The transformative indirect tax regime -GST is all set to be implemented from July 1st, 2017 as the Centre and states settled all of their remaining areas of divergence. At the end of the ninth meeting of the GST Council Monday, the Finance Minister Arun Jaitely hoped that implementing the accord from July will give time to the industry to make the necessary arrangement for the roll out. Commenting about the implementation from mid-way of a financial year, Finance Minister observed that there is no problem in doing it so as GST is a transactional tax. Of the areas of conflict between the centre and states, the most important one was the tax right on low value assesses. Here, as pe
Goverment & RBI
Retail inflation (CPI) came down to 3.41 % - its three year low in December 2016 according to the latest data from Ministry of Statistics and Programme Implementation. The inflation rate was 3.63% during November. The inflation rate is at its lowest level since January 2014. During the last year, on the same month inflation rate was 5.61%. The inflation data was curiously watched by economists and policy makers and several of them predicted a fall in inflation in the background of reduced consumption impact from cash constraints. Downward pressure on prices was mostly induced by vegetables and pulses. The consumer food prices fell to 1.37% compared to 2.03% in the previou
The RBI’s first and most authenticate response about its role in the demonetisation response indicate that the central bank has acted as per government instructions. In a reply to the Parliamentary Committee on Finance led by Congresses’ M Veerappa Moily, the RBI submitted answers to several tactical questions on the subject. The RBI reply indicate that the government on November 7, 2016 ‘advised’ “the RBI to mitigate the problems of counterfeiting, terrorist financing and black money, the Central Board of the RBI may consider withdrawal of legal tender status on of the notes in high denominations of Rs 500 and Rs 1000” The CBD has met on Nove
The cash crunch that is engulfing the economy is expected to faded out only slowly. According to the RBI data, the system has only one third of the total value of required currency notes right now. As against a monetary base of Rs 15.6 lakh crore currency supply, including the small denomination notes, only Rs 5.92 crore is in circulation. This includes the new Rs 2000 and Rs 500 notes and smaller denominations. This means that the physical cash dominated transaction economy may be reactivated only by the second half of this calendar year. The phasing out of currency crunch depends upon the pace of Rs 500 note printing On the timeline date for taking the next step on liquidity r
Continuing the induction of non-monetary experts into the monetary policy operations of RBI, the government has inducted financial sector expert Shankar S Acharya as the fourth Deputy Governor of the RBI. In the notification showing the appointment, Sri. Acharya has entrusted with the Monetary Policy and Research cluster, a relatively academic body rather than having any policy development content. Mr Acharya was serving as Professor, at the Department of Finance, New York University and is a PhD holder in Finance. Interestingly he was a member of the Financial Sector Legislative Reforms Committee that recommended government control over of the RBI’s Monetary Policy Operatio
Around 90 per cent of the scrapped Rs 500 and Rs 1000 are now returned back to the RBI. According to sources, the RBI has received nearly Rs 13.2 lakh crore of these notes out of the Rs 14.5 lakh crores. Next expected step from the government is to track the black income kept in bank accounts. But according to tax and legal persons, this will take time. A smart guess by experts estimate that the black income may be between Rs 1 to 2.5 lakh crores. To tap the black money stored in banks during demonetisation, government has provided an option for the income holders to pay 50% taxes and come clean. Response for this scheme is yet to known. First estimate about the black inc
Initiating the chat on the new budget, the Finance Minister Arun Jaitely made positives of a lower tax regime. According to him, India need a transition to lower level of taxation to make the economy globally competitive. The Finance Minister was speaking at the inauguration of IRS officers training at Faridabad. In the last budget Jaitely made his plan to reduce corporate income tax rate to 25% from the current 34.6%. India is supposed to be a median tax rate country with corporate income tax rate placed at middle levels. The new tax rate is reduction and exemption free as all such leakages are expected to be phased out with the reduction of rates to 25%. Speaking about the ne
Prime Minister Modi hinted more reforms especially those aimed at raising tax revenues. Speaking at a inaugural function of several infrastructure projects near Mumabai’s Bandra Kurla Complex (BKC), he renewed war against black money. “Dishonest people, you should not underestimate the mood of 125 crore people. You will have to be afraid of it… Time has come for ruin of dishonest people. This is a cleanliness campaign,” Just few days to the end of time line that the Prime Minister set for the eliminating cash trouble, he indicated more policies soon. “Let me make one thing very clear: This government will continue to follow sound and prudent econom
Prime Minister Modi has called a meeting of NITI Ayog officials along with that of Ministry of Finance to design economic rebuilding after demonetisation. The meeting is scheduled to be held on Tuesday and is expected to bring the thoughts of all the available resource persons associated with the government. Government is reinforcing quickly as the note ban impact is not going to be settled by December 30- the promised deadline by the Prime Minister. Indications are that continuing cash crunch may develop distrust about demonetisation among people. Similarly, the momentum and popular mood may shift away from attack on black money to cash crunch created hardships. The meeting will
The government has clarified that Rs 500 and Rs 1000 note deposits by political parties in their accounts will be tax exempt. Tax exemption implies that political parities’ as the only entities whose accounts are exempt from any scrutiny. Revenue Secretary Hasmukh Adhia who is supposed to be the chief architect of the demonetisation drive said that bank accounts of political parties will be exempt as they are eligible for exemption from different types of taxes. As per Section 13A of the Income Tax Act, 1961, income from house property and other sources, capital gains taxes etc. will not be applicable to political parties. Similarly, voluntary contributions to political par
Dictionary on Indian Economy
- Logic of withdrawing Rs 1000 and Rs 500 notes
- Raghuram Rajan: The Gladiator returns to Chicago
- Why the GST reform is transformational?
- Good intention but poor thinking - what troubles demonetization?
- India Black Money Report: CBI underestimates black money at Rs 25 lakh crore
- High interest rate rather than inflation is the macroeconomic problem for India right now
- Japan’s first trade deficit in 30 years is part of the Global Shift
- Why we need an emergency monetization plan as well?
- Arvind Subramanian rocks with 'Chakravyuha' in Economic Survey
- NREGS: give respect to the tax payer’s money