FINANCE MINISTRY PREPARING FULL BUDGET PRESENTATION IN JULY
The Union Finance Ministry
has started preparations for the presentation of the full Budget 2019-20 by a
new government in July, even as the country is in the midst of the ongoing
seven-phased general elections. The Ministry has sent out communications to
various industry bodies and other stakeholders inviting their suggestions on
direct and indirect taxes related to various sectors. Industry leaders said
they expect changes in custom rates and direct taxes as the Goods and Services
Tax (GST) has removed most indirect taxes from the purview of the Budget. We
expect a lot of changes on direct tax front. If the current government comes
back they would bring changes as they have certain things in their mind from
previous years. In case a new government comes, they would unlikely go for any
major change given that they would have very little time. From November,
preparations will need to start for next fiscal's Budget, a senior industry
executive said. The Finance Ministry has sought industry comments from by May
10, 2019.
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GST COUNCIL EXTENDS DEADLINE FOR REALTY FIRMS TO OPT FOR OLD
GST RATE TILL MAY 20
The GST Council Thursday
extended by 10 days till May 20 the deadline for realtors to opt for old GST
rates with input tax credit for ongoing projects or shift to new lower tax
rates. The GST Council, headed by Finance Minister Arun Jaitley and comprising
state counterparts, had in March allowed real estate players to shift to 5
percent GST rate for residential units and 1 percent for affordable housing
without the benefit of input tax credit (ITC) from April 1, 2019. For the
ongoing projects, builders have been given the option to either continue in 12
percent Goods and Services Tax (GST) slab with ITC (8 percent for affordable
housing), or opt for 5 percent GST rate (1 percent for affordable housing)
without ITC and communicate to their respective jurisdictional officers the
same by May 10. The date for exercising the option for residential real estate
project to either stay at old GST rate (8 percent or 12 percent with ITC) or to
avail new GST rate (1 percent or 5 percent without ITC) is being extended to
May 20, 2019 from May 10, 2019, the GST Council said in a tweet. The Central
Board of Indirect Taxes and Customs (CBIC) has given the real estate companies
a one-time option to choose either of the tax rates and once a realty developer
chooses a particular tax rate for ongoing projects he would not be able to
modify it. In case, realtors do not exercise the option by May 20, they will be
covered under the lower tax rate of 5 percent and 1 percent with effect from
April 1, 2019, and will not be entitled to avail tax credit on inputs.
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FMCG DISTRIBUTORS FACE GST SCRUTINY FOR POST-SALE DISCOUNTS
Coca-Cola India’s bottling
partner Hindustan Coca-Cola Beverages (HCCB) and distributors of FMCG and
consumer durable firms have come under the lens of the goods and services tax
(GST) authorities over so-called post-sale discounts offered by manufacturers,
said a person familiar with the matter. The authorities have asked why GST was
not paid on these discounts, treating them as services by distributors. In some
cases, authorities have sought sales details for the past five years from
distributors. That’s stumped the industry for which such discounts are commonly
used to promote sales, prompting it to lobby the government for relief. A
spokesperson for HCCB, which accounts for two-thirds of Coca-Cola India’s
volumes, said the company operates in full compliance with regulations. It is
critical to note that none of the past assessments, nor the judicial precedents
on this issue, have treated the said expenses as being in the nature of any
‘service’ rendered by the distributors to the company, an HCCB spokesperson
said in an email. HCCB continued to do business on the same basis, and hence
continued to treat discount schemes, deductible from the value on which GST is
leviable, as a supply of goods, the spokesperson said. The company has met
Directorate General of Revenue Intelligence officials and presented its
arguments on the subject, he said. We are standing by for any further
clarifications and discussions that may be required, the spokesperson said. As
regards the contention of the Directorate General of Goods and Services Tax,
HCCB offers to its distributors various types of discounts, price-offs, rate
rebates and promotions under various schemes and nomenclatures to promote the
sale of products (referred to as discount schemes). These take the form of
additional margins, allowances and redistribution margins related to volumes.
They are separately given as credit notes, on which GST is not paid. Tax authorities
have questioned the discounts, calling them subsidies. Their contention is that
this becomes a part of the consideration in the hands of distributors,
requiring them to pay tax on a higher amount. Tax experts disagree with this
contention. Fundamentally, the nature of discount doesn’t change basis the GST
adjustment and where the transactions happen on a principal to principal basis,
there is hardly any scope for services provided by the dealer to the
manufacturer, said Pratik Jain. In any case, even if GST is levied, it would
largely be revenue neutral as the manufacturers will be entitled for input
credit, Jain added. The industry has told the government that post-sale
discounts should not be treated as a consideration for services provided by distributors
to manufacturers. They also want the inclusion of post-sale discounts in any
amount paid by the manufacturers to distributors or retailers for reduction in
the price of products, in line with the schemes offered by the manufacturer to
promote sales. Ideally, the amounts passed on to dealers and distributors are
nothing but post-sale discounts which are clearly covered under the credit note
provisions. The allegation that these amounts represent a service seems
untenable, said Rashmi Deshpande, partner, Khaitan & Co. These price-offs
extended to distributors on account of reduction in prices of products are
purely in the nature of post-sale discounts and treatment of such discounts as
a ‘subsidy’ is not in consonance with the provision of law.
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CAR DEALERS ON TAXMAN’S RADAR OVER DISCOUNTS & FREEBIES TO
CUSTOMERS
The indirect tax
department is scrutinising discounts and freebies offered to customers by major
car dealers across the country on suspicion that they may have availed input
tax credit on those freebies without paying GST leading to revenue leakage for
the exchequer. The department has issued preliminary notices to some of the top
car dealerships, seeking details of discounts offered by them including
freebies, people with direct knowledge of the matter told. Based on the
information sought by the tax department in the preliminary notices, tax
experts said the investigation is around taxes paid and input tax credit
claimed during transition from old tax framework to the goods and services tax
(GST) regime. Under transitional credit, at the time of paying GST a company
can claim credit on taxes such as excise duty already paid on inputs under the
previous tax regime. The focus of the investigation seems to be on whether
there is a revenue leakage for the department in the way dealers paid GST and
availed input tax credit on the freebies and discounts offered to customers,
said Suresh Nandlal Rohira. Discounts were offered on cars just before GST was
rolled out and the tax department is seeking information regarding discounts
offered, credit availed, GST paid and what were the tran 1 (transitional credit
form) submissions, said Rohir.
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GOVT LIKELY TO ORDER SFIO PROBE INTO JET OVER FUND DIVERSION
ALLEGATIONS
The Ministry of Corporate
Affairs (MCA) is likely to ask Serious Fraud Investigation Office (SFIO) to
probe the alleged fund diversion and writing off of investments by Jet Airways.
The fresh investigation follows recommendation given by MCA's Mumbai regional
office after inspecting the airline's books. In Jet Airways' preliminary probe,
Registrar of Companies RoC (Mumbai) told the MCA that it has found violation of
Companies Act and unaccounted investments, official sources said, adding the
natural way forward is an SFIO probe. ANS had reported on Wednesday that the
RoC Mumbai had submitted a report and that appropriate action would be taken
after its examination. The SFIO will now look into Jet's written-off
investments in various subsidiary companies and try to source where they have
landed. The SFIO will also start the process for seeking personal appearance of
the company's then top management in an attempt to find out why the company
suddenly posted loss in the fiscal year 2018 after a string of profits. The
company had received fund infusion in the form of Etihad 's investments twice
during the period. In his complaint, whistleblower Arvind Gupta had alleged
that Jet Airways' promoters were trying to siphon Rs 5,125 crore from the
airline's books. The RoC Mumbai has completed the books' inspection of Jet
Airways as part of its prelimnary investigation before turning to SFIO for a
full-fledged investigation.
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CENTRAL GST UNION DEMANDS GOVT TO FILL UP 38,581 VACANT POSTS
A large number of posts
are lying vacant in the Central Board of Indirect Taxes and Customs (CBIC)
across the country. These posts need to be urgently filled up to increase the
revenue collections and streamline operations. Existing employees are heavily
overburdened with increasing workload leading to inefficiency, said union in
Nagpur. According to the data given by Directorate General of Human Resource
Development (DGHRD), Central Board of Indirect Taxes and Customs, the total sanctioned
strength in the department was at 91,729 posts whereas the working strength in
the department was only 53,148 posts as on January 1, 2019. This has resulted
in 38,581 posts lying vacant in the department. The vacancies are around 42 per
cent of the sanctioned strength. Most surprisingly is the fact that compared to
last years figures the number of vacant posts have shot up significantly. As
per DGHRD data as on January 1, 2018, total sanctioned posts were at 84,866
whereas the working strength was at 51,137 posts, resulting in 33,729 posts
lying vacant. The vacancy was about 40 per cent last year which has shot up to
42 per cent this year. The data does not include strength of Cost Recovery
posts. In such situation, the Government is requested to start special
recruitment drive to fill up these vacant posts in the interest of the nation,
said Sanjay Thul. Furthermore, a letter in this regard has been sent to the
Prime Minister’s Office (PMO) in New Delhi on May 7, requesting to intervene at
the earliest and solve the issue. Similarly, in Central GST Nagpur Zone, more
than 100 posts are lying vacant at various levels. From the past one year, the
senior posts like Commissioner of Customs and Commissioner of Audit are being
managed by employees holding additional charge. Similarly, a large number of
posts of inspectors, superintendents and various other levels are also lying
vacant which need to be filled up at the earliest, Thul said. The officers and
staff working in the department are overburdened due to insufficient workforce,
resulting in huge amount of work pending at various levels in the department.
Revenue collections could also be hampered due to lack of adequate workforce.
Government should start recruitment immediately so that work vacant positions
can be utilised. It will reduce workload of employees. Recruitment drive will
give opportunity to the army of unemployed youths in the country, Thul added.
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RBI MUST FACILITATE EASY, LESS EXPENSIVE LOANS: EEPC INDIA
With US-China trade
tensions leaving the global financial markets and trade in a state of anxiety,
it is time Indian exporters are enabled to stay competitive by the Reserve Bank
of India which should facilitate an easy and less expensive bank loans more so for
the MSME exporters, the engineering exporters' apex body, EEPC India has said.
We are in the midst very anxious global economic environment marked by
ever-rising US-China trade tensions, instability in the crude oil prices which
tend to leave forex market highly volatile. In this trading landscape, the
Indian exporters, particularly the small enterprises in the engineering sector,
are facing severe cost and other challenges. We have made a comprehensive
presentation to the RBI for carving out an exporter-friendly interest rate
structure and expect the central bank to advise banks accordingly and notify
the changes, where required, EEPC India chairman Mr Ravi Sehgal said. The EEPC
India has suggested to the RBI that the Interest Equalisation Scheme for the exporters
become horizontal in nature by covering the entire MSME sector, so that the
linkage with exports goes away and does not fall foul of the WTO’s norms as
well. At present, the scheme is for Rupee Export Credit with two variants.A 5%
interest equalization is for the MSME Rupee export credit while there is a 3%
interest equalization for 416 tariff lines and Merchant Exporters who export
items falling under these specific tariff lines. However, as the Interest
Equalization Scheme is export specific, it is WTO non-compliant and should
accordingly be re-aligned. In its presentation to the RBI, the EEPC India also
suggested that the banks should not ask for external credit rating as they are
doing internal rating. and banks be advised not to charge loan application
processing and credit Limit renewal fee. Besides, when export bills are
purchased/discounted under ECGC policy, in case of non- realisation on the due
date, banks should not recover the money by debiting the exporter’s account.
Rather they should wait for payment beyond due date otherwise they should wait
for claim to be settled by ECGC. RBI should ask banks not to insist for
discounting of Usance Export Bills.
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CBIC ORGANISES MEETING OF REGIONAL HEADS OF CUSTOMS
Central Board of Indirect
Taxes and Customs (CBIC) is organising a meeting of the Regional Heads of
Customs Administration of Asia Pacific Region of the World Customs Organisation
(WCO) in Kochi from 08th to 10th May, 2019. India is hosting this meeting in its
capacity as Vice Chair of the Asia Pacific region that it assumed on 1st July,
2018 for a two-year period. The meeting will take stock of the progress being
made in carrying forward the programmes and initiatives of WCO to promote,
facilitate and secure the cross-border trade in the region and the capacity
building and technical assistance required to achieve this goal. Reflecting the
importance of the meeting, Customs delegations from more than twenty countries
of the Asia Pacific region are participating, along with senior officials of
the WCO and its regional bodies, i.e. Regional Office for Capacity Building
(ROCB) and Regional Intelligence Liaoning Office (RILO). Chairman, CBIC
reiterated the strategic principles guiding India, in its role as the Vice
Chair of the Asia Pacific region, which are –
·
Greater communication and
connectivity within the region,
·
Harness technology
advancements,
·
Inclusive approach, and
·
Consensus on core issues.
Mr Das highlighted the key
focus areas on which considerable emphasis should be placed, such as
implementation of trade facilitation measures, cross-border e-commerce
transactions, building capacity of small island economies and the on-going
review of the Revised Kyoto Convention (RKC).
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BUILDERS TO REFUND GST ON CANCELLATION OF FLATS BOOKED IN FY19
Builders will have to
refund GST paid by home buyers in case he cancels the flat booked in the last
fiscal and will be allowed to avail credit adjustment for such refunds, the tax
department has said. This clarification forms part of the FAQ released by the
Central Board of Indirect Taxes and Customs (CBIC) on real estate sector. The
FAQ has been issued to clear the air over the migration provision, which
permits the real estate players to shift to 5 per cent GST rate for residential
units and 1 per cent for affordable housing without the benefit of input tax
credit (ITC) from April 1, 2019. For the ongoing projects, builders have been
given the option to either continue in 12 per cent Goods and Services Tax (GST)
slab with ITC (8 per cent for affordable housing), or opt for 5 per cent GST
rate (1 per cent for affordable housing) without ITC. The FAQ said developer
will be able to issue a ‘Credit Note’ to the buyer as per provisions of Section
34 in case of change in price or cancellation of booking. Developer shall be
able to take adjustment of tax paid in respect of the amount of such Credit
Note, the FAQ said. Giving example, it said that a developer who paid GST of Rs
1.20 lakh at the rate of 12 per cent in respect of a gross amount of booking of
Rs 10 lakh before April 1, 2019, shall be entitled to take adjustment of tax of
Rs 1.20 lakh upon cancellation of the said booking on or after April 1, 2019,
against other liability of GST. The FAQ further said that once a real estate
developer opts for the either old GST taxation regime or the new one for
ongoing projects manually with the jurisdictional Commissioner, he will not be
permitted to modify it. With regard to purchase of land from owner by the
developer commonly termed as Transfer of Development Right (TDR), the FAQ said
GST would not apply on agreements entered into on or after April 1, 2019. However,
for TDR agreements entered into prior to April 1, 2019, the developer will not
be able to claim credit for the GST already paid. TDRs were taxed at 18 per
cent in the GST regime. Tieing in the liability to pay tax on TDR’s based on
agreements entered before April 1, 2019, irrespective of the fact that projects
have been initiated under new tax regime without any tax credit, would result
in a huge tax cost for already ailing reality sector, Mohan said. The FAQ
further said that all towers registered as different projects under RERA will
be treated as distinct projects, for which the builder will have to maintain
separate books of accounts. In case a real estate developer has collected 12
per cent GST from home buyers beginning April 1, 2019, but later opted for 5
per cent rate, the builder will have to refund the extra tax (7 per cent)
collected to the buyer. The FAQ, however, did not clearly spell out whether the
7 per cent tax refunded by the builder will be adjusted against his GST
liability. Real estate firms have time till May 10 to communicate to their
respective jurisdictional officers whether they want to continue with the old
GST rates with input tax credit, failing which they will be deemed to have
migrated to new tax rates.
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GOVT MAY REWRITE STARTUP ESOP FRAMEWORK
The Department for
Promotion of Industry and Internal Trade (DPIIT) has begun discussions with the
finance ministry on taxing shares granted by startups under their employee
stock option plan only at the time of sale as part of a package aimed at making
the country a hub for startups. At present, Esops are taxed, as income, when
employees exercise their options and convert them to shares. We have
recommended that Esops be taxed when the actual sale happens, a senior
government official told. The finance ministry will examine the matter when it
looks at proposals for the next budget. The government already has a special
carve-out in the tax regime for recognised startups, which could be useful in
making specific changes to their stock option framework. The government has in
the past four months unveiled several measures to shield startups from the
so-called ‘angel tax’. In case of listed companies, an individual can sell
shares on the stock exchange and raise resources to pay tax on conversion of
stock options into shares. However, in the case of startups, there is no ready
market or buyer to whom such shares can be sold. Esop holders also face other
issues, such as restrictions on the period of holding of shares or on entry in
case of a new investor. This limits their capability to arrange funds and pay
tax on the perquisite value of shares. Industry wants tax to be levied only
when shares are ultimately sold, when the company lists or when employees sell
to an incoming investor. The issue of Esops being taxed at the point of
exercise is very important for the startup community as it prevents startups
from issuing share certificates to its employees, who as per existing rules,
become liable immediately to pay taxes based on a valuation that is mostly on
paper and could get revised downwards, said Sachin Taparia.
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DELHI HIGH COURT PAVES WAY TO UNTANGLE GST KNOT FOR SOLAR
FIRMS
Solar power developers are
hopeful of relief in GST rates after the Delhi High Court's order directing
authorities to redress their grievances. The court last week directed Central
Board of Indirect Taxes and Customs (CBIC), Ministry of New & Renewable
Energy and GST Council to look into their concerns. As per the court order, on
a petition being filed by the Solar Power Developers Association (SPDA), a
consultative meeting will be held with CBIC within the next four weeks for the
solar power producers to put forward their grievances. Ministry of New &
Renewable Energy may also take part in the meeting. Post the deliberations, a
report will be placed before GST Council for consideration upon those points.
Currently, solar power producers are subject to GST in the ratio of 70:30, that
is 70% is considered as goods and attracts 5% tax rate, while 30% is accounted
as services, which is taxed at 18%. Hence, the effective tax rate works out to
be 8.9%. An SPDA spokesperson said, We are thankful to GST Council for bringing
necessary clarity on the taxability of various types of contracts for supply of
goods and services in the solar power generating system. But with the 70:30
ratio of supply of good and services, the industry is ending up paying a higher
effective tax rate of 8.9%, which is impacting the financial viability of solar
projects. We welcome the decision of Hon'ble High Court of Delhi and as directed,
we shall bring relevant facts and figures to the table before CBIC and hope to
reach an amicable and fair settlement on the issue.
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BUILDER’S CALL WILL DECIDE YOUR GST RATE
Your GST liability will
only come down to 5% on the remaining instalments of your under-construction
apartment, if your builder decides to move to the new mechanism. Under the
revised regime, the GST Council has lowered the levy from 12% to 5% (and from
8% to 1% for affordable housing) but taken away the benefit of tax credit on
inputs such as cement, paints and steel as builders were seen to be pocketing
it and charging 12% flat GST. In a set of FAQs, the government has clarified
that you can hope to move to a 5% or 1% rate for the remaining portion of the
under-construction flat. So, if you had paid 40% of the value of the flat up to
March 31 and your builder decides to move to the new regime, you can opt for
the new rate. But in case the builder sticks to the one with ITC (input tax
credit), make sure that the benefits of tax credit accrue, which will mean a
lower than the 12% rate. The government also said that a one-time option has
been given to builders to move to the revamped structure but those who do not
submit their option by Friday, will automatically move to the 5% rate without
ITC, and 1% for affordable homes. It has also reiterated that 80% of the value
of goods and services have to be sourced from registered suppliers. For
calculating this threshold, the value of services by way of grant of
development rights, long term lease of land, floor space index, or the value of
electricity, high speed diesel, motor spirit and natural gas used in
construction of residential apartments in a project shall be excluded, the
16-page FAQs said.
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RAHUL PROMISES TO BRING PETROL, DIESEL UNDER GST
Rahul Gandhi said on
Wednesday that key petroleum products will be brought under the ambit of Goods
and Services Tax (GST) to lower inflation if the party came to power after the
Lok Sabha elections. We are aware that the common man is distressed due to
rising prices. In order to provide relief to them, Congress will bring petrol
and diesel under GST, which will help in checking rising inflation, Gandhi said
in a Facebook post.
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CBDT EXTEND TENURE OF NATIONAL COMMITTEE FOR PROMOTION OF
SOCIAL AND ECONOMIC WELFARE
Whereas in exercise of the
powers conferred by section 35AC of the Income-tax Act, 1961 (43 of 1961) read
with rule 11G of the Income Tax Rules, 1962, the Central Government constituted
the National Committee for Promotion of Social and Economic Welfare vide
notification of the Government of India, Ministry of Finance (Department of
Revenue) number S.O. 5(E) dated the 2nd January, 1992 published in the Gazette
of India Extraordinary Part II Section 3, Sub-Section (ii) as amended by
notification numbers S.O. 926(E) dated the 22nd December, 1994, notification
number S.O. 892(E) dated the 23rd December, 1997; notification number S.O.
444(E) dated the 21st May, 2001; notification number S.O. 1258(E) dated the 9th
November, 2004; notification number 227(E) dated 1st February, 2008;
notification number S.O. 218(E) dated the 1st February, 2011; notification
number S.O. 654(E) dated the 4th March, 2014 and notification number S.O.
1021(E) dated the 31st March, 2017. And whereas, in terms of sub-rule (1) of
Rule 11G of the Income Tax Rules, 1962, by the aforesaid notification, fourteen
persons were appointed by the Central Government as Chairman and members of the
said Committee; And whereas, the term of the Chairman and members of the
aforesaid Committee ended on 30th March, 2018. And whereas, the term of the
Chairman and members of the aforesaid Committee was extended for a further
period of six months i.e. upto 30th September, 2018 vide notification number
S.O. 1658(E) dated the 17th April, 2018. And whereas, the term of the Chairman
and members of the aforesaid Committee was further extended for a further
period of six months i.e. upto 31st March, 2019 vide notification number S.O.
5160(E) dated the 5th October, 2019. Now, therefore, in exercise of the powers
conferred by section 35AC of the Income Tax Act, 1961 (43 of 1961) read with
sub-rule (1) and (3) of rule 11G of the Income Tax Rules, 1962, the Central
Government hereby extend the tenure of persons as Chairman and members of the
National Committee for Promotion of Social and Economic Welfare for a further
period of six months w.e.f. 1st April, 2019 i.e. till 30th September, 2019.
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EXTEND DEADLINE FOR REALTORS WITH ONGOING PROJECTS: TAX
PRACTITIONERS
Extend the deadline for
declaration of ongoing real estate projects for GST rates, demanded tax
practitioners of the state. They have also asked apex body for Goods and Services
Tax (GST) to allow manual filing since online utility is not available. The
deadline for registration is expiring on May 10. GST Council in March this year
had announced 1 per cent GST for real estate projects under the affordable
housing category and 5 per cent GST for rest of the real estate projects. For
this, realtors need to register their projects with the GST Council by May 10.
With just two days left, no online utility is available on the GST network. Tax
Advocates Association of Gujarat has written a letter to GST Council,
Commissioner of Central GST (CGST) and Commissioner of State GST (SGST) that
since there is no way that the projects can be registered, deadline for
application should be extended and tax authorities should also allow manual applications
said Sunil Keswani. There are two categories under affordable housing — those
up to 60 square meters and those up to 90 square metres. They are charged 1 per
cent GST without the tax credit. The rest are under general category and are
charged 12 per cent GST without the tax credit. Vijay Shah, said that
non-compliance in GST will also affect compliance in other aspects like Real
Estate Regulation Act (RERA). If there is a delay because of registration with
GST, there would be a delay in the project, which will violate RERA guidelines
and the realtor will have to pay penalty. Why would realtors pay for the fault
of the government? If the government can integrate GST with income tax, why
can't it integrate GST with RERA so that faults in GST does not attract penal
actions in RERA, asked Shah.
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NOW, OWNERS MAY HAVE TO PAY DIFFERENT GST FOR IDENTICAL FLATS
The taxman has asked
builders to choose before May 10 the new goods & services tax (GST) rate
for ongoing realty projects. The concessional rate, which came into effect
April 1, was set at 1% for affordable houses and 5% for others, from the
earlier 8% and 12%, respectively. Developers of under-construction projects
could opt for the new or previous rate, but now they have been asked to
exercise this option before Friday in the prescribed format. This means, two
people buying identical flats in the same apartment complex but in different
buildings or towers, could technically end up paying different GST rates. If
the developer does not choose the rates before May 10, then the new GST rates
will kick in automatically, the Central Board of Indirect Taxes and Customs
said. The rules of the concessional scheme, including transitional ones, will
apply, it said. In the case of projects that begin on or after April 1, no such
option is available, and these residential apartments will compulsorily have to
pay the new 1% and 5% rates. Developers need to carefully evaluate as to which
scheme is more efficient and clearly communicate to the customers accordingly,
said Siddharth Mehta. The builder, not the buyer, gets to choose the new rate
regime. In effect, the tax component of buyers could vary from building to
building even if they opt for flats in the same apartment complex, experts say.
Buyers would now face situations where buildings under construction in the same
complex could be subjected to differing rates of GST as builders could exercise
the option of availing input tax credits on some buildings and foregoing the
credits on others, said M S Mani. If flats are booked before April 1but
cancelled, the tax paid can be adjusted against any other GST liability,
including the 1% or 5% rates outgo. However, if the cancelled flats are resold
after April 1, the credit availed earlier on procurements will be reversed. In
projects where one building is registered under RERA but construction, booking
and occupancy of buildings vary then the rate will be determined for the
project as a whole, Deduction of land would be onethird and not on the actual
land value, the CBIC said.
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DEMONETISATION AND GST-HIT DATAWIND SHUTS HYDERABAD FACILITY
DataWind, maker of the
world’s cheapest Android-based tablet Aakash, has closed down its two
manufacturing facilities in India, after business shrank due to demonetisation
in 2016, Goods and Service Tax (GST)-related issues, besides the country’s duty
structure, leading to a loss of some 1,000 jobs. Suneet Singh Tuli told that
the twin challenges had derailed the $35-Aakash tablet computer maker’s
strategy to Make in India for the rest of the world, using the country’s human
resource and cost-effective operations. Our target segment -- those at the
bottom of the pyramid -- was severely impacted after demonetisation and has continued
to suffer since then, Tuli said. While people familiar with the matter say both
facilities -- at Hyderabad and Amritsar -- have been shut down, Tuli said that
the Amritsar plant is still operating, but at far lower capacities. In 2017,
the British-Canadian company had already halved its production at its Hyderabad
unit, where production has completely halted now. These people said that
DataWind has been forced to hold up vendor payments as well as to those
employees who have parted ways, while its debt has mounted to Rs 250 crore.
Tuli, however, said that the Rs 250-crore debt on its books was inter-company,
and that was the investment that has been made from the Canadian parent company
into India operations. He further said that the company was fighting a slew of
court cases to recover its dues. Subsequent to demonetization, India Post stole
and misappropriated over 30,000 units for which court cases are still pending
and recovery is awaited, Tuli said. Once booming India’s tablet market has been
reduced to a third, impacted by demonetisation of currency, and existing levies
on components and higher GST slab, said Tuli. GST of 18% tablets versus 12% on
smartphones created a disincentive for customers to buy a 7-inch tablet versus
a 6-inch smartphone, Tuli explained. The refunds associated with GST, he said,
were still pending and the company was forced to approach the courts to make
recoveries.
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AMIT SHAH COULD BE HOME MINISTER, THINK BEFORE VOTING: WARNS
KEJRIWAL
Arvind Kejriwal on Friday
said that if the BJP comes back to power then the current party president, Amit
Shah, would be the Union home minister. He tweeted that people should think
what will happen to a country that has Shah as its home minister. Please think about
that before voting, he tweeted. With his tweet, he also tagged a post of a
polling agency tracking Indian electoral trends which claimed Amit Shah is
positioning himself for the role of home minister if Modi returns to power. The
agency tweet further stated that ex Chief Economic Advisor Arvind Virmani and
former RBI Governor Bimal Jalan can make a good finance minister.
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NYAY IS LIKE GIVING MONEY FOR NO WORK: RAGHUVANSH PRASAD SINGH
Raghuvansh Prasad Singh
has raised doubts on the minimum income scheme (Nyay) proposed by the Congress
although both the parties are contesting the ongoing Lok Sabha polls in Bihar
as part of an opposition alliance. Singh, who is contesting the election from
Vaishali, told that there is no match between Nyay and the Mahatma Gandhi
National Rural Employment Guarantee Act (MGNREGA) implemented when he was rural
development minister in the Congress-led UPA government. MGNREGA is extension
of food for work scheme. It is based on purushartha (object of human pursuit)
while Nyay talks of giving money free without any work. Nyay is like minting
money as per wish and distributing it, Singh told. The five-term MP said, A
famous British economist has argued that nothing should be given for free. The basic
idea of MGNREGA was work. Giving freebies is not in the interest of the
country; other parties may propose some more freebies. MGNREGA addressed the
problem of unemployment to a great extent. In its manifesto for the ongoing Lok
Sabha polls, the Congress has promised to give Rs 6,000 a month to 50 million
poorest of the poor families in the country under Nyay. Singh, who is a
professor and Phd in mathematics, said, RJD and Congress-led Mahagatbandhan
(grand alliance) will corner SC votes. In five phases of polls, we have seen SC
voters have not voted for JDU-BJP alliance in the state. In this election, the
BJP-JDU led alliance will be wiped out and we will get highest number of seats.
Singh further said, BJP and JDU have nothing to talk about their work. They are
seeking votes in the name of Prime Minister Narendra Modi. If you talk about a
constituency, they will say Modi will do it. Tell me - Is Modi fighting from
Vaishali? The RJD leader said the government in Bihar claims that its liquor
prohibition law has done wonders, but the reality is that in the name of
prohibition common people are harassed. As many as 250,000 people were put in
jail in last three years, smuggling of liquor rose manifold and there is police
raj in the state, he said. Liquor is freely available and prohibition law is
just a mockery. Chief minister Nitish Kumar is claiming that a large number of
voters will vote for him due to prohibition law. However, you will see it will
not fetch him even five votes, said Singh.
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NITI AAYOG 'REJECTS' CHARGES THAT IT HELPED PM MODI IN POLL
CAMPAIGNING
Government think tank the
Niti Aayog is learnt to have rejected allegations made by the Congress and Aam
Aadmi Party that it helped provide write ups to the Prime Minister's Office in
advance about places Narendra Modi was set to campaign. Responding to an
Election Commission communication, the body is learnt to have said the
allegations are unfounded, sources aware of the development said Thursday. The
EC had written to Niti Aayog CEO Amitabh Kant on May 4 flagging the allegations
made by the two parties. The think tank's reply, received Wednesday, has been
placed before the full commission for a decision. The poll panel wants to make
it clear whether the model code of conduct, that prohibits use of government
machinery for electioneering purposes, was violated. Only the prime minister is
exempted from the provision that bars ministers from combining official visits
with electioneering.
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ED PROBES JET AIRWAYS' FREQUENT FLYER LOYALTY PROGRAMME DEAL
WITH ETIHAD
The Enforcement
Directorate (ED) is investigating whether Jet Airways violated the foreign
exchange regulations while signing a $150-million (over Rs 900 crore) deal with
its strategic partner Etihad Airways in 2014 for a loyalty programme business.
The probe agency rounded up senior executives, including the airline’s chief
financial officer, earlier this week to check the nuances of the more than
five-year-old transaction under the provisions of the Foreign Exchange
Management Act (Fema), sources in the know said. In 2014, the Gulf carrier had
picked up a 50.1 per cent stake in Jet’s frequent flyer programme. The board of
Jet Privilege Private Limited (JPPL) had allotted 50.1 per cent shares to
Etihad and the remainder to Jet. We have sought information from Jet about the
deal and the foreign investment it received for its loyalty business, said an
ED official privy to the development. According to him, the investment was made
without an approval from the government and Reserve Bank of India (RBI). Any
foreign investment beyond 49 per cent requires such a nod.
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NIRAV MODI DENIED BAIL FOR A THIRD TIME, TO REMAIN IN
'UNLIVEABLE' UK JAIL
Fugitive diamond merchant
Nirav Modi was denied bail by a UK court on Wednesday for the third time in his
extradition case to India to face charges in the Punjab National Bank fraud
& money laundering case amounting to up to USD 2 billion and will continue
to be lodged in a London jail described by his lawyers as unliveable. His bail,
which had already been rejected twice before by Westminster Magistrates' Court
in London, came up for a third attempt before Chief Magistrate Emma Arbuthnot,
who ruled that while the doubling of security offered by Modi's lawyers did
amount to a change in circumstances in order for her to hear the renewed bail
plea, she still had similar concerns as before that he would fail to surrender
before the court. This is a large fraud and the doubling of security to 2
million pounds is not sufficient to cover a combination of concerns that he
would fail to surrender (if bail is granted), said Judge Arbuthnot. The next
hearing in the case will now take place on May 30, the previously scheduled
date for a case management hearing in Modi's extradition case.
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SUPREME COURT SEEKS SENIOR LAWYER’S RESPONSE ON FOREIGN FUNDS
RECEIPT AS ASG
The Supreme Court on
Wednesday sought the Centre's response to a PIL seeking a SIT probe into
alleged receipt of foreign funds by senior advocate Indira Jaising when she was
holding the sensitive post of additional solicitor general during the UPA
regime from 2009 to 2014. Responding to the developments in court, NGO Lawyers'
Collective, in a release signed by Jaising, said the petition was intended to
victimise her for taking up the case of a dismissed woman employee of the SC
who has levelled allegations of sexual harassment against the CJI. The case was
obvious victimisation of her as she has taken up the issue of procedure adopted
in relation to the allegation of sexual harassment against the CJI, the release
said. Appearing for Lawyers' Voice, the petitioner against Jaising, senior
advocate Purushendra Kaurav cited the home ministry's orders of May 31, 2016,
and November 27, 2016, and told the court, Jaising and Anand Grover (secretary
and president of NGO Lawyers Collective) in violation of Foreign Contribution
Regulation Act (FCRA) have indulged in influencing the democratic process of
the country in political arena by unauthorisedly lobbying with MPs and media
for passing certain legislations and to influence policy decisions. The
petition said this was done while Jaising was occupying the office of the
additional solicitor general of India which can play a role in changing the
policy of the government through binding legal opinions. The petitioner accused
the Centre of failing to take the probe, on since 2016, into FCRA violation by
the NGO and its office-bearers to its logical conclusion. A bench of Chief
Justice Ranjan Gogoi and Justice Deepak Gupta issued notices to the Centre,
Jaising, Grover and Lawyers Collective and sought their responses in six weeks.
The bench also said pendency of the petition in the SC was no bar for
investigating agencies to act in accordance with law. The Lawyers' Collective
statement said Jaising had taken up the issue of alleged procedural
irregularities in dealing with the sexual harassment complaint against the CJI
in her capacity as a concerned citizen, a senior member of the bar and women's
rights advocate, without commenting on the merits of the allegations.
Considering that Jaising has been publicly vocal on the issue of due process of
law in relation to the conduct of the in-house inquiry, the CJI ought to have
recused himself from hearing the matter, the NGO said. Jaising has been arguing
many matters successfully before the CJI-led bench even when she was publicly
critical of procedural lapses by both the CJI and the in-house panel. A few
days ago, senior advocate AM Singhvi had argued on behalf of former Kolkata
police commissioner Rajeev Kumar challenging CBI's application seeking his
custodial interrogation. After an elaborate argument by Singhvi, Jaising stood
up before the CJI-led bench to argue for the cop. When the bench said only one
counsel could argue for one litigant, Jaising said while Singhvi argued for the
ex-police commissioner, she would argue for Rajeev Kumar as an individual. The
CJI-led bench bent procedure and allowed Jaising to argue much to the chagrin
of CBI, which wondered how Rajeev Kumar would have two identities - one as
ex-police commissioner and the other as an individual - when it came to his
alleged role in the investigations conducted by the SIT he headed in the chit
fund scam cases. The PIL alleged that from orders passed by the Centre in 2016,
it could not be ruled out that Jaising abused her official position as an ASG
and accepted such foreign contribution as a reward for forbearing any official
act and/or official function or to favour or disfavour any person rendering any
services to the state or to influence a public servant and/or pass binding
direction in form of legal opinion to any government department favouring and
furthering the goals of the foreign donors. It accused Lawyers Collective of
using foreign contributions to bear the expenses of dharnas, rallies and
campaigning to influence policy decisions. The PIL said foreign funds were
received by Jaising, Grover and their NGO predominantly from Ford Foundation
and Open Society Foundation. It is a matter of public knowledge that Ford
Foundation acts as a frontal organisation of the premier international
investigating agency of a country of its origin. The said association has been
known for playing ostensible roles in destabilising the economics and political
establishments of other countries through participative process and/or by
influencing public servants and public opinion of the targeted country, it
said. The PIL said Jaising could also fall foul of Prevention of Corruption Act
for receiving foreign funds while being an ASG for the Union government from
July 2009 till May 2014, during which she received a remuneration of Rs 96.60
lakh from the government. It is impermissible in law for a law officer of the
country to remain on the rolls of a private entity being paid out of foreign
contributions for undisclosed purposes. She also travelled abroad and her
travel expenses were borne from the contributions received by Lawyers
Collective from foreign sources, the PIL alleged. Lawyers' Collective, through
Jaising, strongly disputed mis-utilisation of foreign funds and pointed out the
hurry with which the registry bend the standard operating procedure for listing
of petitions to get this particular PIL listed within days of defects getting
cured. It said, Though the (PIL) petitioner's advocate did not orally seek any
interim orders, the court has passed an order to the effect that pendency of
the petition will not come in the way of government agencies proceeding in the matter.
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SC: CORPORATES SEEM TO HAVE PENETRATED JUDICIARY TO MANIPULATE
COURT ORDERS
In yet another instance of
court orders being altered, a direction to six suppliers of controversial
builder Amrapali to appear before Supreme Court-appointed forensic auditor
Pavan Aggarwal was changed to ask the firms to present themselves to another
auditor. A bench led by Justice Arun Mishra expressed shock at how the order
was changed and said it indicated that some influential corporate houses had
managed to penetrate the judiciary to manipulate court staff. Interestingly,
Justice Mishra's bench has already ordered a probe into allegations that fixers
and middlemen tried to manipulate judicial proceedings. The judge found on
Wednesday that his order too was being manipulated. The court said this had
happened earlier also when an order passed by another bench headed by Justice
RF Nariman in industrialist Anil Ambani's contempt case was changed, leading to
two court staffers being sacked and a criminal case being lodged. It has been
done in the most mischievous manner. It is very unfortunate. What is happening
here? They are trying to manipulate our order sheet. Very serious things are
happening in court. Some more people have to go and removing 2-3 persons is not
sufficient. It is destroying the judiciary and it cannot be allowed. We come
and go but the institution will remain, Justice Mishra said.
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USE OF SMUGGLED GOLD IN LS POLLS IN DELHI? CUSTOMS, I-T DEPT
ON HIGH ALERT
Fearing use of gold and
cash in Lok Sabha elections in Delhi, the Customs department has increased
vigil and started sharing details of seizures with Income Tax and poll
authorities, officials said Wednesday. The Customs department is keeping a
hawkeye especially on passengers coming from the Gulf sector -- infamous for
gold smuggling cases-- to check for any suspicious gold and cash movement the
officials said. The cases of smuggling of foreign currencies are also under the
scanner of the Customs, an official said. Delhi's Indira Gandhi International
(IGI) airport witnesses a large number of gold smuggling cases. Gold worth over
Rs 110 crore was seized from smugglers by Customs officials at the IGI airport
during 2018, according to official data. Customs officials are maintaining a
strict vigil at the airport to check such movement, the official said. The
Customs department is also sharing data on seizure of gold weighing 1 kg or
more with the Income Tax department and poll authorities, he said. It shall
also submit a report of such cases to Delhi poll authorities, it said. A total
of 340 cases of gold smuggling, an increase of 58 per cent as compared to the
cases filed in 2017, were registered by the Customs department at the Delhi
airport in 2018. In these, 402.48 kg of gold, valued at Rs 113.83 crore, were
seized and 262 persons were arrested. There were 57 cases of smuggling of
foreign currencies during the year, in which foreign currencies worth Rs 22.27
crore were seized. A total of 38 persons were arrested in these cases.
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IT RAID AT MAHARSHI PRODUCER DIL RAJU’S OFFICE
Ahead of the release of
Mahesh Babu starrer Maharshi, Income Tax department raided producer Dil Raju’s
office in Hyderabad on Wednesday. The IT officials visited Dil Raju’s office
based on the news in the media about Maharshi’s staggering business. According
to reports, the Vamshi Paidipally directorial did over Rs 130 crore theatrical
and non-theatrical business. As of now, the officials are examining the records
related to the respective movie business.
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BENGALURU AUTO DRIVER WITH RS 1.6-CRORE VILLA GOT MONEY AS
CHARITY, SAYS IT DEPT
A Bengaluru-based auto
driver, who purchased a Rs 1.6 crore villa in an elite gated society in
Whitefield, got the money to purchase the house as charity, the Income Tax
Department has confirmed. Nalluralli Subramani, 37, had been under the scanner
of the I-T Department who suspected that the auto driver had political links.
Subramani, however, had attributed his good life to the largess of one of his
passengers. An investigation began after Subramani was served with a notice
under the Prohibition of Benami Property Transactions Act, 1988. I-T officials
had also questioned the developer of the colony at Jatti Dwarakamai in
Mahadevapura. Mahadevapura MLA Arvind Limbavali, who is also BJP’s Karnataka
general secretary, was also under the scanner after possible links between him
and Subramani were examined during the investigation.
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COMMERCE MINISTRY INTERACTS WITH INDIAN BUSINESS COMMUNITY IN
AFRICA TO BOOST TRADE TIES
To build an effective
engagement with the Indian Diaspora in Africa to further deepen and strengthen
India-Africa trade ties, the Commerce Ministry and Indian High Commissions
along with the Embassies of eleven African countries arranged an interaction
over Digital Video Conference (DVC) over two days, with the Indian business
community in Africa. Africa has a huge demand for new business models for
market entry, stable market access, entrepreneurship and investments in
transport, telecom, tourism, financial services, real estate and construction,
said Commerce Ministry in an official release. This initiative of the Commerce
Ministry emphasizes the need for a multipronged strategy for further enhancing
trade and investment ties between the two regions.
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HC REFUSES TO GRANT BAIL TO PETER MUKERJEA, ALLOWS HIM POST-OP
THERAPY
The Bombay High Court
Wednesday said it cannot grant bail to former media baron Peter Mukerjea, an
accused in the killing of his step-daughter Sheena Bora, but directed jail
authorities to take him for his post-operation cardiac rehabilitation sessions.
A vacation bench of Justice Riyaz Chagla said it was not inclined to order the
release of Mukerjea at the Asian Heart Institute, where he underwent a bypass
surgery, submitted in a report to a special CBI court last month that he has
recovered from the operation. I am, however, inclined to grant limited
protection to the applicant (Mukerjea). It will be appropriate to permit the
applicant to undergo post-operation cardiac rehabilitation sessions and
physiotherapy at the Asian Heart Institute, Justice Chagla said in the order. The
applicant shall be taken to the hospital under police escort for 26 sessions,
as prescribed by the Asian Heart Institute, the court said. Without the
post-operation cardiac rehabilitation sessions and physiotherapy, he (Mukerjea)
will die. Jail is not a proper place to be kept in after undergoing bypass
surgery, he argued on Wednesday. The jail authorities shall take him (Mukerjea)
to the hospital for the post-operation cardiac sessions. He need not be
released on bail for this purpose, Khan argued.
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SC AGREES TO HEAR ESSAR POWER MP PLEA ON SURRENDERING JHARKHAND
COAL MINE
The Supreme Court on
Wednesday agreed to hear Essar Power MP’s plea against the government decision
to invoke its bank guarantee worth Rs 200 crore but said would not call upon
the Centre to return the guarantee while the hearing was on. The top court will
also hear the company’s plea to return the Tokisud North coal mine in
Jharkhand. The Ministry of Coal had issued notices to Essar Power and GMR
Energy to confiscate their bank guarantees worth up to Rs 900 crore following a
judgment by the Delhi High Court rejecting the companies’ petition to surrender
their coal blocks. The ministry had then decided that if the two companies
moved Supreme Court in the designated time, they would withdraw the notice or
else implement it. Essar Power MP had on Wednesday moved the court alleging
that the said bank guarantee had been invoked by the government and the same
should be returned to them during the pendency of the case. Ranjan Gogoi said
that though they would not interfere with the decision of the government to
invoke the bank guarantee, they would hear Essar Power MP’s plea to surrender
the coal mine. The Rs 900-crore bank guarantees are for the two blocks of GMR
and one of Essar. While Essar won in Jharkhand, GMR had placed winning bids for
Talabira-I coal mine in Odisha and Ganeshpur mine in Jharkhand. The CERC’s
directive was done to ensure low power rates from the units associated with the
blocks after the power companies had won the said coal blocks by quoting
extremely low rates during the reverse bidding. The directive restricted higher
energy charge by coal block winners and allowed only downward revision of
tariff. This had hit the power companies, who could have benefited by
escalating the other component of the tariff, to compensate the low rates
quoted for the block.
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EXPORTS OF CERTAIN COMMODITIES TO MALDIVES EXEMPTED FROM
RESTRICTIONS IN 2019-20
Exports of specified
quantity of essential commodities to Maldives have been exempted from any kind
of domestic restrictions or prohibition in the current fiscal, according to an
official notification issued Tuesday. Export of potatoes, onion, rice, wheat
flour, sugar, dal and eggs has been permitted to Maldives under bilateral trade
agreement between India and Maldives during the period 2019-20 with effect from
April, directorate general of foreign trade said. It said that the export of
these items to Maldives will be exempted from any existing or future
restrictions/prohibition.
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PAK ARRESTS 34 INDIAN FISHERMEN DAYS AFTER RELEASING 55 AS
GOODWILL GESTURE
Pakistan has arrested 34
Indian fishermen for allegedly violating the country's territorial waters,
nearly 10 days after releasing 60 prisoners from India as a goodwill gesture,
officials said Wednesday. The fishermen, arrested on Tuesday, have been handed
over to the police, a Pakistan Maritime Security Agency spokesman said. They
will appear before a judicial magistrate who will decide on their judicial
remand, he said. According to the list of prisoners exchanged by India and
Pakistan in January, there are 347 Pakistani prisoners in Indian jails, 249 of
whom are described as civilians and 98 fishermen, the report said.
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Gujarat cops must follow
SC directive on dealing with arrestees: High Court
Acting on a public
interest litigation (PIL) questioning multiple incidents of the police parading
accused in handcuffs, in contravention of Supreme Court guidelines the Gujarat
High Court on Tuesday directed the state police to ensure proper compliance
with the directions laid down by the apex court in the case of DK Basu versus
State of West Bengal on how police should deal with an arrestee. The directions
came from the division bench of Acting Chief Justice AS Dave and Justice Biren
Vaishnav, which also ordered the state government to issue a circular within a
week for all police personnel, so that they are aware on how they should behave
and deal with arrested-accused. Notably, the PIL filed in July 2018 had pointed
out 10 separate incidents from the state whereby the accused were tied with
rope, paraded, made to do sit-ups, crawl on the ground and seek public apology.
The petitioner had submitted to the court that the action of police personnel
involved in all the 10 cases was in contravention of the apex court guidelines
and violates the human rights of the arrested-accused. The incidents were
reported from Vadodara, Rajkot, Mehsana, Ahmedabad, and Bhavnagar. The court,
after issuing the directions, disposed of the matter on Tuesday after the state
government filed a detailed affidavit assuring the court that it has initiated
proceedings against police personnel involved in all the 10 incidents mentioned
in the PIL. The affidavit submitted by additional director general of police
(law and order) Sanjay Srivastava also provides that all the 10 incidents are
being probed by high-ranking officials and also updated the court about the
latest status of the probes in all the 10 cases. The affidavit also provides
that the director general of police has proposed actions to take care of the
problem. These includes issuing an exhaustive circular mandating the guidelines
issued by the apex court at the stage of arrest and also during investigation;
training module on directions issued by Supreme Court for newly-recruited armed
and unarmed police officers; and narrating the apex court guidelines to police
personnel of all concerned police stations during the first week of every
quarter while conducting the roll call.
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Want economic slowdown to
end? Go shop
That Indians haven't been
spending on big-ticket items like houses or cars or bikes has been known for
some time. That they are not flying as much as they should be is also not new.
But now it seems Indians have started saving on their soap and shampoo budgets
too. Consumption is sputtering across a range of products, with sales volumes
dropping to multi-quarter lows.
Wanted shoppers
Passenger car volumes have
dropped in nine of the past 10 months. Growth was down to 2% in the last fiscal
year, the lowest in five. Two-wheeler volume growth fell to the lowest since
demonetisation in November 2016. Volume growth at leading fast-moving consumer
goods (FMCG) companies that derive more than a third of sales from rural areas
has dropped to a six-seven-quarter low. Indian airlines carried 11.6 million
passengers in March, a mere 0.1 percentage point higher than a year earlier, representing
the slowest increase since June 2013.
Shopping and economy
Consumption has been one of the engines that has been driving the economy in
the absence of private investment and exports. And the postponed purchases and
penny-pinching is showing on India’s economic health. It may show up in your
financial health too if you work for companies in the affected sectors when you
get your appraisal letters.
Why is India not spending?
Experts cite three key factors. Farm income growth has been weak for over two
years with prices having stayed low, as reflected in the marginal rise in
agricultural inflation. The growth in nominal gross domestic product (GDP) for
agriculture was 2% in the October-December 2018 period, the slowest in any
quarter since April-June 2012. Second, the benefit of price reduction due to
the reduction in goods and services tax (GST) has run its course. The third
reason is the liquidity crunch sparked by the Infrastructure Leasing &
Financial Services (IL&FS) default in September last year.
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INDIA, CHINA OFFICIALS TO DISCUSS TRADE RELATED ISSUES ON
THURSDAY
Senior officials of India
and China will meet on Thursday in New Delhi to discuss trade-related issues
particularly matters concerning the agriculture sector, an official said. The
meeting assumes significance as India is seeking greater market access for its
manufactured and agricultural products in the Chinese market to bridge the
widening trade deficit. Recently, India has identified and shared with China a
list of 380 products, including horticulture, textiles, chemicals and
pharmaceuticals products, as their shipments hold huge export potential.
Increasing exports of these products will help India narrow the widening trade
deficit with China, which stood at $50.12 billion during April-February
2018-19.
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US MAY HOLD MOVE TO WITHDRAW GSP TILL NEW INDIA GOVT TAKES
OVER
The US has indicated that
it could hold its proposed withdrawal of incentives on annual Indian exports of
$5.6 billion under the so-called generalised system of preference (GSP) until
the formation of the new government here, a source told. The rollback of the
export incentives worth $190 million a year was to kick in from around mid-May.
Wilbur Ross on Tuesday asked India to remove both tariff and non-tariff
barriers for American companies and eliminate data localisation restrictions
that weaken data security and increase the cost of doing business. Ross, who is
on a visit to India, echoed President Donald Trump’s charge of India being a
tariff king. India’s average applied tariff rate of 13.8%, and that remains the
highest of any major world economy. The very highest, Ross said. He claimed
that India imposed a 60% tariff on automobiles, 50% on motorcycles and 150% on
alcoholic beverages. Its bound tariff rates (the highest rate it can charge
under the WTO framework) on farm products averaged 113.5%, with some as high as
300%, he added. India’s import duty on ICT products such as network routers and
switches and parts of cellular phones are as high as 20%, while the US rate for
these same products is zero. These are not justified percentages. They are way
too high, he rued. Without mentioning the new FDI rules in e-commerce, notified
by New Delhi, that have caused unease among American companies such as Amazon
and Walmart, Ross said: currently, US businesses face significant market access
barriers in India. These include both tariff and non-tariff barriers, as well
as multiple practices and regulations that disadvantage foreign companies. Countering
the US allegation, analysts have said even the US imposes very high import
duties on several products, including 350% on tobacco and 164% on peanuts. Even
countries like Japan impose up to a 736% duty on select products and Korea up
to 807%. Importantly, India’s average tariff of 13.8% is much lower than the
average bound rate of 48.5% it is allowed to charge under the WTO framework.
Developing countries, as such, require better tariff protection than the
developed ones, and the WTO acknowledged this need as well, they added. As for
the claim of high Indian tariff on farm items, a paper submitted by India,
China and some others at the WTO points out that the domestic support per
farmer in the US was $60,586 in 2016, a massive 267 times of India’s ($227).
Huge subsidies have led to huge competitive advantage of farm products of
developed countries in the global market, which has forced developing ones
(like India) to offer limited tariff protection to their farmers from the
onslaught of heavily-subsidised imports. While the secretary acknowledged that
US’ exports of goods to India last year jumped by $7.4 billion, or an
impressive 29%, to $33 billion, New Delhi’s exports to Washington, too, rose
12% to $54 billion, representing a trade deficit in goods of $21 billion. For
its part, India wants the US to acknowledge that it was one of the few
countries (unlike China) with which Washington’s trade deficit actually shrank
for a second straight year in 2018. Also, India remains the world’s
fastest-growing major economy, which will continue to generate enormous.
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EACH WORD OF TRUMP’S TARIFF TWEETS WIPED $13 BILLION OFF
GLOBAL STOCKS
It was a total of 102
words that erased about $1.36 trillion from global stocks this week. Equity
markets across the world were roiled by President Donald Trumps tweets on
Sunday that he would boost tariffs on Chines goods. Not only did they spark
losses, but volatility came roaring back with a vengeance, with the Cboe
Volatility Index rising 50 percent in two days to breach 20 for the first time
since January. Risks surrounding U.S.-China trade relations -- which were not
on investors radar as late as last week -- came flooding back. Markets had been
lulled into a state of complacency in recent weeks as confidence grew the trade
discussions were going well, major central banks were dovish and U.S. corporate
earnings were coming in better-than-expected. The latest shift adds a new
dimension of uncertainty to what most market participants were assuming was a
done deal, said Eleanor Creagh. Something shifted over the weekend, and it
could be wishful thinking to keep drinking from the glass half full. The pull
back in markets was due given how hard global equities had rallied and
investors may have been looking for an excuse to take some profits, he said.
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FINANCE COMMISSION MEETS EMINENT ECONOMISTS IN MUMBAI
The economists put forth a
diverse array of issues for the consideration of the Commission; the salient
issues are the following:
·
There is a need to adopt a
total view on the borrowing requirements of the consolidated public sector.
This should encompass off-budget transactions, borrowings of the public sector
undertakings and contingent liabilities of both the Union and State
Governments. This is important from many angles, including debt sustainability,
fiscal transparency and proper coordination of fiscal and monetary policies.
·
It should be carefully
examined whether the increased tax devolution by the 14th Finance Commission
has led to improvements in the social spending of State Governments.
·
There is possibly a
mismatch between the demand and supply of state development loans, which can
affect the cost of borrowings of state governments in the next five years. Given
the maturity profile of state loans, there can also be repayment pressure on
these loans during the period of the 15th FC.
·
Indications are that the
fiscal deficit to GSDP ratio of the States taken as a whole is gradually declining,
after the spike seen in 2015-16 and 2016-17.
·
However, states are at
vastly different stages of debt consolidation. Reaching the FRBM targets would
involve an extremely difficult adjustment path for a few states. However, it is
important that the Union Government, and State Governments as a whole,
consolidate their debt position. According to some economists, expenditure
adjustments alone cannot bring about the required adjustment; fresh
revenue-raising efforts should also be made. Proceeds from auctioning of mines
could be a potential source of revenue.
·
The quality of budgeting
needs to improve. Governments should not budget for a low fiscal deficit,
knowing fully well that it cannot be achieved. Projections of revenues from GST
is tricky, but not impossible if one can work with the available data.
·
Economists also made
suggestions regarding the formula for horizontal devolution of Central taxes
among States and the provision of grant-in-aid to the State Governments. These
suggestions related to weight of income distance in the devolution formula, the
need to consider the quality of forests in addition to its quantity and the
need to consider and incentivise human development through a system of grants
or tax devolution. A few economists also urged that intra-state inequality is
another aspect that begs for the consideration of the Finance Commission.
·
Given the shift from the
use of 1971 population to 2001 population, some economists pointed towards the
need for instituting an incentive structure in devolution. The composition of
population in terms of proportion of elderly in population is becoming
significantly different across States.
·
Some economists urged
Finance Commission to consider reinstating the system of specific-purpose
grants to ensure development of social sectors and other sectors that require
handholding. Finance Commission may also consider the need for achieving
comparable service delivery standards across the country as its guiding
principle.
·
A suggestion was raised
for Finance Commission to consider giving priority to the development of a very
robust statistical system in the country in its recommendations.
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INDIA’S DUTIES LOWER THAN WTO PROMISES
Wilbur Ross may have
chosen against giving the full picture while pointing to India’s high import
duties, when governments over the years have lowered customs duties that are
significantly below India’s commitments to the World Trade Organization (WTO)
and in line with several other developing countries. While Ross, like his boss
Donald Trump, chose to highlight the import duty on alcoholic drinks and
automobiles, he remained silent on his government’s own track record on
products such as tobacco, peanuts and footwear (see graphic), said trade
experts and former negotiators. Every country maintains high tariffs on certain
products to protect its farmers or to promote manufacturing. India is no
different, said a source, pointing to Korea’s over 800% duty on products such
as sweet potato, quinoa and some cereals. As indicated by the government during
negotiations, some of the duties, such as those on electronics goods, cannot be
lowered as third countries such as China would benefit since the share of
American companies was estimated at $415 million, out of total shipments of $20
billion into the country. Similarly, the criticism that data localisation is a
barrier to American companies is seen to be flawed as financial services
players have already adjusted to rules mandated by the RBI, while e-commerce
players such as Amazon, Uber and Google are thriving in India. Most of these
companies have a negligible or no presence in China and promptly comply with
regulations in the EU and Russia but they always try to browbeat Indian
officials using American government pressure, said a former negotiator. Under
Trump, the US government has been putting pressure on India and China to lower
tariffs to allow more exports of Indian goods, while simultaneously tightening
visa rules that make it tougher for Indian professionals to seek jobs.
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BALAKOT BIGGEST ANTI-TERROR OPERATION IN INDIA'S HISTORY:
RAJNATH SINGH
The Balakot air strikes on
the Jaish-e-Muhammed terror training camp in Pakistan was the biggest
anti-terrorist operation in the history of India, Union Home minister Rajnath
Singh said. The senior BJP leader also slammed the Aam Aadmi Party (AAP)
government in Delhi alleging that it did not fulfil its promises made to the
people after coming to power in 2015. Singh lambasted the opposition parties
for seeking to know the exact number of terrorists killed in the Indian Air
Force strikes, days after the Pulwama attack in south Kashmir which claimed the
loves of 40 CRPF personnel. They (opposition parties) say the air force should
have counted the bodies. Being the home minister and having solid intelligence
input, I can say with full conviction that the Balakot air strikes was the
biggest anti-terrorist operation in the history of India, Singh claimed. He
also asserted the air strikes was the biggest anti-terror operation in the
world. India under Prime Minister Narendra Modi has stopped sending dossiers to
Pakistan after terror attacks and now responds directly. The days of sending
dossiers are gone, now we will ensure action against the terrorists, he told
the rally in Badarpur area. Hitting out at the ruling AAP in Delhi, he said:
There would be no crisis of water, electricity, schools and colleges, if it
(AAP) had fulfilled its promises made to the people before coming to power.
Delhi will develop only after the AAP is finished in the next Assembly
elections in the national capital, Singh said.
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EX-CIC REJECTS PM MODI'S CLAIM THAT RAJIV GANDHI USED INS
VIRAAT FOR VACATION
Wajahat Habibullah Thursday dismissed the
claims of Prime Minister Narendra Modi that Rajiv Gandhi used INS Viraat as a
personal taxi for a holiday with his friends and family and said the aircraft
carrier was stationed in Lakshwadeep for security reasons. Habibullah, who was
administrator of Lakshwadeep from August 1987, recalled that the then prime
minister Rajiv Gandhi had come to Kavaratti to attend a meeting of the Island
Development Authority where the Island Development Council was to be
inaugurated and no family member was present with him except his wife Sonia
Gandhi. After the inauguration, the Council had to meet members of the Union
Cabinet in connection with setting up of panchayati raj institutions in the
islands, Habibullah told PTI. Two things have been confused. There was a meeting
of Island Development Authority in Kavaratti, which is the headquarters of
Lakshwadeep. Second, after the official program, there was a holiday of Prime
Minister Rajiv Gandhi, his family and friends in Bangaram which is a separate
island, he said. The controversy erupted after Prime Minister Modi, at a rally
here on Wednesday, accused the Gandhi family of using warship INS Viraat as its
personal taxi for a holiday when Rajiv Gandhi was at the helm. No other family
member or friend of the Prime Minister were aboard that helicopter. I have
photographs of the visit to substantiate that. While I was with the Prime
Minister, my wife was giving company to Sonia Gandhi, he said. INS Viraat or
any other naval ship had nothing to do with that but naval presence was there
because of security reasons as the prime minister was present. Whether it was
INS Viraat or any other ship, I cannot remember, he said. When asked about the
recent comments of Prime Minister Narendra Modi on the issue, Habibullah said,
He (Modi) should check facts before making such a statement. The Navy was made
to host the Gandhi family and Rajiv Gandhi's in-laws, and a helicopter was also
deployed in their service, he claimed, adding that when a family becomes
supreme, the country's security is at stake.
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UK FIRM OFFERS BID FOR GROUNDED JET AIRWAYS, KEEN TO PARTNER
ETIHAD
London-based investment
firm Adi Partners on Wednesday formally placed its bid for the cash-starved Jet
Airways, a day before the bid deadline ends. The company, which is led by
Sanjay Viswanathan, former chief executive officer of Bangalore-based mid-cap
information technology (IT) firm Sonata Software, said it was willing to tie up
with Abu-Dhabi-based Etihad Airways for the bid. Etihad makes a great partner
because we need a strong airline to turn around Jet. I think Etihad will also
be interested because they also need a growing market like India, Vishwanathan
said over telephone. According to Vishwanathan, the firm has bid for 24 per
cent stake in Jet as it wants to avoid an open offer. Primarily, we will be
bidding for 24 per cent stake because we don’t want to trigger an open offer as
it will cause a big-value leakage. The 24 per cent stake will be good enough to
run the company if we get a right partner, he said. Sources involved in the
bidding process confirmed that the entity had submitted a bid but expressed
doubt over its acceptance. Yes, a bid from the entity has reached us but the
firm was not shortlisted during the expression of interest (EoI) process. But
considering that there is no other formal bid tomorrow, lenders may take a
legal view to see if the bid can be considered, the person said. According to
him, there is a possibility that a fresh bid will be called. If there is no
formal bid by tomorrow, it is possible that the lenders will call a fresh bid
with new terms and conditions, he added. However, Vishwanathan said his entity
had submitted the EoI as an individual entity and there was some
misunderstanding which saw Adi Partner’s proposal being ruled out.
Unfortunately, there were some miscommunications that we were aligned with
Goyal. That queered the pitch for us, with the lenders and we were
disqualified. We reached out to SBI Caps and clarified our position. It speaks
volume of our expertise that despite not being in the EoI process we were able
to submit a binding bid. I am very confident that it will be accepted as ours’
would be the well thought out and most attractive bid, he said. After getting
shortlisted the four bidders — Etihad Airways, TPG Capital, Indigo Partners and
NIIF — developed cold feet citing that they see no value in the company as
Jet’s slots and aircraft have been given away to other carriers. But
Vishwanathan said he was not perturbed by this, instead it gives a fresh chance
to restructure the airline’s network. Jet needs a revamp of their operations
and network. What we now have is an opportunity to rebuild the network with a
clean balance sheet, he said.
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TRUMP'S TARIFFS ON $200-BN CHINESE GOODS TAKE EFFECT; CHINA TO
STRIKE BACK
US President Donald
Trump's tariff increase to 25 percent on $200 billion worth of Chinese goods
took effect on Friday, and Beijing said it would strike back, ratcheting up
tensions as the two sides pursue last-ditch talks to try salvaging a trade
deal. China's Commerce Ministry said it deeply regrets the US decision, adding
that it would take necessary countermeasures, without elaborating. The hike
comes in the midst of two days of talks between top US and Chinese negotiators
to try to rescue a faltering deal aimed at ending a 10-month trade war between
the world's two largest economies. Chinese Vice Premier Liu He, US Trade
Representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin talked
for 90 minutes on Thursday and were expected to resume talks on Friday. The
Commerce Ministry said that negotiations were continuing and that it hopes the
United States can meet China halfway, make joint efforts, and resolve the issue
through cooperation and consultation. With no action from the Trump
administration to reverse the increase as negotiations moved into a second day,
US Customs and Border Protection imposed the new 25 percent duty on affected
US-bound cargoes leaving China after 12:01 a.m. EDT (0401 GMT) on Friday. Goods
in the more than 5,700 affected product categories that left Chinese ports and
airports before midnight will be subject to the original 10 percent duty rate,
a CBP spokeswoman said. The grace period was not applied to three previous
rounds of tariffs imposed last year on Chinese goods, which had much longer
notice periods of at least three weeks before the duties took effect. This
creates an unofficial window, potentially lasting a couple of weeks, in which
negotiations can continue and generates a 'soft' deadline to reach a deal,
investment bank Goldman Sachs wrote in a note. Given this detail, downside to
sentiment might be slightly more muted than if the tariff increase came with a
'hard' deadline. This also leaves an opportunity for the two sides to reach an
agreement in the next couple of weeks, though challenges remain. Trump gave US
importers less than five days notice about his decision to increase the rate on
the $200 billion category of goods to 25 percent, which now matches the rate on
a prior $50 billion category of Chinese machinery and technology goods. The
biggest Chinese import sector affected by the rate hike is a $20 billion-plus
category of internet modems, routers and other data transmission devices,
followed by about $12 billion worth of printed circuit boards used in a vast
array of US-made products.
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THERESA MAY REPEATS DEEP REGRET OVER JALLIANWALA BAGH, BUT NO
APOLOGY
Prime Minister Theresa May
has repeated the UK government's deep regret over the Jallianwala Bagh massacre
to mark the 100th anniversary of the British colonial era attack in Amritsar on
Vaisakhi. The massacre took place at Jallianwala Bagh in Amritsar (undivided
Punjab) during the Vaisakhi festival on April 13, 1919, when troops of the
British Indian Army under the command of Colonel Reginald Dyer opened fire at a
crowd of people holding a pro-independence demonstration, leaving scores dead.
Prime Minister May repeated words from her House of Commons statement last
month as she referred to the shameful scar on British Indian history. We deeply
regret what happened and the pain inflicted on so many people, she told a
gathering of the Indian diaspora. She said: No one who has heard the accounts
of what happened that day can fail to be deeply moved. No one can truly imagine
what the visitors to those gardens went through that day one hundred years ago.
It was, as the former prime minister H H Asquith described it at the time,'one
of the worst outrages in the whole of our history'. She added: But although I
haven't yet been to one of these parades I have been lucky enough to be a
frequent guest at gurdwaras in my constituency and across the UK and can not
only imagine the warm Punjabi welcome at this time of year but just how good
the food must be. This of course is a particularly important year for the whole
of the Sikh community, 2019 marks the 550th anniversary of the birth of Guru
Nanak, the first Sikh guru, in 1469. And I am sure we will see many events to
celebrate this later in the year.
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WE WERE CLOSE TO A DEAL WITH CHINA BUT BEIJING BEGAN
RENEGOTIATING: TRUMP
The US and China were
getting very close to a deal but Beijing began renegotiations, President Donald
Trump has said even as the world's two largest economies seem nowhere near an
agreement to end their bruising trade war. The Trump administration on Friday
increased tariffs on $200 billion worth of Chinese products from 10 per cent to
25 per cent despite China threatening to retaliate. Trump on Thursday told
reporters that such a move is necessary to hold China to previous commitments.
The US and China are locked in a trade war since Trump imposed heavy tariffs on
imported steel and aluminium items from China in March last year, a move that
sparked fears of a global trade war. In response, China imposed tit-for-tat
tariffs on billions of dollars worth of American imports. The US President
said: We were getting very close to a deal, then they started to renegotiate
the deal. We can't have that. Trump appeared to be fine with the situation
wherein the US does not enter into a trade deal with China.
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PICHAI GIVES HIS WORD OF HONOUR: GOOGLE WILL NEVER SELL DATA
TO 3RD PARTIES
Google will never sell any
personal information of its users to third parties, CEO Sundar Pichai has said,
amidst growing global concern over the misuse of personal data by some social
media giants. In an opinion piece in The New York Times published on Tuesday,
he also said that privacy cannot be a luxury good that is only available to
people who can afford to buy premium products and services. The 46-year-old
Indian-origin CEO of Google said he believed that privacy was one of the most
important topics of our time. People today are rightly concerned about how
their information is used and shared, yet they all define privacy in their own
ways, he said. To make privacy real, we give you clear, meaningful choices
around your data. All while staying true to two unequivocal policies: that
Google will never sell any personal information to third parties; and that you
get to decide how your information is used, Pichai said. Pichai said he has
seen this first-hand as he talked to people in different parts of the world. To
the families using the internet through a shared device, privacy might mean
privacy from one another. To the small-business owner who wants to start
accepting credit card payments, privacy means keeping customer data secure. To
the teenager sharing selfies, privacy could mean the ability to delete that
data in the future, Pichai said. He noted that privacy was personal, which
makes it even more vital for companies to give people clear, individual choices
around how their data is used. He said legislation will help companies like
Google to work toward ensuring that privacy protections are available to more
people around the world. But we're not waiting for it. We have a responsibility
to lead. And we'll do so in the same spirit we always have, by offering
products that make privacy a reality for everyone, Pichai said. Ideally,
privacy legislation would require all businesses to accept responsibility for
the impact of their data processing in a way that creates consistent and
universal protections for individuals and society as a whole, he said. He said
Google has worked hard to continually earn people's trust by providing accurate
answers and keeping their questions private. We've stayed focused on the
products and features that make privacy a reality for everyone, he said in the
opinion piece. For everyone is a core philosophy for Google; it's built into
our mission to create products that are universally accessible and useful.
That's why Search works the same for everyone, whether you're a professor at
Harvard or a student in rural Indonesia, he said. Our mission compels us to
take the same approach to privacy. For us, that means privacy cannot be a
luxury good offered only to people who can afford to buy premium products and
services. Privacy must be equally available to everyone in the world, Pichai
underlined. He noted that even in cases where Google offered a paid product
like YouTube Premium, which includes an ads-free experience, the regular
version of YouTube has plenty of privacy controls built in.
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CHINA’S INVESTMENT IN US DROPS 83 PER CENT AMID GROWING
MISTRUST
Chinese direct investment
in the United States dropped 83 per cent last year, pushed down by growing
mistrust between the world’s two biggest economies. In a report out Wednesday,
the Rhodium Group research firm said that China sank USD 5 billion last year
into direct investments in America, down from USD 29 billion in 2017 and a
record USD 46 billion in 2016. The numbers fell partly because Beijing sought
to rein in deeply indebted investors and partly because the U.S. regulators
have stepped up scrutiny of Chinese investments. Rhodium estimates that China
dropped deals worth USD 2.5 billion last year because they wouldn’t pass muster
with the Committee on Foreign Investment in the United States, which reviews
foreign investments with national security implications. Chinese investment in
the U.S. information and communications technology industry plunged to USD 200
million last year from USD 2.5 billion in 2017. US direct investment in China,
meanwhile, dipped to USD 13 billion from USD 14 billion in 2017. US investment
in the Chinese information and technology industry dropped to USD 2.1 billion
last year from USD 4.1 billion in 2017 and USD 4.3 billion in 2016.
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TRUMP SAYS CHINA 'BROKE TRADE DEAL', VOWS NOT TO BACK DOWN ON
NEW TARIFFS
Donald Trump said on
Wednesday that China broke the deal it had reached in trade talks with the
United States, and vowed not to back down on imposing new tariffs on Chinese
imports unless Beijing stops cheating our workers. The US Trade
Representative's office announced that tariffs on $200 billion worth of Chinese
goods would increase to 25 percent from 10 percent at 12:01 a.m. (0401) GMT on
Friday, right in the middle of two days of meetings between Chinese Vice
Premier Liu He and Trump's top trade officials in Washington. The Chinese side
deeply regrets that if the US tariff measures are implemented, China will have
to take necessary countermeasures, China's Commerce Ministry said on its
website, without elaborating. The world's two largest economies have been
embroiled in a tit-for-tat tariff war since July 2018 over U.S. demands that
the Asian powerhouse adopt policy changes that would, among other things,
better protect American intellectual property and make China's market more
accessible to US companies. Expectations were recently riding high that a deal
could be reached, but a deep rift over the language of the proposed agreement
opened up last weekend. Reuters, citing US government and private-sector
sources, reported on Wednesday that China had backtracked on almost all aspects
of a draft trade agreement, threatening to blow up the negotiations and
prompting Trump to order the tariff increase.
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MOST AUSTRALIANS SEE CLIMATE CHANGE AS BIGGER THREAT THAN
TERRORISM: STUDY
#For Source of Information copy and paste the heading in google.
Thanks & Regards,
CS Meetesh Shiroya