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GST implementation an example of tax terrorism: Chidambaram

On whether the Goods and Services Tax is flawed despite amendments, Chidambaram said that it proved that it was implemented in a wrong manner.

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P Chidambaram

New Delhi, Aug 19 (IANS) Former Union Finance Minister P. Chidambaram on Sunday attacked the Modi government on the falling value of rupee and said the manner of implementation of the GST is an example of tax terrorism.

The senior Congress leader also said that stagnant investment, fiscal deficit under pressure and the state current account deficit is having an impact on the macroeconomic stability.

Asked if absence of a regular Finance Minister in the Modi government is responsible for the economic slowdown, Chidambaram said: “I thought there were three Finance Ministers — one is de facto, one de jure, and one invisible.”

On the falling rupee, the former finance minister said:”The investment is stagnant at 28.5 per cent. You cannot expect the GDP to grow more than 7 per cent.

“There is something known as Implemental Credited Output Ratio (ICOR). In India, we normally take four ICOR. You divide investment by Incremental Capital Output Ratio. It gives you an indication of the growth. If investment is 28.5 per cent and you divide it by four you will get a growth of only 7 or 7.1 per cent.

“Fiscal deficit is under pressure. The current account deficit in 2017-18 has already touched two per cent and I am told that in the current year, it will cross 2 per cent. All this is having an impact on the macroeconomic stability,” he added.

On whether the Goods and Services Tax is flawed despite amendments, Chidambaram said that it proved that it was implemented in a wrong manner.

“I think, there are still grievances, there are still complaints. GSTR 2 and GSTR 3 have not been notified. Tax liability is being decided by temporary GSTR form called GSTR 3A. If you speak to business persons… they still face numerous difficulties in complying with GST laws,” he added.

Chidambaram said that extraordinary powers have been given to various tax departments and humongous numbers of notices are sent out by every department.

“It only creates fear among the individuals as well as business persons,” he said.

“Somebody who runs a medium-sized business gets a notice practically every third month… what is he supposed to do? Does the department have the capacity to deal with one lakh notices and two lakh notices? They don’t have the capacity. Yet these notices are sent.”

Chidambaram said that since this government had a majority in Parliament it should have repealed the so-called Vodafone amendment to the Income Tax Act.

“Far from that, they have sent Retrospective Tax demands to many other transactions. Vodafone did not turn out to be one-off case. There are several other cases where demands for tax retrospectively have been levied, which is frightening away investors.

“The way the GST is implemented is an example of tax terrorism… you ask someone to file 37 returns in a year in a single state. If he has all-India business, he has to file over 1,000 returns. What else is tax terrorism?” he asked.

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No bail-out for Jet Airways: Suresh Prabhu

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New Delhi, Nov 19 : The Centre on Monday said it would not bail out cash-strapped Jet Airways, stating that it’s the responsibility of the management to implement policies to ensure financial stability and a smooth functioning of the airline.

According to Civil Aviation Minister Suresh Prabhu, the government looks at sector-specific issues in the current deregulated policy environment.

Prabhu was answering questions on a possible bail-out package for the private airline at the launch event of the upgraded version of “AirSewa 2.0 web portal and mobile app” here.

Civil Aviation Secretary R. N. Choubey said the airline wanted some time to pay charges levied by airport operators.

Choubey said the issue had to be sorted out between the airline and airport operators and that the ministry has no role in such commercial deliberations.

Currently, the airline is facing financial troubles due to an increase in jet fuel prices, a weaker rupee, and low fares.

On November 16, Tata Sons, the holding company of the Tata Group firms, said discussions on acquiring a stake in the financially-troubled airline were at a preliminary stage.

On Air India’s financial woes, Choubey said the airline was being given support from “time to time”.

He further said that the airline’s performance was being monitored.

Last month in Hyderabad, the secretary had said that a revival package for the debt-ridden national carrier had nearly been finalised and that the government was providing all support to Air India to ensure that it remained a viable entity.

On August 7, Parliament had approved the gross additional expenditure of Rs 980 crore for equity infusion into the heavily indebted airline.

(IANS)

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RBI to pump liquidity worth Rs 8,000 cr on Nov 22

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RBI Governor Urjit Patel

Mumbai, Nov 19 : The Reserve Bank of India (RBI) would inject Rs 8,000 crore into the market by purchasing government securities on November 22, 2018.

The decision comes amid concerns of a liquidity crisis in the economy after the financial services company IL&FS reported defaults in September.

“Based on an assessment of prevailing liquidity conditions and also of the durable liquidity needs going forward, the Reserve Bank has decided to conduct purchase of…

“Government securities under Open Market Operations for an aggregate amount of Rs 80 billion on November 22, 2018 through multi-security auction using the multiple price method,” the RBI said in a statement on Monday.

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Sensex jumps amid bets of RBI-government truce

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Sensex equity Nifty

Mumbai, Nov 19: Key equity indices jumped amid bets the government and the Reserve Bank of India will bury their differences at a crucial central bank board meeting on Monday.

Subdued global oil prices, and foreign fund inflows amid a stable domestic currency also burnished the appeal of stocks.

The government has been demanding that the RBI make liquidity available, especially to the shadow banks after a series of defaults by the Infrastructure Leasing & Financial Services (IL&FS) triggered a scare and precipitated a credit crunch.

The Centre has also reportedly demanded that the RBI hand over a significant chunk of its reserves, which was subsequently denied by the Union Finance Ministry as “misinformed speculation”.

RBI Deputy Governor Viral Acharya had warned of economic consequences if the central bank’s autonomy was encroached upon.

Interest-rate sensitive stocks like banking, automobile and capital goods rose, while the oil and gas sector came under pressure.

The S&P BSE Sensex settled up 317.72 points or 0.90 per cent at 35,774.88, from its previous close of 35,457.16 points.

NSE’s Nifty50 gained 81.20 points or 0.76 per cent to finish at 10,763.40.

IANS

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