Tax evaders to face strict action: CBDT Chairman Sushil Chandra

The income tax department awaits the conclusion of its investigations on financial dealings of around 100,000 individuals who are suspected of tax evasion and persuade many others caught in the act to start filing tax returns, as told by Sushil Chandra, chairman of the Central Board of Direct Taxes (CBDT), in an interview with Mint.

Chandra further added that the department won’t spare those who make high value purchases and investments but do not file returns. The tax authority is on a massive data-crunching exercise that would make tax evasion difficult and bring the evadors into limelight. The drive also covers those who keep unaccounted funds abroad.

This exercise is being done as a part “Operation Clean Money”, which basically deals with analyzing cash deposits made post demonetisation, after which the department identified  about 754,000 medium-risk, 595,000 low-risk and 341,000 very low-risk assessees in terms of the tax amounts they may have cheated on.

While the individuals in the high risk category will be given priority. The people who fall under the low risk category will get e-mails urging them to file returns.

Besides bringing unaccounted wealth under the tax net, the government will seek to boost revenue to finance a 6.5% jump in its spending to Rs21 trillion in the current financial year from that of last year.

A  three-year low of 5.7% economic growth rate that ended June and declining revenue from the debt-ridden telecom sector, which is battling strong competition, make it imperative for the government to optimize tax revenue growth.

In the first quarter, there was a rise, albeit not very significant, in gross personal income tax receipts and gross corporate tax receipts in the period from a year ago, on which the CBDT chairman said that it was not unusual.

In the annual budget for 2017-18, finance minister Arun Jaitley set a full-year growth target of 15.7% for corporate and personal income tax receipts to Rs9.8 trillion.

Sources- The Mint

RBI Annual Report FY 2016-17 – An Overview

Reserve Bank of India in its annual report stated that fiscal consolidation may come under threat both at the central and state level due to the immediate effects of the goods and service tax (GST), loan waivers and pay revisions, putting pressure on the overall growth matrix.

 

 

According to the report, public administration, defense, and other services mainly stifled the growth number. PADO added 2.2% points to the growth of real GVA in the services sector and 1.4 % points to the growth of overall GVA of 6.6% during the year.

In terms of production, agriculture and other allied activities recovered sharply in 2016-17. This was mainly facilitated by adequate monsoons as well as a considerable amount of increase in pulses’ minimum support prices (MSPs) that augmented the sector’s growth.

RBI said that there were uncertainties in regard to revenue mobilization, subsequent to the implementation of the goods and services tax along with increasing committed liabilities of states could led to a possible breach of fiscal deficit targets.

“In the fiscal sphere, while the gains in growth, efficiency and tax buoyancy over the medium term from the recent implementation of GST are unequivocally recognised, near-term uncertainties with regard to revenue mobilization therefrom – which could impact fiscal consolidation at both centre and state levels – cannot be ruled out as this fundamental reform gains pan-India traction,” RBI said in its annual report

The State finances have also deteriorated on account of the UDAY (Ujwal Discom Assurance Yojana) scheme aimed at reviving poor power distribution companies (discoms) and revenue falling short despite cutbacks in capital expenses. Additionally, four state governments – Uttar Pradesh, Maharashtra, Punjab, and Karnataka — are likely to face challenges as the farm loan waiver could derail the fiscal discipline.

 

Infrastructure saw many firsts

Stalled projects declined by 40% in terms of value and 37% in terms of number, according to the RBI’s annual report.
The financial year saw the highest ever awarding and construction of national highways. Also, capacity addition in all the major ports was also the highest during this year. India for the first time turned from a net importer to a net exporter of electricity.

 

Aggregate Demand Suffered

During the financial year 2016-17, GDP weakened due to the slowdown in Gross capital formation (Net increase in physical assets in the financial year) as a result of sluggish business confidence and lowering in the entrepreneurial spirit took a toll on the new investment.Gross fixed capital formation contributed barely 0.7 percentage points to the real GDP growth of 7.1% in FY17, despite accounting for around one-third of real GDP.
RBI’s assessment reflects the real GDP growth was largely sustained by private and public spending. In fact, in the absence of factors like the 7th Central Pay Commission hikes and the one-rank-one-pension for defense services, real GDP growth would have been lower by 2 percentage points, the regulator noted.

The RBI said Private consumption spending alone contributed two-thirds of the growth in aggregate demand.

On Demonetisation

The RBI reported that 632.6 crore notes of Rs 1,000 denomination in circulation, 8.9 crores have not been returned post the note ban on 8th November 2016. Thus, only 1.3% of Rs 1000 notes didn’t return after the demonetization exercise. The printing cost of new notes doubled to Rs 7,965 cr in the financial year 2017 from Rs 3,421 cr in the financial year 2016 on account of new currency printing post note ban.

Source – RBI Annual Report

http://www.moneycontrol.com/news/business/economy/only-1-3-of-rs-1000-notes-didnt-return-after-demonetisation-rbi-report-2373311.html

Economic Times- http://economictimes.indiatimes.com/news/economy/finance/fiscal-consolidation-may-be-derailed-due-to-gst-loan-waivers-and-pay-revisions/articleshow/60294821.cms

Image source- Financial Express

Moody’s predict over 3% GDP growth of G20 countries and warns of geopolitical risks

In its latest report, Moody’s Investors Services forecast the G20 economic growth at over 3% for the current and the next year. In addition, it also warns of geopolitical risks, US protectionism and spill overs from monetary tightening and China’s deleveraging measures.

The ratings agency clarified that strong data in the first two quarters of the year prompted it to raise 2017 growth forecasts for China to 6.8 % from 6.6%; for South Korea to 2.8% from 2.5%; and for Japan to 1.5% from 1.1%.

In tandem, the agency expects acceleration in the Euro zone through the year based on strong sentiment indicators and has hence revised its forecasts to upwards for economies like Germany, France, and Italy.

However, the agency cut its forecast for the United States to 2.2% in 2017 and 2.3% in 2018, citing its weak first half performance and expectations of more modest fiscal incentive than earlier assumed.

According to the Reuters, the report stated, “The balance of risks is more favourable than it was at the beginning of the year. However, we note event risks related to conflicts in the Korean Peninsula, the South China Sea, and the Middle East. The test firing of missiles by North Korea, intensification of aggressive rhetoric on both sides, and a hard-line stance from the Trump administration have raised the risk of a conflict in the Korean Peninsula.”

While labelling the wide-ranging measures of the Donald Trump administration to address bilateral trade issues as unfair trade practices, which could hurt the superpower’s growth, Moody’s warned China of its growing debt and lowered China’s ratings by one notch to A1 in May, saying the financial strength of the economy would erode in approaching years.

While forecasting for India, the agency slightly lowered the rate to 7.1% because of the government’s demonetization policy last year which led to several months of acute shortages for manufacturing and construction firms in particular; although it said it expects the impact to ease in coming months.

Sources: Reuters, The Hindu Business Line

Image source: BBC.com

Uber to end post-trip tracking of riders

Uber Technologies Inc has decided to pull off the tracking feature from its app which allows it to track a customer up to five minutes post a trip.

Starting this week, ‘ability to share location data only while using the app’, will be rolled out to Apple Inc iPhone users. It comes at a time when Uber is trying to recover from a series of crises culminating in the ouster of Chief Executive Travis Kalanick and Dara Khosrowshahi, the CEO of travel-booking company Expedia Inc prepares to become Uber’s new chief executive, as reported by Reuters.

Joe Sullivan, Uber’s chief security officer, said that he and his team have been working to bring in better customer privacy at Uber since he joined in 2015.

The change comes in just two weeks after Uber settled a U.S. Federal Trade Commission complaint that the company unsuccessful in protecting the personal data of drivers and passengers and was deceptive about its efforts to prevent snooping by its employees.

Sullivan said, the location-tracking update will initially only be available to iPhone users, but Uber intends to bring this change to Android devices as well.

These changes are a part of a series of updates expected in the upcoming year to increase privacy, security, and transparency at Uber, Sullivan added.

 

Sources- Reuters and NDTV

 

 

AAP wins big in Bawana; BJP takes Goa

The assembly by-polls results in Bawana came as a disappointment to the BJP as they could only manage to be a distant second. Aam Aadmi Party managed to win the battle in an intense battle. AAP candidate, Ram Chander got 59886 votes, BJP’s Ved Prakash got 35834 votes and Congress’ Surender Kumar stood at 31919 votes.

In Goa, where the by-polls were contested for two assembly seats, the BJP saw an easy win.  CM Manohar Parrikar registered an easy victory in the assembly elections by winning the Panaji seat by a margin of 4803 votes.
In the other seat, BJP’s Vishwajeet Rane bagged Goa’s Valpoi seat, defeating Roy Naik of the Congress by a margin of 10,066 votes.

“I will resign from Rajya Sabha next week,” Goa CM Manohar Parrikar tweeted after winning Panaji by-poll.

In Andhra Pradesh, BJP’s ally TDP won the Nandyal by-poll. Bhuma Brahmananda Reddy, who is a novice in electoral politics, defeated his Congress counterpart and former minister Shilpa Chandra Mohan Reddy by a huge margin of 27,466 votes.

 

Sources: India Today, First Post

Crude oil price rise: Markets speculate low supply

Crude oil price rise on Tuesday came across with speculation that the future supply may be hit gradually, especially in the United States. At Record price, Brent crude oil went up by 20 cents at $51.86 a barrel by 0930 GMT. U.S. light crude was 15 cents higher at $47.52.

Market analyst, Fawad Razaqzada at futures brokerage Forex.com said that the US crude oil stocks have been falling consistently in recent weeks.

“If the downtrend in oil inventories is maintained, then a bullish case can be made for oil, especially given the ongoing supply restrictions from OPEC and Russia,” Razaqzada added

A 13% fall has been recorded in the US commercial crude inventories from their March figures, to 466.5 million barrels.

In addition, Organization of the Petroleum Exporting Countries and non-OPEC producers including Russia have pledged to hold back around 1.8 million bpd of output between January this year and March 2018 in order to tighten supplies which would eventually lead to rising prices.

Whereas on the contrary, oil production elsewhere has been rising, blunting the impact of output cuts by OPEC and its allies.

With a record crude production in US breaking 9.5 million barrels per day (bpd), its highest since July 2015. Some analysts say that output growth may slow down as energy corporations cut a number of rigs drilling for oil. However, the rise in production has been relentless with increasing volumes from shale, significantly from the enormous Permian basin in Texas and New Mexico.

“With U.S. shale oil production proving more than resilient, the autumn period presents a lot of downside risk to oil prices,” Harry Tchilinguirian, chief oil market strategist at French bank BNP Paribas, told Reuters Global Oil Forum.

To see if the recent downward trend in US stocks continues; the weekly data on US inventories have to be tracked which starts later on Tuesday. According to a Reuters poll, U.S. crude inventories are expected to fall for the eighth week in a row and drop by 3.4 million barrels

Hans van Cleef, senior energy economist at ABN AMRO Bank NV in Amsterdam said, Another decline in US crude stocks may lead to somewhat higher prices again, though the upside may be limited – especially if U.S. crude production ticks higher again.

 

SOURCES: NEW YORK TIMES, REUTERS

IMAGE SOURCE: YAHOO

SEBI: Government to decide on 25% holdings of PSUs

The government needs to take a stand on the fate of public sector companies be from the 25% minimum public shareholding rule, market regulator SEBI (Securities and Exchanges Board of India) chairman Ajay Tyagi said.

Also, stricter norms for credit rating agencies will be considered, mainly because in the past they have failed to take timely action in the case of stressed companies, and that the National Stock Exchange (NSE) should ideally file revised offer documents for its initial public officer.
“Department of investment and public asset management, under the finance ministry, has represented to us on 25% minimum shareholding, but the government has to decide on this,” Tyagi said on Monday on the sidelines of an event organised by Standing Conference of Public Enterprises (SCOPE), an organisation representing central public sector companies. DIPAM oversees stake sale of state-run companies.
Governance Issues 
  • 20% of cos still do not have a woman director
  • Scope for improvement in the functioning and appointment of independent directors and audit panels
  • Role of nominee directors needs to be looked into
All listed PSUs must ensure that their public holding is minimum 25% by August 21, 2017. But a number of such firms are not likely to be able to meet the deadline.

The government is now contemplating extending the deadline to allow time to these PSUs, some officials said. The proposal to bring listed PSUs on par with private sector entities was announced in 2014. The final government decision will have implications on its divestment plan.

Tyagi made these remarks at a recent session with CEOs and senior executives of PSUs organised by SCOPE (Standing Conference of Public Enterprises). SCOPE is an apex professional organisation representing central government public enterprises.

Sources: Economic Times, The Hindu Business Line