The GST Council’s meeting on February 18 at Udaipur will decide tax rate on gold. Gold is at present attracting a sales tax of 1% and an excise duty rate of 1%. Reports indicate that states are arguing for a rate of 4%. At this rate, the centre and state may divide the tax revenues equally among them. Effectively, the proposed rate doubles the existing cumulative rate of 2%. Besides the excise duty and VAT (state sales tax), gold is having an import duty of 10%. A high rate may encourage smuggling and tax evasion. indirectly, such a rate will bring frictions between the dealers and tax officials. The 4% tax rate for gold is a rate outside the prescribed GST rates of 5%, 1
Goverment & RBI
The budget presented by Finance Minister Arun Jaitely in the background of demonetisation and the shift towards a digital economy wonderfully combines several beautiful measures. Budgets’ slogan – the TEC or “Transform, Energise and Clean India”, is well reflected in the initiatives and allocations announced in the budget. Extending from the restriction of Rs 3 lakh on physical transaction of money to galloping MGNREGA allocation to Rs 48000 crore, a dedicated programme for the safety of Railway passengers, partnering digital India steps to ‘clean India’, doubling Mudra scheme allocation, a resolution regime for financial institutions, etc. the b
Fighting black money, providing inclusion, enhancing the delivery of public services etc. the digital economy got top priority in the new budget. There is no tax at all for the manufacturing of certain types of digital economy equipments. All taxes – the customs duties (BCD, CVD, SVD) and excise duties were abolished for domestic manufacturing of digital economy equipments like POS machines and Micro ATMs. Digital economy is one of the ten distinct themes of the budget. Some of the other themes farmers, rural population, youth etc. “Promotion of a digital economy is an integral part of Government’s strategy to clean the system and weed out corruption and black mo
Government is thinking about shifting the delivery of public welfare services. The new idea is for providing Universal Basic Income to the poor people so that they can obtain the public goods. The Economic Survey, presented in the Parliament makes an exhaustive analysis about the feasibility of launching Universal Basic Income in India. UBI is an old welfare idea aimed at providing basic income to all citizens. Finland has launched a UBI for their citizens. Several other small countries are thinking about its launch. According to the Wall Street Journal, Switzerland voters have rejected the programme. Advantage of UBI in the present context is that once the UBI is provided, gove
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
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
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