Loading...

Top
Help
×

By creating an account you can:

Logo TaxTMI
Call Us / Help / Feedback

Contact Us At :

E-mail: [email protected]

Call / WhatsApp at: +91 99117 96707

For more information, Check Contact Us

FAQs :

To know Frequently Asked Questions, Check FAQs

Most Asked Video Tutorials :

For more tutorials, Check Video Tutorials

Submit Feedback/Suggestion :

Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters 0/2000
Make Most of Text Search
  1. Checkout this video tutorial: How to search effectively on TaxTMI.
  2. Put words in double quotes for exact word search, eg: "income tax"
  3. Avoid noise words such as : 'and, of, the, a'
  4. Sort by Relevance to get the most relevant document.
  5. Press Enter to add multiple terms/multiple phrases, and then click on Search to Search.
  6. Text Search
  7. The system will try to fetch results that contains ALL your words.
  8. Once you add keywords, you'll see a new 'Search In' filter that makes your results even more precise.
  9. Text Search
Add to...
You have not created any category. Kindly create one to bookmark this item!
Create New Category
Hide
Title :
Description :
❮❮ Hide
Default View
Expand ❯❯
Close ✕
🔎 News - Adv. Search
TEXT SEARCH:

Press 'Enter' to add multiple search terms. Rules for Better Search

Search In:
Main Text + AI Text
  • Main Text
  • Main Text + AI Text
  • AI Text
Category: ?
Categorized by AI
---- All Categories ----
  • ---- All Categories ----
  • Income Tax
  • GST
  • Customs, DGFT & SEZ
  • FEMA & RBI
  • Corp. Laws, SEBI & IBC
  • PMLA, Black Money & ED
  • Budget
  • News and Press Release
  • PTI News
Month:
---- All Months ----
  • ---- All Months ----
  • January
  • February
  • March
  • April
  • May
  • June
  • July
  • August
  • September
  • October
  • November
  • December
Year:
---- All Years ----
  • ---- All Years ----
  • 2026
  • 2025
  • 2024
  • 2023
  • 2022
  • 2021
  • 2020
  • 2019
  • 2018
  • 2017
  • 2016
  • 2015
  • 2014
  • 2013
  • 2012
  • 2011
Sort By: ?
In Sort By 'Default', exact matches for text search are shown at the top, followed by the remaining results in their regular order.
Relevance Default Date
    VKDL Group’s NPA Bazaar Strengthens India’s Distressed Asset Resolution Ecosystem Under the Leadership of V K Dubey
    Lok Sabha passes bill to authorise govt to permit banks to levy charges on UPI transactions
    Monetary Policy Statement, 2026-27 Resolution of the Monetary Policy Committee August 3 to 5, 2026
    Stock markets edged higher in early trade amid lower crude oil prices, buying in Reliance Industries
    Monthly review of accounts of Government of India upto June 2026 (FY 2026-27)
    DRI busts illegal drug manufacturing unit in Satara district in Maharashtra; two arrested
    CCI approves proposed combination inter alia involving share acquisition(s) and merger of certain entities e.g. AAPC India, Triguna, Caddie, SMPL, Tec...
    Rupee gains 20 paise to close at 95.08 against US dollar post-RBI policy decision
    TN Budget: Revenue deficit at Rs 55,775 crore, fiscal deficit estimated at Rs 1,21,819 crore
    Tatkare slams ‘gungi gudiya’ jibe against Sunetra; Cong says row being exploited for political gains
    RBI invites public comments on Draft Guidelines for ‘on tap’ Licensing of Urban Co-operative Banks
    Pakistan-origin dry dates, routed through UAE, seized at Kandla port
    RBI keeps rates unchanged, retains neutral stance; outlook uncertain on El Nino, geopolitical risks
    Government Notifies Inventory-based Cross-border E-Commerce Export Framework under Foreign Trade Policy 2023
    Customs official among 5 held for smuggling gold of Rs 1.44 crore at Indore airport
    Lok Sabha passes Bankers' Books Evidence Bill to replace colonial-era law
    Sensex gains 152 pts in volatile session as RBI keeps policy rates unchanged
    DRI seizes 364 metric tonne (MT) banned Pakistan-origin dry dates imports worth Rs. 3 crore
    Rupee gains 13 paise to close at 95.15 against US dollar post-RBI policy decision
    ED raids premises linked to ex-Andhra MLA Malla Vijaya Prasad in chit fund scam
❯❯
Maximize Maximize Maximize
0 / 200
Expand Note
Add to Folder

No Folders have been created

+

Are you sure you want to delete "My most important" ?

NOTE:

News
Showing Results for :
Reset Filters
Results Found:
Show All Summaries Hide All Summaries
August 6, 2026
Show AI Summary
Distressed asset resolution integrates restructuring, insolvency advisory, funding facilitation and digital marketplaces for transparent financial recovery transactions.
The platform provides integrated advisory, management and transaction-facilitation services for Non-Performing Assets, stressed assets and distressed assets. Its services include NPA resolution, debt restructuring, One-Time Settlements, funding assistance, insolvency and bankruptcy advisory, asset reconstruction, financial restructuring and capital raising. Digital and offline marketplaces facilitate transactions involving distressed assets, receivables and related movable or immovable properties, supported by collaborations with banks, Non-Banking Financial Companies, Asset Reconstruction Companies, corporates and investors.
August 6, 2026
Show AI Summary
Merchant discount rate framework may permit charges on notified UPI and digital payments through a government notification mechanism.
The proposed amendment to Section 10A of the Payment and Settlement Systems Act, 2007 replaces the existing income-tax-linked reference with a Central Government notification-based mechanism for electronic payment modes. It removes the current statutory restriction preventing banks and payment service providers from charging Merchant Discount Rate on notified modes, enabling the Government to permit charges for UPI and other digital payments. The policy rationale is to support funding for payment infrastructure and a sustainable revenue model for service providers.
August 6, 2026
Show AI Summary
Neutral monetary policy stance continues as resilient growth and food-fuel inflation risks require close macroeconomic monitoring.
The Monetary Policy Committee retained the policy repo rate and continued the neutral monetary policy stance, citing the need to assess evolving growth-inflation conditions. Domestic activity was assessed as resilient, supported by consumption, investment, credit, manufacturing, services and exports, although global uncertainty, energy prices, supply-chain pressures, geopolitical developments and monsoon conditions remain risks. CPI inflation increased mainly because of food and fuel pressures, while underlying inflation remained moderate. The Committee considered that price pressures were not yet generalised and reaffirmed its commitment to align inflation with the target.
August 6, 2026
Show AI Summary
Closing auction price discovery and a neutral monetary policy stance shaped equity market conditions amid lower crude prices.
The Closing Auction Session in the equity cash segment introduced an auction-based mechanism for determining closing prices of eligible shares with futures and options contracts, intended to make price discovery more transparent and robust. The Reserve Bank of India retained its neutral stance and left the benchmark policy rate unchanged, pending greater clarity on the inflationary effects of higher energy costs. Future policy decisions were stated to be data dependent.
August 6, 2026
Show AI Summary
Monthly public accounts review records receipts, expenditure, tax devolution, interest payments, subsidies, and capital spending through June.
Consolidated monthly accounts up to June 2026 report total receipts of Rs.10,49,243 crore, comprising net tax revenue, non-tax revenue and non-debt capital receipts. Tax devolution transfers to State Governments total Rs.2,63,336 crore. Total expenditure is Rs.13,57,076 crore, including revenue expenditure of Rs.10,16,818 crore and capital expenditure of Rs.3,40,258 crore. Revenue expenditure includes interest payments and major subsidies.
August 6, 2026
Show AI Summary
Illicit psychotropic drug manufacture triggered seizure, apprehensions, and investigation into planned trafficking under narcotics control law.
Illicit manufacture and trafficking of Alprazolam and Diazepam, psychotropic substances regulated under the Narcotic Drugs and Psychotropic Substances Act, 1985, were detected at a clandestine facility. Searches recovered finished and intermediary substances, together with raw materials and reaction mixtures used in manufacture, and the goods were seized under the Act. The manufacturer and an intended buyer were apprehended, with material indicating a proposed transaction for further illicit trafficking. Preliminary investigation indicated prior involvement in illegal drug production and trafficking.
August 6, 2026
Show AI Summary
Competition approval for hotel-sector consolidation covers share acquisitions and merger of Accor-branded hotel entities into InterGlobe Hotels.
Competition approval was granted for related share acquisitions and the merger of AAPC India, Caddie, Triguna, Srilanand Mansions, Techpark and Accent into InterGlobe Hotels. The combination involves entities jointly controlled by the Bhatia Family Group and the Accor Group, including hotel-owning and developing entities, hotel management and franchising operations, leasing activities, and captive consultancy and support services relating to Accor-branded hotels in India.
August 5, 2026
Show AI Summary
Rupee appreciation followed unchanged monetary policy, lower crude prices, weaker dollar and expectations of orderly exchange-rate management.
The rupee strengthened after the central bank maintained its policy rate and neutral monetary-policy stance. Lower crude oil prices, a weaker US dollar and declining US Treasury yields supported investor sentiment. Earlier measures to attract capital inflows remained part of the framework supporting the rupee, while the central bank stressed its endeavour to preserve an orderly currency trajectory. Future movement was linked to geopolitical de-escalation, global risk sentiment and US economic data.
August 5, 2026
Show AI Summary
Fiscal consolidation through revenue mobilisation and leakage control aims to reduce deficits while expanding capital expenditure capacity.
Tamil Nadu's Revised Budget Estimates for 2026-27 project a revenue deficit and fiscal deficit, with outstanding liabilities comprising public debt and public-account liabilities. Revenue mobilisation is proposed through improved tax administration, collection efficiency, closure of leakages, liquor-manufacturer privilege fees, and eligible Union grants. The strategy projects gradual deficit reduction to create room for capital expenditure, supported by expenditure reforms aimed at eliminating leakages, optimising expenditure, and improving service delivery.
August 5, 2026
Show AI Summary
Political criticism of public office-holders raises debate over media accountability, personal remarks, and acceptable public discourse.
Political criticism followed a social-media post describing Maharashtra Deputy Chief Minister Sunetra Pawar as "gungi gudiya" in connection with a press interaction on law-and-order issues in Beed district. Congress representatives stated that the post was not a personal insult, had been deleted after adverse reactions, and was followed by an expression of regret. NCP representatives termed the expression inappropriate and stressed that the principal dignitary should conduct media interactions. Shiv Sena (UBT) representatives described the phrase as not unparliamentary and linked it to criticism of a guardian minister's public responsibilities.
August 5, 2026
Show AI Summary
On-tap licensing for Urban Co-operative Banks enters public consultation through draft guidelines inviting stakeholder feedback.
Draft guidelines for 'on tap' licensing of Urban Co-operative Banks have been issued for public and stakeholder consultation. Comments and feedback may be submitted until September 05, 2026, through the designated online consultation facility or by written or email submission to the specified regulatory department.
August 5, 2026
Show AI Summary
Prohibition on indirect Pakistan-origin imports targets alleged origin misdeclaration and UAE routing used to circumvent trade restrictions.
Import prohibition on goods originating in Pakistan applies to direct and indirect imports under the Foreign Trade Policy, 2023. Pakistan-origin dry dates routed through the UAE were allegedly declared as UAE-origin goods for import, and were intercepted under the Customs Act, 1962. Investigation indicated that the goods were first sent from Pakistan to Dubai, re-containerised, and then exported to India. A separate interception involved Pakistan-origin guggul resin allegedly declared as Somali natural resin and routed through Dubai.
August 5, 2026
Show AI Summary
Neutral monetary policy stance keeps benchmark rates unchanged while inflation risks, liquidity management and consumer-protection reforms remain under review.
Monetary policy maintains the benchmark policy rate unchanged and retains a neutral stance, with future decisions guided by incoming data. The central bank remains committed to aligning headline inflation with its medium-term target while monitoring food, fuel and other input-cost risks. Surplus liquidity will be managed through two-way operations, and the regulatory framework for interest rates on advances is proposed to be harmonised and standardised across regulated entities to improve transparency and consumer protection.
August 5, 2026
Show AI Summary
Export-only e-commerce inventory framework enables seller exports through registered exporters while requiring traceability, timely payments and domestic-diversion controls.
The export-only inventory framework permits eligible e-commerce entities to export through a registered Exporter-on-Record, which procures goods from Indian Sellers-on-Record against confirmed overseas orders and assumes export and destination-country compliance responsibilities. Inventory must be segregated, digitally traceable and cannot be diverted to domestic sale. The framework requires timely seller payments, visibility of overseas sales and shipment information, proportional pass-through of export rebates and refunds, annual compliance certification and digital records.
August 5, 2026
Show AI Summary
Gold smuggling enforcement targets concealed foreign-origin gold, airport control evasion, and illicit railway transport under customs law.
Gold smuggling enforcement operations under the Customs Act, 1962 involved alleged concealment and unlawful movement of foreign-origin gold. At an international airport, an alleged syndicate used an airline employee to transfer gold received from arriving passengers outside Customs and immigration controls, with gold disguised as silver-coloured bracelets. A separate railway operation concerned gold concealed in a specially made cloth waist belt and intended for delivery to a jeweller. The actions addressed concealment, evasion of Customs controls, and illicit transport of foreign-origin gold.
August 5, 2026
Show AI Summary
Digital bank-record evidence gains a technology-neutral framework through expanded admissibility, certified authentication, and regulated production of bankers' books.
The Bankers' Books Evidence Bill, 2026, modernises the evidentiary treatment of banking records by extending "bankers' books" to physical, electronic, digital, virtual and cloud-based records. It recognises electronic bank records as admissible evidence, allows production in physical or electronic form, and provides for standardised certificates authenticated by manual, digital or electronic signatures. The Bill also defines "special cause" for compelling bank officers to produce records or testify where the bank is not a party, and permits extension to specified financial-sector entities subject to conditions.
August 5, 2026
Show AI Summary
Closing auction price discovery and unchanged policy rates shaped volatile equity trading amid inflation and geopolitical uncertainty.
The Monetary Policy Committee retained the policy repo rate and neutral policy stance while seeking greater clarity on inflation risks from higher energy costs. Stock exchanges introduced the Closing Auction Session for eligible futures and options shares in the equity cash segment to determine closing prices through a more transparent and robust auction-based price-discovery mechanism. Equity markets showed volatile, limited gains amid geopolitical uncertainty, energy-price concerns, profit booking and the new mechanism's introduction.
August 5, 2026
Show AI Summary
Pakistan-origin import prohibition covers third-country routing, false origin declarations, forged documents, and trans-shipment arrangements used to evade restrictions.
The prohibition on direct or indirect import or transit of goods originating in or exported from Pakistan extends to goods routed through third countries and falsely declared as having another origin. Misdeclaration of country of origin, false descriptions, forged documentation, and trans-shipment arrangements may contravene that prohibition and invite action under the Customs Act, 1962. Dry dates declared as UAE-origin and Guggul resin declared as Somalia-origin were investigated as goods of Pakistan origin routed through Dubai.
August 5, 2026
Show AI Summary
Foreign exchange stability measures support the rupee as policy continuity, capital inflows and global risk sentiment shape currency expectations.
Foreign exchange market movement reflected a rupee appreciation against the US dollar following the monetary policy decision to retain the repo rate and neutral stance. Market sentiment was supported by softer crude oil prices, weakness in the US dollar, lower US Treasury yields and foreign equity inflows. The monetary policy framework sought to support capital inflows and maintain an orderly rupee trajectory, with geopolitical developments and US economic data remaining relevant to near-term exchange-rate expectations.
August 5, 2026
Show AI Summary
Money-laundering investigation examines alleged proceeds from chit fund operations following searches linked to a former company managing director.
A money-laundering investigation concerns alleged proceeds of crime arising from a multi-state chit fund operation associated with Welfare Building and Estates Pvt Ltd. The company is alleged to have collected investor deposits through investment schemes promising high returns before defaulting. Searches at premises linked to its former managing director form part of the inquiry into alleged laundering. The underlying alleged fraud had previously resulted in a CBI case and multiple police FIRs.

News

Back

All News

Showing Results for :
Reset Filters
No Records Found

News

Back

All News

Showing Results for : Reset Filters

Highlights Of Hon’ble Finance Minister’s Speech During Debate On Prices In Lok Sabha Today 4 August 2010

August 4, 2010

Contents
Summary
Note

Note

-

Bookmark

Print

Print

I am grateful to the Leader of Opposition for raising the issue of high taxation of petroleum products.  She is correct if taxes go down, the commodities will become cheaper and it will provide a great relief to the consumer.  It is precisely for this reason that my Government has undertaken the single biggest reform in taxation in the form of GST.  As a matter of fact, the principal opposition parties in their manifesto had promised that if voted to power, they will bring in GST. Implementation of GST depends on the cooperation and support of all political parties as constitutional amendments have to be made.  I do hope all the political parties who have expressed grave concern on the price rise and plight of 'Aam Admi' will convert this concern into real action by whole heartedly supporting GST. It's a win win situation for every one.

Inflation has been a matter of grave concern to the Government—more so, for me and my colleagues, Agriculture and Petroleum Minister who have had to take tough decisions in the face of shrill criticism from my friends on the other side of the House.

The Government has been fully aware of its responsibility and has taken determined steps since the end of last year to contain inflation.

In June 2010, the inflation as measured by the Wholesale Price Index (WPI) was10.6 per cent. Among the components, prices of food items rose by to 10.4 per cent, those of fuels by 14.3  per cent and those of manufactured products by 6.7  per cent. Both the aggregate indices and their components point towards pressure fromsupply side factors like food, fuel and commodity prices and demand side factors as the recovery becomes stronger and domestic capacity constraints in many sectors are being reached.

I must remind the hon'ble Members that inflation is a complex problem and it has to be handled with utmost care. In a democratic country, we cannot control inflation by law and decree. In the 60s, 70s and 80s, some nations tried to control inflation by having the government fix the prices. The predominant effect of this was disappearance of goods from the shops. In other words, goods were cheap but not available. At the same time, black markets flourished. We certainly do not want to create such a situation in India. Our priorities in this regard are as follows:

Goods especially food items should be easily available and accessible to people at large.

Remunerative prices be given to those producing and providing goods and services so that producers are encouraged to produce more.

To ensure that the goods including food items are  provided to vulnerable section of society at subsidised prices through an efficient and effective public distribution system.

In order to address the concern of Aam Admi, my Government has given them entitlement to work, information and education for their children backed by legal enactment. Rs 2,31,000 crore has been given to implement right to education which will be shared by Centre and States in ratio of 65:35 respectively.

A policy package has to be carefully crafted to contain inflationary pressures, maintain the growth momentum and restore the fiscal health of the economy.

Let me begin with the food prices. Inflation was very high at the end of last year and even at the start of this year. In the last week of November 2009, the weekly food price inflation stood at over 21 per cent. In February 2010, when I stood up to present the Budget in this House, food price inflation was close to 18 per cent. As a result of the steps taken by the Government, the food price inflation now has come down to 9.67 per cent !

Food prices rose sharply in the later part of 2009 because of the relatively weak south-west monsoon that year. The moderation in prices in response to a good Rabi harvest was gradual even when the harvest came into the markets. An important reason for this was that many of the crops like pulses which contributed significantly to the rising rate of inflation are grown only during the Kharif season. Prices of such crops were not appreciably impacted by the Rabi harvest.

The performance of the south-west monsoon so far this year has been very good. We are looking forward to a bumper Kharif crop and when larger supplies come in at harvest time, it will lead to significant fall in prices of food items.

I, as the Finance Minister, cannot afford to ignore the role of structural factors leading to high food prices. A recent study by NCAER indicates decreasing share of low income households and increasing share of high income households for the period 2001-02 to 2009-10. While 34.6 per cent households were in the low income category in 2001-02, the corresponding figure in 2009-10 is 17.9 per cent. For the same period, the percentage of middle income households has gone up from 58.0 per cent to 61.6 per cent. The high income households have risen from7.3 per cent in 2001-02 to 20.5 per cent in 2009-10. In absolute terms, in 2009-10, India has 46.7 million high income households as compared to 41 million low income households. The middle income households have increased to 140.7 million out of the total of 228.4 million Indian households.

As large numbers of households see their incomes growing as a result of sustained rapid growth, their food consumption patterns are changing. Households are consuming more and more pulses, dairy products, vegetables and sugar.

The entire agriculture system has to gear up to increase the productivity of food items. Growing demand is an inevitable consequence of rapid and inclusive growth.

In my Budget for the year 2010-11, I presented a four-pronged strategy of increasing production, reducing wastages, providing credit to the farmers and giving boost to the agro industry. We have to take the Green Revolution to the eastern region of the country, conserve the gains made in the green revolution areas and organize 60,000 pulses and oil seed villages at the earliest and create food storage capacities and cold chains to preserve food.

We have taken concrete steps in that direction. As a result of policy interventions, the area sown under all Kharif crops has increased to 758.67 lakh hectares from 698.10 lakh hectares last year. The area under foodgrains has increased from 340.61 lakh hectares to 368.36 lakh hectares. Area under pulses and oilseeds has gone up from 75.45 lakh hectares to 87.36 lakh hectares.

To put more money in the hands of farmers, the MSP of wheat has been increased from Rs.640 in 2004 to Rs.1100 per quintal in 2009 - an increase of 70%. Forpaddy, MSP has moved from Rs.560 to Rs.1000 per quintal - an increase of 79  per cent. The new Nutrient Based Fertilizer Policy is being implemented vigorously and is likely to show positive and early results in near future.

To increase production of pulses during Kharif 2010-11, the MSP of Tur, Urad and Moong has been increased substantially. For Tur, it has been raised from Rs.2300 to Rs.3000 per quintal, for Urad from Rs.2520 to Rs.2900 per quintal, Moong from Rs.2760 to Rs.3170 per quintal. As a direct subsidy, farmers have also been provided an additional incentive at the rate of Rs.5 per kg for these pulses sold during the harvest/arrival period of two months to designated procurement agencies.

To make the life of Aam Admi easier, we are taking pro-active steps to revamp the supply chains management. A package of measures including investment linked tax concessions, attractive schemes for encouraging investment in the creation of modern warehousing facilities and establishment of cold chains has already been put in place. We have accordingly amended the The Income Tax Act 1961 to encourage construction of more warehousing facilities by giving tax exemptions to those contributing for the same.

A committee of Chief Ministers has been set up which has been interacting regularly with the Prime Minister, Agriculture Minister and the Finance Minister to find prompt and effective solutions to the problems of agriculture and supply side management.

ANNOUNCEMENTS

Enhancement of allocation for APL families

The Central Issue Price (CIP) of foodgrains meant for the Public Distribution System has remained static since 2002, despite the increasing cost of procurement, in order to ensure food security. The CIP for rice is fixed at Rs 5.65 per kg for BPL and Rs 3 per kg for AAY and while wheat is at Rs 4.15 per kg for BPL and Rs 2 per kg for AAY. For pulses and edible oils, the Government of India is bearing a subsidy of Rs 10 per kg and Rs 15 per kg respectively for distribution of these items through PDS/Fair price shops.

Recently, the Government has also decided on providing, an additional allocation of 4.57 lakh tonnes of foodgrains per month for APL families at the prevailing APL CIP. This is applicable initially for a period of six months to those States where APL allocations are below 15 kg per family per month.

Increase in Guarantee period under the Scheme for construction of godowns through private entrepreneurs.

During last three years, the procurement of foodgrains has increased substantially in several States which has led to an increase in the requirement of covered storage space. The stock of foodgrains in the Central Pool was 583.55 lakh tonnes as on 1.7.2010. As a result, substantial quantity of wheat had to be kept in open in Cover and Plinth (CAP) storage. We have taken several steps to construct additional storage space for storage of procured foodgrains.

Government is releasing funds as equity to Food Corporation of India (FCI) and as grants-in-aid to the North-Eastern States, including Sikkim and J&K, for construction of storage godowns under a Plan Scheme. For the Eleventh Five Year Plan, Rs. 149 crores has been allocated for the purpose. Action is afoot to create 5.25 lakh tones of additional storage capacity in the North-Eastern States with an investment of Rs.568 crores.

However, the Plan funds are not sufficient to meet the additional storage capacity requirements. To bridge the identified storage gap, a scheme was formulated in July, 2008 for construction of godowns through private entrepreneurs. The identification of storage capacity is based on consumption requirement in consuming States and stock levels in procuring States. Additional capacity of 127.65 lakh tonnes has been identified in 15 States for construction under the scheme. Some more capacity is being identified in Decentralized Procurement (DCP) States. The scheme has also been extended to CWC and SWCs where they own land with a six year guarantee and about 8 lakh tonnes capacity is being constructed by them.

            To make the scheme more attractive, the guarantee is now being extended to 10 years. This will encourage private entrepreneurs to take up construction of new godowns under the scheme.

On the energy and commodities front, rising prices during the second half of 2009 and the first half of 2010 reflected the widespread perception that the global economy was out of recession and that the recovery, though slow, would be steady. Also, the rapid resurgence of growth in Emerging Market Economies (EMEs), especially India and China, would contribute to a firming up of demand for these goods.  The overhang of liquidity in global financial markets, which is constantly in search of higher returns also contributed to the re-emergence of energy and commodities as an asset class. These factors combined to accelerate inflation in these components of the WPI.

However, as we look to the second half of the 2010 and beyond, the global economic environment seems to have taken a turn for the worse. There are clear signs that the US recovery is weaker than earlier thought. Europe is dealing with its fiscal risks through aggressive austerity measures. Most significantly, China after busting out of its slowdown, is now again decelerating, at least partly in response to policy measures aimed at controlling a rapid real estate price build-up.

Given these developments, the outlook for energy and commodities prices is one of continuing moderation. To my mind, this should eliminate one significant source of pressure on prices.

From India's perspective, with particular reference to inflation management, these changes in global conditions offered an opportunity for undertaking pricing reforms in the petroleum sector. In fact, the recent increase in domestic petroleum product prices may well be more than off-set, as deregulated domestic prices adjust to a lower international crude oil prices.

Both these supply-side factors, therefore, point conclusively to a significant moderation of inflation over the second half of the current fiscal year.

The third contributor to inflation is pressure from demand. There is no question that the strong recovery, desirable as it is, has contributed to an acceleration of prices. The Reserve Bank of India has been sensitive to these pressures from January onwards when it began a calibrated adjustment of its policy stance to achieve two objectives. First, it needed to withdraw exceptional infusion of liquidity that had been made as a part of the stimulus packages. Then it needed to raise short-term interest rates to levels that would rein in demand, but not to the point of putting a sharp break on the ongoing recovery. The actions taken so far on both the liquidity and interest rate fronts are expected to have an impact on inflation during the second half of the current year.

To sum up, while recognizing that inflation reached unacceptable levels in the first half of 2010, it is expected that all the three major drivers will soften during the second half. Some of this is due to good fortune, some to a fragile global economy and some to a timely and appropriate policy response which will contribute to bringing inflation down without disrupting growth.

On GST, stated position

After careful consideration of the issues raised by the Empowered Committee of State Finance Ministers, we have revised our position to accommodate the concerns of the State Governments. The Central Government is willing to consider a phased approach for the introduction of GST. In a departure from its earlier stand, the Central Government is also willing to accept a dual rate structure in the transitory phase leading eventually to a "model GST".

The revised position on some of the key issues is as follows:

Exempted List

At present, 99 commodities are in the exempted list of VAT. States propose to keep these in the exempted list of SGST. The Central Government would align its exemption list with the State list and keep these 99 commodities as exempted commodities under CGST as well. Similarly, precious metals, bullion and other similar commodities are proposed to be taxed at 1% under CGST so that the 1% list is common both for SGST and CGST. The Centre proposes to shift the remaining commodities which are in the exempted category under Central Excise to the lower rate of the CGST.

Exemption Threshold

As has been agreed in the earlier meeting of EC, uniform threshold for all dealers with a turnover upto Rs.10 lakh per annum will be exempted both from CGST and SGST. The same threshold will apply to the services.

Threshold for compounding for small dealers

Ideally the threshold for compounding (option to pay tax at a fixed percentage of turnover without input tax credit) should be uniform for CGST and SGST at Rs.50 lakh per annum. However, Centre could consider a higher threshold of Rs. 1 crore if the States also agree to raise the limit.

Rate Structure

As you would recall in the meeting held on 13th January, 2010, FM had clearly stated that the ideal position would be to adopt a single rate structure with a common rate for goods and services. However, to facilitate the introduction of GST regime by 1st April, 2011, the Central Government proposes to keep CGST merit/lower rate for goods at 6% and standard rate at 10%. The services will be charged at 8%. Our request to the States will be to consider keeping the same rates i.e. the lower rate for SGST at 6%, standard rate at 10% and services at 8%. This mutually supportive approach will ensure that we have a single rate for CGST and SGST in the range of 12 to 20% in the first year of GST introduction. The peak effective rate will be about 15% which will be quite acceptable to the trade and industry. Eventually, it will settle down to a level of 16 to 18% for both CGST and SGST which will mean an effective rate of 12%.

In the second year of implementation of GST depending upon the revenue receipt by the Centre and the States and payment of compensation by Government of India to the States, the standard rate for SGST and CGST may be reduced to 9% retaining the lower rate at 6%. During the third year of implementation based on our experience and depending upon the buoyancy of revenue receipt and payment of compensation by the Government of India, the standard rate may be reduced to 8% and lower rate increased to 8% and services retained at 8% both for CGST and SGST. Thus, in a phased manner, we will be able to achieve a single CGST and SGST rate for both goods and services.

Topics

Acts Income Tax