Retrospective Tax ( Retro Tax)

 

According to the dictionary,the term "restrospective" means looking again the past.

And in taxation, retro tax means giving an effect to the amendment in the existing law before the date on which the changes were proposed. In simple words, under retro tax, a transaction that took place before the law comes to act, is taxed. It can be a new or additional charge on transactions happened in the long past.

The government uses retro tax when it feels that the policies in the past & present are vastly different and the tax paid in the past under the old policy is very less. The effect of retro tax is that it could correct the situation by charging tax under the existing policy. Retro tax prevents firms that take benefit from any loophole that exists because of the past taxation policies.

We can also find countries like US, UK, Australia, Canada, Netherlands, Belgium, Italy and India have retrospectively taxed firms.

Retro tax was introduced by the UPA government in 2012, as an amendment to the Income tax Act 1961, asking companies ( Vodafone India and Cairn Energy) to pay tax on mergers and acquisitions that happened before date.

However, the Indian government on August 5th, 2021, proposed to withdraw all tax demands under retro law brought in 2012 and decided to refund the money so collected.

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Reference

1. https://www.google.co.in/search?q=dictionary+meaning+of+retrospective&sxsrf=AOae.

2. https://wap.business-standard.com/about/what-is-retrospective-tax

Payments Bank

 

* It's a new bank model conceptualised by RBI.

* It is licensed under Section 22 of the Banking Regulation Act, 1949, and  registered as public limited company under the Companies Act, 2013.

* Accepts deposit upto Rs 2 lakhs per customer but it can be raised by the RBI based on the performance of the bank .

* They are not permitted to lend to any person including its directors.

* 25% of its branches must be in the unbanked rural area.

* Cannot issue  credit cards, however, ATM cards/ debit cards, online/ mobile banking facility be provided.

* Savings bank account and Current account can be opened.

* Airtel Payments Bank is the India's first payments bank, set up by Bharti Airtel in March 2017.

* The minimum capital requirement is ₹100 crore. For the first five years, the stake of the promoter should remain at least 40%. 

* It's main objective  is to widen the spread of payment and financial services to small business, low-income households, migrant labour workforce in secured technology-driven environment.

* Utility bills can be accepted but not allowed to form subsidiaries to undertake non banking activities.

* The active payments banks include 

Airtel Payments Bank, India Post Payments Bank, Fino Payments Bank,

Jio Payments Bank, Paytm Payments Bank, NSDL Payments Bank.

* The defunct payments banks include Aditya Birla payments banks, Vodafone m-pesa Limited.

* The interest rates paid are

Airtel payments bank 6%

India Post payments bank 2.5%

Fino payments bank 2.75%

Jio payments bank 3.5%

Paytm payments bank 2.5%

NSDL payments bank 5%

Reference

1. https://www.google.co.in/search?q=payments+bank

2. https://en.m.wikipedia.org/wiki/ Payments_bank

3. https://m.economictimes.com/ definition/  payments-banks

4. https://www.goodreturns.in/ classroom/ the-best-interest-rates-paid- by-payments-banks-in-india 1232759.html

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National Pension System

The National Pension Scheme was initiated by the Government of India for its employees who joined after 1st April 2004.

It was, then, opened up for all citizens of India between the age of 18 and 65 in 2009. From 2021, the age limit is increased to 70. NRI s can also open NPS account.

On 10 December 2018, it was made an entirely tax-free instrument in India where the entire corpus escapes tax at maturity.

It is a long term investment plan,that enables one to transform regular savings inti wealth for old age with tax benefits.

Provides attractive market linked returns with a low cost associated to it.

Also an additional tax benefit of Rs 50,000 under Section 80CCD(1b) is provided, which is over the Rs 1.5 lakh exemption of Section 80C of the Income tax Act.

How to open NPS account?

1. By physically visiting the bank branch or post office or by applying online on eNPS website with the PAN( Permanent account number) and bank details.

2. NPS subscriber then is issued PRAN ( Permanent retirement account number).

3. First contribution to the scheme is minimum Rs 500.

If a subscriber doesn't contribute to the scheme,in a financial year, the account is freezed. To unfreeze the account, a penalty of Rs 100 for every year of default be paid.

Encourage all to make use of the scheme for current year's savings and for securing life after retirement.

Reference

1. https://en.m.wikipedia.org/wiki/ National_Pension_System

2. https://npstrust.org.in/

3.https://economictimes.indiatimes.com/wealth/invest/ how-to-reactivate-an-nps-account/articleshow/77817929.cms

UNICORN

 Source: The Times of India, Jan 18, 2022, pg 12

* Unicorn refers to a privately held startup company with a valuation more than $1 billion.

* The term Unicorn is used in the venture capital industry.

* India has over 80 Unicorn start ups, as on 2022.

* Over 40 Indian start ups have joined the Unicorn club in the year 2021.

* BharatPe, upGrad, Meesho, Pharmeasy, Sharechat, Urban Company, Vedantu, Licious, CoinSwitch Kuber, CarDekho, MobiKwik, Acko, NoBroker, Mamaearth were few startups that entered the Indian unicorn club in 2021.

Reference

1. https://www.investopedia.com/terms 

2. https://startuptalky.com/top-unicorn-startups-india/

Pre-Budget Pitch

 Source: The Times of India, Jan 17, 2022, pg 14

The Indian Banks' Association ( IBA) has proposed to the Govt before Budget 2022, with regards to the following.

* Reduction in the lock-in period for Fixed Deposits( FDs) from 5 yrs to 3 yrs, which are used for claiming tax exemption U/ S 80 C of the Income tax Act. This is an effort to make FDs compete favourably with other products like mutual funds, ELSS or direct investment in shares, thereby attracting more investors.

* Seeks faster hearing for disputes with government departments through special mechanism with timelines for completion of appeals.

* Branches of foreign banks be given an option to pay tax at 22% instead of 40%.

* Permission to do away with quarterly TDS certificates.