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Insights Daily Current Events, 12 May 2015

Insights Daily Current Events, 12 May 2015

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Justice Cyriac Joseph appointed NHRC acting chief

According to the orders issued by the President, the National Human Rights Commission Member Justice Cyriac Joseph will act as the Chairperson of the Commission until the appointment of a new Chairperson in place of Justice K.G. Balakrishnan who has completed his tenure.

judge cyriac joesph

About NHRC:

It is a statutory body established in 1993.

Members:

  • It consists of a Chairman and 4 members. Chairman should be a retired Chief Justice of India. Members should be either sitting or retired judges of the Supreme Court or a serving or retired Chief Justice of a High Court and 2 persons having practical knowledge in this field.
  • Ex officio members are the chairmen of National Commission for Scheduled Caste, National Commission for Scheduled Tribes, National Commission for Minorities and National Commission for Women.
  • The chairman and members are appointed on the recommendation of a 6 member committee consisting of Prime Minister, Speaker of the Lok Sabha, Deputy Chairman of the Rajya Sabha, leaders of opposition in both the houses of parliament and Union Home Minister.
  • Term of the chairman and members is 5 years or 70 years whichever is earlier.
  • After retirement they are not eligible for further reappointment.

Removal: President has to refer the matter to Supreme Court and if after enquiry Supreme Court holds it right then they can be removed by the President.

Other details:

  • The commission is not empowered to enquire into matters which were committed one year before.
  • Its recommendations are just advisory and not binding in nature.
  • It submits Annual report to the Central government and to the concerned state governments.

Sources: The Hindu, nhrc.nic.in.

 

Lok Sabha clears black money Bill

The Lok Sabha recently passed The Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015, after the government once again turned down the Opposition’s demand for referring the legislation to a standing committee.

  • However, opposition parties say that the Bill does not prevent the generation of black money in the country and some members are apprehensive that this could become another tool in the hands of enforcement agencies to harass innocent people.
  • The bill will now go to the Rajya Sabha, which will debate and return the bill since it has been termed a money bill. If it does not return the bill in 15 days, it would be deemed to be passed.

The Undisclosed Foreign Income and Assets (Imposition of Tax) Bill:

The Bill will apply to Indian citizens and seeks to replace the Income Tax (IT) Act, 1961 for the taxation of foreign income. It penalizes the concealment of foreign income, and provides for criminal liability for attempting to evade tax in relation to foreign income.

Important provisions In the Bill:

  • According to the provions of the Bill, those who conceal income and assets and indulge in tax evasion in relation to foreign assets can face rigorous imprisonment of up to 10 years. The offence will be non-compoundable and the offenders will not be permitted to approach the Settlement Commission for resolution of disputes.
  • There will also be a penalty of 300% of taxes on the concealed income and assets.
  • According to the Bill, undisclosed foreign income or assets shall be taxed at the flat rate of 30%. No exemption or deduction or set off of any carried forward losses which may be admissible under the existing Income-tax Act, 1961, shall be allowed. And concealment of income in relation to a foreign asset will attract penalty equal to three times the amount of tax (90% of the undisclosed income or the value of the undisclosed asset). This would be over and above tax at a flat rate of 30%.
  • The Bill also proposes to make concealment of income and evasion of tax in relation to a foreign asset a ‘predicate offence‘ under the Prevention of Money Laundering Act, which will enable the enforcement agencies to attach and confiscate the accounted assets held abroad and launch proceedings.
  • The Bill seeks to make non-filing of income tax returns or filing of returns with inadequate disclosure of foreign assets liable for prosecution with punishment of rigorous imprisonment of up to 7 years. 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.
  • The tax liability on an overseas property would be computed on the basis of its current market price, not the price at which it was acquired.
  • The Bill provides for a short window for those holding overseas assets to declare their wealth, pay taxes and penalties to escape punitive action. Failure to furnish return in respect of foreign income or assets shall attract a penalty of Rs.10 lakh. 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 Income Tax assesses with overseas assets will get a one-time opportunity for declaring them. The time-frame of the short window will be notified after the passage of the bill.

Sources: The Hindu, prindia, NDTV.

 

BRICS bank

India has named private banker K.V. Kamath as the first head of the new development bank the BRICS group of emerging market economies is setting up.

k v kamath brics bank

The New Development Bank:

It is a multilateral development bank operated by the BRICS states (Brazil, Russia, India, China and South Africa) as an alternative to the existing US-dominated World Bank and International Monetary Fund.

  • The New Development Bank was agreed to by BRICS leaders at the 5th BRICS summit held in Durban, South Africa in 2013.
  • The bank is set up to foster greater financial and development cooperation among the five emerging markets.
  • The bank will be headquartered in Shanghai, China.
  • Unlike the World Bank, which assigns votes based on capital share, in the New Development Bank each participant country will be assigned one vote, and none of the countries will have veto power.

What it does?

The New Development Bank will mobilise resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries, to supplement existing efforts of multilateral and regional financial institutions for global growth and development.

Benefits:

  • The establishment of the Bank will help India and other signatory countries to raise and avail resources for their infrastructure and sustainable development projects.
  • It would also reflect the close relations among BRICS countries, while providing a powerful instrument for increasing their economic cooperation.
  • It is expected to allow India to raise and obtain more resources for the much needed infrastructure development, the lack of which is coming in the way of inclusiveness and growth as of now.
  • It will make available additional resources thereby recycling the savings accumulated in emerging countries which are presently being locked up in Treasury bonds having much lower returns.

Sources: The Hindu, Wiki, NDB, BRICS.

 

CBDT Breather for  FIIs on MAT Issues

The Central Board of Direct Taxes (CBDT) has said that it would hold off from issuing fresh demands for minimum alternate tax (MAT) from foreign investors, and has advised taxmen not to take coercive action on demands already made, as a government-appointed committee looks into the issue.

Background:

  • The government uses the minimum alternate tax to get companies, which pay less or zero tax due to the available exemptions to pay some tax. The issuance of such tax demand on foreign institutional investors has caused an outcry among them and the issue is citied as one of the reasons for the stock market fall.
  • Foreign institutional investors have been exempted from paying such taxes from April 1, 2015, but the tax demands have been made in respect of previous years.
  • A panel headed by Justice A.P. Shah was constituted to look into the issue.

About CBDT:

The Central Board of Direct Taxes is a statutory authority functioning under the Central Board of Revenue Act, 1963. The officials of the Board in their ex-officio capacity also function as a Division of the Ministry of Finance dealing with matters relating to levy and collection of direct taxes.

  • The Central Board of Direct Taxes (CBDT) is a part of the Department of Revenue in the Ministry of Finance, Government of India. It provides essential inputs for policy and planning of direct taxes in India and is also responsible for administration of the direct tax laws through Income Tax Department.
  • It is India’s official Financial Action Task Force unit.
  • Initially the Board was in charge of both direct and indirect taxes. However, when the administration of taxes became too unwieldy for one Board to handle, the Board was split up into two, namely the Central Board of Direct Taxes and Central Board of Excise and Customs in 1964.
  • The CBDT Chairman and Members of CBDT are selected from Indian Revenue Service (IRS), a premier civil service of India, whose members constitute the top management of Income Tax Department.

Sources: The Hindu, dor.gov.in.

 

 

Banks told to appoint internal ombudsman

In a move to further beef up the quality of customer service, the Reserve Bank of India (RBI) has advised all public sector banks and some private and foreign banks to appoint an internal ombudsman.

  • The internal ombudsman would be designated Chief Customer Service Officer (CCSO).
  • RBI has also made it clear that the CCSO should not have worked in the bank in which he/she is appointed as CCSO.

Why is it required?

The RBI is keen to ensure that there is undivided attention to resolution of customer complaints in banks. Hence, it has suggested the appointment of an internal ombudsman.

Other details:

  • RBI has said that all public sector banks will have to appoint a Chief Customer Service Officer.
  • The private sector and foreign banks which have been told to appoint such officers (or internal ombudsman) are: ICICI Bank Ltd., HDFC Bank Ltd., Axis Bank Ltd., Kotak Mahindra Bank Ltd., IndusInd Bank Ltd., Standard Chartered Bank, Citi Bank N.A. and HSBC Ltd. These banks have been selected on the basis of their asset size, business-mix, etc

Background:

  • The Reserve Bank introduced the Banking Ombudsman Scheme (BOS) in 1995 to provide an expeditious and inexpensive forum to bank customers for resolution of their complaints relating to certain services rendered by banks.
  • Commercial banks, regional rural banks, and scheduled primary co-operative banks are covered under the Scheme.
  • The Reserve Bank operates the BOS, free of cost, so as to make it accessible to all.

The bank’s internal ombudsman will now be a forum available to bank customers for grievance redressal before they can even approach the Banking Ombudsman.

Sources: The Hindu.

 

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