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CBDT notifies e-settlement scheme for taxpayers

The Central Board of Direct Taxes (CBDT) has notified an e-settlement scheme to settle pending income-tax settlement applications transferred to a settlement commission.

The scheme will be applicable to “pending applications in respect of which the applicant has not exercised the option under sub-section (1) of Section 245M of the Act and which has been allotted or transferred by Central Board of Direct Taxes to an interim board”, CBDT said.

The proceedings before the interim board shall not be open to the public. No person other than the applicant, their employee, and concerned officers of the interim board or the income-tax authority or the authorised representatives, without the permission of the interim board, can attend the proceedings even on videoconferencing or video telephony.

CBDT shall establish suitable facilities for videoconferencing including telecommunication application software that supports video telephony at such locations as may be necessary, it said in the notification.

The board had in September allowed eligible taxpayers to file their income-tax settlement claims before the Interim Board for Settlement on certain conditions.

The relief was given to taxpayers who were eligible to file application as on January 31, 2021, but could not file the same due to cessation of Income Tax Settlement Commission as per the Finance Act 2021, and were hence permitted to submit the applications by September 30, 2021 before the interim board.

CBDT had said an assessee should have been eligible to file application for settlement on January 31, 2021 for the assessment years for which the application is sought to be filed and all relevant assessment proceedings of the assessee remain pending as on the date of filing the application for settlement.

The board said such applications, if found valid, will be deemed as “pending applications” and will not be allowed to be withdrawn.

Taxman widens ‘Pandora Papers’ probe against Indians

The Income Tax (I-T) department has broadened the line of questioning as it begins its probe into information leaked by the ‘Pandora Papers’.

Beyond disclosing their ownership in existing foreign assets, people named in the Pandora expose are being told to spell out details of bank accounts which no longer exist and were closed long ago, firms that were dissolved, directorships in overseas firms and tax residency status over the past 16 years.

They are also being asked to identify the ‘service providers’ in the tax havens, according to the first set of summons issued a week ago by the tax department under section 131 (1a) of the I-T Act which empowers tax officials to make enquiries if it suspects non-disclosure of earnings. Service providers are entities hired to set up offshore entities and structures as well as handle communication on client’s behalf.

“We have learnt from our experience and while investigating into the Panama Papers. There may have been cases where persons have closed their accounts and quickly shut down overseas outfits after getting a wind of the leak. Some did it when discussions on the black money legislation were underway,” a senior tax official told ET.

“A person who has closed his foreign account would say ‘no’, when you simply ask him whether he has one,” said the official.

‘Notices can be Sent for 10 Years’
“Technically, he is right. So, these additional questions are aimed to make the exercise more comprehensive,” the official added.

Several Indians who have been named in the Pandora leak have said their overseas investments and interests in trusts and companies abroad are legitimate transactions carried out for business and family requirements. However, in building its case, the I-T department has to convert the leaked information into evidence.

Once the identities of service providers are known, the department can seek additional information by approaching authorities in various jurisdictions under the exchange of information pact or double-taxation avoidance agreement.

Ashish Mehta, partner at the law firm Khaitan & Co, said, “Questions about 16 years of residential status in notices issued to investigate the Panama, Paradise and other leaks were a norm. But at that time under the Income Tax Act, notices could be issued for a period of 16 years in case of offshore accounts (this look back period of 16 years was introduced in 2012 after various data leaks had surfaced).”

“After a complete revamp of the reassessment provisions by the Finance Act 2021, now a maximum of 10 years can be reopened, that too after following procedures as prescribed under the new law, which include issuance of a show-cause notice and considering responses of a taxpayer before issuing notices. Any information gathered under Income Tax Act is available for use under the Black Money Act (which was introduced in the year 2015 and is effective from 1 July 2015). There is a possibility of invocation of Black Money Act in case of proven undisclosed offshore incomes and assets, however, some important provisions of this act, which have a retrospective effect are under constitutional challenge before various courts,” he said.

PLI scheme for specialty steel likely to attract Russian investors

Steel manufacturing firms from Russia are expected to make investments in India under the production-linked investment (PLI) scheme for specialty steel, according to an official. Mukesh Kumar, the Director of Steel Research & Technology Mission of India (SRTMI), said there are some Russian companies interested in setting up businesses in India.

The SRTMI is a collaborative research platform formed jointly by the steel ministry and domestic steel players which facilitate research and development (R&D) in the iron and steel sector by strengthening association among industry, academia and research bodies.

Kumar was replying to a question on whether there are potential domestic and international players who could invest in India’s steel sector under the PLI Scheme for Specialty Steel.

“Our Steel Minister Ram Chandra Prasad Singh recently went to Russia. We are expecting steel producing companies that have technologies like NLMK and Severstal of Russia,” he told PTI.

Severstal even wanted to set up a steel plant having an annual capacity of three million tonnes in Karnataka with NMDC. The project couldn’t take off due to various reasons, Kumar said.

NLMK is also looking to set a electrical steel plant in Maharashtra, he said adding that these two companies and others can come to invest under the scheme. He further said that mainly steel producing companies with in-house technical support can come.

Secondly, technology providers can come indirectly joining hands with Indian companies to develop new steel grade products.

Electricals industry and automakers which require the grades in the scheme may tie up with steel makers, asking them to develop products for them.

On July 22, the Union Cabinet chaired by Prime Minister Narendra Modi had approved the Rs 6,322-crore PLI scheme to boost production of specialty steel in India, attract additional investment of about Rs 40,000 crore and generate fresh 5.25 lakh job opportunities.

The five categories of specialty steel which have been included in the PLI scheme are coated/plated steel products, high strength/wear resistant steel, specialty rails, alloy steel products, steel wires and electrical steel.

Industries like automobile, electrical, defence, pipes etc are consumers of these grades of steel, and are importing the same from outside India.

The government aims to save Rs 33,000 crore forex which goes out of India annually in exchange of import of specialty steel.

Finance ministry approves 8.5% return on PF deposits for FY21

The finance ministry has given its go ahead to 8.5% rate of interest on provident fund deposit for 2020-21 paving way for the Employees’ Provident Fund Organisation to credit the interest in accounts of over 60 million beneficiaries.

The move is expected to bring some cheer a week ahead of Diwali. Labour secretary Sunil Barthwal confirmed the development to ET. “Approval was received from the finance ministry today. It will be notified as soon as possible,” he said.

The labour ministry has to notify the interest rate for the year before EPFO starts crediting it into the beneficiary account.

The move is expected to leave EPFO with a surplus of Rs 300 crore compared to the preceding financial year when it had a surplus of Rs 1000 crore.

The central board of trustees of EPFO, headed by the labour minister, had in March this year approved the interest rate of 8.5% for 2020-21, same as the previous year. However, the labour ministry has to mandatorily seek approval from the finance ministry on the proposed rate. The process was fast tracked after top officials of the labour ministry met finance ministry officials earlier this month to address their queries and asked them to expedite the process.

The finance ministry has over the past few years questioned the higher rate of interest declared by EPFO year after year when the rate of interest for other government schemes including public provident fund or small saving schemes was much lower.

EPFO had pegged an income of around Rs 70,300 crore in the previous fiscal including around Rs 4,000 crore from selling a portion of its equity investments and Rs 65,000 crore from debt.

Based on this, its central board of trustees, headed by the labour minister, had recommended the interest rate of 8.5% for FY21. EPFO had retained the interest rate on PF deposits for 2020-21 same as 2019-20 despite the huge amount of Covid withdrawals from the retirement fund kitty since the scheme was announced last year.

EPFO has an active subscriber base of more than 60 million and every year it invests 15% of its annual accruals in equity and rest in debt instruments. However, since the outbreak of Covid millions of salaried class workers have lost jobs or have been working on reduced wages prompting them to withdraw from their retirement fund kitty under the Covid withdrawal scheme.

Over 40 million register on e-Shram portal: Minister

Over 40 million unorganised workers have registered on the e-Shram portal in less than two months’of its launch with highest enrollment from agriculture and construction sector workers, the labour ministry said.

“As per the data, 40.9 million workers have registered on the portal. Of these around 50.02% beneficiaries are female and 49.98% are male,” the ministry said on Sunday.

“By registering on the portal, the unorganized workers will be able to get the benefits of government schemes easily,” labour and employment minister Bhupender Yadav said in a tweet.

According to the labour ministry, Odisha, West Bengal, Uttar Pradesh, Bihar and Madhya Pradesh are the states with the highest number of enrollments. “Smaller states and union territories (UTs) understandably have a lesser number of registered workforce. Hence, these numbers should be seen in that context,” it said, adding the drive to enroll unorganised workers needs to gain momentum in states and UTs such as Meghalaya, Manipur, Manipur, Goa and Chandigarh.

Further, the largest number of workers registered is from agriculture and construction, given the sheer volume of these two sectors in employment generation in India, it said. Besides, workers from perse and different occupations like domestic and household workers, apparel sector workers, automobile and transport sector workers, electronics and hardware workers, capital goods workers, education, healthcare, retail, tourism and hospitality, food industry and many more have registered at this portal.

“Around 65.68% of these registered workers are in the age group of 16-40 years and 34.32% are in the age group of 40 years and above,” it said, adding that 43% of those enrolled include other backward castes (OBCs) and 27% general castes while 23% and 7% are from scheduled castes and scheduled tribes respectively.

While the majority of the enrollment (77%) are through the common service centres, in certain states like Kerala and Goa as well as Meghalaya and Manipur and the union territories of Dadra & Nagar Haveli, Andaman & Nicobar and Ladakh, a greater proportion of inpiduals have self-registered on the portal.

As per the statement, the minister and the top officials of the labour ministry have been holding several interactions with the unorganised workers and leaders of trade union and media to sensitize them about the features and benefits of the e-SHRAM portal, so as to encourage the workers to register themselves through available modes and take the benefits of several social security and welfare schemes.

Economy on steady track, coal crisis temporary, says finance secretary TV Somanathan

The Indian economy is on course for a “fairly steady and sustainable recovery” as the chances of another major Covid outbreak have diminished thanks to the country’s inoculation drive, finance secretary TV Somanathan said in an interview. He also ruled out any significant impact from the ongoing power crisis on output, as flagged by some experts, saying the coal shortage was a temporary problem.

“Without the third wave, without a big recurrence of Covid, I think we are now on course for recovery,” Somanathan said.

The government will ensure that lack of funds does not act as a constraint on capital expenditure and budgeted spending will take place, said Somanathan, who is also expenditure secretary.

The sale of Air India, he said, will lower the government’s interest liability with the new buyer taking over part of the debt. The government will save about ₹20 crore a day that it has been ploughing into Air India.

Vaccination Effect
The airline is being taken over by the Tata Group.

The privatisation process of two public sector banks is continuing with legal and regulatory issues being sorted out.

“Work is going on – it’s not that they are not being processed, it’s being done,” he said.

As the inoculation drive has been stepped up, the chances of a third Covid wave have faded.

“I think with vaccination having crossed 50% for the single dose and with the emerging numbers and the fact that vaccination will also be continuing on a daily basis at a fairly good pace, the third wave looks unlikely,” he said. “Without the third wave, without a big recurrence of Covid, I think we are now on course for recovery.”

The finance secretary acknowledged that there were some downside risks, such as a rise in international commodity prices and supply shortages outside the country that could hamper the recovery.

“Nevertheless, I am reasonably optimistic that we are on course for fairly steady and sustainable recovery,” he said.

He termed the power crisis as a passing matter.

“I think there was a weather-related problem which affected coal supplies, domestic coal supplies. I think it is a temporary problem,” he said.

Somanathan said the finance ministry will ensure that fund flows are adequate and support the capital projects of ministries.

“Capital spending, within the budget estimate… we will ensure that lack of funds doesn’t restrain capital expenditure,” he said, adding that he was optimistic about the capex target being met.

Asked about the government biting the bullet on some long-pending issues such as the retrospective tax, the telecom relief package and Air India privatisation, he said the starting point was the Atmanirbhar Bharat policy measures of May 2020.

“Many of those reforms were quite radical,” he said, highlighting the new public sector policy, which was outlined then and announced in the budget. “I think it is more a change that has developed over a period of time; it’s not some sudden shift. But what you are seeing is execution.”

DPIIT seeks views on IPR issues ahead of Trade Policy Forum meet with US

The commerce and industry ministry has sought comments and suggestions from stakeholders on intellectual property rights (IPR) matters to be raised during a high-level working group meeting with the US under India-US Trade Policy Forum, that is to be held in the third week of this month.

The Department for Promotion of Industry and Internal Trade (DPIIT) said that this will be a “good opportunity for us to raise concerns and difficulties being faced by domestic stakeholders and their interests before the US”.

“In this regard, you are requested to provide your comments/suggestions/inputs on any IP matters and key asks which Industry/Interest Groups want the government to take up with the US,” it added.

The department has sought information on area of concern such as filing, registration, enforcement or commercialization IP rights in the US and the level at which the challenges were observed such as IP Offices, enforcement or government or regulatory agency.

It also wants stakeholders to suggest the government to focus on which areas in IPRs in its collaborative efforts with the US such as patent, trademark, copyright, design, Geographical Indications, enforcement, commercialization and Technology Transfer Regulatory Approval, by October 20.

MPC to revise stance only after it sees a durable recovery

The members of RBI‘s monetary policy committee –MPC– in the minutes published on Friday have acknowledged an uneven recovery in the economy , expressing their concerns on growth outlook which is uncertain largely due to many global factors with inflation being addressed more by supply side measures. Monetary policy will align to inflation only when out-gap closes sometime in FY’23.

Members unanimously voted for a status quo in rates. But the only dissenting voice was by Prof Jayanth Varma of IIM, Ahmedabad who voted against the accommodative stance as risks to growth and inflation are well beyond the control of the MPC, but they warrant a heightened degree of flexibility and agility.

The MPC kept the policy repo rate unchanged at 4.0 per cent. The reverse repo rate too was maintained at 3.35 per cent. The MPC also decided to continue with the accommodative stance as long as necessary to revive and sustain growth on a durable basis and continue to mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target of 2-6 per cent going forward.

” The biggest risks to India’s macroeconomic prospects are global and they could materialise suddenly” said RBI deputy governor Micahel Patra in his minutes adding that he was awaiting stronger evidence on demand-led inflationary pressures.” Until then, congenial financial conditions need to be in place”.

Members aknowledged that considerable uncertainty about output gap in pandemic times remains. ” If no new disruptions to growth emerge, output gap will close sometime in 2022-23″ said Mridul Sagar, executive director RBI. ” Monetary policy should start to gradually reposition to lowering underlying inflation and inflation expectations next year, especially if inflation edges up from the energy and services side amid sticky goods core inflation”

Investment activity has picked up over the levels seen 2020-21 but yet to reach the 2019-20 levels. The RBI has projected the economy to grow at 9.5 per cent in FY’22. The MSME and the informal sector firms face greater challenges in operating in conditions in which input price pressures are significant and consumer demand is still recovering. “Improving efficiency of logistics services and reduction in indirect taxes would play an important role in easing such exogenous shocks on the cost of transport services and overall inflation” said Shashanka Bhide, senior advisor at NCAER, justifying an accommodative monetary policy stance and the need for broader policy support.

“Overall, elevated global commodity prices, persisting supply disruptions, increasing inflation expectations and reviving domestic demand were cited as among the key risks to the evolving inflation outlook” said Rahul Bajoria, chief India economist at Barclays Capital.

The minutes also underscores the role of supply side factors in managing inflation. ” The theory that temporary Covid-19 related supply shocks are largely responsible for inflation seems to have held out well, although repeated commodity price shocks are an issue” said external member Ashima Goyal, professor emiritus at Indira Gandhi Institute of Development Research. ” Tax cuts on petroleum products are essential to break the upward movement that could impart persistence to domestic inflation. Government initiatives have contributed to the fall in food inflation. This, and relative fiscal conservatism, enables monetary policy to remain accommodative” Goyal said.

External member JR Varma reiterated that the Covid-19 pandemic has mutated into a human tragedy and monetary policy is not the right instrument to deal with this. The ill effects of the pandemic are now concentrated in narrow pockets of the economy, and monetary policy is much less effective than fiscal policy. Besides, at the global levels the ongoing transition to green energy worldwide poses a significant risk of creating a series of energy price shocks similar to that in the 1970s, the tail risk to global growth posed by by emerging financial sector fragility in China reminiscent of Japan of the late 1980s.” Both of these risks are well beyond the control of the MPC, but they warrant a heightened degree of flexibility and agility” Varma said in his defense of discontinuing the accommodative stance.

“We continue to believe that the MPC will look through the supply side factors that are pushing up inflation, and change the stance only after there is clear evidence of a demand revival stoking prices upwards” said Aditi Nayar, chief economist at ratings firm Icra. This is unlikely until the February 2022 policy review. Moreover, the RBI may refrain from hiking the reverse repo rate, until the MPC changes the stance to neutral.

Gati Shakti, digitisation, ‘Make in India’ discussed as Sitharaman meets top CEOs in New York

India’s recently launched Rs 100-lakh-crore infrastructure master plan, digitisation and the ‘Make in India’ initiative were among the main topics discussed as Finance Minister Nirmala Sitharaman connected with the world’s leading business officers at the Big Apple here on Saturday.

Sitharaman arrived here late Friday after her visit to Washington DC where she participated in the Annual Meetings of the World Bank and the International Monetary Fund.

She met Mastercard Executive Chairman Ajay Banga and Mastercard CEO Michael Miebach here on Saturday.

“The initiatives and progress towards #financialinclusion and #DigitalTransformation formed part of the discussion,” the Ministry of Finance said in a tweet.

In her meeting with FedEx Corporation President and Chief Operating Officer (COO) Raj Subramaniam, discussions focussed on the recently launched initiative of National Infrastructure Master Plan ‘Gati Shakti’ and India’s third largest start-up ecosystem and the unicorn base (start-up companies reaching a high valuation).

On October 13, Prime Minister Narendra Modi launched the Rs 100-lakh crore national master plan for multi-modal connectivity that aims to develop infrastructure to reduce logistic costs and boost the economy.

PM Gati Shakti targets to cut logistic costs, increase cargo handling capacity and reduce the turnaround time, Modi said at a function to launch the plan.

The plan aims to lend more power and speed to projects by connecting all concerned departments onto one platform. Now, the infrastructure schemes of various ministries and state governments will be designed and executed with a common vision.

In Sitharaman’s meeting with Citigroup chief executive officer (CEO) Jane Fraser, discussions focussed on the banking company’s “commitment towards #MakeInIndia and focus on #Digitisation and Partnerships with #Fintechs towards #digitaltransformation,” the Finance Ministry tweeted.

Later, Sitharaman also met IBM Chairman and CEO Arvind Krishna.

“IBM’s interest in India in the areas of hybrid cloud, automation, 5G, cybersecurity, data, and AI (artificial intelligence) formed part of the discussion,” the ministry tweeted.

Sitharaman began her week-long US visit with a trip to Boston, where she met CEOs, addressed a roundtable meeting of investors and executives and addressed students and faculty at the Harvard Kennedy School.

Union Cabinet approves phase-2 of Swachh Bharat Mission-Urban, AMRUT

The Union Cabinet on Tuesday approved the second phase of the Swachh Bharat Mission-Urban and the Atal Mission for Rejuvenation and Urban Transformation till 2025-26. A financial outlay of Rs 1,41,600 crore has been finalised for SBM-U 2.0, including a central share of Rs 36,465 crore, which is over 2.5 times the financial outlay of Rs 62,009 crores in the last phase of the mission, the government said in a statement.

The decisions were taken at a Cabinet meeting chaired by Prime Minister Narendra Modi.

The statement said the second phase of SBM focuses on sustainability of Open Defecation Free (ODF) outcomes, achieving scientific processing of solid waste in all cities, and managing waste water in cities with less than one lakh population as per Census 2011.

The government said that the implementation of the mission components will be done in a structured and time-bound manner, with thorough gap analysis of required infrastructure, detailed five-year action plans, and annual action plans with timelines.

“The mission will be completely paperless, digital, leveraging digital technology for complete transparency and accountability through GIS-mapped waste management infrastructure, robust user interface, online grievance redressal system, end-to-end online monitoring of projects starting from project creation to fund release, and project progress monitoring on integrated GIS-based platform,” it said.

The Cabinet also approved the second phase of the Atal Mission for Rejuvenation and Urban Transformation as a step towards Atmanirbhar Bharat and with the aim of making the cities ‘water secure’ and ‘self-sustainable’ through circular economy of water, the statement said.

Total indicative outlay for AMRUT 2.0 is Rs 2,77,000 crore, including a central share of Rs 76,760 crore, for five years from FY 2021-22 to FY 2025-26.

“The cabinet understands that providing reliable and affordable water supply and sanitation services to urban households is a national priority. This will be achieved by providing functional tap connections to all households, undertaking water source conservation/ augmentation, rejuvenation of water bodies and wells, recycle/re-use of treated used water and rainwater harvesting,” the government said.

The project will lead to ease of living by providing piped-water supply and sewerage and septage facility to urban households, it added.