It is official. The much-anticipated Goods and Services Tax (GST), which will replace most of the indirect taxes levied by the Centre and states, will not be introduced from the targeted date of April 1. The Bills pertaining to the introduction of a new law and amendment to the Constitution will not be tabled in the coming Budget session of Parliament. Finance Minister Pranab Mukherjee and state finance ministers will meet in April to decide a new date for the GST rollout.
Department of Revenue has agreed to most of the recommendations put forward by Empowered committee in FDP on GST relating to harmonious structure of rate, taxation base, exemptions, chargeability, definition of taxable event, taxable person, valuation, classification etc.However, there are certain areas where Department of Revenue has suggested changes or deviated from FDP. The said areas of differences are discussed below:
On the basis of the current macroeconomic assessment, as set out in the Third Quarter Review of Monetary Policy 2009-10 issued on January 29, 2010, it has been decided to increase the Cash Reserve Ratio (CRR) for Scheduled Commercial Banks by 75 basis points from 5.00 per cent to 5.75 per cent of their net demand and time liabilities (NDTL) in two stages, effective the fortnights as indicated below:
In a ruling that will provide great relief to corporates planning to restructure their businesses, the Authority for Advance Ruling (AAR) held that restructuring of businesses cannot be construed as an exercise for avoiding tax in India. AAR, a quasi judicial body for settling tax disputes involving foreign entities, in an order last week on an application filed by the Star Group companies
An attempt by the state government to regulate non-banking financial companies (NBFCs) operating in the state failed when justice Jayant Patel of the Gujarat high court ruled that NBFCs can’t be put under the purview of the Money laundering act (ML Act). The judgment is significant in the present scenario as scores of NBFCs in the state and thousands of people are getting advances through such companies regularly. The NBFCs were irked when the registrars of the co-operative department had issued them notices in 2009.
Interest rates may remain soft even if the central bank were to withdraw its accommodating stance and tighten monetary policy, which will be reviewed on Friday. The good news for home loan borrowers is that retail loans are the only form of credit showing some decent growth and bankers are unlikely to jeopardise this demand by raising rates. Corporates, who in any case have not been big borrowers, may also not see an increase in rates as banks have said they are unlikely to increase their benchmark lending rates this fiscal.
The government is likely to extend the 2 per cent interest subsidy given to exporters on rupee export credit from March 31 to December 2010. The announcement is expected in the upcoming Budget. Although India’s exports have started growing again after several months of decline, commerce ministry sources told that the extension is being considered to sustain growth and stabilise it at 15 to 20 per cent.
Ramalinga Raju, former chairman of Satyam Computers, who last year confessed to have inflated his company’s assets by over $ 1 billion, was declared a pauper by a court here exempting him from paying court costs. New York judge Barabara S Jones approved ‘pauper’ status for Raju, his brother Rama Raju, Satyam’s former chief executive officer, and Srinivas Vadlamani, the company’s former head of finance.
Export-Import Bank of India (Exim Bank) has concluded an Agreement dated May 28, 2009 with the Government of the United Republic of Tanzania making available to the latter, a Line of Credit (LOC) of USD 40 million (USD forty million only) for financing eligible goods and services including consultancy services from India for the purpose of financing export of tractors, pumps and equipments.
The Thirtieth PPPAC meeting, chaired by Finance Secretary, met on January 6, 2010 and granted approval to 4 projects of Ministry of Shipping. These projects are in 3 States. The estimated project cost of the approved projects is Rs. 4120.29 crore. Since its constitution in January 2006, PPPAC has granted approval to 141 projects, with an estimated project cost of Rs.148,807.56 crore. These include National Highways (hundred and twenty-two projects), Ports (fifteen projects), Airports (two projects), Tourism Infrastructure (one project) and Railways (one project).
