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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.

Business

Sensex, Nifty trade flat, auto stocks down

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Sensex equity Nifty

Mumbai, Feb 18: The Sensex and Nifty declined after opening on a flat to positive note on Monday led by selling in auto, IT and FMCG stocks.

The Sensex of the BSE opened at 35,831.18 from its previous close at 35,808.95 on Friday.

At 9.20 a.m., the Sensex traded at 35,794.97 lower by 13.98 points or 0.04 per cent.

The Nifty of the National Stock Exchange (NSE) opened slightly higher at 10,738.65A from it’s previous close on Friday.

The Nifty traded at 10,723.05 during the morning trade session, down 1.35 points and 0.01 per cent.

On Friday, foreign institutional investors (FIIs) sold shares to the tune of Rs 966.43 crore while the domestic institutional investors (DIIs) bought Rs 853.25 crore worth of scrips.

IANS

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Comprehensive plan prepared for BSNL’s revival: Government

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BSNL

New Delhi, Feb 17 (IANS) The government is making all efforts to make state-run BSNL robust and financially viable again and has prepared a comprehensive plan for its revival, an official said on Sunday, on the eve of a nationwide strike called by the employees unions over their demands.

BSNL employees and officers have given a three-day country-wide strike call from February 18 to highlight their long-pending issues, including allotment of 4G spectrum to the telecom major and wage revision for the workforce.

“All efforts are being made, and will continue to be made, to make BSNL robust and financially viable,” a Communications Ministry statement said.

“The main demands of the All India Unions and Associations of Bharat Sanchar Nigam (AUAB) include benefits to executives under the 3rd Pay Revision Committee (PRC) with 15 per cent fitment and to non-executives as per the 8th wage negotiations w.e.f. 1.1.2017, allotment of 4G spectrum to BSNL, revision of pension for BSNL retirees w.e.f. 1.1.2017 and delinking of same with pay revision for PRC implementation, and deduction of payment of pension contribution by BSNL on actual basic pay instead of on the highest level of the pay scale.

“Government wishes to re-emphasize that it will continue to engage with the BSNL management and representatives of the unions and associations, to support their reasonable demands, and to guide the organization towards a revival,” it said.

Noting that the Department of Telecommunications (DOT) is taking “positive steps” regarding each of these demands, the ministry said the issue of alloting 4G spectrum to BSNL is being referred to telecom regulator TRAI “to recommend on the issue of administrative allocation, quantum, price and appropriate frequency band”.

“Further action will be taken on receipt of the said recommendation. In parallel, a comprehensive proposal for revival of BSNL has been prepared, which will be taken up for consideration by competent authorities very soon.”

It also noted that a Coordination Committee comprising senior officers of the DoT, BSNL management, and representatives of AUAB is already working in this regard.

“Representatives of AUAB have also held meetings with the DOT Additional Secretary in which they have been duly apprised of the progress being made in relation to their demands,” the statement said.

It pointed out that the BSNL management has appealed to its employees not to resort to any agitation at this critical juncture when the organization is engaged in “sincere and serious efforts” to protect and enhance the company’s market share, “and when any disruption in services can only adversely impact the interests of BSNL and its customers, employees and other stakeholders.”

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Analysis

Rupee weakened against $ in choppy weekly trade

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India Rupee

Mumbai, Feb 17 (IANS) In a choppy week’s trade, the Indian currency weakened against the US dollar to close above the 71 a dollar mark on Friday, owing to a sharp rise in crude oil prices, turmoil in the equity markets and uncertainty around the US-China trade relations.

In what could translate into further trouble for the domestic currency, analysts see an upward move of 6 to 7 per cent in the Brent crude prices in the coming week.

The rupee lost heavily towards the end of the week – over 70 paise in the last three trading session – as traders reacted to the sanction on Venezuela and production cut by OPEC and Saudi Arabia.

Sajal Gupta, Head Fx & Rates Edelweiss, said “technically … crude now looks set for another 6-7 per cent rise” which would mean that the rupee was likely to depreciate further in the coming sessions. “And if Rs 71.80 per dollar is broken, we can head towards Rs 72.50 mark.”

Among other factors impacting the currency, Gupta said, with crude and dollar index giving breakout, rupee would remain under pressure. Trade deficit data released on Friday post market was also not very encouraging with monthly deficit touching almost 15 billion dollars.

“Political tensions would also remain heightened with key leaders vowing strong retaliation in wake of the biggest terror attack in the Kashmir valley.”

Explaining the factors which has caused volatility, Anindya Banerjee of Kotak said the currency markets largely depend on the capital flows … and right now the fear of a possible retaliation by the government in response to the Pulwama attack is having an affect.

“The context of the whole event is also important because (Lok Sabha) elections are around the corner,” Banerjee said.

Also, the currency losing against the dollar and rising crude oil prices was a double whammy for the bond markets, he added.

On the global front, discussing the factors affecting the currency, Banerjee said, the Chinese economy was very fragile right now and moreover investors were looking for developments in the US-China trade talks.

However, Gurang Somaiya, currency analyst, Motilal Oswal, felt that the rupee was protected from any major weakness as “Foreign Institutional Investment (FII’s) came around good”, especially in February.

According to data from the bourses, FII has seen inflows worth Rs 1,096 crore in February.

India on Friday revoked the Most Favoured Nation Status (MNS) of Pakistan and has warned that more stern actions will follow the attack in Pulwama. Additionally, equity markets have declined for 6 straight sessions showing weak investor sentiments.

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