Simar Singh In his quest for foreign investment, Prime Minister Narendra Modi on Tuesday (6 October) clarified that his Government will not invoke any tax law retrospectively. This is likely to be a huge balm for global investors eyeing India. ”We have articulated very clearly that we will not resort to retrospective taxation and reinforce this position by not going for imposition of the Minimum Alternative Tax," said Prime Minister Modi in Bengaluru. Modi was in the city today with German Chancellor Angela Merkel at the Indo-German Summit. For some years now India has been battling a negative image as far as its tax regime is concerned. It was in 2012 that the then finance minister, Pranab Mukherjee, had introduced a provision to tax capital gains made by foreign companies in the country, retrospectively, a move that was single handedly branded the country as a “tax-terrorist”. This move by Mukherjee was to ensure that telecom giant, Vodafone coughed up Rs. 20000 crore that was allegedly due to India in capital gains tax. After Modi’s thumping victory that ushered him into the prime ministerial seat in 2014, many thought that the pro-business politician’s first budget would scrap the retrospective tax. However, it was a disappointment when Finance Minister Arun Jaitley delivered his budget speech in July 2014 and did not repeal this provision. In fact, in the last one year the tax department of India has sent out a notice to British energy giant Cairn Plc under Section 9 of the Income Tax Act, retrospectively. But the PM’s assurance today is likely to go a long way in allaying fears of global investors about an adversarial tax department in India. In fact, in a speech at Columbia University today, finance minister Arun Jaitley also mentioned India’s stance about retrospective taxes. He said that, “we(India) lost credibility with the world" because of the retrospective taxation issue. India’s assurances on tax matters go out after the recent controversy with FIIs over Minimum Alternate Tax. But the top leadership of the Government have gone on record to clarify that they are working towards a stable and predictable tax regime in India.
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Finance Minister Arun Jaitley has promised a rational tax rate for individuals and bringing down of corporate tax to 25 per cent flat in four years beginning next fiscal along with removal of exemptions except those that encourage individual savings. Addressing students and faculty at the Columbia University here on Monday night, he said along with a rational rate of taxation, more banking transactions and making PAN card compulsory for payments over a threshold limit will go a long way in tackling the problem of domestic black money. He also said that once the corporate taxes go down, the exemptions, over there is a bulk of litigations and discretions, will have to be phased out. The Finance Minister said the world needs "additional shoulders" other than China to push growth and this presents an opportunity for India. He outlined the roadmap of the BJP-led Government for the coming months, saying the Goods and Services Tax (GST) will be a "top priority" and hoped to take the Bankruptcy Code to parliament in the winter session. Referring to the problem of black money, the Finance Minister said, "The first step is you rationalise your rates and have rational rate of taxation which helps you in making sure that people comply. "The second factor is that the nature of the economy is itself changing so more and more banking transactions, payment getaways are a reality, all this is going to incentivize and a lot of economy is going to go through the banking transaction as a result of this."(PTI)
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Suchetana Ray North Block that houses Home and Finance Ministries are looking at changing ways communication between the Government and the Fourth Estate of India. First, it was the Ministry of Home Affair that barred journalists from entering the ministry and now different departments under Finance Ministry is taking the cue. The writing on the wall is clear: scribes will not have the free access, to the various Departments of the Finance Ministry, that they once had. Finance Ministry has five departments under it, one after the other their doors are shutting for journalists. Even, reporters with accreditation from the Press Information Bureau of India have been barred from entering. While the Revenue Department have had their lips sealed ever since the new Government assumed power last year; allegedly because of the sensitive nature of their work and also because they had to devote time towards an image makeover from tax terrorist to assessee friendly. In fact, for months now the officials dealing with international taxation have been told off from meeting reporters. For any issue a journalist is promptly directed towards the official spokesperson from the Tax Department. Department of Disinvestment doesn’t want reporters around as they feel that they are very prompt with ‘press releases’. Similar is the attitude of the Department of Financial Services. Not ones to easily give up, journos have been up in arms against this new form of one-way communication adopted by the Finance Ministry. And to ensure that this dissatisfaction doesn’t spread among the regular reporters who cover India’s financial policy matters, the Ministry has decided that it will hold a monthly press conference, attended by all secretaries of the five departments and the Chief Economic Advisor to address all queries of the media. The first such “interaction” began today, with Ratan Watal, Finance Secreatary addressing the media. For today though the agenda of the conference was fixed by the Ministry, but the strategy for these monthly meetings are yet to be fixed, say officials in the Finance Ministry. Clearly, the watchdogs of the Indian Democracy will not be able to sniff around in North Block any more.
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India has been facing acute difficulty in overcoming obstacles to improve the condition of primary education in the country. According to the 2013-14 edition of the District Information System for Education (DISE) report the country’s schooling system is overwhelmingly skewed towards primary schools. This is due to an increasing number of smaller primary schools being founded which lack in adequate infrastructure to provide the students with a suitable learning environment.Further, the Annual Status of Education Report 2015 shows that only a little over 50 per cent schools in the country have access to basic amenities such as electricity. As a result the image of the average classroom remains a dingy, ill-constructed room with a concrete wall as a blackboard, the floor for seating and a teacher struggling to retain the attention of a disinterested class.In a bid to eliminate this education inequity in India to a small extent, one of world’s largest CeramicSteel manufacturers, PolyVision has decided to provide classrooms with a premium teaching tool. In partnership with Teach for India, a nationwide movement working towards eliminating educational inequity in India and Whitemark Limited, the company’s national distributor in India, PolyVision is donating hundreds of high quality CeramicSteel whiteboards and chalkboards to under developed classrooms across 7 cities in India. “Research has shown that whiteboard work which is both kinesthetic and visual has a positive impact on teaching and learning, as it engages both the body and the brain,” said Peter Lewchanin, General Manager, PolyVision.In India, limited access to technology due to budget and infrastructure constraints as always been a hindrance to the state of education. The fact that the country reports, a school drop-out rate of 40 per cent at the elementary level while 4 per cent never make it to school, is alarming. Reports also claim that the low quality of education is the prime deterrent, resulting in only 10 per cent of Indian children being able to go on to college.(BW Online Bureau)
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In a bid to check generation of domestic black money, the government will soon make it mandatory to furnish PAN card details for cash transactions beyond a certain threshold, Finance Minister Arun Jaitley said on Sunday (4 October). "The government is at an advanced stage in considering the requirement of furnishing PAN card details if cash transactions beyond a certain limit are undertaken," Jaitley said in a Facebook post. He said the monitoring regime of the income tax department has been strengthened and its capacity to access information and apply technology driven analytical tools to expose evasion, has been enhanced. "Its ability to detect large cash withdrawals, or large cash transactions which enter the system, is being strengthened. GST regime once introduced will also be a landmark step in this direction. "Thus for commodities like gold where the initial purchase by the exporter is after the payment of custom duty, the subsequent transactions which are mostly in cash, can easily be found out," Jaitley said. In 2015-16 Budget, the Finance Minister had proposed making quoting of Permanent Account Number (PAN) mandatory for all sale and purchase of over Rs 1 lakh. "Quoting of PAN is being made mandatory for any purchase or sale exceeding the value of Rs 1 lakh. The third party reporting entities would be required to furnish information about foreign currency sales and cross border transactions," Jaitley had said. Thereafter, the government had received representations from various persons, including MPs, MLAs, trade and industry associations among others, against the proposed mandatory quoting of PAN for sale or purchase in excess of Rs 1 lakh. Stressing that bulk of black money is still within India, Jaitley said there was a need to change the national attitude so that plastic currency becomes the norm and cash an exception and the government is working with various authorities to incentivise this change. "Being seized of this problem, the government has been working with various authorities in order to incentivise this change. The opening of a large number of payment gateways, internet banking, payment banks and the emerging reality of e-commerce will prompt the use of banking transactions and plastic money rise significantly," Jaitley said. The JAM (Jan Dhan, Aadhaar, Mobile) Trinity and the Direct Benefit Transfer of subsidies to the accounts of beneficiaries of various government schemes will also be a step ahead in this direction, Jaitley added. Each of the 18 crore beneficiaries of Jan Dhan accounts has been provided with RuPay cards, which will encourage them to use plastic currency and get familiarised with it, he said. The MUDRA Yojana, over the next few years, has a target of 6 crore families out of 25 crore families in India to become entrepreneurs. Loans being made available to them by the banks can only be withdrawn from the ATMs by use of MUDRA credit cards which are being provided to them. More and more of their transactions will be through plastic currency or through the banking channel, Jaitley added. (PTI)
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In a breather for Indian IT firms, the "discriminatory" $2,000 H-1B fee mostly imposed on them has now lapsed in a Republican-majority US Congress. The charges, often called outsourcing fee, had forced Indian IT companies in the last few years to pay millions of dollars towards protecting the US-Mexican border from illegal immigratio Indian firms had described the fee on highly-qualified IT professionals coming to the US on a H-1B visa as "discriminatory." The legislation with regard to a $ 2,000 fee on H-1B visas for companies having more than 50 per cent of its employees oversees was adopted by the US Congress in 2010 mainly at the instance of a group of lawmakers led by Senator Charles Schumer. Passed on August 10, the law contains provision to hike H-1B and L-1 Visa fee per application by $ 2,000 and $2,250 respectively for qualifying firm; which mainly targeted Indian IT companies. The duration of law was extended from four to five years under James Zadroga 9/11 Health and Compensation Act of 2010 to provide healthcare and financial compensation for the firefighters and other 'First Responders' who helped out in the aftermath of the 9/11 attack. In a report released last month, Nasscom said Indian tech industry contributed an estimated over $375 million during this period to the US Treasury including helping America secure its borders. In a recent interview, Nasscom president R Chandrashekhar described the fee as unjustified. "It had nothing to do with the IT industry. It was applied in an inequitable way, which specifically targeted Indian companies," he said, adding that he would welcome any move to eliminate the fee. The Congress can still come up with a legislation to reinstall the discriminatory H-1B fee, which lapsed yesterday night, Congressional sources said. However, Institute of Electrical and Electronics Engineers (IEEE-USA) in a statement criticised the US Congress for the lapse of the H-1B fee. (Agencies)
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The government has already told the assessment officers not to go ahead with the taxation measures,The Union Government today said the Income Tax Act would be amended with retrospective effect to exempt overseas companies which do not have a permanent establishment in India from paying Minimum Alternate Tax (MAT). "Not only the FIIs but also foreign companies, which have no place of residence in India and are earning income of royalty and interest - they are all sort of told that MAT will not be applicable to them, and accordingly we will be making some amendments, as and when we go to the Parliament," Union Revenue Secretary Hasmukh Adhia told reporters here. In the meantime, the government has already told the assessment officers not to go ahead with the taxation measures, he added. Earlier this month, the government had exempted foreign institutional and portfolio investors from payment of MAT on the capital gains made by them before April 1, 2015. The Budget 2015-16 had already exempted FIIs/FPIs from paying the levy on gains made after April 1. On September 24, the Finance Ministry had decided to exempt foreign companies which do not have a permanent establishment from payment of MAT to boost investor confidence. "We have announced clarity on non-applicability of MAT on foreign companies other than FIIs not having PE today. We hope this will boost up investor confidence," Adhia had tweeted earlier. On the one-time compliance window under the newly enacted anti-Black Money law that ended yesterday, he said government would initiate action against those who have not disclosed their black money and assets stashed abroad. "Of course, we will have to think about those people who did not declare (their black money and assets stashed abroad) and we would be sort of working on that," Adhia said. However, the government would not harass those who have already disclosed their black money and assets stashed abroad, Adhia said. "It was a window of opportunity to them to make declaration about their assets or investments in foreign country, and we have stuck to it. We have closed the window now. Whatever declarations made by them we accept, and those are the ones who would not be harassed at all," he said.(PTI)
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Minister of state for Home, Kiren Rijiju, who monitors $1.8 billion of foreign aid has accused Greenpeace of inciting protests against industrial projects and warned global activists and aid organisations not to work against the government. The warning from Rijiju follows a crackdown by Prime Minister Narendra Modi's administration on foreign-funded non-governmental organisations (NGOs), including Greenpeace and the Ford Foundation. The crackdown has been criticised by the United States and Indian civil society groups. Greenpeace activists were "unnecessarily inciting innocent people against crucial projects without any valid reason", Rijiju said in an interview with Reuters this week. The ministry's foreigners division, which is under Rijiju and oversaw some $1.8 billion of incoming aid in 2014, suspended Greenpeace's licence to get foreign funds this year, citing financial irregularities. It has frozen some Greenpeace bank accounts. The actions came after Greenpeace supported protests against a planned $3.2 billion coal mine in the Mahan forests in central India, which resulted in a court withdrawing permits for the Indian companies Essar and Hindalcoto develop the project. An Indian activist leading the campaign was barred from flying to London to address parliamentarians about the project. The foreigners division this year prevented one foreign Greenpeace official from entering the country. Rijiju said Greenpeace had diverted foreign contributions from their stated purpose. Greenpeace has taken legal action against the government's measures. "Punitive steps have been taken because rules were totally violated," Rijiju said. "Some of the NGOs, if they are designed to work against a particular party or government, or they misuse the contributions, then they will attract provisions," he said, adding it was "evident" Greenpeace was hostile to the government. Greenpeace, which is fighting the government measures in court, denies its activities are hurting development in the world's largest democracy. "The government's sole aim is to crush each and every voice of dissent. How can campaigns for clean air, programmes for renewable energy be anti-government?" asked Vinuta Gopal, acting head of Greenpeace India. More than 50,000 Indian charities depend on foreign aid for projects. Under Rijiju, the department has cancelled the licences of about 13,000 NGOs. Rijiju said he aimed to stop the misuse of foreign funds. He said he was working to make it simpler for aid groups and charities to comply with regulations. Critics say the crackdown is to muzzle dissent and Rijiju's actions could lead to less foreign aid for projects that fight child marriage, provide clean water in slums and feed pregnant women. (Reuters)
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Suchetana Ray How do celebrate birthdays for political leaders? This could be a question putting a lot of people in dilemma. But not Narendra Modi! Not one to give in to any confusion especially about important events like birthdays, Narendra Modi wanted no hullaballoo around September 17. The clear message from the BJP top management was not to make Modi’s birthday a national event. After all, it is for dynastic parties like the Congress to put up posters in every street corner wishing their “young” Vice-President a happy one! For once, perhaps, Modi-fans and sycophants, agreed with his detractors: How autocratic! He will now decide how his “bhakts” celebrate his birthday? Some people might say, “Thank God for small mercies”, and maybe this dissuaded Mallika Sherawat from reprising her Marilyn Monroe-act and singing “Happy Birthday, Prime Minister”. But such diktats do little to subdue the indomitable spirit of the young and the enterprising. A company that promotes hygienic sanitation in India and builds toilets printed birthday cards to mark the Prime Minister’s birthday with a call for “janm-divas samaroh” (a birthday get-together). A young and very enterprising minister; who has been in the eye of storm recently, for his politically incorrect statements; was the chief guest of this get together and unveiled a 365 kg jumbo laddu to mark the special day. But this Minister of State with Independent Charge of a couple of ministries was quick to dub the event as a conference to mark the organiser’s achievements in the Swachh Bharat Mission; a programme close to the birthday boy’s heart. Another event, another young minister but the same date: September 17. This young and dynamic Minister of State decided to mark the PM’s birthday by calling it “an auspicious day”. Though he was quick to add that it was Ganesh Chaturthi as well as Vishwakarma puja that were being celebrated on the same day. But the minister wanted to make sure that his birthday wish was conveyed to the right man, so he decided to make the auspicious day remark again, the moment he saw his boss, the Cabinet Minister walk into the conference. After all, his boss is known to enjoy Narendra Modi’s confidence and have his ear. But seasoned politician that his boss is, he chose not to acknowledge the birthday remark of his junior minister. Maybe one should follow the First Citizen of India’s example and just take to Twitter for birthday wishes.
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Department of disinvestment to prepare the roadmap for revival or closure of loss-making central public sector enterprises, reports Ashish Sinha The Cabinet Secretariat has asked the department of disinvestment under the finance ministry to draw out a clear roadmap for over 42 loss-making central public sector undertakings (CPSEs) for disinvestment, revival or closure purposes. Overall, there are 65 loss-making CPSEs which have been identified over last several years. Of this list, five CPSEs have been earmarked for closure within the current financial year. There are 11 others which will stop getting the non-plan budgetary support from next financial year and may ultimately be closed, sources said. According to sources, the Board for Reconstruction of Public Sector Enterprises (BRPSE) has recommended revival packages for 48 CPSEs, which has been approved by the government, but still far away from getting implemented. Therefore, under the direction of the Prime Minister’s Office, the Cabinet Secretariat has asked the department of disinvestment to chalk out a strategy of these loss-making CPSEs. Some of these CPSEs also fall in the category of ‘sick’ units. A CPSE is declared sick after it has accumulated losses in any financial year equal to 50 per cent or more of its average net worth during four preceding years. There are 65 units in the list of sick public sector units as of March 31, 2014. “There department of disinvestment will be overseeing the process of revival or closure and sale of assets of these large numbers of loss-making CPSEs. Crore worth of assets are locked in these non-performing central PSUs which needs to be monetised quickly,” said a senior official dealing with the matter. The CPSEs which are part of this list include MTNL, Air India, Bengal Chemicals, Konkan Railway Corporation, Hindustan Shipyard, HMT, Bharat Coking Coal, ITI, Bharat Wagon and Engineering, Tungabhadra Steel, Scooters India, Heavy Engineering Corporation, National Jute Manufacturers, Burn Standard, Fertilizer Corporation of India, British India Corp among several others. The government is evaluating a series of measures before it for the revival of sick or loss-making CPSEs including new norms. These include setting up a separate entity funded by financially strong CPSEs to look at management and revival of sick companies; Profitable PSUs, that have cash on their books can be roped in to support and revive the loss-making/sick CPSEs as part of their mandatory corporate social responsibility (CSR) practice, sources said. Some of these measures are under active consideration of the government, a government official said. Meanwhile, five sick central PSUs that are facing closure in next three months will require funds towards the voluntary retirement scheme for around 2,800 employees which are on rolls. These five sick CPSEs are HMT Bearings, HMT Watches, HMT Chinar Watches, Tungabhadra Steel Products and Hindustan Cables.According to Anant Geete, the Union minister for heavy industries and public enterprises, the government is also looking at creating a land bank pool comprising the surplus land with PSUs. The NDA government has already decided to give VRS to 2800 employees of these sick central PSUs which is expected to free assets worth Rs 22,000 crore. “Since 2007 there is not production in these units and we have already spent about Rs 4,000 crore only on salary and wages of the employees. How long will we continue to spend on salaries in these non-productive units,” the minister had said recently. As per the government estimates, the cost of shutting these five sick units will work out to Rs 1,400 crore while the asset value of these companies stand at Rs 22,000 crore which includes all the immovable properties including land, plant and machinery. These will be sold to interested parties in “as-it-is, where-it-is” basis. “The decision for the sale of property is yet to be taken”, the minister said. ashish.sinha@businessworld.in
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