The Ministry of Finance, Government of India took several measures to revive the economy and maintain the tempo of growth. Though several external and domestic factors contributed to the slowdown of the economy, wide ranging initiatives were introduced in all major sectors at the policy level to meet the challenge during the year. At the same time, steps were also taken to stabilise markets and provide investor friendly environment. On the taxation front several decisions of far reaching import were taken to make tax regime friendly, non-adversarial and higher revenue yielding.
Mid Year Economic Analysis for 2012-12 gives an outlook for growth stabilisation and economy heading towards a gradual recovery. Certain signs suggest economic growth is stabilizing and even picking up. There is an upturn in the Business Expectations Index for the October-December quarter, the PMI index has moved up in November, there is buoyancy in capital markets, there are improved internal accruals in the corporate sector, and there is some pick up in manufacturing, as reflected by 8.2 per cent growth in IIP in October 2012 vis-à-vis October 2011.
Real Gross Domestic Product (GDP) grew by 5.4 per cent, year-on-year, in the first half of the current fiscal year. This is much slower than the average growth rate of around 8 per cent achieved in the last decade. The deficient rainfall in the current year has resulted in the slowdown of the agriculture sector while a combination of global factors such as continuing recessionary conditions in the Euro zone, elevated levels of global prices, particularly crude petroleum and domestic factors resulted in a slowdown in the industrial growth.
WPI Inflation has declined somewhat but CPI inflation has remained sticky. WPI inflation averaged around 9.3 per cent in last two years viz. 2010-11 and 2011-12. It declined to 7.7 per cent in April-September 2012.
Fiscal deficit is expected to be contained at 5.3 per cent of GDP during the current financial year i.e. 2012-13.
Steps to Re-energize Mutual Fund Industry
i. Increasing penetration of mutual fund products and energizing distribution network by permitting fungibility of Total Expense Ratio (TER) which would enable AMCs to pay higher upfront commissions to distributors, simplifying the distributors’ registration process, introducing varied levels for certification and registration of distributors for different types of MF products and reducing fees for registration / certification.
ii. Improving reach of MF products in smaller cities/ towns by allowing Asset Management Companies (AMCs) to charge additional TER (upto 30bps) depending upon the extent of new inflows from locations beyond top 15 cities to incentivize distributors to garner investments.
iii. Aligning the interest of investors, distributors and AMCs by setting apart a portion of the asset management fees annually for the investor education campaigns, permitting direct investments with a lower expense ratio, ensuring single expense structure under a plan to eliminate discriminating between investors, limiting expenses for brokerage or transactions costs, and permitting investments in cash where PAN/ Bank accounts are not available.
iv. Protecting Investor by curbing mis-selling and churning by creating a system of identification of agents and labeling of products and by crediting the exit loads to the scheme while compensating the AMCs by allowing an additional TER to extent of 20 bps.
v. Strengthening regulatory frameworkfor mutual Funds by streamlining disclosures on portfolios, performance and expenses and initiation of the process of setting up of a Self Regulatory Organization (SRO) for regulation of MF distributors.
Reforms in the Primary Market
It has been made mandatory for companies to issue IPOs of Rs. 10 crore and above in electronic form through nationwide broker network of stock exchanges thereby simplifying the process of issuing Initial Public Offers (IPOs), lowering their costs and helping companies reach more retail investors in small towns. Securities and Exchanges Board of India (SEBI) has undertaken a comprehensive review of the extant regulatory framework torevitalise the primary market and approved many progressive measures including:
i. Enhancing the participation of retail investors in IPOs and affording minimum allotment to a larger number of applicants by widening the distribution network of IPOs, in addition to the existing channels, to include the nationwide broker network of stock exchanges at more than 1000 locations for distributing IPOs in electronic form, enhancing the reach of Application Supported by Blocked Amount (ASBA) by mandating all ASBA banks to provide the facility in all their branches in a phased manner, modifying the share allotment system to ensure that every retail applicant, irrespective of his application size, gets allotted a minimum bid lot and increasing the minimum application size for all investors to Rs. 10,000-Rs.15,000.
ii. Facilitating capital raising by issuers by reducing the requirement of average free float market capitalisation from Rs. 5000 Cr. to Rs. 3000 Cr. for further public offerings (FPOs) and rights issues through fast-track route, permitting companies to reach minimum public shareholding requirements through additional routes including Rights and Bonus Issue, permitting issuers to offer 5% discount to Qualified Institutional Buyers (QIBs) and streamlining annual disclosures to investors by a comprehensive statement.
(iii) Enhancing market integrity and Investor confidence by permitting only issuers with a minimum average pre-tax operating profit of Rs. 15 Crore to access the capital market through the “profitability route” and in other cases by compulsory book building route with increased QIB participation of 75%, putting in a place a framework for rejection of poor quality draft offer documents, disallowing any withdrawal or lowering the size of bids for non-retail investors at any stage in the IPO process, increasing transparency in capital raising and restraining employee benefit schemes from acquiring their shares from the secondary market.
SEBI (Alternative Investment Funds) Regulations, 2012
These regulations would extend the perimeter of regulation to unregulated funds, ensure systemic stability, increase market efficiency, encourage formation of new capital and provide investor protection.
Increasing minimum public shareholding for listed companies
The Securities Contracts (Regulation) Rules 1957 provide for the requirements, which have to be satisfied by companies for getting their securities listed on any stock exchange in India. A dispersed shareholding structure is essential for the sustenance of a continuous market for listed securities to provide liquidity to the investors and to discover fair prices. Four additional methods, namely Institutional Placement Program (IPP), Offer for Sale of Shares through the stock exchange, Rights and Bonus Issues have been introduced to increase minimum public shareholding.
Improved market infrastructure for enabling liquidity, transparency in price discovery and for stimulating growth in trading volumes. These measures aim at providing higher level of liquidity by enabling appropriate market infrastructure such as membership of banks in stock exchanges for trading in corporate bonds, permitting specialized trading platforms for trade in corporate bonds, enabling trading in collateralized corporate bond receipts, creating an enabling framework for cash settlement of trades in corporate bonds and facilitating trading in corporate bonds etc.
SEBI has permitted banks to take limited membership in approved stock exchanges for the purpose of undertaking proprietary transactions in the corporate bond market. This will ensure transparency in the price discovery of the product.
Insurance Regulatory and Development Authority (IRDA) has issued circular/guidelines on 4th December 2012 for the participation in the repo market by Insurance Companies, this will enhance the liquidity in the Corporate Bond Markets.
Secondary Markets
Government notified a new tax saving scheme called “Rajiv Gandhi Equity Savings Scheme“(RGESS),exclusively for the first time retail investors in securities market. This Scheme would give 50% deduction of the amount invested from the taxable income for that year to new investors who invest up to Rs. 50,000. The Scheme not only encourages the flow of savings and improves the depth of domestic capital markets, but also aims to promote an ‘equity culture’ in India.
Electronic Voting Facility made mandatory for top listed companies to enhance corporate governance standards and will thereby encourage greater participation of small investors in corporate decision making.
SME Exchange / Platform Launched
Separate trading platforms for small and medium scale enterprises (SMEs) have been launched to ease capital availability to SMEs in a cost effective manner and thereby stimulate the economic growth and generate employment in the sector.
Securities Transaction Tax (STT) for cash delivery transactions reduced by 20% for reducing the cost of transactions for retail investors, who generally operate in this segment, it is also expected to increase the volume and liquidity in the cash segment.
Reformed the regulatory framework for governance and ownership of stock exchanges, clearing corporations and depositories to further strengthen the corporate governance of these institutions which results in better delivery of services to the investors.
Guidelines for Exit Policy of Stock Exchanges Revised facilitating voluntary and compulsory de-recognition of non-performing stock exchanges as per the guidelines.
External Markets and External Commercial Borrowing
On January 1, 2012, Qualified Foreign Investors (QFI) were allowed to invest in listed Equity. QFIs have been permitted to invest in corporate debt securities and Mutual Fund debt schemes subject to a total overall ceiling of USD 1 billion. In May 2012, QFIs were allowed to open individual non-interest bearing Rupee Bank Accounts with Authorized Dealers banks in India for receiving funds and making payment for transactions in securities they are eligible to invest. Definition of QFI was expanded to include residents of the member countries of Gulf Co-operation Council (GCC) and European Commission.
Achievements relating to FII Investment Scheme
FII limit for investment in G-Sec enhanced by US $ 5 billion raising the cap to US $ 20 billion. The limit for FII investment in G-Securities and Corporate bonds (non-infra category) have been further enhanced by 5 billion each taking the total limit prescribed for FII investment to USD 25 billion in G-Secs and USD 51 billion for corporate bonds for long term investors SEBI has instituted monthly auction calendar since May 2012, so that FIIs can plan ahead their bidding and investment strategies.
Achievements relating to ECB Policy:
- The limit for refinancing rupee loans through ECB has been enhanced from 25% to 40% for Indian companies in the power sector. ECB has been allowed for capital expenditure on the maintenance and operations of toll systems for roads and highways, working capital requirements of the airline industry for a period of one year and low cost housing projects.
- The rate of withholding tax has been reduced from 20 % to 5% for a period of three years on certain kind of interest payments on ECBs.
- SIDBI has been permitted as an eligible borrower for accessing ECB for on-lending to MSME sector subject to certain conditions.
- Credit enhancement facility under the Structured Obligation Scheme has been extended to all companies with reduced minimum average maturity norms from 7 years to 3 years.
- Holding companies/Lead Promoters have been permitted to raise ECB for the project use in SPVs of such holding companies to make global funding available to infrastructure companies.
Multilateral Institutions Division
India has announced a contribution of US $ 10 billion to the IMF for enhancement of its resources for crisis prevention and resolution. The contribution will be made through a Note Purchase Agreement (NPA) that the IMF proposes to enter into with the RBI.
India has contributed US$ 10 million as first instalment towards 9th Replenishment of International Fund for Agricultural Development (IFAD) resources.
In the current financial year eight new loans have been negotiated with ADB in the transport (including rural connectivity), energy, finance and urban development sectors. Disbursement of $848.1 million has been achieved (calendar year wise) and of $558.45 million (financial year wise) as on 31.10.2012.
At the Los Cabos Summit of G-20, India succeeded in developing a consensus on the necessity to consider investment in infrastructure to boost growth and create jobs and the same has found a place in the Summit Declaration.
India Chaired the BRICS Summit held in New Delhi on 29-30 March, 2012.
DEPTT. OF DISINVESTMENT
Disinvestmenttransactions completed
The disinvestment target for the year has been indicated as Rs. 30,000 crore in the Budget 2012-13. Against the B.E. 2012-13, an amount of Rs. 6905.20 crore has been realized.
Cabinet Committee on Investments set up
Cabinet has approved to set up the Cabinet Committee on Investments (CCI) with the Prime Minister as the Chairman to expedite decisions on approvals/clearances for implementation of projects. The CCI will monitor and review the implementation of major projects to ensure accelerated and time-bound grant of various licenses, permissions and approvals. The CCI is likely to bring in transparency, efficiency and accountability in accordance of various approvals and sanctions by the respective Ministries / Departments.
Tax free bonds for Government undertakings:
In order to give a boost to infrastructure development, following PSU entities have been authorized to raise tax free bonds worth Rs. 53500 crore during the year 2012-13.
Buyback & Mutual Buying of CPSE shares
Government has permitted CPSEs to use surplus cash available with them (i) to buy back its shares as per SEBI rules: and (ii) to purchase shares of others CPSEs from Department of Disinvestment. Department of Disinvestment has also been enabled to respond to such proposal received from CPSEs.
DEPTT. OF FINANCIAL SERVICES
Legislative Reforms
The Banking Laws (Amendment) Bill 2011, was passed by Parliament in its recently concluded winter session in order to amend the Banking regulation Act, 1949, the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980. It would strengthen the regulatory powers of RBI and to further develop the banking sector in India. It will also enable the nationalised banks to raise capital through bonus and rights issue and would also enable them to increase or decrease the authorised capital with approval from the Government and RBI without being limited by the ceiling of a maximum of Rs. 3000 crore.
The Micro Finance Institutions (Development and Regulation) Bill 2012 to provide a formal statutory framework for development and regulation of the Micro Finance Institutions was introduced in the Lok Sabha and has been referred to the Standing Committee on Finance.
Approval of Financial Restructuring Scheme for State Distribution Companies (Discoms)
With a view to achieve financial turnaround of debt-ridden State Distribution Companies (Discoms), CCEA has approved the scheme for their Financial Restructuring. The Scheme contains measures to be taken by the State Discoms and State Governments for achieving turnaround by restructuring their debt with support through a Transitional Finance Mechanism by the Central Government. The scheme provides for taking over 50% of outstanding short term liabilities of the Discoms by the State Government and restructuring of remaining 50% by the banks.
Banking payment structure
To bring banking payment structure at par with global standards, a comprehensive action plan has been prepared for implementation in 2012-13 by a Key Advisory Group.
“Swabhimaan” the Financial Inclusion Campaign
Under this campaign launched in 2011 to provide appropriate banking facilities to unbanked habitations, 74,194 villages have been provided banking facilities and about 3.16 crore financial accounts have been opened by end of March, 2012.
Opening of one Bank Account per family
In order to ensure electronic transfer of cash subsidies under the various Schemes of GOI and State Governments, banks have been advised to open at least one bank account for each household. Governments has now decided to ensure Aadhaar based Direct Cash Transfer into the account of beneficiaries of 34 Centrally Sponsored /Central Sector Schemes w.e.f 1 January 2013, in 51 Districts in the country.
Kisan Credit Card (KCC)
Kisan Credit Card (KCC) scheme has been modified to make KCC a smart card which could be used at ATM/ Point of Sale (POS) terminals. Banks have been advised to issue Kisan Credit Cards (KCC) to all eligible farmers and complete the process by June 2013.
NABARD’s Capital Base
To strengthen the capital base of NABARD and mobilize its resources, GOI has decided to provide Rs. 3000 crore in two tranches. While Rs. 1000 crore was released in 2011-12, Rs. 500 crore has been released so far during 2012-13.
Women SHG’s Development Fund Scheme
In 2011-12, GOI had created the “Women SHGs Development Fund to empower women and promote their Self Help Groups (SHGs). The fund will also empower women SHGs to access bank credit. The WSHG programme has been extended to 150 most backward districts including the Left wing extremism (LWE) districts. So far (up to 7th December , 2012) 13075 SHGs have been promoted and savings linked and a grant assistance of Rs. 10.19 crore has been released by NABARD.
Rural Infrastructure Development Fund (RIDF):
During 2012-13, an amount of Rs.20,000 crore was provided in RIDF under the Union Budget, of which Rs.5,000 crore shall be exclusively earmarked for Rural Warehousing scheme.
Recovery of Bad Loans
The Government and RBI have taken several steps that have resulted in improvement in recovery of NPAs. The recovery of NPA by Public Sector Banks have increased from Rs. 10,237 crore (March 2010) to Rs. 14,650 crore (March 2011) and Rs. 17,202 crore (March 2012). Following initiatives have been taken in 2012 to deal with the rising NPAs:-
- Appointment of Nodal officers for recovery at the Head Office/Zonal Office/for each DRT;
- Thrust on recovery of loss Assets – assigning loss assets to Assets Reconstruction Companies (ARCs) on commission basis;
- Finalising strategy for NPA management by each bank;
- SLBCs to be proactive to sort out issues with the State Governments.
- RBI has announced that provision for restructured standard accounts is to be raised from existing 2 per cent to 2.75 per cent.
- Sanction of fresh loans/ ad-hoc loans from 1st January 2013 will be made on the basis of sharing of information among the banks.
Domestic Bonds
During 2012-13, IIFCL raised Rs 1100 crore through domestic bond issue. For the first time in the country in the infrastructure sector, a financial institution (IIFCL) has raised bonds of tenure more than 25 years without sovereign guarantee. In February 2012, IIFCL established a subsidiary, IIFCL Projects Limited, to provide varied advisory services from the point of identification and conception of infrastructure project and gauging their feasibility, securing regulatory approvals, pre bidding and even to the point of monitoring and supervision.
Interest subvention scheme for housing loans
The Scheme for interest subvention of 1% on housing loan up to Rs.15 lakh where the cost of the house does not exceed Rs. 25 lakh has been further extended for FY 2012-13 . Further the limit of indirect finance for housing under the priority sector lending has been enhanced from Rs. 5 lakh to Rs. 10 lakh
Credit Risk Guarantee Fund Trust for Low Income Housing
The Credit Risk Guarantee Fund Trust for Low Income Housing was set up & registered by the GOI on 1st May, 2012 through the Ministry of Housing and Urban Poverty Alleviation (MoHUPA). The scheme came into effect on June 21, 2012. Under the Scheme, the Fund will provide credit risk guarantee to the lending institutions against their housing loans in urban areas upto Rs 5 lakh for new borrowers in the EWS/LIG categories without any guarantee. The extent of Guarantee Cover to be provided under the Scheme is 90% of the amount in default.
Education Loan Scheme
Widening the scope of Education Loan Scheme, the Indian Banks’ Association has formulated and circulated a Model Loan Scheme for Vocational Education and Training on 31st May, 2012. The scheme aims at providing financial support from the banking system to those students who want to pursue employment oriented skill development courses offered by recognized institutions.
Recapitalisation of RRBs
Dr. K.C. Chakrabarty Committee had recommended recapitalization of 40 RRBs to improve their CRAR. The recapitalisation scheme has been extended upto March 2014. During 2012-13, Rs. 200 crore has been released by the Central Government as its share for capitalization of 11 RRBs. Cumulatively, GOI has released Rs. 668.92 crore and recapitalization of 26 out of the identified 40 RRBs has been completed.
Initiatives taken to improve functioning of RRBs
The following steps have taken to improve the functioning of RRBs.
- All RRBs have already migrated to Core Banking Solution (CBS) and have also joined National Electronic Fund Transfer (NEFT). With a view to reducing the workload on the branches and provide facility of anytime cash withdrawal for the RRB customers RRBs have been advised to install ATMs, particularly at their branches and issue Debit cum ATM card to all their customers.
- with a view to minimize overhead expenses and optimize the use of technology in RRBs, the Government has initiated amalgamation of geographically contiguous RRBs in a State. During 2012-13, till date 19 RRBs have been amalgamated into 8 RRBs in 6 States.
- Targets have been assigned to RRBs for four years from 2012-13 to 2015-16 for improving per-employee profitability, non-interest income & CD Ratio and for reduction of gross NPA and loss assets.
Customer Service In Public Sector Banks
In order to bring customer centricity in the services provided by the Public Sector Banks (PSBs), guidelines have been issued to all the PSBs to adopt a Standardised Public Grievance Redress System (SPGRS) on the lines of Complaint Management System (CMS) of State Bank of India to make a uniform, robust, cost-effective and expeditious grievance redressal system to resolve the grievances within 21 days timeline.
Insurance Sector
Industry Performance Outlook
Life insurers underwrote premium of Rs.53814.09 crore during April-October 2012 as against Rs.55737.84 crore in the corresponding period of previous year exhibiting a decline of 3.45%. During the year 2012-13, the non-life insurers underwrote premium of Rs.39453.11 crore during April-October 2012 as against Rs.33041.93 crore in the corresponding period of previous year exhibiting a growth of 19.4%.
In the current fiscal, against the Budget Estimate of Rs. 5,03,558 crore, an amount of Rs. 2,92,108 crore has been realized upto November, 2012, recording a growth of nearly 17% over the corresponding period of last fiscal. 58% of the BE for the year 2012-13 stands realized upto November, 2012
Revenue
Indirect Tax Revenue Trends in 2012-13
(Amount in Rs. crore)
|
Sl. No. |
Head |
Budget
Estimate 2012-13 |
April-November (Net Revenue Collection) |
B.E 2012-13 Achieved (in %) | ||
|
2011-12 |
2012-13 |
Growth (in %) | ||||
|
1 |
Custom Duties | 1,86,694 |
1,00,063 |
1,04,864 |
4.8 |
56.2 |
|
2 |
Union Excise duties | 1,92,864 |
91,797 |
1,08,470 |
18.2 |
56.2 |
|
3 |
Service tax | 1,24,000 |
58,284 |
78,774 |
35.2 |
63.5 |
|
4 |
Total | *5,03,558
|
2,50,144 |
2,92,108 |
16.8 |
58.0 |
*Exclusive of cesses (Rs. 1486 crore) not administered by D/o Revenue.
Authorised Economic Operator (AEO) Programme
An Authorised Economic Operator (AEO) Programme was implemented on pilot basis in August, 2011. Final programme was rolled out on 16th November, 2012. Indian Customs has also taken steps towards signing of Mutual Recognition Agreements with other Customs administrations like USA, Korea, Hong Kong, Israel and Taiwan for mutual benefit of trade under AEO Programme. It would enable businesses involved in the international trade to reap the following benefits:
(i) Secure supply chain from point of export to import;
(ii) Ability to demonstrate compliance with security standards when contracting to supply overseas importers/exporters;
(iii) Enhanced border clearance privileges in MRA (Mutual Recognition Agreement) partner countries;
(iv) Minimal disruption to flow of cargo after a security related disruption;
(v) Reduction in dwell time and related costs; and
(vi) Customs advice / assistance if trade faces unexpected issues with Customs of countries with which we have MRA.
24X7 Customs Clearance
In order to facilitate importers and exporters CBEC has begun on a pilot basis 24X7 Customs clearance with effect from 1st September, 2012 at identified Air Cargo Complexes viz. Bangalore, Chennai, Delhi and Mumbai; and Sea Ports viz. Nhava Sheva, Kandla, Chennai and Kolkata in certain categories of imports and exports. It is being monitored closely and a view will be taken by 31st December, 2012 whether to extend it to all categories of imports and exports.
Mandatory E-payment of Customs duty
E-payment of Customs duty has been made mandatory for importers registered under Accredited Clients Programme and importers paying customs duty of one lakh rupees or more per Bill of Entry with effect from 17.09.2012. Besides expediting the process of payment of duty and clearance of imported goods, the facility of e-payment has resulted in reduction of transaction costs.
E-helpline
CBEC has launched an e-helpline facility w.e.f. 1st October, 2012 at the Zonal levels for clarifying the doubts of trade and industry in an administration friendly manner without the assessee having to come to offices of the department. The main objective of the e-helpline is to provide help to the taxpayers in resolving procedural delays and in addressing system related problems.
National Policy on NDPS released
Narcotic Drugs and Psychotropic Substances have several medical and scientific uses. However, they can be and are also abused and trafficked. Government has approved a ‘National Policy on Narcotic Drugs and Psychotropic Substances’, covering all four major dimensions of the subject, with the following objectives:
- To spell out the policy of India towards narcotic drugs and psychotropic substances;
- To serve as a guide to various Ministries and organisations in the Government of India and to the State Governments as well as International Organisations, NGOs, etc.; and
- Re-assert India’s commitment to combat the drug menace in a holistic manner.
CENTRAL BOARD OF DIRECT TAXES (CBDT)
Tax Collection figures
During the F.Y. 2011-12 the Income Tax Department collected (net) Rs. 4,94,799 crore (provisional) as against Rs. 4,46,935 crore collected last year showing growth of 10.71%. Direct Tax-GDP Ratio for F.Y. 2011-12 is 5.59% as against 5.82% during last year. The Cash Collection from Arrear Demand during F.Y. 2011-12 has increased to Rs. 21,822 crore as compared to the figure of Rs. 12,011 crore for F.Y. 2010-11. For F.Y.2012-13 upto 30-09-2012 Rs. 10,757 crore have been collected out f the arrears.
BUDGET ESTIMATES AND ACTUAL COLLECTIONS
| FIN. YEAR | BUDGET ESTIMATES (Rs Cr) | ACTUAL COLLECTIONS (Rs Cr) | |||||
| 2011-12 | 359990 | 172661 | 532651 | 323224 | 170788 | 787 | 494799* |
|
2012-13 upto 30-11-2012** |
373227 | 197030 | 570257 | 162897 | 107215 | 619 | 270731 |
Seizures
In the current financial year upto 30th September, 2012, assets worth about Rs. 290 crore* have been seized in the search & seizure operations and undisclosed income of about Rs. 4005 crore* was admitted. In the current financial year upto 30th September, 2012, undisclosed income of about Rs. 2044 crore* has also been admitted in surveys conducted by the Department. (* figures are provisional)
Measures to Check Tax Evasion
Various anti-evasion measures have been taken in the Finance Act, 2012 which include, inter alia, the following –
• Reporting by residents of assets held outside the country
• Reopening of assessments up to 16 years for taxing undisclosed assets kept outside the country
• Provisions under section 68 (unexplained cash credits) made more stringent by introducing the requirement of explanation of source of the source in case of companies in which public are not substantially interested
• Taxation of amounts charged under sections 68 (unexplained cash credits), 69 (unexplained investments), 69A (unexplained money, etc.), 69B (amounts of investments, etc. not fully disclosed in books of accounts), 69C (unexplained expenditure, etc.) and 69D (amount borrowed or repaid on hundi) at maximum rate of 30%
• Tax collection at source (TCS) on trading of minerals being coal or lignite or iron ore, bullion and jewellery in certain cases
• Penalties imposable on undisclosed income admitted during searches conducted after 01.07.2012
• Director of Income-tax empowered to sanction prosecution
• Introduction of enabling provisions for setting up Special Courts and Special Public Prosecutors to fast-track prosecution cases
• Minimum sentence of 3 months prescribed.
Measures to Check Black money
In furtherance to the policy of checking black money, India has completed negotiations on new Tax Information Exchange Agreements (TIEAs) with eighteen countries. 12 TIEAs have been signed and have come into force. There are 84 DTAAs (78 existing and 6 new DTAAs) and 9 TIEAs in existence. Almost all of the DTAAs have clauses on tax information exchange. India has initiated process of negotiation with 75 countries to broaden the scope of Article concerning Exchange of Information to specifically allow for exchange of banking information and information without domestic interest in the existing DTAAs. As on date, it has completed negotiations with 30 existing DTAA countries to update this Article. These agreements have also been initialed. 19 new DTAAs have also been finalized.
The Government has set up Income Tax Overseas Units in two Indian Missions abroad. Eight more such units are being setup in the current Financial Year to strengthen information exchange mechanism. The special attention on cross border transactions and business deals has resulted in collection of taxes of Rs.27,442 Crores in the last financial year.
A draft of Shome Committee reports on GAAR and indirect transfer of assets has been submitted. The Report of the Shome Committee has been examined by the CBDT and further action is being taken.
Citizen Centric Initiatives and Achievements
E-Filing of Returns
The project was initiated in July 2006 under the guidance of the Hon’ble Finance Minister.In financial year 2006-07, 3.72 Lakh returns were received electronically. In 2012-13 (upto 26th November 2012), this number was 122.01 lakhs. There has been 83% Growth in e-filing over Financial Year 2010-11 and more than 2 crore taxpayers are registered with e-filing portal. E-filing phase-II is underway. This will facilitate electronic filing of 60 forms including non-income tax forms used by Chartered Accountants as a part of their tax audit process, transfer pricing forms etc. This would usher in a phase of paperless filing of all forms enabling faster processing of all forms and comprehensive utilization of information in such forms for enhanced scrutiny selection.
Centralised Processing Centre (CPC)
CPC has achieved a peak processing capacity of 2 Lakhs returns per day. It processed 82,11,694 Returns inFY2012-13 (Apr-11.12.12). Average processing time reduced to 42 days, less than the period specified in citizens` charter. 60 call center agents attend to over 4000 calls daily in 3 languages now, with over 9.36 lakh calls attended till date.
A web based status tracking facility in collaboration with India Post and National Securities Depository Ltd. (NSDL) has also been launched. Refund Status is also available on Internet through ITD website. The information on paid refunds is also available in the ‘Tax Credit Statements’ (Form No. 26AS) being given to taxpayers.
National & Regional Call Centres set-up:
National Call Centre at Gurgaon and four Regional Call Centres at Jammu, Shillong, Jangipur and Kochi have been set up which have an All India toll free number and callers are guided through an Interactive Voice Response System (IVRS) for various information/services.
Payment of Direct Taxes Through ATMs
The facility has been introduced by 13 selected banks both Public and Private Sector. This facility is being expanded. In order to make better use of the existing information and improve both the Taxpayer Services & Tax Administration, the Department has initiated the Project to re-write the existing Income Tax Department (ITD) Applications with the latest technology and new tools.
Online Tax Help
The TRP Scheme has a Help Desk and a Toll Free Call Centre which the TRPs can contact for seeking clarifications on legal issues from tax experts. In the new phase, the TRP Call Centre and Help Desk has been opened to general public under the ‘Online Tax Help’ facility. To avail this facility a taxpayer must visit the website www.trpscheme.com and choose for online tax help. On choosing this option, the taxpayer can fill in his tax related query along with his contact details. The online query will be resolved by tax experts through Email or Phone within 24 hours.
Communication Strategy for school children
The Department has decided to come out with an effective communication strategy for school children in the age groups of 10-12 years and 16-18 years to introduce them to the subject of ‘Need for taxation in civil society’. The message to be given to the children is two-fold: to teach children that paying taxes is ethical and how the taxes are used to build roads, schools, hospitals, bridges etc. and spent on the armed forces, security forces, poverty alleviation programmes etc. The Department has partnered with NCERT to introduce the concept of need for taxation in civil society among school children.
DEPARTMENT OF EXPENDITURE
As austerity measure, 10% cut on non-plan expenditure (excluding interest payments, salaries, Defence capital, pension, etc.) has been imposed. Other measures include restrictions on holding seminars and conferences, foreign travel, ban on purchase of vehicles and creation of posts, observance of discipline in fiscal transfers and on balanced pace of expenditure.
Plan grants of Rs.70080.43 cr. and Rs.40589.93 cr. have been released in 2011-12 and 2012-13 (till date) as against the respective provision of Rs.71741.62 cr. and Rs.86803.00 cr. Under Non-Plan grants, Rs. 24851.14 cr were released for2012-13 (Upto 11.12.2012) as against the allocation of Rs. 58357.46 cr.
To provide immediate relief to people affected by natural calamities like drought, flood, earthquake, Rs.3153.81 cr. have been released under National Disaster Relief Fund (NDRF) to 11 States.
State Borrowing ceilings
During 2012-13 (till 13-12-2012), the States have been permitted to raise Open Market Borrowings (OMBs) to the tune of Rs.132126 cr. and Negotiated Loans (NL) of Rs.23175 cr. Further, the National Small Savings Fund (NSSF) loans and Externally Aided Projects (EAP) loans to States amounting to Rs.2007 cr. and Rs.5195 cr. respectively have been extended so far during 2012-13.
Direct Transfer of Subsidies
Recognizing the urgent need to rationalize the outgo on subsidies, the Government decided to constitute a task force in February last year, work out a system of direct transfer of subsidy using the Aadhar number.
The process for rolling out an Aadhaar-based payment system has been taken up as a pilot in 43 districts across the country. Various entitlements and subsidy disbursals would start flowing from this platform to each of these districts. These are being used for streamlining PDS, NREGA, pension and scholarship payments, and a host of other welfare schemes.
An electronic payment system through Government electronic Payment Gateway (GePG) has been implemented by the office of Controller General of Accounts with great success. Under this system all payments in Government could be directly credited into the bank accounts of beneficiaries thus greatly reducing their dependency on Government offices and officials to receive their dues/payments.
The registration of all the implementing agencies (who receive grants from Govt. of India) on Central Plan Scheme Monitoring System (CPSMS) Portal has been made mandatory for the release of funds.
Central Public Procurement Portal & e-Procurement
Pursuant to the recommendations of the Committee on Public Procurement (CoPP), a Central Public Procurement Portal (CPP Portal) has been set up for providing comprehensive information and data relating to public procurement and is accessible at www.eprocure.gov.in. It is being used at present by various Ministries/ Departments, CPSEs and autonomous/ statutory bodies. e-Publishing of tender enquiries, corrigenda thereto and details of contracts awarded thereon, on the Portal, has been made mandatory in a phased manner w.e.f 1st January 2012.
Further, instructions have been issued to all Central Government Ministries/Departments to commence e-procurement in respect of all procurements with estimated value of Rs.10 lakh or more in a phased manner. Use of e-procurement would enhance transparency and accountability and make procurement more efficient. This would also help in monitoring delays and reducing the procurement cycle.