India Has Got Black Money Details From Germany: Government - May 04, 2009

On 2nd May, the government said that it has already secured significant information from Germany and income-tax sleuths were following it up. The government was assuring the Supreme Court that it was trying to retrieve black money stashed in tax havens abroad.

The finance ministry revealed this in a 27-page affidavit to the apex court in response to a lawsuit accusing the government of doing precious little to retrieve Indian black money to the tune of Rs.70 trillion stashed abroad.

In its affidavit, the government also told the court that its persistent efforts in collaboration with international community have also resulted in Switzerland agreeing to make its secretive banking laws and norms more transparent in tune with the global standards.

Director Priya V.K. Singh of the Department of Revenue under the finance ministry told the court that following repeated efforts since Feb 27 last year, the government got the information on Indians with secret accounts in LGT Bank of Liechtenstein March 18 this year.

Duty Cuts Impact Govt Indirect Tax - Feb 20, 2009

The government on Feb 19 said the indirect tax collections in this financial year was affected by the excise duty cuts announced in the last year''s Budget along with the slowdown in some sectors. According to S S Palanimanickam, Minister of State for Finance, "The Central excise duty rates were reduced in the Budget 2008 ... These reductions along with some slowdown in specific sectors affected the revenue (indirect tax) collections".

He also added that central excise duty rates on motor spirit as well as the high-speed diesel oil were also reduced subsequent to the Budget. He pointed out that that government has taken a number of administrative steps to plug the loopholes in law procedures and improve the revenue position as well as the data collection and analysis, audit and anti-evasion measures. Regarding the duty evasion in the export-oriented units, he said that persuasive action is being taken by the government to receive duties along with initiation of penal proceedings.

Government Announces The Stimulus Package For Media - Feb 9, 2009

The government on Saturday said it will shortly announce a stimulus package for media sector. The Minister of State for Information and Broadcasting Anand Sharma told reporters that the representatives of the media industry had written to the government and met with me on Saturday about the adverse impact of the financial crisis on the media industry. We are going to give some stimulus package to the media industry and we do hope to mitigate the situation.

Sharma said that certain recommendations about the package has already been sent by I&B ministry to the Finance ministry and the government will announce it soon. When asked if the package would also cover the electronic media, Sharma said that though it is mostly concerning the print media, "some aspects" of it would also apply to the electronic media too.

The media industry, both print and electronic, is facing the impact of the global financial crisis in the form of decline in advertisement revenue.

Government To Impose Service Tax On Rental Income From Commercial Properties - Aug 19 , 2008

The Centre on Aug 18 sought the Supreme Court''s intervention in deciding the constitutional validity of the Finance Act 2007 that empowers the government to impose service tax on rental income from commercial properties. A bench headed by Justice B N Agrawal while seeking reply from Retailers Association of India, Confederation of Real Estate Developers'' Associations of India and Multiplex Association of India on the transfer petition filed by the Centre also stayed proceedings before various high courts. The Centre through Department of Revenue has sought transfer of petitions pending before the high courts of Bombay, Madras, Kolkata, Punjab and Haryana and Kerala on the ground that there was a likelihood of conflicting decisions.

According to the petition, retailers, real estate developers and multiplex owners had filed writ petitions before various high courts challenging levy of service tax on leasing, letting, renting or any other similar arrangement in respect of immovable property for use in furtherance of business or commerce. It further said that they had challenged the constitutional validity of the Finance Act 2007 on the ground that it was beyond the legislative competence of the Union and thus Parliament cannot levy such a tax. Pantaloon Retail, Trent Ltd, Aditya Birla Retail Ltd, Archies, CISCO systems India, Citibank NA, DLF Universal, IBM India, ITC Ltd, McDonalds India, Reliance Petromarketing, Reliance Webstore, Bombay Dyeing, Titan Industries, Unilever India Exports, Adlabs Films and Bijli Group are among those who had sought relief contending that lease or license (including renting or letting out) was not a service.

Govt Expects To Raise More Resources From Service Tax - July 28 , 2008

The Government expects to mop up more resources from the service tax, according to Mr P.C. Jha, Chairman of Central Board of Excise and Customs. The service sector adds more than 50 per cent of GDP while in terms of tax-GDP ratio, the share of the service tax is a meagre 1.1 per cent.

The service tax in India was launched in 1994 and in 1994-95, the tax rate was five per cent and three services were taxed and the Government raised Rs 410 crore on this score. In the past 14 years, the number of services being taxed has increased to 106 and the Government earnings from the service tax many times more and the rate of tax too has been jacked up to 12.36 per cent. In 2007-08, over Rs 51,000 crore was increased by way of service tax and the aim for the current year has been set at more than Rs 64,000 crore. Judging from the trend so far in the current year.

Inflation eases to 11.89pc - July 25 , 2008

The annual wholesale price index-based inflation at 11.89 per cent during the week ended July 12, slightly lower than the previous week''s annual rise of 11.91 per cent, Government data showed on July 24.

The year-on-year inflation rate was 4.76 per cent during the corresponding week of the previous year. On a disaggregated basis, the Primary Articles group index increased 0.6 per cent as the index for ''Food Articles'' grouprose by 0.6 per cent due to higher inflation in items such as coffee (8 per cent), fruits and vegetables, urad and mutton (2 per cent each) and arhar, moong and jowar (1 per cent each). However, the inflationary trend in case of fish-marine (3 per cent), tea (2 per cent) and condiments and spices and maize (1 per cent each) declined. The index for ''Non-Food Articles'' group rose by 0.8 per cent for the previous week due to higher inflation in case of sunflower and raw rubber (3 per cent each), rape and mustard seed, castor seed and gingelly seed (2 per cent each) and raw cotton (1 per cent).

The index for ''Base Metals, Alloys and Metal Products'' group increased slightly due to higher inflation in lead ingots (6 per cent) and zinc ingots (3 per cent). The index for ''Machinery and Machine Tools'' group rose by 0.2 per cent due to higher prices of other electrical equipment and systems (2 per cent) and enamelled copper wires (1 per cent).

The heavyweight Manufactured Products group index increased by 0.05 per cent as the index for ''Food Products'' group increased by 0.1 per cent due to higher inflation on items such as coffee powder (6 per cent) and khandsari, gingelly oil and oilcakes (1 per cent each). However, rice bran oil (2 per cent) and imported edible oil, cotton seed oil and groundnut oil (1 per cent each) showed a fall. The index for ''Textiles'' group declined by 0.1 per cent due to lower inflationary trend seen in case of texturised yarn and hessian and sacking bags (2 per cent each) and hessian cloth (1 per cent).

United Progressive Alliance Govt. Increased Its Loan Waiver

The United Progressive Alliance government on Friday increased its loan waiver package by nearly 20 per cent to Rs. 71,680 crore to provide relief to ''big'' farmers, bringing them under the purview of the debt write-off scheme as proposed in the 2008-09 budget.

As per the expanded and modified scheme approved by the Cabinet, in keeping with demands from various quarters including Congress general secretary Rahul Gandhi, all farmers - small, marginal and big - in 237 identified dry, unirrigated and drought-prone districts in various States will get a minimum one-time debt relief of 25 per cent of their outstanding loan amount or Rs. 20,000, whichever is higher.

Briefing journalists, Finance Minister P. Chidambaram made it clear that the loans of small and marginal farmers would be completely waived, whether they were in the identified districts or other regions.

In view of the inclusion of big farmers in dry land areas holding larger acreage, the scheme would benefit more than four crore small, marginal and other large farmers and cost the exchequer Rs. 71,680 crore as per fresh estimates (unaudited), up from the original estimate of Rs. 60,000 crore, Mr. Chidambaram said.

"Small and marginal farmers will get full debt waiver, while 60-65 per cent of large farmers also get full debt waiver. This is why the cost of the scheme has increased."

The number of small and marginal farmers expected to benefit from the enlarged scheme stood revised to 3.69 crore against the earlier estimate of three crore, while the number of other farmers was scaled down to 59.75 lakh from one crore.

Govt. On Friday Expanded Farm Debt Waiver Scheme

NEW DELHI: The government on Friday rolled out an expanded farm debt waiver scheme, which will cost the exchequer a whopping Rs 71,600 crore, 20% higher than the initial estimate of Rs 60,000 crore. The scheme will now include more than four crore farmers and will also cover those with landholdings in excess of two hectares.

In line with demands from political party leaders, including Congress general secretary Rahul Gandhi, farmers in drought-prone areas covered under the Prime Minister’s relief plan have also been included in the scheme.

In a separate development, RBI on Friday asked banks to take necessary steps to complete the debt waiver scheme by June 30.

The expanded loan waiver scheme, which was announced in the Union Budget 2008-09, will now include farmers engaged in allied activities such as poultry, dairy farming. Direct agricultural loans taken under a Kisan Credit Card, as well as loans of self-help and joint-liability groups would also be covered.

The government has also decided to waive off restructured loans, including those under the Vidharba package and calamity relief, whether or not they were overdue.

Briefing reporters after a Cabinet meeting, chaired by Prime Minister Manmohan Singh, finance minister P Chidambaram said: “Farmers deserve this support. We are only discharging the debt we owe to the farmers. The central government is taking over the debt and will reimburse the banks. All small and marginal farmers will get full debt waiver, while 60%-65% of large farmers will also get full debt waiver. This is why the cost of the scheme has increased.”

While unaudited cost is pegged at Rs 71,600 crore, the FM said the audited estimate was Rs 66,000 crore. The cash outgo from the government as reimbursements to banks is seen at Rs 60,416 crore for small & marginal farmers and Rs 7,960 crore for others, according to estimates by RBI and Nabard.

Loans not eligible under the scheme include advances against pledge or hypothecation of agricultural produce other than standing crop, agricultural finance to corporates, partnership firms and societies other than co-operative credit institutions.

If a farmer has taken two separate loans — for instance a short-term production loan and an investment loan — they shall be counted as two distinct loans, and the scheme would apply to the two loans separately. Direct agricultural loans include short-term production loans and investment loans provided directly to farmers for agricultural purposes.

A short-term production loan is one given in connection with the raising of crops and which is to be repaid within 18 months. An investment loan is for direct agricultural activities, including asset financing and allied activities such as dairy, poultry farming and biogas generation. The amount eligible for debt waiver or relief, in case of a short-term production loan, includes the principal and the interest.

While small and marginal farmers are eligible for debt waiver, others are eligible for a one-time settlement (OTS) scheme.

The debt waiver scheme will cover all loans disbursed to farmers between March 31, 1997, and March 31, 2007, and overdue as of December 31, 2007, and remaining unpaid until February 29, 2008.

Under OTS, the farmer will be given a rebate of 25% of the ‘eligible amount’, or Rs 20,000 (whichever is higher). Further conditions have also been spelt out on the deadline before which the repayment has to be made. Banks cannot charge interest on the eligible amount after February 29, 2008.

However, in the case of investment credit for allied activities, the land holding is not germane, and hence, those farmers, whose principal loan amount is Rs 50,000 or less, will be classified as ‘small and marginal farmers’, where the principal amount exceeds Rs 50,000, he would be classified as ‘other farmer’.

Mr Chidambaram said a scheme of this kind was not contemplated by the NDA government despite being in power for six years. “We have been able to muster courage at the end of four years, as it is a massive scheme. Only when I was confident and Prime Minister was confident of the implementation did we announce the scheme,” he added.

Guidelines will soon be issued to all lending institutions, including banks, rural regional banks, co-operative credit institutions and local area banks. Under the scheme, every bank branch would be required to prepare a list of farmers, along with the amount of loan waived, so that they can claim benefit without problems.

“This list would have to be displayed on the notice board,” he said. The farmers will not be required to submit any documents and will receive a certificate from the bank with the details of the waiver. The list will have to be put up on or before June 30, 2008.

He said the banks have also been asked to set up grievance cells to address the farmers problems with regard to the scheme in a time-bound manner. Besides, a high-level body headed by the secretary, financial services, and including secretary agriculture, RBI deputy governor, Nabard chairman and CMDs of two public sector banks would be set up to monitor implementation.

“All executive directors, bank chairmen have been asked to fan out across the country. Chief Ministers would be requested to co-operate. I will also travel for on-spot verifications to see how lists have been put up by banks and how farmers are getting relief.”

“Banks are in no way prejudiced. They have welcomed the scheme. Extensive consultations have been held with them about the scheme and its implementation,” he said.

“All claims will be on the central government. RBI will be the nodal agency for scheduled commercial banks and Nabard for RRBs and co-operative banks,” he said.

Govt Staff To Get Effective Salary Hike Of 28%

New Delhi: The Sixth Pay Commission may have recommended an average 40 per cent hike in the salaries of government employees, but the effective increase will be much less at 28 per cent on account of merger of 50 per cent DA in basic pay way back in 2004.

After submitting the report, the Commission Chairman justice B N Srikrishna had said the average increase in salaries would work out to be 40 per cent over the Fifth Pay Commission award.

The government had merged 50 per cent of the Dearness Allowance (DA) with the basic pay with effect from January 1, 2004.This accordingly puts the basic pay at much higher level than that was provided in the Fifth Pay Commission and the effective increase over that level is 28 per cent, a top Commission official said.

The government increase the DA of its employees every six months to compensate them for rising cost of living. Among other things, the Sixth Pay Commission has also suggested that the government should revise the base year of the Consumer Price Index (CPI) for computation of DA "as frequently as feasible". It further recommended that a separate CPI should be prepared by the National Statistical Commission for computation of DA for government employees

Budget May Cut Excise Duties To Boost Manufacturing

Concerned over the slump in industrial production and to maintain inflation around 4 per cent, the Government is likely to provide relief to the manufacturing sector by marginally cutting excise duty rates or sector-specific duties in the Budget 2008-09. Finance Minister P Chidambaram may announce cut in excise duty rates across the board from 16 per cent to 14 per cent or sector-specific duty cuts in the budget to be presented on February 29, official sources said. Sectors like pharmaceutical, textile machinery, food processing, paper and auto including two wheelers, tyres are expected to get relief in excise duty, but like last year Chidambaram could also prune excise duty exemptions to maintain revenue collections, sources said.

According to Finance Ministry, due to various excise duty exemptions the estimated revenue foregone touched Rs 9,690 crore in 2006-07 as against Rs 66,760 crore in the previous year. It includes area-specific tax exemptions of Rs 7,000 crore in 2006-07. With the approval of over 400 special economic zones, the revenue foregone figures could be much higher for 2007-08, although some tax exemptions were withdrawn in the last budget.