New Delhi, July 26: Outgoing Chief Economic Adviser Arvind Subramanian exuded confidence that the highest slab of 28 per cent tax under GST would be “virtually a hollow shell” over the next year or so.
The all powerful GST Council comprising state finance ministers and headed by Union Finance Minister has pruned the highest 28 per cent slab by cutting tax rates on 191 goods over the last one year, including ACs, digital cameras, video recorders, dish-washing machines and automobiles.
There are just 35 items left in the highest tax bracket.
When the 28 per cent tax rate was imposed on certain items under GST, there was a political reaction against it, and the GST Council responded by “really whittling down…quite substantially” the number of products in that slab, Subramanian said in an interview to Rajya Sabha TV’s ‘To The Point’ programme.
“I am very confident that over the next year so that 28 per cent hopefully will be virtually a shell hollow shell,” he said.
The CEA also said that a lot of effort and time was devoted to the simplifying the burden on small and medium enterprises.
To a question regarding lateral entry into government, he said: “I am lateral entrant myself. So how can I argue against that?”
He stressed on the need to get talent from everywhere outside the government or outside the country as well.
“You need specific expertise. I think the lateral entry is a good thing. Govt needs more talent than silicon valley,” said Subramanian, who would be leaving the finance ministry on July 30. He had joined the ministry in October 2014.
.New Delhi, Jul 2: Union Minister Arun Jaitley on Sunday dismissed the idea of a single GST slab being advocated by Congress President Rahul Gandhi as flawed , saying that it can only work in a country where the entire population has similar and high capacity to spend.
The minister, in an article on ‘The GST Experience’ on completion of the first year of rollout of the Goods and Services Tax (GST), also exuded confidence the GST Council would look into rationalisation of the taxation structure after stabilisation of the collections.
Jaitley, who was the Finance Minister when the GST was introduced, is currently minister without portfolio, and is recuperating from a kidney transplant operation.
Rahul Gandhi has been advocating a single slab GST for India. It is a flawed idea. A single slab GST can function only in those countries where the entire population has a similar and a higher level of paying capacity.
Being fascinated by the Singapore model is understandable but the population profile of a state like Singapore and India is very different. Singapore can charge 7 per cent GST on food and 7 per cent on luxury goods. Will that model work for India?, the Minister questioned.
Since the GST is a regressive tax, the poor have to be given a substantial relief, he said, stressing that most of food items agricultural products and the Aam Aadmi used products have to be tax exempt while some others have to be taxed at a nominal rate.
The others could be taxed higher. Eventually, as the collections improve, many more items from the 28 per cent category can possibly come down. Only sin products and luxury goods can remain there.
There would also be a scope again, depending on the collection going up, to merge some of the mid category slabs but for that we have to see the progress of the new tax regime and the possible upward movement in the collections, the minister said.
Observing that there is always scope for improvement, he said key areas of future action will include further simplifying and rationalising the rate structure and bringing more products into the GST. I am confident that once revenue stabilises and the GST settles, the GST Council will look into these carefully and act judiciously.
Referring to the issue of levying GST on petroleum products, Jaitley said that while the UPA kept petroleum products permanently outside GST, we brought them back into the Constitution as levyable to GST and can gradually impose the GST when the GST Council so decides.
For this I would continue to make my earnest efforts and hopefully when the states are more comfortable with the revenue position, it would be an ideal time to strike for a consensus between them.
He further said that while Gandhi and former Finance Minister P Chidambaram have repeatedly demanded that petroleum products be forthwith brought within the GST, the finance ministers of the Congress-ruled states were against it.
When I speak to the Congress Finance Ministers’ in the states, they don’t seem to be ready for it. But what was the UPA’s own track record on petroleum products in the GST? The Constitution amendment proposed by the UPA permanently kept all petroleum products outside the GST, he said.
Jaitley further said that he used the inclusion of petroleum products as a bargaining issue with the states while conceding the Central Sales Tax (CST) and compensation payment to the states.
I worked out a formulae that petroleum products would be included in the Constitution amendment providing for the GST but the council can decide the date from which to bring them into GST. The states agreed, he said.
He further said that when the GST was to be launched on July, 1, 2017, the government was advised by the Congress to postpone it.
A reluctant government can never take reformist decisions. We went ahead. At the initial stage, we fixed the first set of rates. A large number of requests started coming from trades, industry and, therefore, we started rationalising the rates, he added.
The minister took comfort from the fact that the country witnessed the smoothest switch-overs in one of the largest tax reforms in the country. All the check-posts disappeared overnight. The system of input tax credit ensures that disclosures are made.
The GST has encouraged enormous voluntary tax registration. Detailed calculations done in this year’s Economic Survey show that as of December 2017, about 1.7 million registrants were those who fell below the GST threshold but nevertheless chose to be part of the GST. Similarly, more than 50 percent of those who could have chosen to opt for the simpler composition scheme chose to register under the regular GST scheme, the Minister said.
As regards the all powerful GST Council, Jaitley said, it is India’s first experience at cooperative-federalism based decision-making authority. We cannot afford to risk a failure and, therefore, it is functioning as to arouse confidence amongst all states. The meetings have always been consensus based.
The only area where unanimity seems to be lacking is the television bites that some ministers’ give after the meeting, which may be necessary for their own political position. I am willing to live with the experience of a healthy debate and unanimity within the Council and a show of dissent outside the Council meetings, Jaitley added.
New Delhi : Finance Minister Arun Jaitley today said investigative agencies are doing their best to ensure extradition of controversial businessman Vijay Mallya, who was arrested in London yesterday and later released on bail.
“I think the government and all the investigating agencies are certainly putting (in) their best efforts because the agencies do believe that an offence has been committed for which the person (Mallya) is required in India,” the minister told reporters here.
The minister further said Mallya’s extradition is part of the “judicial process” in the UK.
“It’s part of the judicial process in that country and the judicial process functions on certain considerations,” he said in response to queries regarding Mallya’s extradition.
Mallya, who has been declared a proclaimed offender by Indian courts, was arrested in London by the Scotland Yard yesterday on India’s request for his extradition on fraud charges.
He was, however, released on bail a few hours later on a bail bond worth 6,50,000 pound. He is required to appear at Westminster Magistrates’ Court on May 17.
The 61-year-old liquor baron has to face charges in Indian courts in connection with loan default cases.
Mallya, whose now-defunct Kingfisher Airlines owes more than Rs 9,000 crore to various banks, had left India on March 2, 2016.
The Indian government has since revoked his Indian passport, but he has repeatedly dismissed all charges against him.
In January, an Indian court ordered a consortium of lenders to start the process of recovering the loans.
India had placed a formal extradition request for Mallya as per the Extradition Treaty between India and the UK through a note verbale on February 8.
Earlier in January this year, a CBI court had issued a non-bailable warrant against Mallya in the Rs 720-crore IDBI Bank loan default case. He is the owner of a Formula One team.
While handing over the request, India had asserted that it has a “legitimate” case against Mallya and maintained that if an extradition request is honoured, it would show British “sensitivity towards our concerns”.
New Delhi : Transaction charges need to be kept at a minimum level to encourage digital payments and make it “ubiquitous” as India is a “cost-sensitive” market, TRAI Chairman R S Sharma said today.
Citing example of the telecom sector, Sharma said mechanism can be worked out to ensure that small payments are financially sustainable.
“There are three things which are extremely important for digital transactions to become ubiquitous – cost, convenience and confidence. India is an extremely cost-sensitive market…you can’t have Rs 5 commission on Rs 100 transaction.
That is not going to work,” Sharma said speaking at a seminar on ‘Demonetisation to Digital Remonetisation’ organised by FICCI.
Urging financial institutions to emulate the telecom sector where average value of pre-paid digital recharge is Rs 10, is “financially sustainable”, Sharma said that charges levied on digital transactions should be based on ‘work done’ principle.
“My view is that not only in the short run, in the longer run too, if the work done principle is adopted in digital transactions, this whole merchant discount rate (MDR) and other issues will go away. I am not saying that they (banks) should stop earning any money but if they earn money they should earn money in a reasonable manner,” Sharma said.
He further pointed out that two per cent charge on credit card transactions would prompt people to use alternative, which is cash.
“That thing has to go in the long run, if we want cashless to continue…otherwise there is a danger than once these incentives end, people will revert back to cash, which should not happen. India has to become cashless,” he said.
“I think there is a need to reduce these MDR and other digital charges…” Sharma said.
Asked about Vodafone’s move to challenge in court TRAI’s Rs 1050 crore penalty recommendation for denial of interconnectivity to newcomer Reliance Jio, Sharma declined to comment on the matter.
“This is a free country, every entity has the right of legal recourse and they are well within their rights to go to approach the courts, which is fine. Why should I have any comments, reservation or problems with that,” Sharma said on the sidelines.
Vodafone last week told the Delhi High Court that the TRAI’s recommendation to the Centre to impose Rs 1050 crore penalty on it for not giving interconnectivity to Reliance Jio was an “arbitrary” decision.
TRAI had recommended imposition of a fine of Rs 50 crore for each of the 21 circles of Vodafone, except in Jammu and Kashmir, coming to a total of Rs 1050 crore.
New Delhi : Public sector banks (PSBs) have reported 16 per cent rise in number of wilful defaulters at 8,167 who collectively owe them Rs 76,685 crore at the end of March 2016.
As against the previous year, there is 16 per cent rise in wilful defaulters owing over Rs 25 lakh each to 8,167 from 7,031 at the end of March 2015. However, dues to the bank have increased to 28.5 per cent to Rs 76,685 crore in 2015-16 from the earlier Rs 59,656 crore.
To recover loans from such defaulters, banks have filed 1,724 FIRs with a total outstanding of Rs 21,509 crore in 2015-16. The conviction rate in all these cases was only 1.14 per cent.
Last fiscal, banks recovery efforts in such cases yielded Rs 3,498 crore.
There were 129 wilful defaulters who borrowed loans in excess of Rs 100 crore amounting to Rs 28,525 crore from PSBs as on June 30, 2016, Minister of State for Finance Santosh Kumar Gangwar told the Lok Sabha in a written reply.
To bring down NPAs, he said, RBI has formulated guidelines for early recognition of financial distress for recovery from borrowers.
“Before a loan account turns NPA, banks are required to identify stress in the account under three sub-categories of Special Mention Account (SMA),” he said.
Banks are required to report credit information on borrowers having aggregate exposure of more than Rs 5 crore to Central Repository of Information of Large Credits (CRILC), he said.
“As soon as an account is reported by any of the lenders to CRILC as SMA-2, Joint Lenders’ Forum (JLF) is to be mandatorily formed if the aggregate exposure of lenders is more than 100 crore,” he said.
In a separate reply, Gangwar said banks have seized property worth Rs 64,519 crore during 2015-16 as against Rs 54,060 crore in the previous fiscal.
These properties were seized by invoking the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act.
The Reserve Bank of India (RBI), on Monday, published four circulars in which it announced various steps that the central bank as well as other banks will undertake to decrease public distress of cash crunch.
1) Waiver of Customer charges on ATM transactions:
Banks will waive the levy of ATM transaction charges by savings bank customers done at their own banks’ ATM as well as other banks’ ATMs, regardless of the number of transactions done during the month. The waiver is applicable from November 10 to December 30, 2016, the central bank announced in a circular.
2) Expanding the distribution locations for deposit and withdrawal of cash:
i) Current Account (accounts which are operational for three months or more) holders can withdraw up to Rs 50,000 in a week, predominantly in Rs 2,000 denomination only.
ii) Banks may station Micro ATMs near village Panchayat Offices, Police Stations/ Police and Military Outposts, Government departments, offices of Public Sector Units, Petrol Pumps and similar locations. Since such locations may pose larger cash requirements, RBI has directed banks to enhance the limit of micro ATMs to atleast Rs 50,000 and allow the frequent filling of cash in them.
iii) RBI has asked banks to use mobile vans to provide an exchange, deposit and withdrawal facility to people residing in remote or unbanked areas.
iv) The central bank has stated that banks should open accounts for Tea/coffee and other plantation workers, employees of sugar cooperatives, diary firms and other worker groups where the payment location is concentrated.
v) It recommended banks to hire retired employees in order to have a helping hand under the increased work load.
vi) RBI has asked banks to ensure that customers use separate pay-in-slips for depositing specified bank notes and other legal tender bank notes. Banks have to put in place within the Core Banking Solution, a mechanism to maintain a record of receipts of Sustainable Banking Networks, customer-wise and denomination wise whether for exchange or for deposit, in order to facilitate subsequent verification.
3) Withdrawal limit in District Central Cooperative Banks:
RBI has asked district central cooperative banks to permit customers to withdraw money up to Rs 24,000 per week until November 24, 2016. However these banks will not have any exchange and deposit facility of the defunct Rs 500 and Rs 1,000 notes. The limit of Rs 24,000 is not applicable to withdrawal of cash by a DCCB account with any other bank.
4) Formation of Task Force to re-calibrate ATMs and enable dispensation of Mahatma Gandhi (New) Series Bank notes:
RBI has set up a task force under the chairmanship of Deputy Governor, S. S. Mundra to re-calibrate all ATMs and cash handling machines. The task force will comprise of members from the Department of Economic Affairs, Financial Services, Ministry of Home Affairs, representatives from four banks with the largest ATM network, i.e., SBI, Axis Bank, ICICI Bank and HDFC Bank. It will also consist of representative from NPCI and the Chief General Manager from the department of Currency Management. While the aforementioned representatives will be members of the task force, the Chief General Manager, Department of Payment and Settlement System will be the Member Secretary.