Fiscal Policy 22 Jul 2016 by Tojo Jose

Tax Department to sent notices to 7 lakh Non -PAN high value transactions

Tax Department to sent notices to 7 lakh Non -PAN high value transactions

The chase against black money will be getting a big push as the government is tracking high value transactions that has not quoted PAN.  As part of this effort, the Income Tax Department has decided to send tax notices to reported non-PAN transactions that have high values. The move comes amidst the muted response to the tax departments’ mega effort to track black money- the domestic black money disclosure scheme. According to the IT sources, tax notices will be issued to parties of nearly 7 lakh non -PAN transactions. The tax department officials revealed that they have got the information about such transactions from other sources. There are 7 lakh identified cluster

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Fiscal Policy 30 Jun 2016 by Tojo Jose

Central government staff to get 23.5% hike in salaries

Central government staff to get 23.5% hike in salaries

The center declared a trend setting pay hike for its employees and pensioners under the Seventh Pay Commission Report. Nearly one crore central government employees and pensioners will get the benefit of the new package from January this year with arrears.                 The new hike will increase the budgetary burden of Rs 102100 crore this year and Rs 72800 crore next year according to the Finance Minister.   Entry level pay will be RS 18000 whereas the Cabinet secretary will get the highest salary of RS 2.5 lakh. Salary of the Cabinet Secretary will be higher than that of MPs. Finance Minister Ar

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Monetary Policy 28 Jun 2016 by Tojo Jose

Government Constitutes Monetary Policy Committee

Government Constitutes Monetary Policy Committee

The centre has notified the formation of Monetary Policy Committee (MPC) under the RBI which will take decision on interest rate or repo rate setting in future. MPC will bring significant changes in the power the RBI governor while deciding on repo rate. At present, the Technical Advisory Committee which is chaired by the Governor takes decisions on repo rate. But the RBI Governor has a veto power. According to the government sources, the MPC is responsible for bringing “value and transparency to monetary policy decisions. Under MPC, the governor has a casting vote and doesn’t enjoy veto power. Decisions will be taken on the basis of majority vote.  There are si

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Monetary Policy 19 Jun 2016 by Tojo Jose

Rupee and Market May make a ‘vote’ on Rexit tomorrow

Rupee and Market May make a ‘vote’ on Rexit tomorrow

Anxiety about how the Rupee and stock market will respond to the news of Raghuram Rajan’s exit is looming. Though Rajan was not a friend of market volatility makers or the so called speculator classes who loved low interest rate, his feat of producing stable macroeconomic fundamentals won investors mind. But the Chicago university professor’s exit may raise doubts in the minds of investors who prefer the long term stability of the economy.  Many foreign commentators who sells their ideas to global investors describe the entire issue as a victory of bad politics over sophisticated economics. In this context, the Rexit may leave doubt among investors about India's r

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Fiscal Policy 15 Jun 2016 by Tojo Jose

States move closer to GST

States move closer to GST

The Goods and Service Tax that is on the launch mode for several years is entering on the last phase of its introduction as the last barrier-ratification by states is almost complete. According to the Finance Minister, almost all states except Tamil Nadu has agreed to its implementation. The bill was passed in the Lok Sabha in May 2015 but is still pending on the Rajya Sabha. According to government sources, the new bill will not have a built in upper cap (rate) suggested by the Congress. Finance Minister Arun Jaitely indicated that such a cap will remove flexibility in the tax structure. Once GST is ratified by the Rajya Sabha where the Congress is losing its strength, the refor

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Monetary Policy 14 Mar 2016 by Tojo Jose

Inflation records decline after five months

Inflation records decline after five months

The retail inflation has come recorded a decline to 5.18% from 5.69% for the month of February 2016. This is the first time after six months that CPI inflation records a fall. The present decline was contributed by fall in food prices including vegetables, pulses and fruits. So far India’s inflation data goes in contrast to the global trend. Major developing countries including China are in low inflation trajectories. Form many developed countries deflation and steep recession are the status on price and macroeconomic fronts. Most frequently, there is talk of deflation and decline in demand. For India, other data especially industrial production indicators are consistent w

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Fiscal Policy 02 Mar 2016 by Tojo Jose

Disinvestment policy gets a facelift in the new budget

Disinvestment policy gets a facelift in the new budget

Indications from the budget are that the government goes aggressive on the disinvestment policy front. Most important one is the revival of the strategic sale route. The budget has separately mentioned a target of Rs 20500 for strategic sale. Under strategic sale, government will shed its management and control in PSEs to a strategic private sector investor by selling majority stake. Strategic sale is a full scale privatization measures whereas the normal disinvestment implies government keeping majority shares in the PSE. The strategic sale CPSEs will be selected by the NITI Ayog . On the usual type of disinvestment – the sale of fractional shares; the set target is Rs 3

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Fiscal Policy 29 Feb 2016 by Tojo Jose

FM presents many surprises in a disciplined budget

FM presents many surprises in a disciplined budget

Finance Minister Arun Jaitely presented a sharply reduced fiscal deficit year when the seventh pay commission responsibilities and defence OROP burden are looming. In his extensive budget that covered even many finer details, the FM has also made some remarkable reform measures besides bringing some surprises. The most important surprise is the amnesty or what we call the voluntary disclosure scheme that allows a person to convert his undisclosed domestic assets into white money by paying an aggregate tax of 45%. With the SC already banned any amnesty scheme in 1997, it is to be seen whether the additional clauses of the new scheme will help it in front of the court. Second surpr

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Fiscal Policy 29 Feb 2016 by Tojo Jose

Features of the new domestic black money scheme: How the budget reloads it

Features of the new domestic black money scheme: How the budget reloads it

FM sets a smart and tempting tax rate of 45% to compell the ex-tax evaders to declare thier black mone and come clean. One of the big and surprising news of this budget is that the government will launch a (amnesty) scheme for black money holders to convert their black money into white money by paying a tax rate of 45% including a marginal 7.5% penalty. The difference in tax difference for an evader is he shuold pay 7.5% penalty and a 7.5% surcharge in addition to the tax rate of 30%. A black money hodler can take away 65% of his black income  pay giving 45% of it to the government – freebees are no prosecution and no enquiries as well. The programme exactly lo

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Fiscal Policy 29 Feb 2016 by Tojo Jose

Government to introduce resolution regime for banks

The budget envisages implementation of a resolution regime for Indian financial institutions. Resolution regime refers to the orderly settling of failing financial institutions at the same time without loss of public money and any serious disruption to the financial system. Here, banks and FIs prepare a plan for the settling of the problem in prior if they faces financial weaknesses. In exact form resolution regime asks banks to prepare a plan for its funeral if it goes to fail. Advantage of resolution regime is that costly bailout using public money need not be made when a bank fails. Rather it will have own resources and it should be spend in accordance with the plan suggested b

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