Showing posts with label tax. Show all posts
Showing posts with label tax. Show all posts

mnemonics for types of taxes

Mnemonics for Taxes

DIRECT TAXES :- "wepro.co.in" 
We : wealth tax
Pro : property tax
Co : corporate tax
In : income tax

INDIRECT TAXES :- "excuse me" 
Ex : excise tax
Cu : custom tax
Se : service tax
M : market tax/vat
E : entertainment tax

RBI as Banker to Government



One of the important role of RBI is being Banker to Governments - GOI & State Govts. It doesn't get much public attention because it does not directly impact prices/ policy rates/ GDP figures of the country. However it's an important role of RBI. RBI also gives financial advice to govt, whenever called to do so.

RBI - banker to Government.

Legal Framework:


RBI Act 1934:

RBI has the 'obligation' to undertake the receipts and payments of the Central Government and to carry out the exchange, remittance and other banking operations, including the management of the public debt of the Union.


RBI has the 'right' to transact Government business of the Union in India.

Accordingly RBI is also banker to all State Govts, as per the agreements they enter into, except J&K and Sikkim.

RBI does NOT get any remuneration for the conduct of ordinary banking business other than the advantages which may accrue to it from the holding of their cash balances free of obligation to pay interest thereon.


Banker to Central Govt:

Work relating to Govt. business is handled by Public Accounts Dept of RBI. Govt's Principal accounts are maintained at Central Accounts Section in Nagpur. Duties involve receipt & payment of moneys on behalf of various govt dept.


Each ministry/Dept has been allotted a Public Sector Bank for handling it's transactions based on principle of 'One Bank - One Ministry/Dept'. The responsibility of maintenance of accounts lies with individual Ministry/Department only. This includes arranging payments, accounting receipt, disbursal, auditing of transaction. RBI does NOT handle day-to-day transactions as before, except where nominated.


Banker to State Govts:


The financial transactions of State Govts are done at various agency bank branches in respective states. All the transaction are consolidated at 'Link cell' in State Capital & settled with RBI office in the state. All consolidated position are then ultimately booked in Principal Accounts of the resp. State maintained @ CAS (Central Accounts Section) Nagpur.

Meanwhile transactions at various agency offices (RBI, SBI, Nationalized banks' branches, treasuries etc) are done without any reference to cash position of the State Govt @ CAS.



Central Accounts (CAS@ Nagpur):

Each agency bank has set up a 'Link office' in Nagpur, for fund settlement with CAS. All the financial transactions thus merge into CAS Nagpur, which work out daily cash balance of each Govt.

RBI sends daily, monthly advice of balance in its books, ways & means granted, investments made to respective Govts. This is useful for govts in preparing 'Ways & Means budgets'.



Other Services:

Besides receipt & payment of money on behalf of Govts. RBI performs other services to govts for which it may receive nominal fees, often this don't even cover costs!

Being Banker to govt RBI provides: exchange, handle forex transaction of GOI, remittance transactions, management of public debt & issue of new loans, invest surplus funds, issue & management of special funds, bonds, pension schemes, safe custody facility and act as Adviser to Govt on various Monetary & economic perspectives.


Reforms:


a) Computerization: RBI's endeavor is to help common person to pay Govt's dues at bank branch of his choice, while ensuring instantaneous credit to Govt's a/c @ RBI.

RBI & Govts are working towards computerization of dealing branches, CAS, all PAOs (Pay & Accounts Offices)/ Circle Offices of Govt/ Drawing offices/ Treasury offices.

It is envisaged that real-time settlement of funds would handle shortcomings observed in manual system of handling transactions. Reconciliation at every level will be quicker with increased accuracy.


Instead of paper scrolls, Govt depts are geared up for accepting the same in e-format. Earlier all deposits in Govt's a/cs were to be accompanied by appropriate challans. Challans were in multiple copies, different shapes, sizes. Paying taxes & accounting for same was cumbersome, time-consuming process.

With the progress in banking it is possible for assesses to pay govt's dues using single pay-in-slip. Later electronically just by quoting PAN!


OLTAS (On-Line Tax Accounting System) introduced in 2004, for collection of Direct Taxes is a step in that direction. OLTAS can be accessed through Net-banking of Agency Banks & taxes can be paid by common taxpayer in minutes.



b) Expansion in Agency Banks: At present all public sector banks & 3 private sector banks (Axis, HDFC, ICICI bank) act as RBI's agent to do Govt business.

Agreement between State Govt & RBI provide that the RBI is not entitled for any remuneration for ordinary banking operations apart from the advantages which may accrue from holding cash balances free of obligation to pay interest thereon. However minimum balances doesn't adequately compensate RBI for the cost of conducting Govt's business.


Presently 'Agency commission' is given to commercial banks by RBI. This merely covers the cost of doing the transaction. In most of the countries this cost is borne by Govts themselves.

RBI is trying to create a climate of competition for Govt Business. It's suggested that system of 'bidding' would rationalize agency charges better rather than present 'cost system'


For more information read FAQs by RBI & speech by Sh. YV Reddy (former RBI Governor).



Height of global inequality: rich-poor gap widening

Height of Global Inequality!

A very shocking report is published by Oxfam which reports that: a tiny group of 85 richest people own as much as 3.5 billion poor! wtf.


Some points of the study can be used in essays, answers regarding global inequality, poverty or to point out failure of democracy, taxation policies.

Important Points for essays


a) Wealthy groups have co-opted political power, thus undermining democracy in a country including India. This group then create rules which is in favor of those having high income.


b) Since the late 1970s tax rates for rich have fallen. In last 25 yrs wealth have concentrated even more in the hands of few families. Around 1% of rich families own around 50% of wealth.

c) In India since last decade no. of billionaires have increased tenfold thanks to 'highly regressive tax structure' & 'political connections'.

All this bends the rules of economic game in favor of fittest group. In the end rich are getting richer & poor are becoming even more poor. Govt spending on poor is low.


Some of the policies in favor of rich are: Tax havens & secrecy, financial deregulation, anti-competitive business practices & cuts in public spending.