act as also other applicable laws.

Tags : Launch Operation Clean money

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Press Information Bureau

31.01.2017

Miscellaneous

Economic Survey advocates reforms to unleash economic dynamism and social justice

MANU/PIBU/0063/2017

India needs an evolution in the underlying economic vision across the political spectrum and further reforms are not just a matter of overcoming vested interests that obstruct them. This was stated in the Economic Survey 2016-17 presented in the Parliament today by the Union Finance Minister Shri Arun Jaitley. The Survey lists the some of the challenges that might impede India's progress. These challenges are classified by the Survey as follows: ambivalence about property rights and the private sector, deficiencies in State capacity, especially in delivering essential services and inefficient redistribution. The Survey highlights difficulties in privatizing public enterprises, even for firms where economists have made strong arguments that they belong in the private sector. In this context, the Survey points towards the need to further privatize the Civil Aviation, Banking and Fertilizer sectors. The Survey points out that the capacity of the State in delivering essential services such as health and education is weak due to low capacity, with high levels of corruption, clientelism, rules and red tape. At the level of the states, competitive populism is more in evidence than competitive service delivery, the Survey adds. Constraints to policy making due to strict adherence to rules and abundant caution in bureaucratic decision-making favours status quo, the Survey cautions.

According to the Survey, redistribution by the government is far from efficient in targeting the poor. This is intrinsic to current programs because spending is likely to be greatest in states with better institutions and which will therefore have fewer poor. The Survey notes that over the past two years, the government has made considerable progress toward reducing subsidies, especially related to petroleum products. Technology has been the main instrument for addressing the leakage problem and the pilots for direct benefit transfer in fertilizer represent a very important new direction in this regard, the Survey adds. Noting that India has come a long way in terms of economic performance and reforms, Economic Survey 2016-17 says that there is still a journey ahead to achieve dynamism and social justice. Completing this journey will require broader societal shifts in the underlying vision, the Survey adds.

Tags : Survey Reforms Economic dynamism

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Press Information Bureau

31.01.2017

Labour and Industrial

Labour migration in India increasing at an accelerating rate, reveals new study: Economic Survey 2016-17

MANU/PIBU/0072/2017

New estimates of labour migration in India have revealed that inter-state labor mobility is significantly higher than previous estimates. This was stated in the Economic Survey 2016-17 presented by the Finance Minister Shri Arun Jaitley in the Parliament today. The study based on the analyses of new data sources and new methodologies also shows that the migration is accelerating and was particularly pronounced for females. The data sources used for the study are the 2011 Census and railway passenger traffic flows of the Ministry of Railways and new methodologies including the Cohort-based Migration Metric (CMM) .

The new Cohort-based Migration Metric(CMM) shows that inter-state labor mobility averaged 5-6.5 million people between 2001 and 2011, yielding an inter-state migrant population of about 60 million and an inter-district migration as high as 80 million. The first-ever estimates of internal work-related migration using railways data for the period 2011-2016 indicate an annual average flow of close to 9 million migrant people between the states. Both these estimates are significantly greater than the annual average flow of about 4 million suggested by successive Censuses and higher than previously estimated by any study.

The second finding from this new study is that migration for work and education is accelerating. In the period 2001-2011 the rate of growth of labour migrants nearly doubled relative to the previous decade, rising to 4.5 per cent per annum. Interestingly, the acceleration of migration was particularly pronounced for females and increased at nearly twice the rate of male migration in the 2000s. There is also a doubling of the stock of inter-state out migrants to nearly 12 million in the 20-29 year old cohort alone. One plausible hypothesis for this acceleration in migration is that the rewards (in the form of prospective income and employment opportunities) have become greater than the costs and risks that migration entails. Higher growth and a multitude of economic opportunities could therefore have been the catalyst for such an acceleration of migration.

Third, and a potentially exciting finding, for which there is tentative but no conclusive evidence, is that while political borders impede the flow of people, language does not seem to be a demonstrable barrier to the flow of people. For example, a gravity model indicates that political borders depress the flows of people, reflected in the fact that migrant people flows within states are 4 times than migrant people flows across states. However, not sharing Hindi as a common language appears not to create comparable frictions to the movement of goods and people across states.

Fourth, the patterns of flows of migrants found in this study are broadly consistent with what is expected - less affluent states see more out migration migrating out while the most affluent states are the largest recipients of migrants. Figure 2 shows the strong positive relationship between the CMM scores and per capita incomes at the state level. Relatively poorer states such as Bihar and Uttar Pradesh have high net out-migration. Seven states take positive CMM values reflecting net in-migration: Goa, Delhi, Maharashtra, Gujarat, Tamil Nadu, Kerala and Karnataka. Fifth, the costs of moving for migrants are about twice as much as they are for goods - another confirmation of popular conception.

Policy actions to sustain and maximize the benefits of migration include: ensuring portability of food security benefits, providing healthcare and a basic social security framework for migrants - potentially through an inter-state self-registration process. While there do currently exist multiple schemes that have to do with migrant welfare, they are implemented at the state level, and hence require greater inter-state coordination.

Tags : Labour migration Increase Study

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Reserve Bank of India

30.01.2017

Banking

India Post Payments Bank Limited commences operations

MANU/RPRL/0009/2017

India Post Payments Bank Limited has commenced operations as a payments bank with effect from January 30, 2017. The Reserve Bank has issued a licence to the bank under Section 22 (1) of the Banking Regulation Act, 1949 to carry on the business of payments bank in India. Department of Posts was one of the 11 applicants which were issued in-principle approval for setting up a payments bank, as announced in the press release on August 19, 2015.

Tags : Payments bank Operation Commencement

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Ministry of Finance

30.01.2017

Service Tax

Service Tax (Second Amendment) Rules, 2017

MANU/DSTX/0006/2017

In exercise of the powers conferred by sub-section (1), read with sub-section (2) of section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the Service Tax Rules, 1994, namely:-

1. (1) These rules may be called the Service Tax (Second Amendment) Rules, 2017.

(2) They shall come into force on the date of publication in the Official Gazette.

2. In the Service Tax Rules, 1994, in rule 6, in sub-rule (1), after the last proviso, the following proviso shall be inserted, namely,-

“Provided also that in case of online information and database access or retrieval services provided or agreed to be provided by any person located in a non-taxable territory and received by non-assessee online recipient, the service tax payable for the month of December, 2016 and January, 2017, shall be paid to the credit of the Central Government by the 6th day of March, 2017.”

Tags : Service Tax Rules Amendment

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Securities and Exchange Board of India

27.01.2017

Capital Market

Procedures for Exchange Listing Control Mechanism

MANU/SSMD/0005/2017

Regulation 45 of the SECC Regulations provides for listing of stock exchanges on any recognised stock exchange, other than itself and its associated stock exchange. As per Regulation 45(2) of the SECC Regulations, the Board may specify such conditions as it may deem fit in the interest of the securities market.

In order to address any conflict arising out of aforesaid provisions of listing of a stock exchange on any recognised stock exchange, other than itself, and also to ensure effective compliance with the applicable laws, it has been decided that:

I. The Listing Department of the listing stock exchange (i.e. a stock exchange on which the listing is done) shall be responsible for monitoring the compliance of the listed stock exchange (i.e. a stock exchange which is getting listed) as in the case of listed companies.

II. The Independent Oversight Committee of the listing stock exchange shall exercise oversight at the second level to deal with the conflicts, if any. The listed stock exchange may appeal to the Independent Oversight Committee of the listing stock exchange, if aggrieved, with the decision on disclosure of the listing stock exchange as referred under para 2 (I).

III. An independent Conflict Resolution Committee (CRC) constituted by SEBI, with an objective for independent oversight and review, shall monitor potential conflicts between listed and listing stock exchange on a regular basis. The listed stock exchange aggrieved by the decision of the Independent Oversight Committee of the listing exchange may appeal to the CRC.

Tags : Exchange Listing Mechanism Procedures

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Press Information Bureau

01.02.2017

Civil

Abolishment of Foreign Investment Promotion Board

MANU/PIBU/0085/2017

While presenting the General Budget 2017-18 in Lok Sabha here today, the Union Finance Minister, Shri Arun Jaitley proposed that the Foreign Investment Promotion Board (FIPB) will be phased-out in the next fiscal. Expressing concern over dubious deposit schemes, Shri Jaitley said that a Bill will soon be tabled in Parliament to protect the poor and gullible investors. Stating that the Government has already undertaken substantive reforms in FDI policy in the last two years and more than 90% of the total FDI inflows are now through the automatic route, Shri Jaitley said that the FIPB has successfully implemented e-filing and online processing of FDI applications and now reached a stage where FIPB can be phased out. Therefore, FIPB will be abolished in 2017-18, he added.

Pointing out that there is an urgent need to protect the poor and gullible investors from dubious deposit schemes, operated by unscrupulous entities, the Finance Minister said that a draft bill to curtail the menace of illicit deposit schemes has been placed in the public domain and will be introduced in parliament shortly after its finalisation. This Act will be amended in consultation with various stakeholders, as part of our 'Clean India' agenda, he added. Dealing with the markets, the Finance Minister proposed that high net worth NBFCs can also now participate in IPOs just like the banks and insurance companies. Shri Jaitley said he proposed to allow systemically important NBFCs regulated by RBI and above a certain net worth, to be categorised as Qualified Institutional Buyers (QIBs) by SEBI at par with the banks and insurance companies, making them eligible for participation in IPOs with specifically earmarked allocations. This will strengthen the IPO market and channelize more investments, he added. Shri Jaitley said that a common application form for registration, opening of bank and demat accounts, and issue of PAN will be introduced for Foreign Portfolio Investors (FPIs). SEBI, RBI and CBDT will jointly put in place the necessary systems and procedures. This will greatly enhance operational flexibility and ease of access to Indian capital markets. The commodities and securities derivative markets will be further integrated by integrating the participants, brokers, and operational frameworks, he added.

In effort to improve the ease of doing business, the Finance Minister said the process of registration of financial market intermediaries like mutual funds, brokers, portfolio managers, etc. will be made fully online by SEBI. Steps will be taken for linking of individual demat accounts with Aadhar, he added. To check bank NPAs and enhance capital flows into the securitisation industry, Shri Jaitley said that the listing and trading of Security Receipts issued by a securitisation company or a reconstruction company under the SARFAESI Act will be permitted in SEBI registered stock exchanges. Stating that in the Financial Sector, the Government's focus is on building stable and stronger institutions, Shri Jaitley said this thrust will be continued with several new measures as part of the reforms agenda. Shri Jaitley said that the Cyber security is critical for safeguarding the integrity and stability of our financial sector and a Computer Emergency Response Team for our Financial Sector (CERT-Fin) will be established. This entity will work in close coordination with all Financial Sector Regulators and other stakeholders, he added.

Tags : Board Abolishment Foreign investment

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Press Information Bureau

01.02.2017

Banking

Political Parties cannot receive donation above Rs. 2,000 in cash from one person

MANU/PIBU/0099/2017

The Union Minister for Finance and Corporate Affairs, Shri Arun Jaitely while presenting the General Budget 2017-18 in Parliament today said that the political party can receive maximum donation up to Rs. 2,000 in cash from one person. Proposing steps towards transparent funding of political parties, the Finance Minister Shri Jaitley proposed that banks will issue Electoral Bonds to enable donations to political parties.

In his Budget Speech, the Finance Minister Shri Jaitley further said that the political parties will be entitled to receive donations by cheque or digital mode from their donors. Every political party will have to file its Income-Tax Return within the prescribed time limit, he added.

In a significant step to cleanse the system of funding of political parties, Shri Jaitley said that donations to political parties can soon be made by purchasing electoral bonds from authorized banks. The Finance Minister said that the Government will soon frame a Scheme in this regard and an amendment is being proposed to the Reserve Bank of India Act to enable the issuance of electoral bonds. He said that a donor could purchase bonds from authorised banks against cheque and digital payments only. These bonds shall be redeemable in the designated account of a registered political party within the prescribed time limit from issuance of bond, he added.

The Finance Minister said that these steps have been proposed as the political funding for elections couldn't become transparent though attempts were made to cleanse the system. Despite amendment to the Representation of Peoples' Act, the Companies Act and the Income Tax Act to incentivise political donations by individuals, partnership firms, HUFs and companies, political parties continue to receive most of their funds through anonymous donations which are shown in cash. He said that the situation has only marginally improved since the provisions were introduced, such as granting exemption from payment of tax to both the donor and the donee, provided a list of donors is maintained, who had contributed more than Rs. 20,000.

Tags : Donation Limit Political parties

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Press Information Bureau

01.02.2017

Indirect Taxation

GST Council has finalised its recommendations on almost all the issues based on consensus, says Finance Minister in his Budget Speech

MANU/PIBU/0078/2017

The Union Minister for Finance and Corporate Affairs, Shri Arun Jaitley while presenting the General Budget 2017-18 in Parliament today said that the GST Council has finalised its recommendations on almost all the issues based on consensus after spirited debate and discussions. The Finance Minister said that the Government on its part has promptly given effect to various provisions of the Constitutional Amendment Act, including constitution of the GST Council. The GST Council held 9 meetings to discuss various issues relating to GST, including broad contours of the GST rate structure, threshold exemption and parameters for composition scheme, details for compensation to States due to implementation of GST, examination of draft model GST law, draft IGST law and the Compensation Law and administrative mechanism for GST. He said the preparation of IT system for GST is also on schedule.

The Finance Minister Shri Jaitley in his Budget Speech further said that the extensive reach-out efforts to trade and industry for GST will start from 1st April, 2017 to make them aware of the new taxation system. He said that since the enactment of the Constitution (One Hundred and First Amendment) Act, 2016, there has been substantial progress on preparatory work towards ushering in GST which is by far the biggest tax reform since Independence. Several teams of officers both from the States and Central Board of Excise and Customs (CBEC)have been working to give finishing touch to the Model GST law, rules and other details, he added.

Shri Jaitley said that the Government, through the Central Board of Excise & Customs (CBEC) shall continue to strive to achieve the goal of implementation of GST as per schedule without compromising the spirit of co-operative federalism. He added that the implementation of GST is likely to bring more taxes both to Central and State Governments because of widening of tax net. The Finance Minister Shri Jaitley stated that not many changes have been proposed in current regime of Excise & Service Tax in the Budget proposals since they are to be replaced by GST soon.

Tags : Debate Council Recommendation

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