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
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
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
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
UPA government’s super hit - Aadhaar identification project’s man in charge and technocrat Nandan Nilekani was called into service by the government to head a 13-member committee. The committee will suggest ways to encourage people to adopt digital payment systems. Government is now in a hurry to maximize and showcase the returns from demonetization. New forecasts from experts and rating agencies rates demonetization as a GDP dampener. So far attempts are concentrating to exhibit the high achievements on two fronts- black money and cashless transaction. On the cashless transaction front, the huge number of illiterates, rural orientation, weak penetration of smart phon
The fifth meeting of the GST Council has ended without agreeing on critical legislations required to rollout the tax reform on April 1, 2017. Practically, the fifth meeting of the Council was influenced by demonetization and both sides failed to agree on all the supporting legislations. Especially, decision about the sharing of administrative powers between the centre and the states remained unsolved. The Council has decided to conduct its next meeting between 11-12 of this month. If the tax reform is to be implemented with the next budget, the next Council meeting became very crucial as the general budget is pre-scheduled to early February. “Nine chapters each of the Cent
Nobel Prize Winning economist, Paul Krugman observed that demoentisation may not bring long term benefits. People will invent new methods of black income holding and hence India as a developing country is difficult to get much progress on black money fight. According to him the long-term benefits of demonetization is difficult to occur. “I understand the motivation, but it is a highly disruptive way to do it. I hardly see significant long-run gains, but there certainly are significant, although temporary, costs,” – Krugman told the meeting. At the same time, the country could face significant short run costs according to the Professor at Graduate Center of the
The Government is fastening digital transaction drive post demonetization. In a meeting on Monday, the Cabinet charted a road map towards cashless payments. At the center of the government plan is the NPCI promoted Unified Payments Interface (UPI). Banking and digital wallet apps like that of the Paytm and creating government installed touch points at schools and post offices are other components of the renewed cashless transaction drive. Collaborating with state governments comes top of the action plan. Already several state governments have adopted cashless transactions in the context of cash constraints. The meeting for designing cashless drive was chaired by Minister for Law
As a strong follow up of the demonetization drive, government has launched a penalizing tax scheme for black income holders. The new scheme puts 50% tax on disclosing black money kept at bank accounts after the demonetization date. For those who are not ready to disclose black money should pay a high rate of 85%. The new government step is not confined to imposition of high tax rates. More than that, it contains several measures including a cess on black money that will be used to finance poverty eradication programmes. The cess will be used to support Pradhan Mantri Garib Kalyan Yojana which is a half-implemented anti-poverty programme launched in April 2015. Similarly, 25% of t
The Cabinet is preparing a disclosure scheme for unaccounted deposits stored with banks after the launch of demonetization. As per this scheme, people with unaccounted money who stored in banks can avail a disclosure oportunity by paying a 50% tax. Additionally there is a lock in period of four years for the deposits. The new idea of taxing extra for the trapped unaccounted money gives more mileage for the government as it will give additional tax revenue. Besides, the second condition indicates that banks can utilize this deposit for four years. Payment of interest during this period is not mentioned as per the initial design. If the account holder is not revealing 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