Financial System: 2015

During the current fiscal, Ministry of Finance has undertaken various initiatives and measures for enhancing the Revenue Collection ,easing and formulating the Taxation policy, Fiscal consolidation , improving the Economic Growth and there by contributing to the Nation building. The major highlights of the achievements of the Ministry are as follows:

DEPARTMENT OF ECONOMIC AFFAIRS (DEA)

During the current fiscal, Department of Economic Affairs (DEA), Ministry of Finance has undertaken various initiatives for enhancing the Economic Growth and ensuring the Fiscal Stability of the economy.

The major highlights of the achievements of the Department are as follows:

INFLATION

Wholesale Price Index (WPI): WPI inflation has declined from 6.0 per cent in 2013-14 to 2.0 per cent in 2014-15 and -3.5 per cent during April to October 2015. WPI has been negative since November 2014 and is placed at -3.8 per cent in October 2015. WPI Food inflation has also shown steady decline from 6.0 per cent in January 2015 to 1.7 per cent in October 2015. Inflation in Fuel & power stood at -16.3 per cent in October 2015 compared to -17.7 per cent in the previous month and -11.0 in January 2015. Inflation for Manufactured products decreased to -1.7 per cent in October 2015 as compared to 1.0 per cent in January 2015.

Consumer Price Indices (CPIs): CPI-New Series inflation for 2014-15 declined to 5.9 per cent from 9.5 per cent in 2013-14, has remained below 5.5 per cent since January 2015. During 2015-16 (Apr-Oct), average CPI inflation was 4.7 percent and stood at 5.0 per cent in October 2015. Inflation in terms of Consumer Food Price Index (CFPI) has come down to 5.2 per cent in October 2015 from a high of 6.9 per cent as reported in February 2015.

Inflation based on CPI-Industrial Workers for September 2015 stood at 5.1 per cent as compared to 7.2 reported in January 2015. Inflation based on CPI-Agricultural Labour and CPI-Rural Labour declined to 3.5 per cent and 3.7 per cent respectively in September 2015 as compared to 6.2 per cent and 6.5 per cent in January 2015.

Measures taken to control inflation

The measures taken by the Government along with decline in global oil and commodity prices have contributed towards achieving low inflation. The measures taken by Government include, advising states to allow free movement of fruits and vegetables by delisting them from the APMC Act, banning of export of all pulses (except kabuli channa and organic pulses and lentils upto certain quantity), zero import duty on pulses and onion, empowering States/UTs to impose stock limits in respect of onion, pulses, edible oil, and edible oilseeds under the Essential Commodities Act, modest increase in minimum support prices in last two years etc. The vigilant monetary policy stance by the RBI and adoption of a Monetary Policy Framework agreement between Government and RBI has also led to moderation in inflation by bringing in an element of certainty of action by the RBI.

MONETARY POLICY

During 2015, policy (Repo) rate has been cut by 125 basis points, signalling a period of easing of monetary policy. Taking into account the continuous decline in inflation and with a view to spur growth, the last cut in the policy rates by 50 basis points to 6.75 percent was undertaken by the RBI on September 29, 2015.Overall, the RBI stance continues to be accommodative.

Government of India and RBI have signed a Monetary Policy Framework agreement in February 2015. The objective of this framework is to primarily maintain price stability, while keeping in mind the objective of growth. As per the agreement, RBI would set the policy interest rates and would aim to bring inflation below 6 percent by January 2016 and within a band of 4 percent with (+/-) 2 percent for 2016-17 and all subsequent years. The agreement has brought in an element of certainty for the market with regard to action by the RBI in managing inflation.

BANKING

Permission has been accorded by RBI for setting up Payment Banks and Small Finance Banks to improve financial inclusion. RBI has accorded in principle approval to 11entities to form Payment Banks in August 2015 to 10 entities to form ‘Small Finance Banks’ in September 2015. The minimum paid-up equity capital for Payments Banks shall be Rs. 100 crore, of which the promoter’s contribution would be minimum 40 percent of paid-up equity capital for the first 5 years of commencement of the business.
For recapitalizing the public sector banks, Government has already provided adequate funds in this financial year. An amount of Rs.12,000 crore has already been provided n the Supplementary Demand passed by the Parliament, in addition to Rs.7,940 crores already provided in the budget of FY 2015-16.
Government announced MISSION INDRADHANUSH in August 2015, which attempts to revamp public sector banks and to address problems impacting their performance including governance, accountability and capitalization. This includes: A seven-member Bank Board Bureau, which will oversee the appointments process at public sector banks and provide advisory services. On the basis of best global practices, to separate the post of Chairman and Managing Director by prescribing that in the subsequent vacancies, CEO will get the designation of MD & CEO and there would be another person who would be appointed as non-Executive Chairman of PSBs. Government proposes to make available Rs.70,000 crores out of budgetary allocations for bank capitalization in the next four years. De-stressing public sector banks by strengthening risk control measures and NPA disclosures.No interference from Government and Banks are encouraged to take their decision independently keeping the commercial interest of the organization in mind.
FINANCIAL SECTOR

Approval accorded for setting up of the proposed Rs 20,000-crore National Investment and Infrastructure Fund (NIIF).
Approval given for foreign investment in the Alternative Investment Funds (AIF). Foreign investment will now be permitted in AIFs, which are set up as registered trust, incorporated company or limited liability partnership.
With the objective of having a more predictable regime for investment by the foreign portfolio investors (FPI), RBI has set out the medium term framework (MTF) for FPI limits in debt securities. The limits for FPI investment in debt securities will henceforth be announced/ fixed in rupee terms. The limits for FPI investment in the central government securities will be increased in phases to 5 per cent of the outstanding stock by March 2018. In aggregate terms, this is expected to open up room for additional investment of 1,200 billion in the limit for central government securities by March 2018 over and above the existing limit of 1,535 billion for all government securities (G-sec).Additionally, there will be a separate limit for investment by FPIs in the State Development Loans (SDLs), to be increased in phases to reach 2 per cent of the outstanding stock by March 2018. This would amount to an additional limit of about 500 billion by March 2018.
Forward Market Commission (FMC) was merged with Securities Exchange Board of India (SEBI) on September 28, 2015 with a view to strengthen the regulation of commodity forward markets.
TAX-FREE BONDS

Government of India has allowed the issuance of Tax-free bonds of Rs 40000 crore during the Financial Year 2015-16, by Central Public Sector Enterprise (CPSE) such as National Highways Authority of India (NHAI), Indian Railways Finance Corporation (IRFC), Housing and Urban Development Corporation (HUDCO), Indian Renewable Energy Development Agency (IREDA), Power Finance Corporation Limited (PFC), Rural Electrification Corporation Limited (REC), National Thermal Power Corporation Limited (NTPC).The following categories of investors can subscribe to these Bonds:

Retail Individual Investors (RIIs),Qualified Institutional Buyers (QIBs),Corporates (including statutory corporations), trusts, partnership firms, Limited Liability Partnerships, co-operative banks, regional rural Banks and other legal entities, subject to compliance with their respective Acts, and High Networth Individuals (HNIs).These Bonds are issued for ten (10) or fifteen (15) or twenty (20) years. Further details of terms & conditions of Tax Free Bonds for the FY 2015-16 can be accessible at:

THE 11TH INDIA- SAUDI ARABIA JOINT COMMISSION

The 11th India- Saudi Arabia Joint Commission Meeting (JCM) was held during 26-28th May, 2015 at New Delhi. A wide range of issues, including cooperation in trade and commerce, higher education, health, communication, culture and IT were discussed. Both sides also acknowledged the need to explore investment opportunities in both countries.

ENABLING ENVIRONMENT FOR PUBLIC PRIVATE PARTNERSHIPS (PPPS)

Initiatives by Government of India for promoting PPPs:Government of India (GoI) has been placing strong emphasis on the use of Public Private Partnerships (PPPs) as a strategy for expanding the provision of infrastructure services. Several initiatives have been taken to create an enabling framework for PPPs:
The appraisal mechanism for the PPP projects has been streamlined to ensure speedy appraisal of projects, eliminate delays, adopt international best practices and have uniformity in appraisal mechanism and guidelines.
The Public Private Partnership Appraisal Committee (PPPAC)set up for the appraisal of PPP projects posed by Central Line Ministries and Departments has so far in 2015 approved 13 central projects proposal with TPC of Rs.21817.03crore (USD 3636.17 million).
The Government had created a Viability Gap Funding Schemefor PPP projects. Infrastructure projects are often not commercially viable on account of having substantial sunk investment and low returns. However, they continue to be economically essential. Accordingly, the Viability Gap Funding Scheme has been formulated which provides financial support in the form of grants, one time or deferred, to infrastructure projects undertaken through public private partnerships with a view to make them commercially viable. The Scheme provides total Viability Gap Funding up to twenty percent of the total project. The Government or statutory entity that owns the project may, if it so decides, provides additional grants out of its budget up to further twenty percent of the total project cost. Viability Gap Funding. During the current calendar year i.e. 2015, so far Empowered Institution has granted in-principle approval for 5 projects with a Total project cost of 901.00 crore (USD 150.16 million). Like-wise, EI also granted Final Approval to 9 projects of 1119.66crore (USD 186.61 million)[1] in various sectors with VGF component of Rs. 166.7 crore (USD 27.78 million).
Municipal Borrowing- Government has initiated a pilot project for developing a framework to build capacities of Urban Local Bodies ( ULBs) to raise financing through the Capital Markets for financing infrastructure projects (normally PPPs). The pilot initiative aims to develop a replicable model and related documents and demonstration of the model through a successful pilot transaction for an ULB. Guidelines for issuance of Municipal Bonds in India have been notified
Knowledge Resources: As part of wide ranging efforts for knowledge dissemination on PPPs, DEA has developed tool kits and knowledge products for use of PPP practitioners.
FINANCIAL STABILITY AND DEVELOPMENT COUNCIL (FSDC)

The Financial Stability and Development Council (FSDC) under the Chairmanship of Finance Minister with Heads of Financial Sector regulatory authorities, and Secretaries of concerned Departments and Chief Economic Adviser (CEA) as members, monitors macro prudential supervision of the economy including functioning of large financial conglomerates, and addresses inter-regulatory coordination and financial sector development issues, including issues relating to financial literacy and financial inclusion.

From January 2015 to November, 2015 the Council had held two meetings on May 15, 2015 and 5th November, 2015. In these meetings, important issues concerning financial stability and development inter regulatory coordination and also challenges facing the economy were deliberated. The major issues include external sector vulnerabilities, focus on future financial sector reforms, Corporate Bond Market Development, Prevention & detection of Fraud in banks & building effective deterrence, rising bank NPAs and corporate sector balance sheet stress, and harmonization and convergence of regulations relating to securities market & commodity derivatives market.

The FSDC Sub-committee set-up under the chairmanship of Governor, RBI met two times and deliberated on issues such as Account Aggregation for Financial Assets, global and domestic developments impinging on financial stability, Corporate Bond Market Development, Foreign Account Tax Compliance Act (FATCA), developing a comprehensive financial resolution regime etc. Various Technical Groups have been set-up under FSDC Sub-Committee such as Inter Regulatory Technical Group (IRTG), Technical Group on Financial Inclusion and Financial Literacy (TGFIL), Inter Regulatory Forum on Financial Conglomerates (IRF-FCs) and Early Warning Group (EWG) met during the period to discuss issues in accordance with their mandate.

FSB Peer Review of India

As a part of FSB commitment, India has volunteered to undergo FSB peer review, for the first time, in 2015, the Terms of Reference (TOR) for which has been finalized. The topics being covered under the review are (i) macro prudential policy framework and (ii) regulation and supervision of NBFCs.

ESTABLISHMENT OF NEW DEVELOPMENT BANK (NDB)

New Development Bank has been established by BRICS countries in Shanghai, China. The Bank will mobilize resources for infrastructure and sustainable development projects in BRICS countries, other emerging economies and developing countries. It will complement the existing efforts of multilateral and regional financial institutions. Mr. K.V. Kamath, has taken over as the first President of the Bank. NDB is expected to make its first lending by April, 2016.

ESTABLISHMENT OF BRICS CONTINGENT RESERVE ARRANGEMENT (CRA)

Most of the foundation work for the establishment of CRA by BRICS countries has been completed in 2015. The Governing Council Procedural Rules and Standing Committee Procedural Rules were approved by the Governing Council in its inaugural meeting held on September 4, 2015. The establishment of a self-managed contingent reserve arrangement would have a positive precautionary effect, help BRICS countries forestall short-term liquidity pressures, provide mutual support and further strengthen financial stability. It would also contribute to strengthening the global financial safety net and complement existing international arrangements as an additional line of defense.

GOLD SCHEMES

Introduction of Gold Monetization Schemes

The scheme was announced in Budget 2015-16 with the aim of mobilizing the gold lying idle with households and trusts and deploying it for productive use. The scheme was launched by the Prime Minister of India on 5th November, 2015. The scheme will benefit the manufacturers of gold jewellery who are largely small and medium scale enterprises, by making gold available to them. It will also benefit the common man by allowing him/her to earn interest on their holdings of gold.

Introduction of Sovereign Gold Bond Scheme

The scheme was announced in Budget 2015-16 with the view to provide a new financial instrument of investment to public at large and for reducing the demand for physical gold. The scheme was launched by the Prime Minister of India on 5th November, 2015.In the long-run, this scheme will help in reducing the country’s demand for import of gold, to a large extent. In the first tranche issuance of the bonds which was open from 6th November, 2015 to 30thNovember, 2015 approximately 250 crore worth SGBs were subscribed to.

Introduction of Indian Gold Coin

The scheme was announced in Budget 2015-16 with the view to promote indigenously minted national gold coins. The scheme is aligned with the ‘Make in India’ programme of the Government. The scheme was launched by the Prime Minister of India on 5th November, 2015.

CREATION OF “NATIONAL INVESTMENT AND INFRASTRUCTURE FUND” (“NIIF”)

The Government of India has put investment in infrastructure as one of the core elements of its economic programme. The Union Finance Minister Shri Arun Jaitley made the announcement of setting-up of a National Investment and Infrastructure Fund (NIIF) in his Budget Speech 2015-16 .To maximize economic impact mainly through infrastructure development in commercially viable projects, both greenfield and brownfield, including stalled projects, NIIF has been created with the aim to attract investment from both domestic and international sources. The NIIF will be established as one or more Alternate Investment Funds (AIF) under the Securities and Exchange Board of India (SEBI) Regulations. The initial authorized corpus of NIIF would be Rs. 20,000 crore, which may be raised from time to time. Government’s contribution/share in the corpus will be 49 per cent in each entity set up as an AIF and will neither be increased beyond, nor allowed to fall below 49%. The whole of 49 per cent would be contributed by Government directly.

NIIF would solicit equity participation from strategic anchor partners. The contribution of Government of India to NIIF would enable it to be seen virtually as a sovereign fund and is expected to attract overseas sovereign/quasi-sovereign/multilateral/bilateral investors to co-invest in it. Government’s funds, each year, to each entity set-up as an AIF for executing its functions based on its annual plan, would be provided as required. Cash-rich Central Public Sector Enterprises could contribute to the Fund which would be over and above the Government’s 49%. Similarly, domestic pension and provident funds and National Small Savings Fund may also provide funds to the NIIF.

The NIIF will be established as a Trust/other legal entity from both the point of view of taxation and flexibility. To oversee the activities of the NIIF, it has been decided to constitute a Governing Council with the following composition:-

(i) Finance Minister - Chairman

(ii) Secretary, DEA - Member

(iii) Secretary, Financial Services - Member

(iv) Ms Arundhati Bhattacharya - Member

(v) Shri Hemendra Kothari - Member

(vi) Shri T.V. Mohandas Pai - Member

The mandate of the Governing Council includes the approval of the following matters:

Guidelines for Investment of Trust property/Corpus of NIIF;

Parameters for appointment and performance of investment managers/ advisors;

Any other matter related or incidental thereto.

Agreement on Urban Water, Sanitation and Hygiene (WASH):

An agreement in this regard was signed between Department of Economic Affairs and U.S. Government (through USAID) on 30th September, 2015. Under this agreement, the Govt. of India and USAID will work together to share expertise, best practices, innovation and technologies in support of India’s efforts to strengthen access to clean water, sanitation and hygiene in urban areas.

MoU on Financial Inclusion:

A Memorandum of Understanding to support ‘Financial inclusion’ under Pradhan Mantri Jan Dhan Yojana (PMJDY) was signed between Department of Economic Affairs and U.S. Government (through USAID) on 4th November, 2015. The MoF and USAID are now working towards signing of an agreement in this regard. Under this agreement, the Government of India and USAID will work together to support financial inclusion through expanded payments acceptance networks and other efforts.

PROJECTS INCLUDING NATIONAL INITIATIVES SWACHH BHARAT AND SMART CITIES MISSIONS

A strong pipeline of urban projects fully aligned with the Government of India’s strategy in Power, urban and Solar sector and national initiatives like Swachh Bharat and Smart Cities Missions have been developed. These projects once delivered will significantly strengthen urban service delivery and power sector in project States, such as UP, MP, Jharkhand and Karnataka.
The World Bank would provide financial assistance to Swachh Bharat Mission (Gramin) to the tune of US $ 1500 million. It would help the country in reducing open defecation in rural areas, achieving and sustaining Open defecation Free (ODF) status of villages, and enhancing access to solid and liquid based management. The project has been negotiated with the World Bank, and is likely to be implemented in a few months.
There has been significant focus on Education and Skill Development sector. A robust pipeline for education projects, particularly in the areas of skill development has been developed with National level programme like Skill and Employability Enhancement Programme (SEEP), Nai Manzil programme for minority youth and State level Skill Development programs in Jharkhand and Uttarakhand. Projects for providing Solar infrastructure & installation at rooftop PV has also been posed to World Bank and ADB.

DEPARTMENT OF REVENUE

INDIRECT TAX COLLECTIONS

In October 2015, indirect tax revenue (provisional) collections increased by 36.8% compared with collections made in October 2014. Cumulatively, during April-October 2015, indirect tax collections increased by 35.9% over the collections made during the same period last year, while, the target growth rate for 2015-16 is 18.8%. Overall, in monetary terms, the indirect tax revenue (provisional) collections increased to Rs 3,82,860 crore during April-October 2015 from Rs.2,81,798 crore during April-October 2014. In the month of October 2015 alone, the collections increased to Rs.58, 691 crore from Rs.42, 897 crore in October 2014.Collections on account of Central Excise increased from Rs.87,588 crore in April-October 2014 to Rs.1, 47,685 crore in April-October 2015 and thereby registering an increase of 68.6 %. In case of Service Tax, collections increased from Rs. 89,379 crore in April-October 2014 to Rs. 1, 12,727 crore in April-October 2015 and thereby registering an increase of 26.1 %. Collections on account of Customs increased from Rs. 1, 04,831 crore in April-October 2014 to Rs. 1, 22,448 crore in April-October 2015 and thereby registering an increase of 16.8 %.

These collections continue to suggest a healthy growth in the underlying tax base

DIRECT TAXES

Measures taken through Finance (No. 2) Act, 2014
Introduction of a “Roll Back” provision in the Advanced Pricing Agreement (APA) scheme so that an APA entered into for future transactions is also applicable to international transactions undertaken in previous four years in specified circumstances.
Introduction of range concept for determination of arm’s length price in transfer pricing regulations. Necessary rules have also been framed in this regard.
To allow use of multiple year data for comparability analysis under transfer pricing regulations.
Resident taxpayers enabled to obtain an advance ruling in respect of their income tax liability above a defined threshold.
The scope of the Income-tax Settlement Commission enlarged.
High Level Committee has been set up to interact with trade and industry on a regular basis and ascertain areas where clarity in tax laws is required and based on their recommendation the Central Boards of Direct and Indirect Taxes would issue appropriate clarifications in a time bound manner, wherever considered necessary.
Measures taken through Finance Bill, 2015

Section 9 of the Income-tax Act was amended by Finance Act, 2012 to clarify that if an asset, being a share of, or interest, in a company or an entity derives its value, directly or indirectly, substantially from an asset situated in India, the gain arising from transfer of such share or interest shall be taxable in India. Taking into account the recommendations made by the Expert Committee and the concerns raised by the various stakeholders, the provisions of Section 9 of Income-tax Act has been amended so as to clarify certain terms used in amended provisions to remove any ambiguity thereby to reduce litigation.
The threshold limit for applicability of transfer pricing regulations to specified domestic transactions increased from Rs. 5 crore to Rs. 20 crore.
Safe harbour rules have been provided to cover state power utilities in respect of transaction related to supply, transmission, wheeling of electricity.
Clarification with respect to the long pending demand relating to the period of stay for the purpose of deciding the residential status of seafarers, who are Indian Citizen, going on the international voyage, has been brought.
‘Yoga’ has been included as a specific category of activity in the definition of ‘charitable purpose’ and also to provide relief for activities in the nature of business undertaken by genuine charitable organizations subject to the condition that income from such activity is less than 20% of the total receipts.
Tax neutrality on transfer of units of a scheme of a Mutual Fund under the process of consolidation of schemes of Mutual Funds as per SEBI Regulations, 1996 has been provided.
A mechanism to pre-empt the repetitive appeals by the revenue in the same assessee’s case on the same question of law year after year has been provided.
The levy of Wealth-tax has been abolished with effect from 2016-17 (Assessment Year) for reducing the compliance burden on the tax payers.
Non-adversarial tax regime

The Central Board of Direct Taxes has issued detailed instructions to its field formations to ensure that the dignity of the taxpayers is respected while dealing with them, no frivolous demands are raised and no unnecessary litigation is continued.
Issues relating to taxation of foreign companies, having no permanent establishment in India, have been under consideration of the Government. In this regard, the Government has already clarified the inapplicability of MAT provisions to FIIs/FPIs. The Government has now considered the issue of applicability of MAT under section 115JB of the Income-tax Act to foreign companies having no place of business/permanent establishment in India. After due consideration of the various aspects of the matter, the Government has decided that with effect from 01.04.2001 the provisions of section 115JB shall not be applicable to a foreign company if —
the foreign company is a resident of a country having DTAA with India and such foreign company does not have a permanent establishment within the definition of the term in the relevant DTAA, or
the foreign company is a resident of a country which does not have a DTAA with India and such foreign company is not required to seek registration under section 592 of the Companies Act 1956 or section 380 of the Companies Act 2013.
An appropriate amendment to the Income-tax Act in this regard will be carried out.
INDIRECT TAXES

Reduction in number of levies:Education Cess and Secondary & Higher Education Cess on excisable goods have been subsumed in Basic Excise duty. Similarly, Education Cess and Secondary & Higher Education Cess on excisable services have been subsumed in Service Tax with effect from 01.06.2015.

Registration in two days:Registration in Central Excise as well as in Service Tax to be granted with two working days. Verification of documents and premises to be carried out after the grant of the registration.

Digital Signature and preserving records in electronic form: Legal provisions have been amended to prescribe that a manufacturer may use digital signature on invoices and may preserve records in electronic format. Further, a notification and an instruction has been issued to prescribe procedure, safeguards and conditions for using digital signature on invoice and preserving documents in electronic format. Similarly, Service tax assesses have been allowed to issue digitally signed invoices and maintain other records electronically.

Simplification of procedure for payment of Excise duty and availment of CENVAT credit: The facility of electronic payment of duty has been extended to all Central Excise assessees. Further, for availing of CENVAT credit of service tax paid under reverse charge mechanism, the condition of having made the payment of consideration to the service provider has been done away with.

Time limit for taking CENVAT: Time limit for taking CENVAT credit of duty/tax paid on inputs and input services has been increased from six months to one year.

Transfer/Sale/Re-Export Of Plant/Equipment By Projects Financed by UN etc.:-Plants & Equipment supplied / imported prior to 2008 for use in projects financed by the UN or an international organization could not be transferred / sold out /re-exported from the project site. Amendments to the notification concerned were made which allowed such goods to be transferred / sold / re-exported from the project site subject to certain conditions.

Exemption in respect of wind operated electricity generators:-With a view to reduce litigation and to improve ease of doing business in the important sector of non-conventional energy, CBEC has issued circular on 20.10.2015 to clarify that parts, such as, tower, nacelle, rotor, blades, wind turbine controller etc. of Wind Operated Electricity Generators (WOEG) are eligible for exemption from Central Excise duty.

Point to taxation for reverse charge mechanism:-To bring certainty in the determination of point of taxation in case of reverse charge mechanism, it has been provided that point of taxation will be the payment date or three months from the date of invoice, whichever is earlier.

Ensure certainty and uniformity in valuation of the goods for the purposes of levy of excise duty:

All goods falling under Chapter sub-heading 2101 20, including iced tea, are being notified under section 4A of the Central Excise Act for the purpose of assessment of Central Excise duty with reference to the Retail Sale Price with an abatement of 30%. Such goods are also being included in the Third Schedule to the Central Excise Act, 1944.
Goods, such as lemonade and other beverages, are being notified under section 4A of the Central Excise Act for the purpose of assessment of Central Excise duty with reference to the Retail Sale Price with an abatement of 35%. Such goods are also being included in the Third Schedule to the Central Excise Act, 1944.
Simplification of processes for trade facilitation:

24X7 Customs clearance facility established in 17 airports and 18 seaports.
Single Window Project -Online message exchange: Single Window provides a common platform to EXIM trade to meet requirements of all regulatory agencies (such as, Animal Quarantine, Plant Quarantine, Drug Controller, Textile Committee etc) through message exchange. Single Window Scheme, established since1.04.15, helps in ease of doing business, reducing transaction costs, enhancing transparency, reducing duplicity and cost of compliance and optimal utilisation of resources, through an electronic online message exchange facility between Customs and the Food Safety and Standards Authority of India (FSSAI) and the Department of Plant Protection, Quarantine and Storage (PQIS) at JNPT (NhavaSheva), ICD, Tughlakabad and ICD, Patparganj.
To facilitate trade and to simplify procedures, number of mandatory documents has been reduced to three, except for import and export of special nature under preferential agreements etc.
Special Notified Zone for trading of rough diamonds: Consequent to Hon’ble Prime Minister’s announcement to make India into a hub for trading of rough diamonds, a ‘Special Notified Zone’ was operationalised at Bharat Diamond Bourse at Mumbai. The procedure envisages major diamond mining companies bringing in rough diamonds for display and/or auctions to be conducted within the customs area and re-exporting the unsold consignments.
Adoption of Digital Signature: To dispense with requirement of physical submission of documents and encourage paper-less working, with effect from 01.04.2015, on an optional basis, the facility of 'Digital Signature' has been introduced for importers, exporters, airlines, shipping lines etc. However, for importers registered under the 'Accredited Client Programme' (ACP), digital signatures are mandatory with effect from 01.05.2015. Introduction of digital signature will maintain data integrity and reduce cost of compliance.
Setting Up of Customs Clearance Facilitation Committee (CCFC): To ensure expeditious clearance of EXIM goods, a high level administrative Committee, i.e., 'Customs Clearance Facilitation Committee' (CCFC) has been put in place at every major Customs seaport and airport under the chairmanship of Chief Commissioner of Customs/Commissioner of Customs and include senior most functionaries of other organisations present at aircargo for identifying and resolving bottlenecks, if any, in the clearance procedure of imported and export goods; and resolving grievances of members of the trade and industry in regard to clearance process of imported and export goods. Similarly, at Central level, a 'Central Customs Clearance Facilitation Committee' has also been set up under the chairmanship of Revenue Secretary to address the issue relating to customs clearance and infrastructure impacting clearance of goods.
Advance Passenger Information System (APIS) :-The Advance Passenger Information System (APIS) application was rolled out at 03 more international airport namely Calicut, Trivandrum and Trichy during the month of June, 2015. With this access to the application has now been made available at 12 international airports in the country.
Precious Cargo Customs Clearance Centre (PCCCC):- This module was made operational and few selected exporters have started using this module. This enabled filing of approximately 200 electronics Shipping Bills per day worth to the tune of Rs. 150 crore per day of precious cargo.
Revised of limit for prosecution:-For evasion of tax under the Customs Act by wrongful declaration of exemption or duty drawback, the limits have been revised to Rs. 1 crore from Rs. 10 lakh. Similar revisions regarding value of goods have been carried out for appraisal of tax during import or export. However, there shall be no lower limit for arrest and prosecution in cases of smuggling of fake Indian currency notes, arms, ammunition and explosives, and endangered species.
Cenvat Credit Rules, 2004 have been amended so as to allow credit of Education Cess and Secondary and Higher Education Cess (subsumed under Service tax with effect from 1st June, 2015) paid on inputs/input services and capital goods to be utilized for payment of service tax in specified circumstances.
RELIEF GIVEN TO TAXPAYERS

Measures taken through Finance (No. 2) Act, 2014

Personal Income-tax exemption limit raised by Rs 50,000/- that is, from Rs 2 lakh to Rs 2.5 lakh in the case of individual taxpayers, below the age of 60 years. Exemption limit raised from Rs 2.5 lakh to Rs 3 lakh in the case of senior citizens i.e. individuals of the age of 60 years but below the age of 80 years.
Investment limit under section 80C of the Income-tax Act raised from Rs 1 lakh to Rs 1.5 lakh. This would encourage domestic investment in long term savings.
Deduction limit on account of interest on loan in respect of self-occupied house property raised from Rs.1.5 lakh to Rs.2 lakh. This would reduce the burden for middle and lower middle class for whom housing continues to be an area of concern due to high cost of financing.
Measures taken through Finance Act, 2015

With a view to encourage savings and to promote health care among individual taxpayers, a number of measures have been taken by way of incentives under the Income-tax Act. Some of these are enumerated below:-

Investment in Sukanya Samriddhi Scheme will be eligible for deduction u/s 80C and any payment from the scheme shall not be liable to tax.
The limit of deduction u/s 80D of the Income-tax Act has been increased from Rs. 15,000/- to Rs. 25,000/- on health insurance premium (in case of senior citizen from Rs. 20,000/- to Rs. 30,000/-). Deduction of expenditure of similar amount in case of a very senior citizen not eligible to take health insurance has been allowed.
The limit of deduction in case of very senior citizens u/s 80DDB of the Income-tax Act on expenditure on account of specified diseases has been increased from Rs. 60,000/- to Rs. 80,000/-. Further, rule 11DD of the Income-tax Rules have been amended to relax the condition of obtaining the certificate for claiming expenditure under section 80DDB in respect of specified ailments from a specialist working in a Government hospital. As per amended Rule 11DD, the prescription can be issued by any specialist mentioned in the amended Rule. Henceforth, it will not be mandatory to obtain a certificate from a specialist working in a Government hospital.
The limit of deduction u/s 80DD of the Income-tax Act in respect of maintenance, including medical treatment of a dependant who is a person with disability, has been increased from Rs. 50,000/- to Rs. 75,000/-. The limit of deduction has been increased from Rs. 1 lakh to Rs. 1.25 lakh in case of severe disability.
The limit of deduction u/s 80U of the Income-tax Act in case of a person with disability, has been increased from Rs. 50,000/- to Rs. 75,000/-. The limit of deduction has been increased from Rs. 1 lakh to Rs. 1.25 lakh in case of severe disability.
The limit of deduction u/s 80CCC of the Income-tax Act on account of contribution to a pension fund of LIC or IRDA approved insurer has been increased from Rs. 1 lakh to Rs. 1.5 lakh.
The limit of deduction u/s 80CCD of the Income-tax Act on account of contribution by the employee to National Pension Scheme (NPS) has been increased from Rs. 1 lakh to Rs. 1.50 lakh. A deduction of Rs. 50,000/- over and above the limit of Rs. 1.50 lakh to any individual who makes contribution to NPS has been allowed.
Sub-clause (ii) of clause (14) of section 10 of the Income-tax Act, 1961 provides that any allowance granted to the assessee either to meet his personal expenses at the place where the duties of his office or employment of profit are ordinarily performed by him or at the place where he ordinarily resides, or to compensate him for the increased cost of living, as may be prescribed and to the extent as may be prescribed shall not be included in the total income of the assessee. Rule 2BB of the Income-tax Rules, 1962 prescribes such allowances. Rule 2BB was amended vide Notification No. S.O.1002 (E) dated 13th April, 2015 and transport allowance exemption granted to an employee to meet his expenditure for the purpose of commuting between the place of his residence and the place of his duty wasincreased from Rs. 800/- per month to Rs.1600/- per month and transport allowance exemption granted to an employee who is blind or orthopedically handicapped with disability of lower extremities, to meet his expenditure for the purpose of commuting between the place of his residence and the place of his duty was increased from Rs. 1600/- per month to Rs.3200/- per month. The benefit of exemption up to 3200/- per month in respect of transport allowance has also been extended to an employee who is deaf and dumb to meet his expenditure for the purpose of commuting between the place of his residence and the place of his duty.
The facility of filing self-declaration of non-deduction of tax by the recipients of taxable maturity proceeds of life insurance policy has been provided.
Under the existing provisions of the Income-tax Act, an individual buying an immovable property from a resident is required to deduct tax but is not required to obtain TAN for depositing the tax so deducted. The same facility has been extended to an individual or HUF purchasing an immovable property from a non-resident.
MEASURES TAKEN FOR THE INTERESTS OF DOMESTIC FARMERS

Basic customs duty was increased on sugar from 15% to 25% which was later increased to 40%.
Excise duty was exempted on ethanol produced from molasses generated from cane crushed in the sugar season 2015-16 i.e. 1st October, 2015 onwards, for supply to the public sector oil marketing companies, namely, Indian Oil Corporation Ltd., Hindustan Petroleum Corporation Ltd. or Bharat Petroleum Corporation Ltd., for the purposes of blending with petrol. Also, input tax credit was allowed to manufacturers of such exempted ethanol.
Basic customs duty was increased on crude edible oils (of vegetable origin) from 7.5% to 12.5% and refined edible oils (of vegetable origin) from 15% to 20%.
Basic customs duty was increased on ghee, butter and butter oil from 30% to 40% for a period upto and inclusive of the 31st day of March, 2016.
Basic customs duty of 10% was imposed on wheat which was later increased to 25% for a period up to 31.03.2016.
The Customs duty concession for import of white butter, butter oil and anhydrous milk fat(AMF) upto TRQ of 15,000 MT at Nil import duty was withdrawn.
MEASURES TO IMPROVE THE QUALITY OF LIFE AND PUBLIC HEALTH THROUGH SWACHH BHARAT INITIATIVES

Clean Energy Cess levied on coal, lignite and peat was increased from Rs.100 per tonne to Rs.200 per tonne.
Concessional customs and excise duty rates on specified parts of Electrically Operated Vehicles and Hybrid Vehicles, available upto 31.03.2015, was extended upto 31.03.2016.
Excise duty on sacks and bags of polymers of ethylene other than for industrial use was increased from 12% to 15%.
An enabling provision was made to empower the Central Government to impose a Swachh Bharat Cess on all or certain taxable services at a rate of 2% on the value of such taxable services. The provision has been implemented with effect from 15th November, 2015 and Swachh Bharat Cess at the rate of 0.5% has been made applicable on all services except those which are exemptfrom Service Tax or are in the negative list.The proceeds from this Cess would be utilized for Swachh Bharat initiatives.
Service provided by a Common Effluent Treatment Plant operator for treatment of effluent was exempted.
Measures to promote Public Health

Excise duty on cigarettes was increased by 25% for cigarettes of length not exceeding 65 mm and by 15% for cigarettes of other lengths. Similar increases have been made on cigars, cheroots and cigarillos. Also, maximum speed of packing machine was specified as a factor relevant to production for determining excise duty payable under the Compounded Levy Scheme presently applicable to pan masala, gutkha and chewing tobacco. Accordingly, deemed production and duty payable per machine per month are being notified with reference to the speed range in which the maximum speed of a packing machine falls.
Life-saving drugs and medicines imported by an individual for personal use are fully exempted from basis customs duty, additional duty of customs, validity of certificate required for this purpose has been extended for one year for regular users of such drugs.
Miscellaneous Measures

In order to give impetus to banking in rural areas under thePradhanMantri Jan DhanYojana(PMJDY) Scheme,specified services provided by Business Facilitators/Business Correspondents with respect to a Basic Saving Bank Deposit (BSBD) Account covered by PradhanMantri Jan DhanYojana in a banking company’s rural area branches has been exempted from Service Tax.
In keeping with the declaration of 21 June as the International Day of Yoga by UN General Assembly, charitable activities relating to advancement of Yoga have been exempted from Service Tax.
Exemption of Services provided to Government etc.:-To avoid disputes, exemption in respect of services provided to Government or local authority or governmental authority, by way of water supply, public health, sanitation conservancy, solid waste management or slum improvement and up gradation has been made more specific.
Rationalization work contracts:- Categories of works contracts have been rationalized to reduce litigation and improve compliance with a uniform service tax of 14% on 70% of the gross value of service.
Innovative Programmes Launched :The initiatives outlines in the preceding paragraphs are aimed at facilitating trade and achieving ease of doing business. Improvement of the facilitation measures is a continuous process, launched to help the trade to obtain optimum services of the Department with minimal human interface, without compromising the interest of revenue.
MEASURES TAKEN FOR PROMOTION OF GROWTH, INVESTMENT, MANUFACTURING AND JOB CREATION:

Investment allowance at the rate of 15 percent to a manufacturing company that invests more than Rs 25 crore in any year in new plant and machinery. The benefit to be available for three years i.e. for investments upto 31.03.2017, so as to incentivize smaller entrepreneurs in manufacturing sector.
10 year tax holiday extended to the undertakings which begin generation, distribution and transmission of power by 31.03.2017. As supply of power continues to be a major area of concern for the country, stability in the policy will help the investors to plan their investments better.
Conducive tax regime has been provided for Infrastructure Investment Trusts and Real Estate Investment Trusts to be set up in accordance with regulations of the Securities and Exchange Board of India. This would facilitate growth in Infrastructure and construction sectors which have a significant role in the revival of the economy and generation of jobs.
Accelerated depreciation on wind power projects has been decided to be restored.
Income arising to foreign portfolio investors from transaction in securities to be treated as capital gains. This would removeuncertainty in taxation on account of characterization of their income and would encourage flow of funds from FIIs.
Concessional rate of 15 percent on foreign dividends has been allowed without any sunset date.
The eligible date of borrowing in foreign currency extended from 30.06.2015 to 30.06.2017 for a concessional tax rate of 5 percent on interest payments. Tax incentive extended to all types of bonds instead of only infrastructure bonds.
Measures proposed through Finance Bill, 2015

With a view to streamline the taxation regime of Alternative Investment Funds (AIFs), pass through status to all the sub-categories of category-I and also to category-II AIFs governed by the regulations of Securities and Exchange Board of India (SEBI) has been provided.
With a view to facilitate relocation of fund managers of offshore funds in India, the permanent establishment (PE) norms have been modified.
Additional investment allowance (@15%) and additional depreciation to new manufacturing units set-up during the period 01.04.2015 to 31.03.2020 in notified areas of Andhra Pradesh, Bihar, West Bengal and Telangana has been provided.
The period of applicability of reduced rate of tax at 5% in respect of income of foreign investors (FII and QFI) from corporate bonds and government securities has been extended from 31.5.2015 to 30.06.2017.
With a view to obviate the problems faced by small companies and to facilitate the inflow of technology, the rate of tax on royalty and fees for technical services has been reduced from 25% to 10%.
With a view to facilitate generation of employment, the tax benefit in the form of 30 % deduction of additional wages for 3 years has been extended to every ‘person’ (rather than to only a company) deriving profits from manufacture of goods in a factory and paying wages to new regular workmen in excess of 50 workmen employed during the year.
Reduction in duty on certain inputs to address the problem of duty inversion:

‘Metal parts’ for use in the manufacture of electrical insulators.
Ethylene-Propylene-non-conjugated-Diene Rubber (EPDM), Water blocking tape
and Mica glass tape for use in the manufacture of insulated wires and cables.
Magnetron upto 1 KW for use in the manufacture of microwave ovens.
C- Block for Compressor, Over Load Protector (OLP) & Positive thermal co-efficient and Crank Shaft for compressor, for use in the manufacture of Refrigerator compressors.
Zeolite, ceria zirconia compounds and cerium compounds for use in the manufacture of washcoats, which are further used in manufacture of catalytic converters.
Anthraquinone for manufacture of hydrogen peroxide.
Sulphuric acid for use in the manufacture of fertilizers.
Parts and components of Digital Still Image Video Camera capable of recording video with minimum resolution of 800x600 pixels, at minimum 23 frames per second, for at least 30 minutes in a single sequence, using the maximum storage (including the expanded) capacity.
Reduction in Basic Customs Duty to reduce the cost of raw materials required for further manufacture and thereby induce domestic venue addition:

Ethylene dichloride (EDC), vinyl chloride monomer (VCM) and styrene monomer (SM) from 2.5% to 2%.
Isoprene and Liquefied butanes from 5% to 2.5%.
Butyl acrylate from 7.5% to 5%.
Ulexite ore from 2.5% to Nil.
Antimony metal, antimony waste and scrap from 5% to 2.5%.
Specified components for use in the manufacture of specified CNC lathe machines and machining centres from 7.5% to 2.5%.
Certain specified inputs for use in the manufacture of flexible medical video endoscopes from 5% to 2.5%.
HDPE for use in the manufacture of telecommunication grade optical fibre cables from 7.5% to Nil.
Black Light Unit Module for use in the manufacture of LCD/LED TV panels from 10% to Nil.
Organic LED (OLED) TV panels from 10% to Nil.
CVD and SAD are being fully exempted on specified raw materials [battery, titanium, palladium wire, eutectic wire, silicone resins and rubbers, solder paste, reed switch, diodes, transistors, capacitors, controllers, coils (steel), tubing (silicone)] for use in the manufacture of pacemakers.
Evacuated Tubes with three layers of solar selective coating for use in the manufacture of solar water heater and system to Nil.
Active Energy Controller (AEC) for use in the manufacture of Renewable Power System (RPS) Inverters to 5%, subject to certification by MNRE.
Parts, components and accessories (falling under any Chapter) for use in the manufacture of tablet computers and their sub-parts for use in manufacture of parts, components and accessories are being fully exempted from BCD, CVD and SAD.
Reduction in SAD to address the problem of CENVAT credit accumulation:

All goods except populated PCBs, falling under any Chapter of the Customs Tariff, for use in manufacture of ITA bound goods from 4% to Nil.
Naphtha, ethylene dichloride (EDC), vinyl chloride monomer (VCM) and styrene monomer (SM) for manufacture of excisable goods from 4% to 2%.
Metal scrap of iron & steel, copper, brass and aluminium from 4% to 2%.
Inputs for use in the manufacture of LED drivers and MCPCB for LED lights, fixtures and LED lamps from 4% to Nil.
Miscellaneous:

Export duty on upgraded ilmenite is being reduced from 5% to 2.5%.
Excise duty structure for mobiles handsets including cellular phones is being changed from 1% without CENVAT credit or 6% with CENVAT credit to 1% without CENVAT credit or 12.5% with CENVAT credit.
Excise duty structure of 2% without CENVAT credit or 12.5% with CENVAT credit is being prescribed for tablet computers.
Basic Customs Duty on Digital Still Image Video Camera capable of recording video with minimum resolution of 800x600 pixels, at minimum 23 frames per second, for at least 30 minutes in a single sequence, using the maximum storage (including the expanded) capacity is being reduced to Nil. Basic Customs Duty on parts and components of these cameras is also being reduced from 5% to Nil.
Concessional customs duty structure of Nil Basic Customs Duty, 6% CVD and Nil SAD on specified parts of electrically operated vehicles and hybrid vehicles, presently available upto 31.03.2015, is being extended upto 31.03.2016.
Excise duty structure on certain goods is being restructured as follows:

Wafers for use in the manufacture of integrated circuit (IC) modules for smart cards from 12% to 6%.
Inputs for use in the manufacture of LED drivers and MCPCB for LED lights, fixtures and LED lamps from 12% to 6%.
Mobiles handsets, including cellular phones from 1% without CENVAT credit or 6% with CENVAT credit to 1% without CENVAT credit or 12.5% with CENVAT credit. NCCD of 1% on mobile handsets including cellular phones remains unchanged.
Tablet computers from 12% to 2% without CENVAT credit or 12.5% with CENVAT credit.
Specified raw materials [battery, titanium, palladium wire, eutectic wire, silicone resins and rubbers, solder paste, reed switch, diodes, transistors, capacitors, controllers, coils (steel), tubing (silicone)] for use in the manufacture of pacemakers to Nil.
Pig iron SG grade and Ferro-silicon-magnesium for use in the manufacture of cast components of wind operated electricity generators to Nil, subject to certification by MNRE.
Solar water heater and system from 12% to Nil without CENVAT credit or 12.5% with CENVAT credit.
Round copper wire and tin alloys for use in the manufacture of Solar PV ribbon for manufacture of solar PV cells to Nil subject to certification by Department of Electronics and Information Technology (DeitY).
Miscellaneous:

Excise duty on leather footwear (footwear with uppers made of leather of heading 4107 or 4112 to 4114) of Retail Sale Price of more than ` 1000 per pair from 12% to 6%.
Excise duty levied on the value of duty paid on rails for manufacture of railway or tramway track construction material is being exempted retrospectively for the period from 17.03.2012 to 02.02.2014, if no CENVAT credit of duty paid on such rails is availed.
Reduction in abatement limit:-Uniform abatement of 70% from gross value prescribed for transport by rail, road and vessel. Service Tax in all these cases will now be charged on 30% of the gross value of such service subject to non-availment of Cenvat Credit on inputs, capital goods and input services.
In order to allocate additional resources to infrastructure, the effective rates of Additional Duty of Customs Excise levied on Petrol and High Speed Diesel Oil [commonly known as Road Cess] have been increased from Rs.2 per litre to Rs.6 per litre.
MEASURES TAKEN FOR SIMPLIFICATION OF PROCEDURES AND BETTER TAXPAYER SERVICES:

Issue of PAN: PAN (Permanent Account Number) is a 10 digit alpha-numeric number allotted by the Income Tax Department to taxpayers and to the persons who apply for it under the Income Tax Act, 1961. PAN number enables the department to link all transactions of the “person” with the department. These transactions include tax payments, TDS/TCS credits, returns of income, specified transactions, correspondence, and so on. PAN, thus, acts as an identifier for the “person” with the Income tax department. In fact, PAN has now taken on the role of “identifier” beyond the Income tax department as it is now required for various activities like opening of bank account, opening of demat accounts, obtaining registration for Service Tax, Sales Tax / VAT, Excise registration etc.

PAN database has shown steady growth in tune with economic progress. The progressive number of PANs allotted till 31stMarch, 2015 is 22,32,47,190. During the current year (up to 31st March 2015) 1,86,04,948PANs have been allotted.

E-Biz programme is a mission mode project of Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry to facilitate the investors by providing SINGLE WINDOW clearance like licensing, environment & land clearances, approvals from various ministries and departments for start-up businesses. Level -1 integration of PAN & TAN services with E-biz platform has been completed.

E-filing of Income Tax Returns: The e-filing project is an eminent e-governance and e-delivery measure taken by the Income Tax Department for providing web- enabled services to the taxpayers. The project aims at enabling e-filing of Income tax returns, audit reports and other Forms prescribed under the Income Tax over Internet directly by taxpayers and through e-return intermediaries (ERIs).The project also provides other web- enabled services to facilitate public private participation in the filing of returns.

In Financial Year, 2014-15, 341.73 Lakh returns were received through e-filing, representing a growth of around 15.14% as compared to the last year. In F.Y.2015-16, 2.06 Crore returns have been received on the e-filing portal till 07.09.2015 registering an increase of 26.12% over the corresponding period of the preceding financial year. As on 07.09.2015 Central Processing Centre Processed 45.18 Lakh Returns Relating to the A.Y. 2015-16 and issued refunds to 22.14 lakh taxpayers for the A.Y.2015-16. More than 90% of the returns filed in FY 2015-16 have been filed electronically.

Centralized Processing Center (CPC) for Income Tax Returns: This project enables Centralized Processing of all e-filed Income Tax returns, and all paper returns also of Karnataka and Goa, at Bengaluru. CPC has processed in excess of 9.25 crore E- Returns till 31st March 2015 against the projected 2.7 crore e-filed returns that CPC was to process in the initial 5 years. CPC has processed 3.07 crore returns of income during Financial Year 2014-15 with a growth rate of 26%, over 2.44 crores processed during Financial Year 2013-14. CPC has achieved a peak processing capacity of 3.78 lakh returns per day.

Refund Banker: The Refund Banker project has enabled system driven process for determination, generation, issue, dispatch and credit of refunds. This project has made the process of delivery of refund completely automated, speedy and transparent. The refund is directly credited to the bank account of the taxpayer through ECS as soon as it is determined.

A web based status tracking facility in collaboration with India Post and National Securities Depository Ltd. (NSDL) is available under the Scheme. Call centre facility with toll free number 1800-42-59-760 is also available for tracking status of refunds issued through the scheme.There has been a steady increase in number and percentage of refunds issued through the scheme. During Financial Year, 2014- 2015, the percentage of refunds issued through the scheme was 99.84% of the total number of refunds issued all over India.

E-Payment of taxes: The E-Payment project has enabled online payment of all direct taxes using net banking facility. The scheme provides for ease of payment anytime, anywhere. With effect from 1 April, 2008, e-payment of direct taxes was made mandatory for all Companies and auditable cases covered by section 44AB of I. T. Act. E-payment facility has been now extended to 30 agency banks collecting direct taxes. SBI has started the e-payment facility online through its debit cards as well. Facility of payment of direct taxes has been launched through ATMs of certain banks.In Financial Year 2014-15 the count and amount of e-tax payments was 64.20 % and 87.00% respectively.

Project Insight:The Income Tax Department has initiated ‘Project Insight’ on Data Warehouse and Business Intelligence (DW&BI) platform to strengthen the non-intrusive information driven approach for improving compliance and effective utilization of information in all areas of tax administration.

The Project will integrate enterprise data warehouse, data mining, web mining, predictive modelling, data exchange, master data management, centralized processing, compliance risk management and case analysis capabilities. A Compliance Management Centralized Processing Centre (CMCPC) will also be set up under the Project to handle resource intensive repetitive tasks and ensure optimum resource mobilizationwithin ITD for high skill work. The Project is also envisaged to meet the requirements relating to Foreign Account Tax Compliance Act (FATCA), Common Reporting Standard (CRS) and Automatic Exchange of Information.The project is expected to be rolled out in 2016.

E-Sahyog:

“E-Sahyaog” pilot project was launched as an online mechanism to resolve mismatches in income-tax return through end to end e-service obviating the need to visit income-tax office by the taxpayer.Under this initiative the Department will provide an end to end e-service using SMS, e-mails to inform the taxpayers of the mismatch. The taxpayer will simply need to visit the e-filing portal and log in with their user-ID and password to view mismatch related information and submit online response on the issue. The responses submitted online by the taxpayers will be processed and if the response and other information are found satisfactory as per automated closure rules, the issue will be closed. The taxpayer can check the updated status by logging in to the e-filing portal.

E- verification of return of income: To facilitate the taxpayers and to provide end-to-end e-enabled services, a system of electronic verification of return of income has been launched by CBDT. A taxpayer can now verify his electronically-filed return through internet banking portal or through Aaadhar-based authentication process. For the small taxpayers, an Electronic Verification Code (EVC) can also be generated through the e-filing website of the Income Tax Department. Persons using this facility will not be required to submit paper-based ITR-V verification form to CPC Bengaluru. About 33 lakh e-returns have been verified through EVC till 07.09.2015.

Constitution of Committee to recommend measures for simplification of the Income Tax Act, 1961:

A committee under Justice (Retd.) R.V. Easwar has been constituted to recommend measures for simplification of the Income-tax Act, 1961 with a view to reduce litigation and promote ease of doing business.

The Government has accepted the report of Justice A.P. Shah Committee that Minimum Alternate Tax (MAT) is not applicable to Foreign Portfolio Investors (FPIs). Further it has also been decided that a foreign company not having a permanent establishment in India shall not be liable to MAT with effect from 01.04.2001. Accordingly, Instruction No.9/2015 dated 02.09.2015 has been issued to the field units of the Income Tax Department to keep in abeyance the pending assessment proceedings in such cases.

STEPS TAKEN TO CURB BLACK MONEY:

Constitution of Special Investigation Team(SIT)
Constitution of a Special Investigation Team (SIT), in May 2014, with two former judges of the Hon'ble Supreme Court as Chairman and Vice-Chairman, inter alia, to deal with issues relating to black money stashed abroad;
Introduction of Undisclosed Foreign Income and Assets(Imposition of Tax) Bill, 2015
In order to fulfill the commitment made by the Government to the people of India through the Parliament, the Black Money (Undisclosed Foreign Income and Assets (Imposition of Tax)) Act, 2015 has been enacted. Relevant rules [Black Money(Undisclosed Foreign Income and Assets) and Imposition of Tax Rules, 2015] under the said Act have been framed. Explanatory circular and Several circulars in the form of Frequently Asked Questions(FAQs) have been issued to clarify provisions relating to one time compliance window under the Act. The salient features of the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015 are as under:-
Rate of tax and penalty - Undisclosed foreign income or assets shall be taxed at the flat rate of 30 percent without any exemption, deduction or set off of any carried forward losses. The penalty for non-disclosure of income or an asset located outside India will be equal to three times the amount of tax payable thereon, i.e., 90 percent of the undisclosed income or the value of the undisclosed asset, in addition to tax payable at 30%.
The act also provides for stringent penalties and enhanced punishment for violation of various provisions. Prevention of Money Laundering Act(PMLA), 2002 has been amended to include offence of tax evasion under this Act, as a scheduled offence under PMLA.
Failure to furnish return in respect of foreign income or assets shall attract a penalty of Rs.10 lakh. This will also be punishable with rigorous imprisonment for a term of six months to seven years. The same amount of penalty is prescribed for cases where although the assessee has filed a return of income, but he has not disclosed the foreign income and asset or has furnished inaccurate particulars of the same.
The punishment for willful attempt to evade tax in relation to a foreign income or an asset located outside India will be rigorous imprisonment from three years to ten years. In addition, it will also entail a fine.
Abetment or inducement of another person to make a false return or a false account or statement or declaration under the Act will be punishable with rigorous imprisonment from six months to seven years. This provision will also apply to banks and financial institutions aiding in concealment of foreign income or assets of resident Indians or falsification of documents.
To protect persons holding foreign accounts with minor balances which may not have been reported out of oversight or ignorance, it has been provided that failure to report bank accounts with a maximum balance of upto Rs.5 lakh at any time during the year will not entail penalty or prosecution.
One time compliance opportunity - The Black Money Act also provided a one-time compliance opportunity for a limited period (from 1st July, 2015 to 30th September, 2015) to persons who have any undisclosed foreign assets which have hitherto not been disclosed for the purposes of Income-tax. Such persons were allowed to file a declaration before the specified tax authority. The declarants are required to pay tax at the rate of 30 percent and an equal amount by way of penalty. Such persons will not be prosecuted under the stringent provisions of the new Act.Rs. 4147 crore of Undisclosed foreign assets have been declared vide 638 declarations under the one time compliance opportunity.
Benami Transactions(Prohibition) Bill

As regards curbing domestic black money, a new and more comprehensive, the Benami Transactions (Prohibition) Amendment Bill, 2015 has been introduced in LokSabha to amend the Benami Transactions (Prohibition) Act(BTPA) 1988. The new amended law will enable confiscation of Benami property and provide for prosecution, thus blocking a major avenue for generation and holding of black money in the form of Benami property, especially in real estate.
Prevention of Money Laundering Act(PMLA):

The offence of concealment of income or evasion of tax in relation to a foreign asset will be made a predicate offence under the Prevention of Money Laundering Act, 2002 (PMLA). This provision would enable the enforcement agencies to attach and confiscate unaccounted assets held abroad and launch prosecution against persons including in laundering of black money.

Amendment of PMLA:

The definition of ‘proceeds of crime’ under PMLA is being amended to enable attachment and confiscation of equivalent asset in India where the asset located abroad cannot be forfeited.
Inclusion of predicate offences: - Undisclosed Foreign Income and Assets(Imposition of Tax) Bill, 2015 also proposes to amend Prevention of Money Laundering Act (PMLA), 2002 to include offence of tax evasion under the proposed legislation as a scheduled offence under PMLA.
Section 132 of the Customs Act, 1962 has been included in Finance Bill, 2015 making false declaration as predicate offence.
Thus, in keeping with the commitment of the government for focussed action on black money front, an unprecedented and multi-pronged attack has been launched to root out the menace of black money. The Government is confident that this new law will act as a strong deterrent and curb the menace of black money stashed abroad by Indians.
FEMA

Necessary amendments has been proposed in the FEMA by inserting Section 37 (1), (2) & (3) vide clause 168 of the Finance Bill, 2015 incorporating special provisions relating to assets held outside India in contravention of section 4. The Foreign Exchange Management Act, 1999 (FEMA) is also being amended to the effect that if any foreign exchange, foreign security or any immovable property situated outside India is held in contravention of the provisions of this Act, then action may be taken for seizure and eventual confiscation of assets of equivalent value situated in India. These contraventions are also being made liable for levy of penalty and persecution with punishment of imprisonment upto five years.

Automatic Exchange of Information(AEOI):

Joining the global efforts to combat tax evasion, including supporting implementation of a uniform global standard on Automatic Exchange of Information on a fully reciprocal basis,facilitating exchange of information regarding persons hiding money in offshore centres.

Legislative measures, wherever required, including amendment to section 285BA of the Income-tax Act, 1961 vide Finance (No.2) Act, 2014 facilitating the Automatic Exchange of Information.

Limiting Cash transaction:

A few other measures are also proposed in the Budget for curbing black money within the country. The Finance Bill includes a proposal to amend the Income Tax Act to prohibit acceptance or payment of an advance of Rs. 20,000 or more in cash for purchase of immovable property. Quoting of PAN is being made mandatory for any purchase or sale exceeding the value of Rs. 1 lakh. The third party reporting entities would be required to furnish information about foreign currency sales and cross border transactions. Provision is also being made to tackle splitting of reportable transactions. To improve enforcement, CBDT and CBEC will leverage technology and have access to information in each other’s database.

DEPARTMENT OF FINANCIAL SERVICES (DFS)

Department of Financial Services (DFS), Ministry of Finance is a nodal department as far as banking and insurance sector in the country is concerned. In the current fiscal, Department of Financial Services has taken various initiatives and launched different Financial Inclusion & Social Security related Schemes in its pursuit of achieving the goal of Universal Financial Inclusion.

The major achievements of the Department during the Current Fiscal are as follows :

PRADHAN MANTRI JAN DHAN YOJANA (PMJDY) :"Mera Khata - Bhagya Vidhaata"

The biggest financial inclusion initiative in the world was announced by the Prime Minister on 15th August 2014 and Mega launch was done by him on 28th August 2014 across the country. This National Mission on Financial Inclusion has an ambitious objective of covering all households in the country with banking facilities and having a bank account for each household. It has been emphasized by the Prime Minister that this is important for including people left-out into the mainstream of the financial system.

The Government started the PMJDY to provide 'universal access to banking facilities' starting with "Basic Saving Bank Account" with an overdraft upto Rs.5000 subject to satisfactory operation in the account for six months and RuPay Debit card with inbuilt accident insurance cover of Rs. 1 lakh .

Achievements

As on 11th November 2015, Banks have opened 19.21 Crore accounts under PMJDY with deposit of more than 26819 crores. Rupay cards issued to 16.51 Cr. customers.
Two lakh accounts are opened per day
As on13th November 2015 more than 45.98 lakhs accounts have been offered Overdraft facility. Out of these overdraft facility has been availed by 8.86 lacs account holders amounting to Rs. 124.95Lacs.
1336 Claims of Life cover of Rs.30000 and 333 Claims of accident insurance cover of Rs. 1 lakh have been paid till 13th November 2015.
Zero balance accounts in PMJDY have declined from 76% to 36.50 % from September 2014 to 11th November 2015.
For providing Banking access in the country, out of total159920 Sub-Service Areas (SSAs), 126003 SSAs have been covered through fixed location Bank Mitrs & 33100 SSAs have been covered through branches as on 13th November 2015. 817SSAs are uncovered due to connectivity issue.
To ensure universal banking access more than 1.26 lakh Bank Mitrs have been deployed with on- line devices capable of e-KYC based account opening and significant number with interoperable payment facility.
Jan Dhan Yojana features in Guinness Book of World Records:Guinness World Records recognised the achievements made under PMJDY for opening 18,096,130 accounts by Banks in a week (from 23 to 29 August, 2014) as a part of Financial Inclusion Campaign.
Payment of wages under MNREGA: More than Rs 4273 crore have been routed through these accounts till June 2015 towards payment of wages under MNREGA. (Source: MNREGA, Ministry of Rural Development).
DBTL transactions: Transfer of subsidy of more than Rs 17446crore through Jan Dhan accounts from November 2014 to 31st July 2015.
PRADHAN MANTRI MUDRA YOJANA (PMMY) : “ FUND THE UNFUNDED”

In the Union Budget 2015-16, the Finance Minister proposed to create a Micro Units Development Refinance Agency (MUDRA) Bank.Pradhan Mantri Mudra Yojana (PMMY) has been launched by the Prime Minister on 8th April, 2015 to provide formal access to credit for Non –Corporate Small Business Sector. Any Indian Citizen who has a business plan for a non-farm sector income generating activity such as manufacturing, processing, trading or service sector and whose credit need is less than10 lakh can approach either a Bank, MFI, or NBFC for availing of MUDRA loans under Pradhan Mantri Mudra Yojana (PMMY).

Categories of loans:

Loans upto Rs. 50,000 - Shishu
Loans above Rs.50, 000 and upto Rs. 5.0 lakh - Kishore
Loans above Rs.5.0 lakh and upto Rs. 10 lakh - Tarun
MUDRA Card is an innovative credit product wherein the borrower can avail of credit in a hassle free and flexible manner. Public Sector Banks have been allocated a total target of Rs.70,000 crore, and private sector/ Foreign Banks a target of Rs 30000 cr. The RRBs were given a target of Rs 22000 crore. Altogether, the target for loan disbursement under PMMY for F.Y 2015-16 is fixed at 1,22,000 crore.

Achievements

Total Amount disbursed under PMMY- Rs. 45948.28 crore as on 25.11.2015.
Total No of borrowers-66,00,241
Women borrowers-23,50,542
New Entrepreneurs- 3286094
SC/ST/OBC borrowers- 2201944
Total Mudra Card issued - 198499
No of Shishu Loans have nearly gone-up nearly six fold (from 7.2 lac to 47 Lac) and the amount disbursed shows a 283% hike. (from Rs. 1835 Cr. to Rs 7046 Cr.)
In the Kishore loan category, disbursements have increased by 91% (from Rs. 8156 Cr. to Rs. 15704 Cr.)
In the Tarun Loan category, disbursements have increased by 21% (from Rs. 7851 Cr. to Rs. 9501 Cr.)
ATAL PENSION YOJANA (APY)

The Government of India has introduced a pension scheme called the Atal Pension Yojana (APY), with effect from 1st June, 2015, pursuant to the announcement in the Budget for 2015-16 on creating a universal social security system for all Indians, especially the poor, the under-privileged and the workers in the unorganised sector. APY is being administered by the Pension Fund Regulatory and Development Authority (PFRDA) under the overall administrative and institutional architecture of the National Pension System (NPS).

APY is being operationalised through CBS enabled Banks. Public Sector Banks, Private Sector Banks, Regional Rural Banks, Apex Cooperative Banks and District Central Cooperative Banks have already started the process of mobilization and registration of the subscribers’ under Atal Pension Yojana.

Achievements:

A total of 10.35 lakh subscribers have been enrolled under the Scheme as on 24.11.2015.

PRADHAN MANTRI SURAKSHA BIMA YOJANA (PMSBY)

The Pradhan Mantri Suraksha BimaYojana (PMSBY) is a one year personal accident insurance scheme, annually renewable offering coverage of Rs. two lakh for death or permanent total disability and Rs. one lakh for permanent partial disability due to an accident. It is available to people in the age group of 18 to 70 years.

Subscription material made available in all regional languages.
An exclusive website www.jansuraksha.gov.in created by DFS with all relevant material / information, including forms, FAQs etc.
State wise toll free numbers allotted to respond to queries of the customers.
PRADHAN MANTRI JEEVAN JYOTI BIMA YOJANA (PMJJBY)

The Pradhan Mantri Jeevan Jyoti BimaYojana (PMJJBY) is a one year life insurance scheme, annually renewable offering coverage of Rs. two lakh for death due to any reason and is available to people in the age group of 18 to 50 years (life cover up to age 55 on payment of premium after enrolment up to age 50 years).

Subscription material made available in all regional languages.
An exclusive website www.jansuraksha.gov.in created by DFS with all relevant material / information, including forms, FAQs etc.
State wise toll free numbers allotted to respond to queries of the customers.
Achievements

Gross enrolment reported by Banks is 2.86 crore under PJJSBY as on 24.11.2015.
Under PMJJBY the share of Public Sector Banks (including RRBs) is 91%.
As on 23.11.2015, 8558 were registered under PMJJBY, 5955 have been disbursed.
DEPARTMENT OF EXPENDITURE

The highlights of the Achievements of the initiatives undertaken by the Department of Disinvestment in the current Fiscal year are as follows:

COOPERATIVE FEDERALISM:In accordance with the formulation prescribed by Fourteenth (14th) Finance Commission (FFC), the Annual Borrowing ceiling for States was fixed for the year 2015-16 at Rs. 3,78,903 crore as against the Annual Borrowing ceiling of Rs.3,34,989 crore fixed for the States in 2014-15.

Restricting the States to remain within Net Borrowing Ceiling (NBC) fixed by Ministry of Finance by allowing them to raise borrowings to the tune of Rs. 2,99,931 crore has resulted in net lower borrowings of Rs. 35,058 crore and consequently kept outstanding Debt/GSDP ratio of States at 24.9 % of GSDP, well within the FC XIII projection of 30.3% of GSDP.

During the year 2015-16 (Up to 15.12.2015), the States have been permitted to raise Rs. 3,12,861 crore (Gross) as compared to permission granted to raise borrowing to the tune of Rs.2,17,488 crore during the corresponding period in 2014-15.

The States have been allowed borrowing permissions to States on quarterly basis in order to spread out the borrowings evenly over the 2015-16 to avoid bunching at last movement. This will help the State to borrow at competitive interest rates from Market.

Prior concurrence of D/o Expenditure by States for seeking external loan by multi-lateral agencies, have been dispensed with for improving ease of doing business.

The States are required to remain within the borrowings ceiling fixed by the Ministry of Finance each year and also the fiscal deficits limits & debt to GSDP norms prescribed by Finance Commissions as incorporated in the FRBMA of States. In order to streamline the process of accessing external loans, it has now been decided that there may not be any need to examine the proposals of State Governments for external loan assistance from the debt sustainability angle. However, loans under EAPs would be considered by Department of Economic Affairs (DEA) subject to States confirming/ self certifying on the aspects given in the guidelines for examining proposals of States availing Structural Adjustment Loan and other external loan for clearance from debt sustainability angle.

By: Vishal