India negotiating changes in Mauritius tax treaty: FM

Finance secretary Sunil Mitra recently said that discussions to resume the re-negotiation of the three-decade old treaty, stalled since 2008, are likely to resume in July or August

Washington: Finance minister Pranab Mukherjee Wednesday said the government is negotiating changes in a tax treaty with Mauritius, the country which accounts for the maximum foreign investment in India, reports PTI.

“So far as Mauritius is concerned, we are having discussions with them for amendment of the avoidance of double taxation agreement. Talks are going on,” Mr Mukherjee told PTI when asked whether the government is looking at the possibility of imposing levies on inflows from tax havens.

Around 42% of foreign direct investment (FDI) and about 40% of foreign institutional investor (FII) fund flows into India are routed through the island nation.

It is believed that a large majority of them are third country investors which use the Double Taxation Avoidance Convention (DTAC) with Mauritius for saving capital gains tax.

Mr Mukherjee said the Group of 20 (G-20) developing and developed countries across the world is holding discussions on cooperating to share banking information.

“... These can be achieved through a legal framework and that legal framework is provided by two sorts of agreements—one is avoidance of the double taxation agreement and another is the tax information exchange agreement,” he said.

So far India has negotiated/renegotiated DTAAs with 33 countries and also entered into Tax Information Exchange Agreements (TIEA) with 13.

Mr Mukherjee said the legal framework required to trace black money ‘alleged’ to have been stashed in overseas accounts was being worked out. “This legal framework is being framed and we are working on it,” he added.

India’s finance secretary Sunil Mitra recently said that discussions to resume the re-negotiation of the three-decade old treaty, stalled since 2008, are likely to resume in July or August.

While the government has been pressing for re-negotiating the Mauritius treaty, seeking to plug the loopholes and revenue leakages, some experts have raised concerns that the move may impact foreign direct investment (FDI) into the country.

According the pact, capital gains from the sale of shares by residents of Mauritius in India would be liable to tax only in that country. As Mauritius does not have capital gain tax, there is no burden on investors routing money in India through a circuitous route.

User

SC directs W Bengal govt to halt return of land to farmers in Singur

The apex court said it was passing a limited interim order and asked the high court to proceed with the main matter in which the Tatas have challenged the new law enacted by the Mamata Banerjee government for taking possession of land and distributing it to farmers who were the original owners

New Delhi: The Supreme Court today directed the West Bengal government not to go ahead with distribution and return of land in Singur to farmers which was acquired for Tata Motors’ small car project Nano, reports PTI.

“As an interim order we direct state government not to hand over or return land to farmers concerned until further order passed by the Calcutta High Court,” a vacation bench comprising justices P Sathasivam an AK Patnaik said.

The bench said it was making it clear that this was an “interim arrangement” and it was not expressing any opinion on the merits of the case.

The judges said they were passing a limited interim order and asked the high court to proceed with the main matter in which the Tatas have challenged the new law enacted by the Mamata Banerjee government for taking possession of land and distributing it to farmers who were the original owners.

However, the bench said since the main issues were pending before the high court, it was not inclined to go into them.

“We are not inclined to interfere at this stage on the main issues pending before the high court,” it said.

The bench observed it was granting interim protection as senior counsel PP Rao, appearing for the state government, said the possession of land will remain in the hands of state government till the high court decides the issues.

During the proceedings, the bench observed it is not a question of political issues but a question of rights.

The court was hearing a petition filed by Tata Motors challenging the order of Calcutta High Court which refused to grant any relief to it.

Tata Motors had yesterday approached the Supreme Court accusing the West Bengal government of enacting the law in a haste to take over land in Singur allotted to it for its Nano car project and using police force illegally to take back possession of the plot.

The Tatas, which on 27th June failed to get any relief from the Calcutta High Court, had challenged the Singur Land Rehabilitation and Development (SLRD) Act, passed by the state assembly for taking back possession of the land and distributing it among farmers who owned them before acquisition by the previous Left Front government.

Tatas have filed the appeals against the orders of the high court which rejected its plea to restrain the state government from taking back possession and distribution of land to farmers.

The petitions said the state government was allegedly indulging in ‘colourable exercise of power’ on Singur land issue.

Tatas alleged the state government has been ‘illegally’ taking possession of land by using police force.

The company had said that in view of ‘vandalism’ and ‘looting’ of goods at the factory site, the land should be returned immediately to Tata.

Tata Motors had filed separate petitions challenging two Calcutta High Court orders dated 23rd June and 27th June.

On 23rd June, the high court had refused to entertain the company’s plea seeking directions to restrain the state government from taking possession of the about 1000 acre land.

The company had also filed another plea in the high court on 27th June, unsuccessfully challenging the SLRD Act and rules and notification since 20th June.

It had also sought a direction to restrain the state government from distributing land to original owners and farmers thus creating a third party interest.

User

RBI deputy governor calls for paperless, chequeless, cashless banking

RBI deputy governor KC Chakrabarty said role of the banker is very challenging today as at one end lies the demand to achieve financial inclusion as nearly 50% are yet to be covered under the formal system of banking and at the other end lies the task to fulfil the needs of the existing customer

Mumbai: Reserve Bank of India (RBI) deputy governor KC Chakrabarty on Tuesday called up on banks to begin a journey onto the path of paperless, cheque-less and cashless banking stating that the future of banking lies there, reports PTI.

"The next big challenge for our banks is to make banking paperless, cheque-less and cashless," he told the sixth Banking Technology Summit organised by CII here.

"I know the answers to these questions are not easy and nobody has a readymade answer. But this should put us on the track to think differently and think big. It would definitely take time to achieve these goals but it is not impossible as it is already happening globally," he noted.

Noting that technology is changing the cultural and business landscapes beyond recognition, the deputy governor said the world over, organisations are using transformative power of technology to create business value for today, and step-function growth for tomorrow. And the banking sector cannot be any exception, he added.

With financial inclusion gaining faster currency, he admitted that role of the banker is very challenging today as at one end of his spectrum lies the demand to achieve financial inclusion as nearly 50% are yet to be covered under the formal system of banking and at the other end lies the task to fulfil the needs of the existing customer.

Stating that core banking is one of the top priorities of the RBI, Mr Chakrabarty said, "The first priority is to get all banks on adopting core banking solution, including all regional rural banks (RRBs). The next is a multi-channel approach using handheld devices, mobiles, cards, micro-ATMs, branches, kiosks etc can be used."

The RBI had recently released its IT Vision document for 2011-17 that envisages transforming RBI into a knowledge organisation using IT as a strategic resource, IT governance.

It also looks at banks moving from core banking to enhanced use of IT in areas like regulatory reporting, risk management, MIS, financial inclusion and CRM.

On the need for curbing the rising instances of cyber fraud in banks, he said it is necessary to improve controls and examine the need for pro-active fraud risk assessments and management processes in commercial banks.

"My belief is that commerce or banking to the poor is always more viable than commerce or banking for the rich.

That's why corporates get money at 7%-8% and MFI borrowers pay at 60%. It is viable provided you have the ability to do business with the poor.

"What we are saying is that don't subsidise the poor, but don't exploit them, because so long as the rich get a thing cheaper, they will not allow that item to reach the poor. And this has to change, at least in banking," Mr Chakrabarty said.

On whether RBI is happy with the progress of the inclusion programme so far, he said, "We are never happy with anything nor are we depressed. It is not that nothing has happened on the inclusion front. Many things have happened, but we have to scale up."

Stating that the real issue is not about viability, but the ability of banks to do it properly, he said, "Banks are not able to do this because they don't have the capacity to do so. That is why we are asking them to build their capacities through technology and new delivery models."

Comparing inclusion banking to buying a house, he said, "You have to invest first to make future profits. You will never say you are spending money on your house, but investing in your house. Banks have to look at the inclusion project as an investment and over a period of time they will get the return on their investment."

Asked whether instead of each bank being pushed to do inclusion banking, should not the government set up a separate bank to handle this programme by diverting the money it annually infuses into PSU banks, he quipped, "No, the government should not get into any business as it can never be a good businessman."

"Its job is to facilitate, encourage and regulate business so that is it done in an ethical and in a non- exploitative manner," he concluded.

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)