Following a measured pushback from Reserve Bank Governor Raghuram Rajan, the Modi government on Thursday withdrew its Budget proposals aimed at the most significant regulatory shake-up in the 80-year history of the central bank — to take away from the RBI, and give to a new independent agency, the task of managing the Centre’s borrowings and to strip it of the authority of regulating government bonds.
Ahead of the vote in the Lok Sabha on the Finance Bill, 2015-16, Union Finance Minister Arun Jaitley said the government would make a fresh road map for a new independent agency to issue, and manage, public debt after consulting the Reserve Bank. He, however, did not offer reasons for the rollback.
In his Budget speech in February, the Minister had proposed a public debt management agency, which became a source of friction between the Reserve Bank and the Centre.
Dr. Rajan had told The Hindu earlier this month: “… There have been concerns that a central bank being the public debt management authority may be lax in some of its functions … I have always believed those concerns [are] not entirely unwarranted but perhaps overblown. But let’s say ... perception of these conflicts exists then may be there is some rationale to having an independent agency. But if that agency is too close to the government also, we should be careful ..."
Jaitley promises ‘extremely simplified’ I-T returns form
Union Finance Minister Arun Jaitley on Thursday proposed to bring in an ‘extremely simplified’ income tax returns form in place of the controversial 14-page ITR form that sought information on bank accounts held overseas and details of all foreign trips made during the year.
“I am having the entire matter reviewed and very soon you will hear an extremely simplified procedure coming for us,” the Minister said during the debate in the Lok Sabha on the Finance Bill which was passed by a voice vote.
MAT exemption
Mr. Jaitley offered tax relief to foreign investors by exempting income from securities transactions, royalties and technical service from minimum alternative tax (MAT) in those cases where the normal tax rate is less than 18.5 per cent.
Mr. Jaitley also announced exemption from service tax on life insurance policies under the Pradhan Mantri Jeevan Jyoti Bima Yojana and Pradhan Mantri Jan Dhan Yojana and on general insurance policies under the Pradhan Mantri Suraksha Bima Yojana, besides some changes in duty rates applicable to raw silk, iron ore and rubber.
During the debate, in response to oft-repeated remarks including by Congress vice-president Rahul Gandhi on Prime Minister Narendra Modi’s foreign visits, he said: “When PM goes abroad he is performing a national duty…there’s a difference between performing a national duty and disappearing for a jaunt.”