September 2019 Economic Affairs

Sakshi Education

EAC PM welcomes the measures taken by the Government to Revive Economic Sentiment
Union Minister for Finance & Corporate Affairs Smt Nirmala Sitaraman revised the corporate tax rate downward and altering the percentage and application of Minimum Alternate Tax in certain cases.

She took measures to stabilize and enhance the flow of funds into the capital market and broadened the scope of CSR funding.

EAC-PM welcomed these comprehensive measures. These are important steps which will boost investment and enhance India’s economic growth.

Finance Minister gave an option to corporations to choose between reduced tax rates and prevailing exemptions.

The Council lower tax rate of 15% for companies making fresh investments in the coming months is bound to trigger new investments which will further augment India’s GDP. This augmentation will counterbalance the revenue that will be foregone.

The part of the series of measures taken by the Government to revive economic sentiment will go a long way in helping India realize its full economic potential.
CBDT to set up NeAC in Delhi
Central Board of Direct Tax (CBDT) has set up the National e-Assessment Centre (NeAC) in Delhi.

NeAc aims to expand the scope of e-governance and ease of doing business.

The move comes after the announcement by PM Narendra Modi during the National Conference of Tax Officials in 2017 to create a transparent and corruption-free assessment system.

BACKGROUND:
NeAc will assess tax returns electronically without any personal contact between officials and taxpayers. It will reduce human discretion in assessments and scrutiny.

This will put an end to corruption by using new technologies like artificial intelligence (AI), machine learning, video conferencing, telecommunication application software and mobile applications.
SBI to link new floating rate home auto loans to RBI's repo rate
State Bank of India or SBI, the country’s largest lender decided to adopt Reserve Bank of India’s repo rate as the external benchmark for all floating rate loans for MSME, home and retail loans effective October 1, 2019.

RBI earlier asked banks to link all new floating rate personal or retail loans and floating rate loans to Micro and Small Enterprises to external benchmarks from October 01, 2019.

The benchmarks include RBI's repo rate, Government of India 3-Months Treasury Bill yield published by the Financial Benchmarks India Private Ltd (FBIL), Government of India 6-Months Treasury Bill yield published by the FBI or any other benchmark market interest rate published by the FBIL.

The banks are free to offer such external benchmark linked loans to other types of borrowers as well.

It has voluntarily extended the external benchmark based lending to Medium Enterprises to boost lending to the MSME sector as a whole.
IRCTC to launch IPO on 30 September as stock markets rebound
State-owned Indian Railway Catering and Tourism Corp Ltd (IRCTC) tickets for Indian Railways and manages its catering services, plans to launch its initial public offering (IPO)

The plan to launch its initial share sale comes immediately after a sharp turnaround in the Indian stock markets, following the finance minister’s announcement last week to cut corporate taxes.

The proposed IRCTC IPO is expected to see the government sell stake worth Rs.480 crore through an offer for sale, said a person aware of the development.

IRCTC is expected to announce the price band for the IPO.

The government is looking to offload up to 20 million shares in IRCTC via the IPO, Mint reported on 23 August. The stake sale will result in the government reducing its stake in the company by about 12.5%.
SEBI imposes penalty on Aurobindo Pharma
Securities Exchange Board of India (SEBI) has imposed penalties of Rs.22.7 crore on Aurobindo Pharma and its promoters on 23 September.

The penalty was laid as the company has violated the provisions of insider trading in relation to a licensing deal it had entered with Pfizer in 2009.

SEBI has ordered Aurobindo and its promoters to pay the penalty within 45 days of the receipt of the order.
PM NarendraModi delivers keynote address at Bloomberg Global Business Forum
Prime Minister Narendra Modi urged the global investors and businesses to invest in India to avail the golden opportunity arising out of its huge market, its huge infrastructure ecosystem and a growing startup ecosystem.

In his keynote address at the third edition of Bloomberg Global Business Forum in New York, his government is working towards improving the business environment in the country.

India has cut corporate tax and has done away with 50 old laws that were detrimental to the development.

The Insolvency & Bankruptcy Code has been formulated to strengthen the banks and 377 million people have been brought under the banking sector in the last 4 years.

India has opened its defence sector like never before. 90% of FDI is through automatic route now.

Mr. Modi informed the forum, India is going to invest 1.3 trillion dollars in modern infrastructure in the coming years.

Lakhs of crores of rupees are also being spent on improving the social infrastructure of the country and new infrastructure for future generations. India is rapidly defeating poverty and moving up in the ladder, increasing the purchasing power.

The 4 factors that make India reliable for investors and make India unique are - Democracy, Demography, Demand and Decisiveness.

Exhorting the business leaders present there, the Prime Minister said 'Your technology and our talent can change the world. Your scale and our skills can speed up global economic growth.'

On this occasion, Prime Minister also interacted with philanthropist and Bloomberg CEO Michael Bloomberg and said challenge before India is nuclear energy. He said if India gets the opportunity to produce nuclear energy that will revolutionalize its power needs.

Mr. Modi also highlighted steps taken towards promoting organic farming, Ayushman Bharat scheme, Digital India and Atal Tinkering Labs. The world needs a strong India.

Bloomberg Global Business Forum meet is an annual event organized by philanthropist Michael Bloomberg every year to share the ideas and visions of global leaders from public and private sectors on key issues. The theme of the third edition of the annual event in 2019 is - Restoring Global Stability.

In continuation of his vision to attract foreign investment and expand India's economic cooperation, Prime Minister is now holding a round table conference with the top CEOs in New York.
Date for filing ITRs, Tax Audit Reports extended till October 31
The Central Board of Direct Taxes (CBDT) has extended the due date for filing of income tax returns (ITRs) & Tax Audit Reports from September 30th 2019 to 31st Oct 2019 in respect of persons whose accounts are required to be audited. The CBDT said that a formal notification for the same will be issued soon.

This category of ITR is to be filed by those entities that are assessed under section 44AB of the I-T Act such as companies, partnership firms, proprietorship among others and their accounts are to be audited before filing.

Certain categories of individuals like a working partner in a firm also fall under this clause.
PM Narendra Modi invites top American CEOs to invest in India
Prime Minister Narendra Modi has invited US industry leaders to invest in India.

India is an ideal destination for investors and offers a golden opportunity to partner with.

Prime Minister Narendra Modi highlighted how India made rapid progress in last five years and invited investors. He said, desires of industry leaders matched the government’s dreams, and combined with technology, talent can change the world.

Digital India, and start-ups are priorities of the government, Mr Modi added that since returning to power, the government has pushed several measures to streamline investment procedures and boost manufacturing. He cited easing of rules like 30 per cent sourcing from India for single brand retailers and legalisation of contract manufacturing to allow 100 per cent investment.

In the coming years, government is going to spend around 1.3 Trillion dollars on modern infrastructure in India and lakhs of crores of rupees are also being spent on social infrastructure.

Four factors make India reliable for investors and makes India unique. These are, Democracy, Demography, Demand and Decisiveness.

Skills of business leaders and speed of government can increase global economic growth.

For good governance, social media’s role is very important. Prime minister Modi later interacted with over 42 business leaders and American CEOs.

Harnessing investment opportunities in India and boosting commercial linkages between India and USA were at the centre of discussion.

Steps taken by India to build a 5 trillion dollar economy were highlighted and the global business community was also upbeat about the India success story.
Forex reserves decline by USD 388 million to USD 428.57 billion
India's forex reserves declined by USD 388 million to USD 428.572 billion for the week ended September 20 due to a slide in core currency and gold assets.

The Reserve Bank data released showed that in the week to September 20, foreign currency assets a major component of overall reserves declined by USD 125 million to USD 396.670 billion.

It also showed that during the week, the value of gold reserves declined by USD 259 million to USD 27.843 billion, making it the second consecutive week of decline in the value of the precious metal held by India.

According to the data, country's special drawing rights with the International Monetary Fund increased by USD 3 million to USD 1.435 billion during the week, while country's reserve position with the Fund declined by USD 6 million to USD 3.623 billion.
Deadline to link PAN with Aadhaar extended till Dec 31
The deadline to link permanent account number (PAN) with Aadhaar has been extended by three months till 31st of December.

Earlier, the deadline was September 30. This is the seventh time that the government has extended the deadline for individuals to link their PAN with Aadhaar.

Central Board of Direct Taxes has issued a notification in this regard. It is now mandatory to link the two unique IDs for income tax purposes.
RBI Allows Payment Of All Recurring Bills Through BBPS
RBI expanded the scope of Bharat Bill Payment System (BBPS) to cover all repetitive bill payments. They may include school fees, insurance premiums and municipal taxes.

Currently, the facility of payment of recurring bills through BBPS is available only in five segments namely direct to home (DTH), electricity, gas, telecom and water.

BBPS functions under the aegis of National Payments Corporation of India (NPCI).

The facility would be expanded to include other types of repetitive payments like insurance premium, mutual funds, school fees, EMIs, and municipal taxes, among others.

The expansion of biller categories would increase the user base of Bharat Bill Pay along with providing an efficient, cost-effective alternative to the existing systems and enhance consumer confidence and experience.
Allahabad Bank board approves merger with Indian Bank
Allahabad Bank approved the merger proposal with Indian Bank. The main aim is to make the amalgamated entity the seventh-largest public sector lender of the country.

The consolidation of 10 state-run banks into four large-scale lenders. The board of directors in a meeting held considered and accorded its in-principle approval for amalgamation of Allahabad Bank into Indian Bank. The employees and officers of Allahabad Bank staged a demonstration in front of its headquarters here to protest against the merger.

The amalgamation is being opposed as Allahabad Bank has higher levels of CASA - current account and savings account more staff strength and a bigger volume of business compared to the other lenders.
EPFO launches e-nomination facility for your PF account
The Employees Provident Fund Organization EPFO started online e-nomination facility on its website. Filing e-nomination helps you to easily file online pension claim at the required time. The nominees can easily file online composite claim in the event of demise of the EPFO member if the e-nomination has been done.

The name of a nominee/s, you must get your Universal Account Number (UAN), allotted by the EPFO, activated, if not done already at the EPFO portal.

The next step is to make sure UAN is linked with your Aadhaar. The Aadhaar, on the other hand, should be linked with your mobile number to get OTPs.

They provide Aadhaar number, address, date of birth, mobile number, bank account details and scanned copies of photographs of all nominees, under the new e-nomination rules.
RBI restricted access to credit data of consumers
The Reserve Bank of India (RBI) has asked the banks and non-banking finance companies (NBFCs) to restrict access to consumers' credit data on 16 September.

The move aims to impact the business model of fintech companies. The Central bank has asked the banks and NBFCs to implement the measures in 15 days.
Airtel Payments Bank launches Bharosa savings account
Airtel Payments Bank launched Bharosa savings account which enables customers to withdraw cash check their balance or access a mini statement of their account at over 6,50,000 Aadhaar-enabled payment system (AePS) enabled outlets across India.

These services have been designed for deepening financial inclusion in the country.

The benefits of this product will be further amplified through a structured roadway for the phased introduction of other features linked to formal banking. To begin with, it will be available at over a quarter million banking points.

The balance or access a mini statement of their account at over 6,50,000AePS (Aadhaar-enabled payment system) enabled outlets across India.
Corporate tax rates slashed to 22% for domestic companies: FM Nirmala Sitharaman
Finance Minister Nirmala Sithraman today (20 September, 2019) said, a new provision has been end in the Income-tax Act which allows any domestic company an option to pay income-tax at the rate of 22% if they do not avail any exemption/incentive. It will be effective from the current Financial Year.

Addressing the media ahead of 37th GST council meeting in Goa, She announced reduction in corporate tax for domestic companies and domestic new manufacturing companies.

Another new provision allows any new domestic company incorporated on or after 1st October 2019 making fresh investment in manufacturing and commences their production on or before 31st March, 2023, will have to pay income-tax at the rate of only 15%. Finance Minister has also announced the government decision to expand the scope of 2 percent CSR spending.

Meanwhile, 37th GST council meeting, headed by Finance Minister Nirmala Sitaraman is underway in Panaji, Goa.

Prime Minister Narendra Modi has hailed the decision to cut corporate tax terming it as historic one. In a tweet, Mr Modi said, it will give a great stimulus to Make In India, attract private investment from across the globe, improve competitiveness of the private sector, create more jobs and result in a win-win for 130 crore Indians.

The Prime Minister said, the announcements in the last few weeks clearly demonstrate that the government is leaving no stone unturned to make India a better place to do business, improve opportunities for all sections of society and increase prosperity to make India a 5 Trillion dollar economy.

Appreciating the efforts taken by the Finance Minister, Commerce and Industry Minister, Piyush Goyal said that these announcements will give necessary fillip to the economy. He said that government has taken series of measures to boost the economy and today's measures are the largest one.
GST Council rates cut in several items including hotel tariffs
GST Council has slashed tax rates on several items, including hotel room tariffs and cut and polished semi-precious stones. The Council recommended tax rate increase in some other items. Council has also decided to link Aadhaar with the registration of taxpayers under GST and also examined the possibility of making Aadhaar number mandatory for claiming refunds.

The 37th GST Council meeting was held in Goa on 20 September, 2019 under the chairmanship of Finance & Corporate Affairs, Minister Nirmala Sitharaman. Finance Minister announced that no GST will be charged for hotel rooms having tariffs of upto 1,000 Rupees per night. She said 12 per cent GST will be levied on the hotel room from the existing 18 per cent whose tariff ranges between 1,001 to 7,500 Rupees. Hotel room having tariff of 7,500 Rupees and above will be charged 18 per cent from the existing 28 per cent.

Minister said that GST Council recommended to lower 12 per cent cess on 1,500 CC diesel and 1,200 CC petrol vehicles with capacity to carry up to 13 persons. GST council has also recommended to reduce the GST rates on slide fasteners, marine fuel, wet grinders and dried tamarind. It decided to exempt the imports of specified defence goods not being manufactured indigenously and supply of goods and services to Food and Agriculture Organization for specified projects in India.

Nirmala Sitharaman said that caffeinated beverages will be charged with 28 per cent tax plus 12 per cent compensation cess in place of existing tax rate of 18 per cent. GST rates on railway wagon and coaches have been hiked from 5 per cent to 12 per cent.
SEBI sets up panel to create SSE
Capital market regulator Securities and Exchange Board of India (SEBI) set up a high-level panel to suggest possible structures and regulations create Social Stock Exchanges (SSE).

The move comes after the budget announcement of the Finance Minister Nirmala Sitharaman in July about setting up such exchanges to take the capital markets closer to the masses and meet various social welfare objectives.
BACKGROUND:
- The creation of Social Stock Exchanges (SSE) aims to facilitate listing and fund-raising by social enterprises and voluntary organizations.
- It will also raise capital as equity, debt or as units like a mutual fund.
Reserve of Bank of India tightens norms for banks up penalties
Reserve Bank of India prescribed a turnaround time (TAT) for banks to settle failed transactions for customers and also notified compensations payable for various types of customer complaints.

The financial compensation should be done suomotu by the bank, without waiting for a complaint or a claim by a customer.

The central bank had first announced a move to harmonize TAT this April for resolving customer complaints and compensation after observing that time taken for resolving customer complaint varies across payment systems.

To have prompt and efficient customer service in all electronic payment systems it is necessary to harmonize the TAT of resolution of customer complaints and charge-backs and to have a compensation framework in place for the benefit of customers.

The RBI categorized eight different avenues of transaction in which the new guidelines will be applicable, including ATMs, card transactions, immediate payment system, unified payment interface and prepaid cards.

The timeline for auto-reversal has been set at between one day after the transaction to five days.

The financial compensations have been set at Rs 100 per day if the reversal does not happen within a specified timeline.

The move is aimed at upping customer confidence and bringing-in uniformity in processing of the failed transactions.

Customers who do not get the benefit of redress of the failure as defined in the TAT, can register a complaint to the banking ombudsman.
Public Sector Banks to organize loan melas in 400 districts
Public-sector banks (PSBs) hold public meetings with borrowers for distributing loans in 400 districts of the country to boost demand ahead of the festive season.

Union Finance Minister Nirmala Sitharaman announced the banks will take help from non-banking financial companies (NBFCs). The National Democratic Alliance (NDA) government will be following the footsteps of its predecessor, the United Progressive Alliance (UPA) government introduced the concept of loan mela to boost credit by directing banks to lend to people through public meetings.

The government has told PSBs not to declare stressed assets of micro, small and medium enterprises (MSMEs) non-performing assets (NPAs) till 31 March, 2020.

This will come as a major boost to the sector with its 65 million firms employing around 120 million workers the biggest job creation after the agriculture sector.

The government is also considering a special dispensation for the farm and MSME sectors.
World Bank to fund tourism projects in Uttar Pradesh
World Bank will fund ‘pro-poor tourism’ (PPT) development projects worth more than $57 million in top tourist hotspots of Agra and Braj- Mathura regions in Uttar Pradesh.

While the World Bank will incur 70% of the project cost, the remaining 30% will be borne by the UP government.

Pro-poor tourism is a holistic tourism concept aimed at poverty alleviation.
GST Council likely to extend the date of filing annual return audit report for FY19
Goods and Services Tax annual return and audit report for FY19.

The GST Council is likely to extend the due date to enable businesses to comply as companies are currently busy with meeting the deadline for FY18.

Businesses have time till 30 November to file the annual return and audit report for the July-April period of FY18 The three extensions already considering the numerous changes in rules and the difficulties faced by them in shifting to a new technology reliant indirect tax regime.

The extension will be of immense help as without it they will have to finalize annual returns and the audit report for FY19 within one month of having filed the same for the previous fiscal.

The government does not want to pre-empt the preparations that businesses are currently doing to meet the due date.

GST implementation marked by continued extensions of due dates for filing various return forms as the new technology driven indirect tax regime brought into its fold a large number of small firms. The Council has progressively liberalized the compliance regime, especially for small businesses, which now have to pay only quarterly returns though they pay taxes on a monthly basis. The central government expects the new tax regime may take some more time to stabilize. The focus of the authorities at present should be on improving compliance for FY 18. The first year can be used to improve compliance for the years to follow. Simplification of GSTR-9 (annual return).
State Bank of India revises service charges for deposits and withdrawals from October
State Bank of India or SBI on its website regarding revision of service charges with effect from 1st October.

The bank allows free transactions to its customers at ATMs for 8-10 times in a month. The mandated number of free transactions, SBI charges a certain amount to its customers.

SBI will also charge for transaction decline due to insufficient balance and cardless cash withdrawal at ATMs.
BACKGROUND:
- Regular savings bank account holders get eight free transactions, including five transactions at SBI ATMs and three transactions at other bank ATMs.
- In non-metros, such account holders get 10 free transactions, including five at SBI ATMs and five at other bank ATMs.SBI charges a fee ranging from Rs.5 plus GST to Rs.20 plus GST for any additional transactions beyond this limit.
- SBI will charge Rs.20 plus GST for transaction decline due insufficient balance.SBI will also charge Rs.22 plus GST for cardless cash withdrawal at ATMs.
- SBI offers free unlimited transactions at State Bank Group (SBG) ATMs and other bank ATMs.
State Bank of India launches OFS to sell stake in life insurance
State Bank of India is one of the biggest banking sector in India launched a two-day offer for sale (OFS) to sell a 4.5% stake in SBI Life Insurance Co Ltd.SBI is looking to sell up to 3.5% through the OFS with an option to sell an additional 1%.SBI Life started as a joint venture between the public sector lender and France’s BNP Paribas Cardif.

The secondary share sale at Rs.770 apiece, a discount of 3.6% to the stock’s closing price of Rs.798.75. The Shares of SBI Life closed at Rs.791.9 apiece down 0.86% on the BSE

SBI will fetch Rs.3,465 crore about $487 million if it sells the entire 4.5% stake. The stake sale will help the company comply with minimum public shareholding norms (of 25%).

The secondary share sale, which opened for institutional and non-retail investors subscribed 2.7 times.

The Investment banks Sbicap Securities Ltd HSBC and Nomura are managing the share sale.

SBI Life went public in September 2017 with an initial public offering, which saw SBI selling 8% and BNP Paribas Cardif selling a 4% stake. The total IPO size was worth Rs.8,400 crore, with SBI raising around Rs.5,600 crore and BNP Paribas Cardif around Rs.2,800 crore.SBI sold a 3.9% stake to investors KKR and Co. LP and Temasek Holdings. This is the first time that SBI is selling its stake in the life insurer.

The global private equity firm Carlyle Group acquired a 9% stake in SBI Life from BNP for around Rs.4,600 crores.
GST collection in August stands at Rs 98,202 crore
GST collection in the month of August stood at 98 thousand 202 crore rupees.

The total number of GSTR 3B Returns filed for the month of July up to 31st of August is around 76 lakh.

The government has settled 23 thousand 165 crore rupees to CGST and 16 thousand 623 crore rupees to SGST from IGST as a regular settlement.

The total revenue earned by the Central Government and the State Governments after regular settlement in the month of August 2019 is 40 thousand 898 crore rupees for CGST and 40 thousand 862 crores for the SGST.

It said, 27 thousand 955 crore rupees have been released to the states as GST compensation for the months of June and July, 2019.
Over 5.65 crore income tax returns filed for assessment year 2019-20
Over five crore 65 lakh Income Tax Returns were filed by taxpayers for the Assessment Year 2019-20.

This is 4 per cent more compared to the previous assessment year. Central Board of Direct Taxes (CBDT) data shows that 5 core 42 lakh ITRs were filed for the Assessment year 2018-19. In a statement, CBDT said, e-filing of ITRs touched an all-time high of over 49 lakh 29 thousand in a single day on August 31 for the year 2019-20.

From August 27 to 31, 2019, nearly one crore 47 lakh 82 thousand people filed online income tax returns, an increase of 42 per cent as compared to the same period of 2018-19.It said that the I-T department is actively interacting with taxpayers on social media to help them resolve their grievances and e-filing related queries and getting accolades in return.

The last date for submission of e-filing of ITRs for 2019-20 was August 31. It added that the peak filing rate per second was at 196 ITRs.

Out of the 5 crore 65 lakh ITRs filed so far, 3 crore 61 lakhs have been verified.
RBI task force calls for central corporate loan contract registry
Reserve Bank-constituted task-force on developing a vibrant secondary market for corporate loans has called for setting up a central loan contract registry to remove information asymmetries between buyers and sellers.

The six-member task force, headed by Canara Bank chairman TN Manoharan, was formed to examine the scope for developing a secondary market for corporate loans and make recommendations to facilitate rapid development of such a vibrant market.

The task force submitted the report to Governor Shaktikanta Das on 03 September, 2019. It has called for creating a loan contract registry to remove information asymmetries between buyers and sellers, its ownership structure and related protocols such as standardization of loan information, independent validation and data access.

It also suggests creation of a self-regulatory body of the participants that can finalise detailed operational modalities of such a secondary market, including standardization of the documentation process.

The report also recommends setting up of an online loan sales platform to conduct auctions/sale process of secondary market loans.
PAN for people filing ITR with Aadhaar
The Income Tax Department will automatically issue PAN to a taxpayer using Aadhaar number for filing returns as part of a new arrangement to link the two databases.

A person who furnishes Aadhaar, as they do not have PAN, shall be deemed to have applied for allotment of PAN and they will not be required to apply or submit any more documents.

The rule has come into effect from 1st September, 2019.
RBI panel recommended self-regulatory agency
A task force set up by the RBI submitted its report on the development of a secondary market for corporate loans on 3 September 2019.

The task force headed by Canara Bank chairman T.N. Manoharan recommended setting up of a self-regulatory body (SRB).

The SRB may be set up as an association by scheduled commercial banks, public financial institutions.
PSBs must have Rs.10 lakh crore business to appoint CGMs’
The Finance Ministry has decided to fix a cut-off mark in terms of total business of public sector banks (PSBs) to create the position of chief general managers (CGMs).

PSBs will now have the position of CGM which was thus far available only to the State Bank of India.

In a communication to bank chiefs, the government said PSBs having a total business of Rs.10 lakh crore will be eligible to have CGM posts in Scale VIII.

As a result, three sets of merger bound banks — of the four sets announced by the Finance Minister — will be eligible for CGMs.
Centre urges CPSEs to stick to their capital expenditure plan
The Centre has asked large Central Public Sector Enterprises (CPSEs) to stick to their capital expenditure plan which will increase liquidity in the market and boost economic growth.

This was emphasised by the Finance Ministry during a meeting with the Heads of Maharatna and Navratna CPSEs and Financial Advisors of infrastructure Ministries in New Delhi.

Capital expenditure by various CPSEs and Ministries and resolution of outstanding payments which may have been held up on account of disputes were reviewed.

The Finance Ministry will constantly monitor the progress of large infrastructure projects and hold follow up meetings.