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September 2019 - Economy News

  • Union Minister for Finance & Corporate Affairs Smt Nirmala Sitaraman revised the corporate tax rate downward and altering the percentage and application of Minimum Alternate Tax in certain cases. She took measures to stabilize and enhance the flow of funds into the capital market and broadened the scope of CSR funding.

    EAC-PM welcomed these comprehensive measures. These are important steps which will boost investment and enhance India’s economic growth. Finance Minister gave an option to corporations to choose between reduced tax rates and prevailing exemptions.

    The Council lower tax rate of 15% for companies making fresh investments in the coming months is bound to trigger new investments which will further augment India’s GDP. This augmentation will counterbalance the revenue that will be foregone. The part of the series of measures taken by the Government to revive economic sentiment will go a long way in helping India realize its full economic potential.

  • Central Board of Direct Tax (CBDT) has set up the National e-Assessment Centre (NeAC) in Delhi. NeAc aims to expand the scope of e-governance and ease of doing business. The move comes after the announcement by PM Narendra Modi during the National Conference of Tax Officials in 2017 to create a transparent and corruption-free assessment system.

    NeAc will assess tax returns electronically without any personal contact between officials and taxpayers. It will reduce human discretion in assessments and scrutiny. This will put an end to corruption by using new technologies like artificial intelligence (AI), machine learning, video conferencing, telecommunication application software and mobile applications.

  • SBI to link new floating rate home auto loans to RBI's repo rate. State Bank of India or SBI, the country’s largest lender decided to adopt Reserve Bank of India’s repo rate as the external benchmark for all floating rate loans for MSME, home and retail loans effective October 1, 2019. RBI earlier asked banks to link all new floating rate personal or retail loans and floating rate loans to Micro and Small Enterprises to external benchmarks from October 01, 2019.

    The benchmarks include RBI's repo rate, Government of India 3-Months Treasury Bill yield published by the Financial Benchmarks India Private Ltd (FBIL), Government of India 6-Months Treasury Bill yield published by the FBI or any other benchmark market interest rate published by the FBIL. The banks are free to offer such external benchmark linked loans to other types of borrowers as well. It has voluntarily extended the external benchmark based lending to Medium Enterprises to boost lending to the MSME sector as a whole.

  • PM NarendraModi delivers keynote address at Bloomberg Global Business Forum in NewYork.
    Prime Minister Narendra Modi urged the global investors and businesses to invest in India to avail the golden opportunity arising out of its huge market, its huge infrastructure ecosystem and a growing startup ecosystem.

    In his keynote address at the third edition of Bloomberg Global Business Forum in New York, his government is working towards improving the business environment in the country. India has cut corporate tax and has done away with 50 old laws that were detrimental to the development. The Insolvency & Bankruptcy Code has been formulated to strengthen the banks and 377 million people have been brought under the banking sector in the last 4 years. India has opened its defence sector like never before. 90% of FDI is through automatic route now.

    Mr. Modi informed the forum, India is going to invest 1.3 trillion dollars in modern infrastructure in the coming years. Lakhs of crores of rupees are also being spent on improving the social infrastructure of the country and new infrastructure for future generations. India is rapidly defeating poverty and moving up in the ladder, increasing the purchasing power.

    The 4 factors that make India reliable for investors and make India unique are - Democracy, Demography, Demand and Decisiveness. Exhorting the business leaders present there, the Prime Minister said 'Your technology and our talent can change the world. Your scale and our skills can speed up global economic growth.'

    Bloomberg Global Business Forum meet is an annual event organized by philanthropist Michael Bloomberg every year to share the ideas and visions of global leaders from public and private sectors on key issues. The theme of the third edition of the annual event in 2019 is - Restoring Global Stability.

  • India's forex reserves declined by USD 388 million to USD 428.572 billion for the week ended September 20 due to a slide in core currency and gold assets. The Reserve Bank data released showed that in the week to September 20, foreign currency assets a major component of overall reserves declined by USD 125 million to USD 396.670 billion.

    It also showed that during the week, the value of gold reserves declined by USD 259 million to USD 27.843 billion, making it the second consecutive week of decline in the value of the precious metal held by India.

    According to the data, country's special drawing rights with the International Monetary Fund increased by USD 3 million to USD 1.435 billion during the week, while country's reserve position with the Fund declined by USD 6 million to USD 3.623 billion.

  • RBI expanded the scope of Bharat Bill Payment System (BBPS) to cover all repetitive bill payments. They may include school fees, insurance premiums and municipal taxes. Currently, the facility of payment of recurring bills through BBPS is available only in five segments namely direct to home (DTH), electricity, gas, telecom and water. BBPS functions under the aegis of National Payments Corporation of India (NPCI).

    The facility would be expanded to include other types of repetitive payments like insurance premium, mutual funds, school fees, EMIs, and municipal taxes, among others. The expansion of biller categories would increase the user base of Bharat Bill Pay along with providing an efficient, cost-effective alternative to the existing systems and enhance consumer confidence and experience.

  • The Employees Provident Fund Organization EPFO started online e-nomination facility on its website. Filing e-nomination helps you to easily file online pension claim at the required time. The nominees can easily file online composite claim in the event of demise of the EPFO member if the e-nomination has been done.

    The name of a nominee/s, you must get your Universal Account Number (UAN), allotted by the EPFO, activated, if not done already at the EPFO portal. The next step is to make sure UAN is linked with your Aadhaar. The Aadhaar, on the other hand, should be linked with your mobile number to get OTPs. They provide Aadhaar number, address, date of birth, mobile number, bank account details and scanned copies of photographs of all nominees, under the new e-nomination rules.

  • Airtel Payments Bank launched Bharosa savings account which enables customers to withdraw cash check their balance or access a mini statement of their account at over 6,50,000 Aadhaar-enabled payment system (AePS) enabled outlets across India. These services have been designed for deepening financial inclusion in the country.

    The benefits of this product will be further amplified through a structured roadway for the phased introduction of other features linked to formal banking. To begin with, it will be available at over a quarter million banking points. The balance or access a mini statement of their account at over 6,50,000AePS (Aadhaar-enabled payment system) enabled outlets across India.

  • Corporate tax rates slashed to 22% for domestic companies: FM Nirmala Sitharaman.  Finance Minister Nirmala Sithraman on 20 September, 2019 said, a new provision has been end in the Income-tax Act which allows any domestic company an option to pay income-tax at the rate of 22% if they do not avail any exemption/incentive. It will be effective from the current Financial Year.

    Addressing the media ahead of 37th GST council meeting in Goa, She announced reduction in corporate tax for domestic companies and domestic new manufacturing companies. Another new provision allows any new domestic company incorporated on or after 1st October 2019 making fresh investment in manufacturing and commences their production on or before 31st March, 2023, will have to pay income-tax at the rate of only 15%. Finance Minister has also announced the government decision to expand the scope of 2 percent CSR spending.

    Meanwhile, 37th GST council meeting, headed by Finance Minister Nirmala Sitaraman is underway in Panaji, Goa. Prime Minister Narendra Modi has hailed the decision to cut corporate tax terming it as historic one. In a tweet, Mr Modi said, it will give a great stimulus to Make In India, attract private investment from across the globe, improve competitiveness of the private sector, create more jobs and result in a win-win for 130 crore Indians.

    The Prime Minister said, the announcements in the last few weeks clearly demonstrate that the government is leaving no stone unturned to make India a better place to do business, improve opportunities for all sections of society and increase prosperity to make India a 5 Trillion dollar economy. Appreciating the efforts taken by the Finance Minister, Commerce and Industry Minister, Piyush Goyal said that these announcements will give necessary fillip to the economy. He said that government has taken series of measures to boost the economy and today's measures are the largest one.

  • Capital market regulator Securities and Exchange Board of India (SEBI) set up a high-level panel to suggest possible structures and regulations create Social Stock Exchanges (SSE).

    The move comes after the budget announcement of the Finance Minister Nirmala Sitharaman in July about setting up such exchanges to take the capital markets closer to the masses and meet various social welfare objectives.
    • The creation of Social Stock Exchanges (SSE) aims to facilitate listing and fund-raising by social enterprises and voluntary organizations.
    • It will also raise capital as equity, debt or as units like a mutual fund.

  • Reserve of Bank of India tightens norms for banks up penalties.  Reserve Bank of India prescribed a turnaround time (TAT) for banks to settle failed transactions for customers and also notified compensations payable for various types of customer complaints. The financial compensation should be done suomotu by the bank, without waiting for a complaint or a claim by a customer.

    The central bank had first announced a move to harmonize TAT this April for resolving customer complaints and compensation after observing that time taken for resolving customer complaint varies across payment systems. To have prompt and efficient customer service in all electronic payment systems it is necessary to harmonize the TAT of resolution of customer complaints and charge-backs and to have a compensation framework in place for the benefit of customers.

    The RBI categorized eight different avenues of transaction in which the new guidelines will be applicable, including ATMs, card transactions, immediate payment system, unified payment interface and prepaid cards. The timeline for auto-reversal has been set at between one day after the transaction to five days. The financial compensations have been set at Rs 100 per day if the reversal does not happen within a specified timeline.

    The move is aimed at upping customer confidence and bringing-in uniformity in processing of the failed transactions. Customers who do not get the benefit of redress of the failure as defined in the TAT, can register a complaint to the banking ombudsman.

  • World Bank will fund ‘pro-poor tourism’ (PPT) development projects worth more than $57 million in top tourist hotspots of Agra and Braj- Mathura regions in Uttar Pradesh. While the World Bank will incur 70% of the project cost, the remaining 30% will be borne by the UP government. Pro-poor tourism is a holistic tourism concept aimed at poverty alleviation.

  • Over 5.65 crore income tax returns filed for assessment year 2019-20. This is 4 per cent more compared to the previous assessment year. Central Board of Direct Taxes (CBDT) data shows that 5 core 42 lakh ITRs were filed for the Assessment year 2018-19. In a statement, CBDT said, e-filing of ITRs touched an all-time high of over 49 lakh 29 thousand in a single day on August 31 for the year 2019-20.

    From August 27 to 31, 2019, nearly one crore 47 lakh 82 thousand people filed online income tax returns, an increase of 42 per cent as compared to the same period of 2018-19.It said that the I-T department is actively interacting with taxpayers on social media to help them resolve their grievances and e-filing related queries and getting accolades in return.

  • Reserve Bank-constituted task-force on developing a vibrant secondary market for corporate loans has called for setting up a central loan contract registry to remove information asymmetries between buyers and sellers. The six-member task force, headed by Canara Bank chairman TN Manoharan, was formed to examine the scope for developing a secondary market for corporate loans and make recommendations to facilitate rapid development of such a vibrant market.

    The task force submitted the report to Governor Shaktikanta Das on 03 September, 2019. It has called for creating a loan contract registry to remove information asymmetries between buyers and sellers, its ownership structure and related protocols such as standardization of loan information, independent validation and data access.

    It also suggests creation of a self-regulatory body of the participants that can finalise detailed operational modalities of such a secondary market, including standardization of the documentation process. The report also recommends setting up of an online loan sales platform to conduct auctions/sale process of secondary market loans.

  • The Income Tax Department will automatically issue PAN to a taxpayer using Aadhaar number for filing returns as part of a new arrangement to link the two databases. A person who furnishes Aadhaar, as they do not have PAN, shall be deemed to have applied for allotment of PAN and they will not be required to apply or submit any more documents. The rule has come into effect from 1st September, 2019.

  • RBI panel recommended self-regulatory agency. A task force set up by the RBI submitted its report on the development of a secondary market for corporate loans on 3 September 2019. The task force headed by Canara Bank chairman T.N. Manoharan recommended setting up of a self-regulatory body (SRB). The SRB may be set up as an association by scheduled commercial banks, public financial institutions.

  • The Finance Ministry has decided to fix a cut-off mark in terms of total business of public sector banks (PSBs) to create the position of chief general managers (CGMs). PSBs will now have the position of CGM which was thus far available only to the State Bank of India.

    In a communication to bank chiefs, the government said PSBs having a total business of Rs.10 lakh crore will be eligible to have CGM posts in Scale VIII. As a result, three sets of merger bound banks — of the four sets announced by the Finance Minister — will be eligible for CGMs.

  • The Centre has asked large Central Public Sector Enterprises (CPSEs) to stick to their capital expenditure plan which will increase liquidity in the market and boost economic growth.

    This was emphasised by the Finance Ministry during a meeting with the Heads of Maharatna and Navratna CPSEs and Financial Advisors of infrastructure Ministries in New Delhi.

    Capital expenditure by various CPSEs and Ministries and resolution of outstanding payments which may have been held up on account of disputes were reviewed.

    The Finance Ministry will constantly monitor the progress of large infrastructure projects and hold follow up meetings.



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