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Major reforms undertaken; India deserves rating upgrade: Economic Affairs Secretary

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New Delhi:Days after Fitch Ratings denied India a rating upgrade for the 12th year in a row, the government said the country “deserves” an upgrade on the strength of “major structural and fundamental reforms” undertaken.
In an interview to PTI, Economic Affairs Secretary Subhash Chandra Garg said Fitch’s action did not come as a surprise as the rating agency had in discussion earlier indicated its focus on level of government debt even though it had a very favourable view on India’s economy.
“We truly believe, we honestly believe India deserves an upgrade. The performance, macroeconomics parameters everything has stabilised,” he said.
The government, he said, will continue engage with rating agencies and “try to convince” them of “achievement and real performance in the economy.”
“The kind of major structural and fundamental reforms undertaken in the country so far are truly global, they are really big,” he said, adding that the Goods and Services Tax (GST) transformed the indirect taxation system in the country and the Insolvency and Bankruptcy Code is transforming the way the country resolves its non-performing assets.
Also, the RERA (Real Estate (Regulation and Development) Act) has transformed the realty sector. National biometric ID Aadhaar has institutionalised how to deal with people’s identity. He also cited the recently promulgated legislation on dealing with economic offenders fleeing the country.
“One thing I would like to stress is that the kind of reforms undertaken are truly phenomenal and big,” he added.
Fitch had retained India’s sovereign rating at BBB-, the lowest investment grade, with a stable outlook, saying weak fiscal balances continue to constrain its ratings. It had cited government debt amounting to 69 per cent of GDP in 2017-18 to buttress its point.
The government had made a strong pitch with Fitch for an upgrade in ratings after rival Moody’s Investors Service in November last year gave the country its first sovereign rating upgrade since 2004.
Fitch had last upgraded India’s sovereign rating from BB+ to BBB- with a stable outlook on August 1, 2006.
Fitch had changed the outlook to negative in 2012 and then again to stable in the following year, though it kept the rating unchanged at the lowest investment grade.
While Moody’s had in November 2017 raised India’s sovereign rating from the lowest investment grade of ‘Baa3’ to ‘Baa2’ — the first upgrade in almost 14 years — and changed the outlook from stable to positive, S&P refrained from upgrading the rating from ‘BBB-’ citing high government debt and low income levels. S&P has maintained ‘BBB-’ rating on India since 2007.
Asked about the expectation from Standard and Poor’s, Garg said the Finance Ministry is in conversation with them. “We have provided all information to them. We will meet them again. Judgement is finally their’s,” he said.


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CBDT identifies 20.4 million non-filers, asks I-T dept to take action

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New Delhi :The Central Board of Direct Taxes (CBDT) has directed the Income-Tax Department to initiate penalty proceedings by June 30 against non-filers and ‘drop filers’ of tax returns.
According to the non-filer monitoring system (NMS) of the I-T department, data for 20.4 million non-filers has been obtained between 2013 and 2017, of which 2.5 million are those who are inconsistent — popularly known as ‘dropped filers’.
“We are issuing notices in all the non-filer/dropped filer cases across the country, and proceedings shall be initiated accordingly in the relevant cases,” said an assessing officer.
Typically, the penalty for non-filing is pursued under Section 271F of the Income Tax Act, and that for late filing under Section 234. If an assessee files returns after the due date of August 31 but before December 31, it will attract a penalty of Rs 5,000. For those who file returns after December 31, the penalty rises to Rs 10,000. However, there is an exemption for small taxpayers — if the total income does not exceed Rs 5 lakh per annum, the maximum penalty will be Rs 1,000.
The tax department has initiated action based on the NMS database, which has identified such non-filers and dropped filers. The said data has been shared with assessing officers. This information may be acted upon as efficiently as possible to widen the tax base, said the officer cited above.
chart The NMS data shows a sharp increase in non-filers since 2013. In 2014, the number of non-filers was 1.22 million, which surged to 6.75 million in 2015.
The number of dropped filers in FY18 stood at 2.52 million, down from 2.83 million in FY17.
“If the existing database is acted upon, coupled with optimum tax administration, and if legislative impetus — such as periodical review of provisions related to exemption, deductions, tax incentives, tax collection from the third parties, and taxing new areas such as digital economy — is provided, there will be considerable increase in the tax base,” said a senior tax official.
An assessing officer can initiate proceedings for prosecution from three months to two years, along with a fine. The period could be extended if the taxable income exceeds Rs 25 lakh.

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RBI releases draft framework for regulatory sandbox to help fintech space

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Mumbai :The Reserve Bank of India (RBI) released a draft ‘Enabling Framework for Regulatory Sandbox’ in order to support the country’s rapidly growing fintech space.
The sandbox will begin the testing process with 10-12 selected entities focusing on financial inclusion, payments and lending, digital KYC, etc. The cohorts (end-to-end sandbox process) may run for varying time periods, but should ordinarily be completed within six months, said the RBI.
A regulatory sandbox usually refers to live testing of new products or services in a controlled/test regulatory environment for which regulators may (or may not) permit certain regulatory relaxations for the limited purpose of the testing.
The regulatory sandbox would be within a well-defined space and duration where the RBI will provide the requisite regulatory guidance, so as to increase efficiency, manage risks, and create new opportunities for consumers.
The draft guidelines highlight the clear principles and role of the proposed regulatory sandbox, its pros and cons, the reasons for setting up the regulatory sandbox and expectations of the RBI from the sandbox. The central bank has invited comments on the draft guidelines from stakeholders by May 8.
The draft framework was released on the recommendation of an inter-regulatory working group set up by the RBI in July 2016 to review the regulatory framework and respond to the dynamics of the rapidly evolving fintech scenario.
The target applicants for entry to the regulatory sandbox are fintech firms which meet the eligibility conditions prescribed for start-ups by the government. The entity also needs to have a minimum net worth of ~50 lakh, according to its latest audited balance sheet.
The RBI said that it shall bear no liability arising from the regulatory sandbox process and any liability arising from the experiment will be borne by the applicant as a sandbox entity.
The focus of the regulatory sandbox will be to encourage innovations where there is absence of governing regulations or a need to temporarily ease regulations for enabling the proposed innovation or the proposed innovation shows promise of easing/effecting delivery of financial services in a significant way.
The applicants should highlight how it would address an existing gap in the financial system through its product/service and demonstrate that there is a relevant regulatory barrier in its deployment.
The guidelines listed out the various entities that can apply for the sandbox process as well as the ones that won’t be eligible for the sandbox.

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Mallya asks SBI to disclose ‘legal fees’ spent to recover funds

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New Delhi: Fugitive businessman Vijay Mallya on Friday urged Indian media to file an RTI against the State Bank of India (SBI) to ascertain how much money it has spent on the legal fees of the lawyers while recovering money from him in the United Kingdom.
“Whilst media love sensational headlines, why doesn’t anybody ask the PSU State Bank of India under RTI on how much they are spending on legal fees trying to recover money from me in the United Kingdom (UK) when I have offered 100 per cent payback in India,” Mallya tweeted.
To further substantiate his point, he said: “Assets belonging to me in the UK were sold and the costs of sale were almost 50 per cent of value. The remaining assets yet to be sold won’t cover legal costs. So what’s this all about? To enrich UK Lawyers?”
He also demanded an answer from the public sector bank on the same lines.
Mallya also accused the SBI Lawyers representing SBI in the UK of “making presentations on their accomplishments against him” at the “cost of Indian taxpayers’ money.”
Mallya is facing trial for alleged fraud and money laundering amounting to Rs 9,000 crore.
On April 8, a United Kingdom court had denied permission to the liquor baron to appeal against his extradition order to India to face trial for alleged fraud and money laundering amounting to Rs 9,000 crore.

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