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The Centre plans to levy penalty for fake invoicing – used to claim input tax credit (ITC) illegally – with effect from April 1. While this seems to be a reasonable step, experts say that such provisions, if not properly implemented, may counter the government’s aim to alleviate tax terrorism. Several cases were found by tax authorities, where the assessees had claimed ITC using fake invoices after implementation of GST. It was noticed that these fake invoices were issued by racketeers who do not actually carry on any business or profession. As per the memorandum of Budget FY21, the GST charged on such invoices was neither paid nor was intended to be paid. But using these fake invoices, a few registered tax payers fraudulently claimed ITC to reduce their GST liability. Therefore, the Budget has proposed a new provision under GST to levy penalty on those issuing fake invoices. The provision will be triggered if the issuer of invoice makes any false entry or if any transaction is omitt...

The government on Sunday clarified that the proposed tax on NRIs will not apply on bonafide Indians working in tax-free foreign countries and is intended to tax only those seeking to escape tax by exploiting their non-resident status. Finance Minister Nirmala Sitharaman in her Budget for 2020-21 had proposed to tax Non-resident Indians (NRIs) who do not pay taxes in any foreign country. This provision raised anxiety in minds of those working in the Gulf region where countries don’t tax income earned by individuals. First Sitharaman clarified that only Indian income of NRIs is proposed to be taxed under the new provision, and later the tax department issued a statement to say that “the new provision is not intended to include in tax net those Indian citizens who are bonafide workers in other countries”. The Union Budget for 2020-21 presented on Saturday had tightened the screws on those seeking to escape tax by exploiting their non-resident status. While earlier it was possible to be ...

The abolition of dividend distribution tax, the lowering of personal income tax and the removal of long-term capital gains tax were the three big expectations from the budget. Sitharaman has granted the first, held back on the second, and delivered the third with a twist in the tail. In fact, on income tax what we have now is, in effect, an optional parallel system of personal income tax. Individuals will now have the option of paying taxes at lower rates if they forego tax exemptions. Depending on exactly how much an individual is currently able to get exemptions for, this may mean a lower tax, or it may not. This is an optional call that each taxpayer will have to take. The key issue that I’m personally concerned about is whether this new optional tax regime is a disincentive for savings. That’s because the major exemptions that the taxpayer will have to forego are those under various parts of section 80, under which investments like PPF, NPS and ELSS funds come. It is a fact that ...

Shares in Life Insurance Corporation (LIC) and IDBI Bank — the two storied, state-owned institutions in the country’s financial sector — will be sold to the public. The surprise announcement in the budget is critical to the financing of government expenditure this year. Some market players expect the LIC stake sale to be the flotation of the decade while Bengal chief minister Mamata Banerjee expressed shock. Finance minister Nirmala Sitharaman has set a divestment target of Rs 2.1 lakh crore — the highest ever. Of this, Rs 90,000 crore is expected to be raised from the sale of the government’s stake in LIC and IDBI. The remaining Rs 1.2 lakh crore will come from the sale of stake in central public sector undertakings like Bharat Petroleum Corporation and Air India. Sitharaman said the government would sell a part of its holding in LIC through an initial public offering (IPO) but did not say how much. Some analysts believe that a successful flotation of the LIC shares would be critica...

The government has asked the Reserve Bank of India to consider extending the loan restructuring scheme for micro, small and medium enterprises (MSMEs) by one more year till March 31, 2021. The government proposal, announced in the Union Budget, would help MSME entrepreneurs – who were hit by demonetization and GST implementation — in supporting their business. While over five lakh small businesses had taken advantage of the scheme in the last one year, thousands of units have either shut down or on the verge of closure as the economic slowdown has intensified the woes of the MSME sector. From farm sector to personal finance, here’s The Indian Express’ full coverage of Budget 2020 Unveiling the scheme on January 1, 2019, the RBI had said the aggregate exposure, including non-fund based facilities of banks and non-bank entities, to a small borrower should not exceed Rs 25 crore as on January 1, 2019. The restructuring was originally to be implemented by March 31, 2020 and a provision o...

In her Budget speech, Nirmala Sitharaman spelled out sixteen measures to reboot agriculture and re-affirmed the Modi government’s resolve to double farmers’ incomes by 2022. Agriculture is categorized by her as “Aspirational India”. All these sixteen measures are broadly in the right direction, and in line with the tune of the Economic Survey that unequivocally supported the invisible hand of the markets (with trust) for wealth creation. The question for us is to evaluate whether these measures are sufficient to double farmers’ incomes by 2022. In order to respond to this question, we must understand that this would require about 15 per cent per annum growth in real incomes of farmers for the next three years, compared to about 3 per cent growth that was achieved during the five years of Modi 1.0. This five-fold increase in farmers’ incomes, from 3 to 15 per cent per annum, is an almost impossible task given the parameters in which farm incomes are determined, and the measures being ...

The first main thing is, as is the analysis done by economists, policy experts and so on is, if private investment is not really catching up, where does it stop? Where does the buck stop? The buck stops at the government’s doors. The government will have to show that it is not waiting for the private investments to happen, it will happen whenever it happens but we have to go about investing, and that’s what we made very clear saying, “Yes, we will invest and in infrastructure.” I want to point out two or three things to you, to prove and strengthen that point. We are definitely spending on infrastructures, obviously, we have gone into the detail. It is not just that (the) Prime Minister announced it in the Red Fort speech during Independence Day, Rs 100 lakh crore in five years. Soon after that we started, we had a task force, we looked into details, we consulted states, we consulted private sector and came up with a pipeline of 6,500 projects. You’ve seen government for a very long ...

Zimbabwe has quietly lifted a ban on imports of genetically modified corn for the first time in 12 years as the southern African nation begins to take action to avert what could be its worst famine. While genetically modified corn imports from South Africa are being allowed, the grain is carefully quarantined and is milled into a corn meal, a national staple, three officials with knowledge of the situation said, asking not to be identified as an announcement has not been made. Currently corn meal, used to make the staple food known locally as sadza, is in short supply across the nation. Zimbabwe is battling its worst drought in 40 years and is in the midst of an economic collapse. That’s left about 8 million people, or more than half the population, in need of food aid. Aside from in South Africa, genetically modified corn is shunned across sub-Saharan Africa and in Zimbabwe steps are being taken to ensure the grain doesn’t enter national seed stocks. A logistics team has been sent t...

NEW DELHI: The National Democratic Alliance government has allocated ₹61,500 crore for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) for 2020-21, which is less than the revised estimate of ₹71,000 crore for this fiscal. MGNREGS promises 100 days of work to a household in a year. In fiscal 2019-20, the initial allocation for the programme was ₹60,000 crores. At ₹71,000 crore, the spend under the programme this year will be the highest since it was introduced in 2006 to stem distress migration of the unemployed under the previous Congress-led United Progressive Alliance government. Analysts said the higher spend can be attributed to rural distress. “The agriculture sector is not doing well and rural distress is seen in the higher demand for jobs under the MGNREGS," said Himanshu, a professor at the New Delhi-based Jawaharlal Nehru University. “The wages in MGNREGS are lower than the daily wages but still, people are turning to this as the last resort....

NEW DELHI : The government on Saturday said it will soon release the national logistics policy, which aims to promote seamless movement of goods across the country. Finance Minister Nirmala Sitharaman in her Budget speech said that the policy will help in clarifying the roles of Centre, states and key regulators. "A National Logistics Policy will be released soon," she said, adding that it envisages creation of a single window e-logistics marketplace and focus on generation of employment, skills and making MSMEs competitive. The e-marketplace will act as a one-stop platform for exporters and importers. The policy is being worked out by the logistics division under the Commerce Ministry. The policy, which is also aimed at reducing high transaction cost of traders, may propose setting up of a central portal, which will provide end-to-end logistics solutions to companies. The announcement assumes significance as high logistics cost impact competitiveness of domestic goods in t...

The economic survey on Friday has proposed the government should scythe food subsidies by “revisiting” the prices of foodgrains at ration shops and scrap the Essential Commodities Act, which is meant to stop hoarding but has long outlived its usefulness. Foodgrains via ration shops are supplied at highly subsidised rates of Rs 3 per kg for rice, Rs 2 per kg for wheat and Rs 1 per kg for coarse grains through the public distribution system (PDS), according to the National Food Security Act (NFSA). “With a large share of poor people, maintaining food security is still a challenge. The rates fixed under the NFSA initially for a period of three years have not been revised since 2013, resulting in a burgeoning food subsidy. The rates under NFSA and the coverage need to be revisited,” the survey said. The food subsidy bill has increased to Rs 1,71,127.5 crore in 2018-19 from Rs 1,13,171.2 crore in 2014-15, it said. While the economic cost has increased, the central issue price (the rate at...

Market capitalism suffers from, what psychiatrists describe as, bipolar disorder. The affliction leads to alternate periods of elation and depression. This ailment can be controlled and managed by treatment, but never completely cured. The Indian economy is currently in a state of changing moods, from euphoria to dejection. There are unmistakable signs of slowing down and growing misery — low demand, absence of private investments, rising unemployment and stagnating production in many important sectors of the economy, including the agricultural sector where farmers are in acute distress. Two questions come to the mind of ordinary citizens: what is the cause of this impending gloom about the economy, and what, if anything, can be done about it to improve the situation? Let’s take the second question first. That the economy is not in proper health is accepted by even the most die-hard Bharatiya Janata Party supporter. The issue is whether we need to do anything about ...

India’s 2019-20 economic survey has underscored a decline in out-of-pocket healthcare spending by households over a three-year period, but experts say the fall is likely linked to expanding private health insurance than to extra government spending. The survey, citing figures from the National Health Accounts (NHA), has pointed out that the out-of-pocket expenditure as a percentage of total health expenditure has declined from 64.2 per cent in 2013-14 to 58.7 per cent in 2016-17. Health experts have for long advocated a substantial increase in government spending on healthcare to help reduce the country’s high out-of-pocket — either households’ savings or money borrowed from friends of relatives — expenditure on healthcare. The survey has also listed multiple government initiatives, including the Pradhan Mantri Jan Aarogya Yojana (PMJAY), a nationwide health insurance cover for up to Rs 5 lakh per year per household for hospital expenses, and free drugs and diagnostics initiatives. T...

Shiv Sena in its mouthpiece Saamana has speculated that the deadly coronavirus might have been produced during attempts to develop biological weapons of mega destruction by China. "China's biological laboratory is in Wuhan province where coronavirus was found. The world community must research whether this virus was produced in attempts to develop biological weapons of mega destruction," read the editorial. "In the wake of threat from the coronavirus, several countries including India have put a ban on flights from and to China. This step might be justified but many countrymen are stuck in China. To bring them back is a challenge," it said. "It cannot be ruled out the possibility of the spread of the virus in northeastern states adjoining China. The need of the hour is to deploy special health teams in these states. The virus spread fast in China because it has a huge and dense population and its possibility of spreading fast in India cannot be ruled out,...