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Govt measures, I-T efforts raise tax-GDP ratio to 10-year high

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New Delhi: A sharp rise in the number of Income-Tax returns filed and an increase in the number of taxpayers have widened and deepened the tax base during the last three assessment years, which in turn has seen the direct tax-GDP ratio touch a decadal high of almost 6 per cent.

Legislative and administrative measures, combined with enforcement efforts by the Tax Department to check tax evasion, have meant that the average tax paid by corporates has jumped 55 per cent to Rs 49.95 lakh in 2016-17 compared with Rs 32.28 lakh in 2013-14.

In the case of individuals, the average tax paid has increased by 26 per cent to Rs 58,576 in 2016-17 from Rs 46,377 in 2013-14, according to data released Monday by the Central Board of Direct Taxes.

 

The Tax Department data also show better compliance among salaried taxpayers vis-à-vis non-salaried taxpayers. During the three-year period (2013-14 to 2016-17), the number of salaried taxpayers increased from 1.70 crore to to 2.33 crore, a growth of 37 per cent. The average income declared by salaried taxpayers rose by 19 per cent to Rs 6.84 lakh from Rs 5.76 lakh during the same period.

The number of non-salaried individual taxpayers grew 19 per cent to 2.33 crore from 1.95 crore and the average non-salary income declared increased by 27 per cent to Rs 5.23 lakh in 2016-17 from Rs 4.11 lakh in 2013-14.

The number of taxpayers disclosing gross total income above Rs 1 crore rose 16.7 per cent year-on-year to 1.40 lakh crore in financial year 2016-17, according to the data.

Over a three-year period from the financial year 2013-14, a growth of 60 per cent has been recorded for the number of total taxpayers (including corporates, firms, Hindu Undivided Families, individuals) disclosing income above Rs 1 crore. In the individual taxpayers category, a 68 per cent growth was registered in 2016-17 to 81,344 from 48,416 in 2013-14.

 

Making an yearly comparison, taxpayers showing gross total income above Rs 1 crore grew by 16.7 per cent in 2016-17, higher than the growth of 10.9 per cent shown in 2015-16 but lower than the 22.2 per cent growth seen in 2014-15.

The number of returns filed also increased to 6.85 crore in 2017-18 from 5.57 crore in 2016-17 and 3.79 crore in 2013-14. The number of taxpayers increased to 7.41 crore in financial year 2016-17 from 6.92 crore in 2015-16 and 5.71 crore in 2013-14. Taxpayers, as defined by CBDT, include “persons who have filed a return of income for the relevant Assessment Year or in whose case tax has been deducted at source in the relevant Financial Year but the taxpayer has not filed the return of income”.

CBDT Chairman Sushil Chandra said the rise in compliance is the result of many non-intrusive administrative and enforcement measures taken by the Tax Department. Explaining one of the measures, Chandra said that last year, the Department had analysed data on the purchase of properties worth over Rs 1 crore, and asked taxpayers to pay the advance tax on time.

“The total number of taxpayers (corporates, firms, HUFs among others) showing income of above Rs 1 crore has registered a sharp increase over the three-year horizon. While 88,649 taxpayers had disclosed income above Rs 1 crore in assessment year 2014-15, the figure was 1,40,139 for AY 2017-18, which is a growth of about 60 per cent,” the CBDT said.

A closer look at the data reveals that while 14,068 individuals paid tax exceeding Rs 1 crore in 2016-17 as against 11,123 individuals in 2015-16, only four individuals paid tax exceeding Rs 100 crore but less than Rs 500 crore in 2016-17 (about Rs 665 crore) as against seven individuals (tax paid Rs 1,098 crore) in the same category in the preceding year. No individual paid tax of over Rs 500 crore in 2016-17 and 2015-16.


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Govt should ease law on firing workers, reform labour laws: Panagariya

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Mumbai: India should ease norms for hiring and firing workers to make it easier for companies to do business in the country, according to a former adviser to Prime Minister Narendra Modi’s government.

Easing the rules are crucial for employers, as their primary aim is not to fire workers, Arvind Panagariya, the head of government think-tank NITI Aayog, said in an interview in New Delhi. “You need consistency across labour laws.”

Finance Minister Nirmala Sitharaman, in her maiden budget this month, proposed combining multiple laws governing workers to form four sets of labor codes to improve the ease of doing business. But what’s needed is the reform of labor laws and not just streamlining of existing ones, said Panagariya.

 

He said the government’s plan to introduce a single minimum wage across the country may hurt businesses in smaller towns considering the wide differences in costs across urban and rural India. It could especially hurt small exporters and erode their competitiveness globally.

Modi’s government, which was re-elected for a second straight five year term in May, can do more to help grow the economy, Panagariya said, adding that some of India’s labor laws are probably more than 100 years old. Almost all of them are more than 30 years old.

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Ban cryptocurrencies, consider launching own digital money: Panel to govt

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New Delhi: A panel tasked with examining virtual currencies has recommended that the government should ban private cryptocurrencies and could consider launching its own digital money. It has also recommended that to deter the use of private cryptocurrencies, anyone doing so could be punished with imprisonment of up to 10 years.

The committee on virtual currency is headed by Finance Secretary Subhash Garg. The other members are Ajay Prakash Sawhney, secretary, Ministry of Electronics and Information Technology; Ajay Tyagi, chairman, Securities and Exchange Board of India (Sebi); and B P Kanungo, deputy governor, Reserve Bank of India (RBI).

The committee submitted its report — after a delay of a year. A piece of draft legislation, Banning of Cryptocurrency and Regulation of Official Digital Currency Bill, 2019, was also put in the public domain.

 

The Supreme Court is slated to hear a challenge to a ban on cryptocurrencies by the central government and the Reserve Bank of India.

In its report, the committee has recommended that distributed ledger technology (DLT), the most common use of which is blockchain, can be of great benefit to the country in several financial and non-financial areas, such lowering costs of the Know Your Customer process and improving access to credit.

Ban cryptocurrencies, consider launching own digital money: Panel to govt “There is no underlying intrinsic value of private cryptocurrencies. These… lack all the attributes of a currency. There is no fixed nominal value of these private cryptocurrencies. They neither act as any store of value nor they are a medium of exchange,” the panel said in its report, noting that since their inception, cryptocurrencies had demonstrated extreme fluctuations in their prices.

The draft Bill states: “Whoever directly or indirectly mines, generates, holds, sells, deals in, transfers, disposes of or issues cryptocurrency or any combination thereof… shall be punishable with fine or with imprisonment which shall not be less than one year but which may extend up to ten years, or both.”

The panel said policymakers and regulators should have an open mind regarding the introduction of an official digital currency in India. “It may be possible to visualise some models of future official digital currencies but as of date it is unclear whether there is clear advantage in the context of India to come up with an official digital currency.”

The panel also recommended if required, a group can be constituted by the finance ministry’s department of economic affairs, with participation of the representatives of the Reserve Bank of India (RBI), the Ministry of Electronics and Information Technology (MeiTY), and the department of financial services for examination and development of an appropriate model of digital currency in India. If one is launched, the RBI should regulate it.Technology experts, however, were not very happy with the recommendations of the panel.

“The definition of cryptocurrency in the report is reasonably vague and may not cover something like Facebook’s libra or even bitcoin if one were to read it too technically. The drafting needs to be better,” said a lawyer who did not want to be named.Experts said it might be possible to develop a distributed ledger with nodes kept only in India.

“As a venture capitalist, I find… the suggestion of a ban quite disappointing because they did not engage with start-ups or domain experts,” said Nitin Sharma, technology investor and founder, Incrypt Blockchain.

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Maruti, Hyundai skip rural slump, manage to increase sales in FY19

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Chennai: The country’s largest two carmakers, Maruti and Hyundai, managed to increase their rural sales in 2018-19. This took place despite the rural economy being under pressure.

Both companies are optimistic about 2019-20, too, with the raising of rural allocations in the Union Budget and higher Minimum Support Prices. That means more of rural disposable income.

Maruti Suzuki’s (the country’s largest car maker) rural sales in 2018-19 rose to 205,000 units or 39 per cent of sales. A year before, it was around 165,000 units or 37 per cent of sales. This year’s outcome will depend on the monsoon, farm output and how rural sales pick up.

 

Hyundai’s rural sales were 17.3 per cent of its FY19 total, as against 15.6 per cent a year before. In FY20, the contribution is expected to be around 20 per cent.

Both companies — they address most of the spectrum — have said they are optimistic on the future, despite the overall industry having slowed. According to the Federation of Automobile Dealers Associations, passenger vehicle sales dropped by 4.6 per cent in FY19, to 224,755 units.

Shashank Srivastava, executive director for marketing and sales at Maruti, estimates growth of 4-8 per cent for the current financial year. However, he adds, a good monsoon and a satisfactory (for sales) festival season would be important, he adds.

With car penetration of around 22 per 1,000 population, India continues to be a big opportunity to sell cars, especially in rural areas. Srivastava says the rate of growth in the rural market has invariably been higher in recent years.

“Today, with booming internet users and a strong millennial population, rural markets are emerging as growth engines for sales,” he says.

Further, rural infrastructure has improved significantly. Motorability has seen sharp improvement there, resulting in exponential increase of two-wheeler sales and offering similar potential for cars.

Vikas Jain, national sales head at Hyundai Motor India, says customers of urban and rural markets might have differing needs but similar aspirations. In the latter, owning a car is a big aspiration.

Urban markets are experimenting with mobility solutions such as subscription and leasing. Hyundai has a partnership with self-drive car rental firm Revv and another with mobility solutions firm ALD Automotive India.

The company believes there is huge aspiration among youth in tier-1 and tier-II cities to own a vehicle. Rising disposable income and the expanding presence of financial institutions in rural markets, to offer credit at attractive rates, will enable ownership of cars.

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