Bharat Bill Payment System

The Reserve Bank of India (RBI) proposes to set up anytime anywhere bill payment system under Bharat Bill Payment System (BBPS). RBI has issued guidelines for implementation of BBPS on November 28, 2014. The BBPS is designed to function as a tiered structure for operating the bill payment system in the country with a single brand image providing convenience of ‘anytime anywhere’ bill payment to customers. The National Payments Corporation of India (NPCI) has been designated as the authorized Bharat Bill Payment Central Unit (BBPCU) to set the standards for BBPS processes which need to be adhered to by all authorized operating units under the system. The applications for authorization can be submitted to the Reserve Bank of India from the first quarter of 2015.

Kisan Vikas Patra

Government has formulated a number of schemes having different features for different segments of the saving population. Each of the available saving option has different features in terms of eligibility to invest, rate of interest, maturity period, lock-in-period, tax treatment, pledging facility, minimum and maximum ceilings etc. Main features of KVP, are: Amount invested in Kisan Vikas Patra (KYP) doubles in 100 months at the present rates. The certificates can be purchased by an adult for himself or on behalf of a minor or to a minor. It can also be purchased jointly by two adults. A certificate may be transferred from one person to another with consent in writing to an officer of the Post Office or Bank. Under the scheme the transferee has to be eligible to purchase the certificate. The certificate may be prematurely encashed any time after two years and a half from the date of purchase, in the event of death of holder or any holder in case of joint holder, on order of court of Law and forfeiture by a pledge. The Government has no proposal to separately tax benefit on KVP. However, income on KVP would be taxable as per existing provisions. Investor will have to undergo Know Your Customer (KYC) modalities at the time of application. In the case of transfer of KVP from one customer to another, a request has to be made in writing to an officer of the Post Office or Bank and the transferee has to be eligible to purchase KVP certification in the first instance. Kisan Vikas Patra (KYP) has been reintroduced and is available in Post Offices. In future, DVP will be available in banks which are/will be authorized for handling small savings schemes.

India’s Role in IMF and WB

India has sought a greater role in International Monetary Fund (IMF) and the World Bank (WB). The voice and quota reforms in IMF WB are an ongoing process. India’s quota share in IMF increased from 1.91 percent to 2.44 percent in 2011. The 2010 IMF Quota and Governance Reforms (also referred to as the 14th General Review of Quotas) will increase India’s quota share from the current 2.44 percent to 2.75 percent, making India the eighth largest quota holding country at the IMF from the current position of being eleventh largest. Government of India has conveyed its consent to the reforms and proposed quota increase. For the reforms to enter into force: (i) Member countries having no less than 70 percent of the total of quotas have to consent in writing to the increase in quotas; and (ii) Reform of the Executive Board has to be accepted by three-fifth of the Fund’s 188 members (or 113 members) having 85 percent of the Fund’s total voting power. 159 members, representing 78.88 percent of the IMF Quotas have consented to the proposed Quota increases and 145 members representing 76.97 percent of quota have accepted the proposed amendment to the reform of the Executive Board of the IMF. Since the Monterrey consensus in 2002, voice reforms of the World Bank (in IBRD, i.e. International Bank for Reconstruction and Development) have taken place in two phases, the first phase in 2008 and the second phase in 2010. With the complete implementation of reforms, India will become the seventh largest shareholder in IBRD with voting power of 2.91 percent from 2.77 percent.

Zero Mass Foundation

As per information received from State Bank of India (SBI), it has handed over the task of opening and operating the accounts in rural areas to an organization known as “Zero Mass Foundation (ZMF)”, which is one of their National Business Correspondents (BC). BC model envisages use of intermediate agents/organizations for supporting the Bank in extending financial services to unbanked population at an affordable cost at their door step. ZMF is operating in Assam, Tripura, Sikkim, West Bengal, Odisha, Bihar, Jharkhand, Uttar Pradesh, Uttarakhand, Madhya Pradesh, Rajasthan, Delhi, Haryana, Jammu & Kashmir, Chhattisgarh, Gujarat, Dadra & Nagar Haveli, Maharashtra, Goa, Karnataka, Tamilnadu, Andhra Pradesh and Telangana. Till now it has opened more than 99 lakh Savings Bank accounts under Small Accounts category. The operations done in the account are safe as all ZMFs, Customer Service Point (CSP) are connected to Bank’s server in a firewall secured environment. All financial transactions are happening at online real-time basis. Each debit/credit transaction happening at CSP service point reflects in Bank’s Core Banking System (CBS) and a system generated print out is given to the customer for each transaction as an acknowledgement of the gransaction.

Shri Arun Jaitley Intoduces the Constitution Amendment Bill on Goods and Services Tax (GST) in Lok Sabha

Union Finance Minister Shri Arun Jaitley Intoduces the Constitution Amendment Bill on Goods and Services Tax (GST) in Lok Sabha; New Article 246a Proposed to Confer Simultaneous Power to Union and State Legislatures to Legislate on GST ; Centre To Compensate States for Loss of Revenue Arising on Account of Implementation of the GST for a period up to Five Years

The Union Cabinet approved on 17th December,2014 the proposal for introduction of a Bill in the Parliament for amending the Constitution of India to facilitate the introduction of Goods and Services Tax (GST) in the country. The Union Finance Minister Shri Arun Jaitley introduced the said Bill in the Lok Sabha today. The proposed amendments in the Constitution will confer powers both to the Parliament and State legislatures to make laws for levying GST on the supply of goods and services in the same transaction. GST will simplify and harmonise the indirect tax regime in the country. GST will broaden the tax base, and result in better tax compliance due to a robust IT infrastructure. Due to the seamless transfer of input tax credit from one state to another in the chain of value addition, there is an in-built mechanism in the design of GST that would incentivize tax compliance by traders. It is thus, expected that introduction of GST will foster a common and seamless Indian market and contribute significantly to the growth of the economy. Following are the salient features of this Bill: • A new Article 246A is proposed which will confer simultaneous power to Union and State legislatures to legislate on GST. • A new Article 279A is proposed for the creation of a Goods & Services Tax Council which will be a joint forum of the Centre and the States. This Council would function under the Chairmanship of the Union Finance Minister and will have Ministers in charge of Finance/Taxation or Minister nominated by each of the States & UTs with Legislatures, as members. The Council will make recommendations to the Union and the States on important issues like tax rates, exemptions, threshold limits, dispute resolution modalities etc. • It is proposed to do away with the concept of ‘declared goods of special importance’ under the Constitution. • Centre will compensate States for loss of revenue arising on account of implementation of the GST for a period up to five years. A provision in this regard has been made in the Amendment Bill (The compensation will be on a tapering basis, i.e., 100% for first three years, 75% in the fourth year and 50% in the fifth year). The proposed GST has been designed keeping in mind the federal structure enshrined in the Constitution and will have the following important features: • Central taxes like Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty (CVD) and Special Additional Duty of Customs (SAD), etc. will be subsumed in GST. • At the State level, taxes like VAT/Sales Tax, Central Sales Tax, Entertainment Tax, Octroi and Entry Tax, Purchase Tax and Luxury Tax, etc. would be subsumed in GST. • All goods and services, except alcoholic liquor for human consumption, will be brought under the purview of GST. Petroleum and petroleum products have also been Constitutionally brought under GST. However, it has also been provided that petroleum and petroleum products shall not be subject to the levy of GST till notified at a future date on the recommendation of the GST Council. The present taxes levied by the States and the Centre on petroleum and petroleum products, i.e., Sales Tax/VAT, CST and Excise duty only, will continue to be levied in the interim period. • Both Centre and States will simultaneously levy GST across the value chain. Centre would levy and collect Central Goods and Services Tax (CGST), and States would levy and collect the State Goods and Services Tax (SGST) on all transactions within a State. • The Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all inter-State supply of goods and services. There will be seamless flow of input tax credit from one State to another. Proceeds of IGST will be apportioned among the States. • GST is a destination-based tax. All SGST on the final product will ordinarily accrue to the consuming State. • GST rates will be uniform across the country. However, to give some fiscal autonomy to the States and Centre, there will a provision of a narrow tax band over and above the floor rates of CGST and SGST. • It is proposed to levy a non-vatable additional tax of not more than 1% on supply of goods in the course of inter-State trade or commerce. This tax will be for a period not exceeding 2 years, or further such period as recommended by the GST Council. This additional tax on supply of goods shall be assigned to the States from where such supplies originate.

Performance of National Food Security Mission (NFSM)

The performance of National Food Security Mission (NFSM) during 11th Five Year Plan has been assessed through an independent agency. The Mission has helped in widening the food basket of the country with sizeable contributions coming from the NFSM districts. The focused and target oriented implementation of mission initiatives has resulted in bumper production of rice, wheat and pulses. The production of wheat has increased from 75.81 million tonnes in pre-NFSM year of 2006-07 to 94.88 million tonnes during 2011-12 i.e. an increase of 19.07 million tonnes against the envisaged target of 8 million tonnes at the end of XI Plan. Similarly, the total production of rice has increased from 93.36 million tonnes in pre NFSM year of 2006-07 to 105.30 million tonnes in 2011-12 with an increase of 11.94 million tonnes against the target of 10 million tonnes. The total production of pulses has also increased from 14.20 million tonnes during 2006-07 to 17.09 million tonnes during 2011-12 with an increase of 2.89 million tonnes against the envisaged target of 2 million tonnes. Thus, 33.90 million tonnes of additional production of total foodgrains against the target of 20 million tonnes. The various interventions of the mission have been instrumental in bringing about significant yield gain to the farmers resulting into increase in their income level. The Mission has been continued during 12th Five Year Plan with inclusion of coarse cereals crops and commercial crops (sugarcane, jute, cotton). The Mission has target of additional production of 25 million tonnes of foodgrains comprising 10 million tonnes of rice, 8 million tonnes of wheat, 4 million tonnes of pulses and 3 million tonnes of coarse cereals by the end of 12th Five Year Plan.

India Signs First Bilateral Advance Pricing Agreement (APA)

India Signs First Bilateral Advance Pricing Agreement (APA) With A Japanese Company; APA Period is Five Years; APA Scheme Introduced to Bring About Certainty and Uniformity in Transfer Pricing Matters of Multi-National Companies and Reducing Litigation

Central Board of Direct Taxes (CBDT) signed here today a bilateral Advance Pricing Agreement (APA) with a Japanese Company. This is India’s first bilateral APA. The APA is for a period of five years. The APA has been finalized in a period of about one and a half years, which is shorter than time normally taken in finalizing APAs internationally. The APA scheme has been introduced to bring about certainty and uniformity in transfer pricing matters of multi-national companies and reducing litigation. APAs will improve investment climate in the country. In the context of growing economic ties between Japan and India, especially after the Prime Minister Shri Narendra Modi’s visit to Japan, this APA is expected to generate positive sentiments among Japanese investors in India.