Header Ads

Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016


Image result for Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016

Taxation Laws (Second Amendment) Bill, 2016 introduced in Lok Sabha; A scheme namely, ‘Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016’ (PMGKY) proposed in the Bill.
Evasion of taxes deprives the nation of critical resources which could enable the Government to undertake anti-poverty and development programmes. It also puts a disproportionate burden on the honest taxpayers who have to bear the brunt of higher taxes to make up for the revenue leakage. As a step forward to curb black money, bank notes of existing series of denomination of the value of Rs.500 and Rs.1000 [Specified Bank Notes(SBN)] have been recently withdrawn the Reserve Bank of India.

Concerns have been raised that some of the existing provisions of the Income-tax Act, 1961 (the Act) can possibly be used for concealing black money. The Taxation Laws (Second Amendment) Bill, 2016 (‘the Bill’) has been introduced in the Parliament to amend the provisions of the Act to ensure that defaulting assessees are subjected to tax at a higher rate and stringent penalty provision.
Further, in the wake of declaring specified bank notes “as not legal tender”, there have been suggestions from experts that instead of allowing people to find illegal ways of converting their black money into black again, the Government should give them an opportunity to pay taxes with heavy penalty and allow them to come clean so that not only the Government gets additional revenue for undertaking activities for the welfare of the poor but also the remaining part of the declared income legitimately comes into the formal economy.
In this backdrop, an alternative Scheme namely, ‘Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016’ (PMGKY) has been proposed in the Bill. The declarant under this regime shall be required to pay tax @ 30% of the undisclosed income, and penalty @10% of the undisclosed income. Further, a surcharge to be called ‘Pradhan Mantri Garib Kalyan Cess’ @33% of tax is also proposed to be levied. In addition to tax, surcharge and penalty (totaling to approximately 50%), the declarant shall have to deposit 25% of undisclosed income in a Deposit Scheme to be notified by the RBI under the ‘Pradhan Mantri Garib Kalyan Deposit Scheme, 2016’. This amount is proposed to be utilised for the schemes of irrigation, housing, toilets, infrastructure, primary education, primary health, livelihood, etc., so that there is justice and equality.
An overview of the amendments proposed in the Bill are placed below;
Overview of Amendments Proposed          
PARTICULARS
EXISTING PROVISIONS
PROPOSED PROVISIONS



General provision for penalty
PENALTY (Section 270A)
Under-reporting - @50% of tax
Misreporting - @200% of tax
(Under-reporting/ Misreporting income is normally difference between returned income and assessed income)
No changes proposed
Provisions for taxation & penalty of unexplained credit, investment, cash and other assets
TAX  (Section 115BBE)
Flat rate of tax @30% + surcharge + cess
(No expense, deductions, set-off is allowed)

TAX  (Section 115BBE)
Flat rate of tax @60% + surcharge @25% of tax (i.e. 15% of such income). So total incidence of tax is 75% approx.
 (No expense, deductions, set-off is allowed)
PENALTY (Section 271AAC)
If Assessing Officer determines income referred to in section 115BBE, penalty @10% of tax payable in addition to tax (including surcharge) of 75%.
Penalty for search  seizure cases
Penalty (271AAB)
(i) 10% of income, if admitted, returned and taxes are paid
(ii) 20% of income, if not admitted but returned and taxes are paid
(iii) 60% of income in any other case
Penalty (271AAB)
(i) 30% of income, if admitted, returned and taxes are paid
(ii) 60% of income in any other case
Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016’ (PMGKY)
New Taxation and InvestmentRegime
Undisclosed income in the form of cash & bank deposit can be declared:
(A) Tax, Surcharge, Penalty payable
      Tax  @30% of income declared
       Surcharge   @33% of tax
       Penalty  @10% of income       declared
       Total  @50% of income (approx.)
(B)  Deposit
     25% of declared income to be deposited in interest    
     free Deposit Scheme for four years. 
********

Auction for Sale (Re-issue) of “Government of India Floating Rate Bonds 2024” and Government Stocks

 


The Government of India have announced the Sale (Issue/Re-issue) of (i) “Government of India Floating Rate Bonds 2024” for a notified amount of  Rs. 2,000 crore (nominal) through price based auction, (ii) “7.61 per cent Government Stock  2030” for a notified amount of Rs. 8,000 crore (nominal) through price based auction,   (iii) “New 17 year Government Stock 2033” for a notified amount of  Rs. 2,000 crore (nominal) through yield based auction,   (iv) “7.06 per cent Government Stock  2046” for a notified amount of Rs. 2,000 crore (nominal) through price based auction. The auctions will be conducted using multiple price method. The auctions will be conducted by the Reserve Bank of India, Mumbai Office, Fort, Mumbai on December 2, 2016 (Friday).

  Up to 5% of the notified amount of the sale of the stocks will be allotted to eligible individuals and Institutions as per the Scheme for Non-Competitive Bidding Facility in the Auction of Government Securities.

  Both competitive and non-competitive bids for the auction should be submitted in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system on December 2, 2016. The non-competitive bids should be submitted between
10.30 a.m. and 11.30 a.mand the competitive bids should be submitted between
10.30 a.m. and 12.00 noon.   

   The result of the auctions will be announced on December 2, 2016 and payment by successful bidders will be on December 5, 2016 (Monday).   

      The Stocks will be eligible for “When Issued” trading in accordance with the guidelines on ‘When Issued transactions in Central Government Securities’ issued by the Reserve Bank of India vide circular No. RBI/2006-07/178 dated November 16, 2006 as amended from time to time.

******

Quarterly Report on Public Debt Management for the Second (Q2) Quarter (July-September, 2016) released; During Q2 of FY17, the Government issued dated securities worth Rs. 176,000 crore taking the gross borrowings during H1 FY17 to Rs. 341,000 crore or 56.8 per cent of BE, vis-a-vis 58.5 per cent of BE in H1 FY 16; Net market borrowings during H1 FY 17 was at Rs.124,777crore i.e. 55.1 per cent of BE.
Since April-June (Q1) 2010-11, Public Debt Management Office (PDMC) (earlier Middle Office), Budget Division, Department of Economic Affairs, Ministry of Finance, is bringing-out a Quarterly Report on Debt Management on regular basis. The Current Report pertains to the Quarter July-Sept. 2016 (Q 2 FY 17).
During Q2 of FY17, the Government issued dated securities worth Rs. 176,000 crore taking the gross borrowings during H1 FY17 to Rs. 341,000 crore or 56.8 per cent of BE, vis-a-vis 58.5 per cent of BE in H1 FY 16. Net market borrowings during H1 FY 17 was at Rs.124,777crore, 55.1 per cent of BE. Auctions, both Government dated Securities and Treasury Bills, during Q2 of FY17 were held in accordance with the pre-announced issuance calendar. In the 12 tranches of G-securities auction, two new securities, namely 6.97% GS 2026 and 6.84% GS 2022 were issued during the quarter on Sep 6 and Sep 12, 2016, respectively. The weighted average maturity (WAM) and weighted average yield (WAY) issued during Q2 FY17 was 14.26 years and 7.24 per cent. Liquidity conditions in the economy remained comfortable and in surplus mode during the quarter. It continued to improve in Q2 with RBI front-loading the liquidity required to manage FCNR (B) redemptions. The cash position of the Government during Q2 of FY17 was comfortable and remained mostly in surplus mode.
The Public Debt (excluding liabilities under the ‘Public Account’) of the Central Government provisionally increased by 3.0 per cent in Q2 of FY 17 on Q-o-Q basis. Internal debt constituted 92.3 per cent of Public Debt as at end-September 2016, while marketable securities accounted for 83.4 per cent of Public Debt. About 26.2 per cent of outstanding stock has a residual maturity of up to 5 years at end - September 2016, which implies that over the next five years, on an average, around 5.6 per cent of outstanding stock needs to be rolled over every year. Thus, the rollover risk in the debt portfolio continues to be low. The implementation of budgeted buy back/ switches in coming period is expected to reduce roll over risk further.
G-sec yields declined sharply across the curve during the quarter, with 10 yr segment gaining the most, on the back of softening of crude prices, increase in risk appetite globally after sharp correction post Brexit, passage of GST Bill by Upper House of Parliament, liquidity easing measures of RBI, expectation of rate cut from RBI, etc.The trading volume of Government securities on an outright basis during Q2 FY 17 increase by 78.45 per cent over the previous quarter.

******
Ease of Doing Business further enhanced for the Importers and Exporters by reducing/eliminating physical print-outs/paper documents for customs clearance;
These instructions will become operational from 1st December, 2016; Will help the Importers and Exporters to move towards electronic messaging and paper–free environment.
The “Ease of Doing Business” will be further enhanced for the Importers and Exporters by reducing/eliminating physical printouts for customs clearance. The Central Board of Excise and Customs (CBEC) issued a Circular No. 55/2016- Customs dated 23rd November, 2016, wherein Importers and Exporters will henceforth not be required to submit paper documents such as GAR 7 forms / TR 6 Challans, Trans-shipment Permit (TP), Shipping Bill (Exchange Control copy and Export Promotion copy) & Bill of Entry (Exchange Control Copy) to Banks/ DGFT / Customs Ports etc.
As 95% of the importers are now paying duty through e-payment and these documents can be viewed on the ICEGATE e-payment Gateway, the need for print-out of GAR 7 Forms /TR6 Challans is not required. Similarly, Trans-shipment Permit information is sent electronically to the carrier, the transporter undertaking the transshipment, the custodian of the gateway port and the ICES system at the destination ICD or port, the requirement for submission of manual printouts of TP copy has been done away with.
The ICES generates documents such as the Shipping Bill and the Bill of Entry electronically. The CBEC provides copies of the digitally signed Shipping Bill to DGFT and also the data of Shipping Bill is integrated with the EDPMS (Export Data Processing and Monitoring System) of RBI. Therefore, printing of the Exchange Control copy and Export Promotion copy of the Shipping Bill for manual submission by the exporter is not required. Similarly, with the operationalisation of the IDPMS (Import Data Processing and Monitoring System) banks are not required to obtain a physical copy of Bill of Entry from the importer as an evidence of import because data can be transferred in secured manner from the system of Customs department to IDPMS. It has been, therefore, decided to discontinue the printing of Exchange control copy of Bill of Entry.
The above instructions are to be made operational from 1.12.16. All Customs Houses at Ports, Air Cargo Complex, ICDs and CFCs have been asked to issue Public Notice. The above step will help the Importers and Exporters to move towards electronic messaging and paper–free environment.

No comments

Powered by Blogger.