RBI Fiscal news

May 15, 2016 Naresh Sagar

Income Declaration Scheme for domestic black money to commence from June 01

‘Income Declaration Scheme’ or four month window for declaration of domestic black money will commence from 1st of next month.It will remain in force till 30th of September.

In a statement, Finance Ministry said, declarations can be filed online or with the Principal Commissioners of Income-tax. It said, surcharge and penalty must be made latest by 30th November, 2016.

Assets specified in the declaration will be exempted from Wealth tax. Non-payment of total taxes, surcharge and penalty in time or declaration by misrepresentation or suppression of facts shall render the declaration void. It also said, other penal consequences will also follow accordingly.

The scheme is part of Finance Act, 2016 which seeks to provide an opportunity to all persons who have not declared their income correctly in previous years to come forward and declare their undisclosed incomes.

Under this scheme, the declared income would be taxed at the rate of 30 per cent plus ‘Krishi Kalyan’ cess of 25 per cent on taxes payable and a penalty at the rate of 25 per cent of the taxes payable.

Easier to file tax returns in India, than in US: RBI Governor

RBI Governor Raghuram Rajan has said that he finds it easier to file his tax returns in India, as compared to the US. During a discussion at the Chicago Booth School of Business in London, Dr Rajan asserted that developed nations must do their part in tackling the problem of corruption as money taken out illegally from developing countries often find its way to places like London.

Replying to a question on whether corruption in India remained a big issue, he said, it is an important tax on the system which impedes good decision making and impedes economic growth.

Stating that it has come down significantly in India, Dr Rajan gave examples of railway ticketing and the tax department. He said, there is a very strong upsurge against corruption in India.

Indicating his interest in a second term as RBI Governor, Rajan said, he has enjoyed every moment of the job but there is more to do. Dr Rajan’s current three-year term as RBI Governor will end in September. The RBI Governor is currently on a visit to the UK for a series of lectures.

Acting upon recommendations of the Special Investigation Team on black money, market watchdog Securities and Exchange Board of India – Sebi plans to tighten due diligence requirements for issuance and transfer of controversy-ridden P-Notes and put the onus on investors to ensure compliance with anti-money laundering law.

These include mandating the issuers of P-Notes to file Suspicious Transaction Reports with the Financial Intelligence Unit. On the KYC norms, they would need to be followed by issuer entities for carrying out customer due diligence of the subscribers.

The Supreme Court appointed SIT on black money last year had suggested that Sebi should strengthen its norms to keep a tab on beneficial ownership of P-Notes as they were widely used by foreign investors and could be prone to misuse.

RBI issues norms for prior approval of branch offices by foreign entities

Reserve Bank of India has said that entities from Pakistan, China, Bangladesh and four other regions including Sri Lanka, Afghanistan, Iran and Hong Kong or Macau will require its prior approval to establish branch office or project office in India.
RBI has released new guidelines for foreign entities to open a branch office (BO) or a liaison office (LO) or a project office (PO) in India.
It has said that Permission of RBI will also be required for opening a BO/LO/PO in Jammu and Kashmir, North East region and Andaman and Nicobar Islands.
The apex bank said that its approval would also be required if the applicant is a Non-Government Organization (NGO), a Non-Profit Organization, or a Body/ Agency/ Department of a foreign government.
It further said that approval would also be needed if the principal business of the applicant falls in the four sectors viz, defence, telecom, private security and information and broadcasting.
However, the RBI has clarified that in the case of proposal for opening a PO relating to defence sector, no separate reference or approval of Government of India shall be required if the said non-resident applicant has been awarded a contract by/ entered into an agreement with Ministry of Defence or Service Headquarters or Defence Public Sector Undertakings.

Retail inflation jumps to 5.39% in Apr on high food prices

May 12,  8:17 PM Retail inflation climbed to 5.39 per cent in April this year, on the back of higher food prices. Inflation based on the consumer price index had stood at a six-month low of 4.83 percent in March this year, and at 4.87 percent in April last year. According to data released by the Ministry of Statistics and Program Implementation, food inflation rose to 6.32 per cent in April, from 5.21 in March. Retail inflation in vegetables increased to 4.82 percent, while in cereals and products it remained unchanged at 2.43 percent in April. But retail inflation in the fuel and light segment softened to 3.03 per cent during the month.

Industrial output growth down to 0.1% in March

Growth in the country’s industrial production slowed to 0.1 per cent in March this year, due to poor performance of the manufacturing and mining sectors, and a sharp fall in capital goods output. Factory output measured in terms of the Index of Industrial Production, IIP, had expanded 2.5 per cent in March last year. According to data released by the Central Statistics Office, manufacturing sector output, which accounts for over 75 percent of the index, contracted 1.2 per cent in March, and mining sector output shrank 0.1 per cent during the month. But electricity generation surged 11.3 per cent in March. Capital goods output, which is a barometer of investment, contracted 15.4 per cent in March. And the consumer goods sector recorded a small growth of 0.4 per cent in March.