On May 6, 2015, Lok Sabha passed the constitutional amendment bill on Goods and Services Tax (GST). The government strategists are working hard to get this approved by Rajya Sabha (RS) where the ruling NDA [National Democratic Alliance] is in minority. The bill is listed in agenda for RS on May 11, 2015. There is a distinct possibility of it going through in RS as Congress which uses every opportunity to embarrass the ruling establishment [Dr Manmohan Singh even suggested that the bill be referred to the Standing Committee] cannot afford to be seen as sabotaging or delaying a bill it had introduced in 2011 and has narrated its virtues umpteen number of times. GST has the potential to increase...
More No comments
Blog
Taxman’s wild-goose chase of e-commerce
The industry, trade and commerce has for generations got used to a habit of minimizing its tax liability (a jargon used in common parlance is ‘tax planning’) or pay no taxes at all. To pursue this goal, they can go to any extent exploiting loopholes in tax laws thereby denying state its legitimate dues. And if you have on plate a new form of economic activity or business transactions for which the extant tax rules and regulations are out of sync or inadequate, that may turn out to be a gold mine for the industry and trade. For sure, that gives an easy opportunity to them to escape the tax net completely. The e-commerce transactions provide one such avenue. From...
More No comments
Plugging loopholes in anti-corruption law
In 1947, India got political independence under Congress which also pledged economic independence for all its citizens within shortest possible time frame. Out of 67 years since then, this grand old party ruled India for 54 years on its own and for another 6 years running a minority government with support from other parties [National Democratic Alliance (NDA) led by BJP under Vajpayee was at the helm in the remaining 7 years]. Forget economic independence, currently majority of citizens are living under economic subjugation. They are not able to generate adequate income to make both ends meet even as their condition in regard to access to housing, water, electricity, sanitation, education and health continues to be pathetic. This is primarily...
More No comments
Direct benefit transfer – Time to move beyond LPG
Putting cash in the bank account of a beneficiary or direct benefit transfer (DBT) is a revolutionary idea that has the potential for radically transforming the way government’s welfare schemes including subsidies are administered. DBT is globally recognized for (i) openness and transparency in administration; (ii) substantially enhanced targeting and speedy reach; (iii) elimination of leakages and (iv) avoidance of market distortions and resultant benefits of competition where subsidies on food, fertilizers, LPG and kerosene etc are involved. India latched on to this idea only a couple of years back when the erstwhile UPA – government announced its adoption in January 2013 for some 29 schemes. The move was half-hearted as it kept out food and fertilizers [these account for...
More No comments
Who is pro-corporate and anti-poor?
In a rare intervention during discussion in Indian parliament (Lok Sabha/lower house) on “Agrarian crisis in India” on April 20, 2015, Rahul Gandhi, scion of Gandhi family and Vice-President, Congress (likely to be anointed as President soon) taunted Modi – dispensation as “Suit-boot ki Sarkar”. Addressing a Kisan (farmer) rally on the previous day i.e. April 19, 2015, he had hurled another diatribe viz., “Modi took thousands of crores from industrialists/businessmen for funding his election campaign during 2013/2014 and will now be snatching away land from farmers to repay that debt”. When seen in conjunction, the two statements tantamount to a very serious insinuation that government led by him works only to promote interests of industrialists/businessmen and shows no concern...
More No comments
India’s food reforms – trapped in ‘twilight’ zone
Pressure is mounting on the government even from within to fix a much higher minimum support price (MSP) for paddy during July – June 2015-16 agriculture crop season than the amount recommended by the Commission on Agriculture Cost and Prices (CACP). The CACP had recommended a modest increase of 4% which translates to about Rs 50 per quintal over existing price of Rs 1360 per quintal for common variety of paddy. On the other hand, some sections within government are gunning for a hike of double this amount or Rs 100 per quintal. Meanwhile, farmers organizations e.g. Bharat Krishak Samaj (BKS) have resurrected demand for bonus over and above MSP that some states viz., Chattisgarh, Madhya Pradesh etc were giving...
More No comments
Tax terrorism or tax heaven – say ‘NO’ to both
In recent times, foreign investors have viewed every action of tax authorities in India with suspicion. They have reacted to tax demand for past years with vengeance and in most cases, dragged the latter to court. In several cases, they even avoid Indian jurisdiction (for fear of losing the case) and have gone for international arbitration invoking bilateral investment protection agreements (BIPAs). On a parallel track, they run high voltage media publicity which is even pushed to a point of branding India as an un-attractive investment destination and actions of I-T as ‘tax terrorism’. And, since we need foreign investment for development and building infrastructure, they get additional fuel in their armoury to intensify attack on the government. True, in...
More No comments
Uniform gas pricing – precursor to full-fledged urea reforms?
In the CCEA (cabinet committee on economic affairs) meeting on March 31, 2015, the government decided on a uniform gas pricing policy and pooling of domestic and imported liquefied natural gas (LNG) for urea plants. Under it, gas will be supplied at ‘uniform’ delivered price to all urea plants on gas grid through a pooling mechanism. What do these announcements have in store for the industry? Does it mean Modi – dispensation has finally got cracking on big bang reforms in fertilizers after a 10 month wait and 2 full-fledged budgets? Currently, there are a total of 30 urea producing units in India. Of these, 27 are based on gas which is considered to be the most energy efficient and...
More No comments
Invoking bilateral investment treaty on tax claims – an act of brinkmanship
In recent times, multinational companies have taken increasing recourse to international arbitration under Bilateral Investment Promotion and Protection Agreement (BIPA) to resolve the income tax (IT) department claim on them arising from application of the 2012 retrospective legislation. Spate of international arbitration Thus, the British telecom major Vodafone had invoked the India-Netherlands BIPA seeking international arbitration in its long-drawn Rs 20,000 crores tax dispute with the tax department following cancellation of its conciliation talks with the Government of India (GOI). Similarly, the Finnish mobile handset maker Nokia resorted to the treaty to resolve the tax department claim of over Rs 21,000 crores tax liability, both in the form of existing and anticipated liability, for seven years commencing 2006-07. More recently,...
More No comments
Gas-based power plants ‘woes’ – look for permanent solutions
True to its commitment to filling the cleavages in system left over by a decade of policy paralysis and mis-governance under erstwhile UPA dispensation, Modi – government has sewed up a package for resurrecting 24,000 megawatt (mw) of power generation capacity based on gas. For starters, 14,000 mw of capacity with an investment of Rs 60,000 crores is lying dormant (no generation at all) due to absence of fuel linkage. Another 10,000 mw with Rs 40,000 crores blocked is operating at sub-optimal level i.e. below 30% due grossly inadequate supply of domestic gas. The relevant plants were commissioned in anticipation of abundant supplies from prolific KG-D6 field off Andhra coast [this discovery was made in 2002 and initial development plan...
More No comments