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BREAKING NEWS 2016

BREXIT
Like Mr. Cameron, Mrs. May was against
Britain leaving the EU but she says she will
respect the will of the people. She has said
"Brexit means Brexit" but there is still a lot
of debate about what that will mean in
practice especially on the two key issues of
how British firms do business in the
European Union and what curbs are
brought in on the rights of European Union
nationals to live and work in the UK.

What does Brexit mean?


It is a word that has become used as a
shorthand way of saying the UK leaving the
EU - merging the words Britain and exit to
get Brexit, in a same way as a possible
Greek exit from the euro was dubbed Grexit
in the past.

Why is Britain leaving the European


Union?
A referendum - a vote in which everyone (or
nearly everyone) of voting age can take part
- was held on Thursday 23 June, to decide
whether the UK should leave or remain in
the European Union. Leave won by 52% to
48%. The referendum turnout was 71.8%,
with more than 30 million people voting.

What was the breakdown across the UK?


England voted strongly for Brexit, by 53.4%
to 46.6%, as did Wales, with Leave getting
52.5% of the vote and Remain 47.5%.
Scotland and Northern Ireland both backed
staying in the EU. Scotland backed Remain
by 62% to 38%, while 55.8% in Northern
Ireland voted Remain and 44.2% Leave.

What has happened since the referendum?


Britain has got a new Prime Minister Theresa May. The former home secretary
took over from David Cameron, who
resigned on the day after losing the
referendum.

What about the economy?


The UK economy appears to have
weathered the initial shock of the Brexit
vote, although the value of the pound
remains near a 30-year low, but opinion is
sharply divided over the long-term effects of
leaving the EU. Some major firms such as
Easyjet and John Lewis have pointed out
that the slump in sterling has increased
their costs.
Britain also lost its top AAA credit rating,
meaning the cost of government borrowing
will be higher. But share prices have
recovered from a dramatic slump in value,
with both the FTSE 100 and the broader
FTSE 250 index, which includes more
British-based businesses, trading higher
than before the referendum.
The Bank of England is hoping its decision
to cut interest rates from 0.5% to 0.25% - a
record low and the first cut since 2009 - will
stave
off
recession
and
stimulate
investment, with some economic indicators
pointing to a downturn.

What is the European Union?


The European Union - often known as the
EU - is an economic and political
partnership
involving
28
European
countries. It began after World War Two to
foster economic co-operation, with the idea
that countries which trade together are

more likely to avoid going to war with each


other.
It has since grown to become a "single
market" allowing goods and people to move
around, basically as if the member states
were one country. It has its own currency,
the euro, which is used by 19 of the member
countries, its own parliament and it now
sets rules in a wide range of areas including on the environment, transport,
consumer rights and even things such as
mobile phone charges.

When will Britain actually leave it?


For the UK to leave the EU it has to invoke
an agreement called Article 50 of the Lisbon
Treaty which gives the two sides two years
to agree the terms of the split. Theresa May
has confirmed this will be done by the end of
March 2017, meaning the UK will be
expected to have left by the summer of 2019,
depending on the precise timetable agreed
during the negotiations.
Once negotiations officially begin, we will
start to get a clear idea of what kind of deal
the UK will seek from the EU, on trade and
immigration.
The government will also enact a Great
Repeal Bill which will end the primacy of
EU law in the UK. It will incorporate EU
legislation into UK law, after which the
government will decide which parts to keep,
change or retain.

Who is going to negotiate Britain's exit from


the EU?
Theresa May has set up a new government
department, to be headed by veteran
Conservative MP and Leave campaigner
David Davis, to take responsibility for
Brexit. Former defense secretary, Liam Fox,
who also campaigned to leave the EU, has
been given the job of international trade
secretary and Boris Johnson, who led the
Leave campaign, is foreign secretary.
These men - dubbed the Three Brexiteers will play a central role in negotiations with
the EU and seek out new international
agreements, although it will be Mrs. May, as

prime minister, who will have the final say.


The government did not do any emergency
planning for Brexit ahead of the referendum
- and it is now rushing to hire a team of
skilled negotiators to manage the complex
business of negotiating withdrawal and
ensuring Britain gets the best possible deal.

How long will it take for Britain to leave the


EU?
Once Article 50 has been triggered, the UK
will have two years to negotiate its
withdrawal. But no one really knows how
the Brexit process will work - Article 50 was
only created in late 2009 and it has never
been used.
Former
Foreign
Secretary
Philip
Hammond, now Chancellor, wanted Britain
to remain in the EU, and he has suggested
it could take up to six years for the UK to
complete exit negotiations. The terms of
Britain's exit will have to be agreed by 27
national parliaments, a process which could
take some years, he has argued.
EU law still stands in the UK until it ceases
being a member. The UK will continue to
abide by EU treaties and laws, but not take
part in any decision-making.

Why will Brexit take so long?


Unpicking 43 years of treaties and
agreements covering thousands of different
subjects was never going to be a
straightforward task. It is further
complicated by the fact that it has never
been done before and negotiators will, to
some extent, be making it up as they go
along.
The post-Brexit trade deal is likely to be the
most complex part of the negotiation
because it needs the unanimous approval of
more than 30 national and regional
parliaments across Europe, some of whom
may want to hold referendums.
In very simplified terms, the starting
positions are that the EU will only allow the
UK to be part of the European single market
(which allows tariff-free trade) if it
continues to allow EU nationals the

unchecked right to live and work in the UK.


The UK says it wants controls "on the
numbers of people who come to Britain from
Europe". Both sides want trade to continue
after Brexit with the UK seeking a positive
outcome for those who wish to trade goods
and services" - such as those in the City of
London. The challenge for the UK's Brexit
talks will be to do enough to tackle
immigration concerns while getting the best
possible trade arrangements with the EU.

What do "soft" and "hard" Brexit mean?


These terms are increasingly being used as
debate focuses on the terms of the UK's
departure from the EU. There is no strict
definition of either, but they are used to
refer to the closeness of the UK's
relationship with the EU post-Brexit.
So at one extreme, "hard" Brexit could
involve the UK refusing to compromise on
issues like the free movement of people in
order to maintain access to the EU single
market. At the other end of the scale, a "soft"
Brexit might follow a similar path to
Norway, which is a member of the single
market and has to accept the free movement
of people as a result.
Ex-chancellor George Osborne and Labour
leader Jeremy Corbyn are among those to
have warned against pursuing a "hard"
option,
while
some
Eurosceptic
Conservative MPs have put forward the
opposite view.

What happens to EU citizens living in the


UK?
The government has declined to give a firm
guarantee about the status of EU nationals
currently living in the UK, saying this is not
possible without a reciprocal pledge from
other EU members about the millions of
British nationals living on the continent.
EU nationals with a right to permanent
residence, which is granted after they have
lived in the UK for five years, will be able to
stay, the chief civil servant at the Home
Office has said. The rights of other EU
nationals would be subject to negotiations

on Brexit and the "will of Parliament," he


added.

What happens to UK citizens working in the


EU?
A lot depends on the kind of deal the UK
agrees with the EU. If it remains within the
single market, it would almost certainly
retain free movement rights, allowing UK
citizens to work in the EU and vice versa. If
the government opted to impose work
permit restrictions, then other countries
could reciprocate, meaning Britons would
have to apply for visas to work.

What about EU nationals who want to work


in the UK?
Again, it depends on whether the UK
government decides to introduce a work
permit system of the kind that currently
applies to non-EU citizens, limiting entry to
skilled workers in professions where there
are shortages.
Citizens' Advice has reminded people their
rights have not changed yet and asked
anyone to contact them if they think they
have been discriminated against following
the Leave vote.
Brexit Secretary David Davis has suggested
EU migrants who come to the UK as Brexit
nears may not be given the right to stay. He
has said there might have to be a cut-off
point if there was a "surge" in new arrivals.

What does the fall in the value of the pound


mean for prices in the shops?
Summer holidaymakers travelling overseas
from the UK are finding that their pounds
are buying fewer euros or dollars after the
Brexit vote.
The day-to-day spending impact is likely to
be more significant. Even if the pound
regains some of its value, currency experts
expect it to remain at least 10% below where
it was on 23 June, in the long term.
If they are correct, imported goods will
consequently get more expensive - that
means food, clothing and homeware are all
likely to get pricier.

These price rises might not kick in


immediately. For example, all the big
retailers would have factored in the
currency risk when organising their
finances. In effect, they have insured
themselves against a fall in the pound, but
this will start to unwind next year leading
to price increases in the shops.
Sellers of luxury items, such as high-end
cars, have much bigger profit margins, so
may be able to absorb the extra costs
without passing these on to customers.

Will immigration be cut?


Prime Minister Theresa May has said one of
the main messages she has taken from the
Leave vote is that the British people want to
see a reduction in immigration.
She has said this will be a focus of Brexit
negotiations. The key issue is whether other
EU nations will grant the UK access to the
single market, if that is what it wants, while
at the same time being allowed to restrict
the rights of EU citizens to live and work in
the UK.
Mrs. May has said she remains committed
to getting net migration - the difference
between the numbers entering and leaving
the country - down to a "sustainable" level,
which she defines as being below 100,000 a
year. It is currently running at 330,000 a
year, of which 184,000 are EU citizens, and
188,000 are from outside the EU - the
figures include a 39,000 outflow of UK
citizens.

Who wanted the UK to leave the EU and


what were their reasons?
The UK Independence Party, which
received nearly four million votes - 13% of
those cast - in May's general election, has
campaigned for many years for Britain's
exit from the EU. They were joined in their
call during the referendum campaign by
about half the Conservative Party's MPs,
including Boris Johnson and five members
of the then Cabinet. A handful of Labour
MPs and Northern Ireland party the DUP
were also in favour of leaving.

They said Britain was being held back by


the EU, which they said imposed too many
rules on business and charged billions of
pounds a year in membership fees for little
in return. They also cited sovereignty and
democracy, and they wanted Britain to take
back full control of its borders and reduce
the number of people coming here to live
and/or work.
One of the main principles of EU
membership is "free movement", which
means you don't need to get a visa to go and
live in another EU country. The Leave
campaign also objected to the idea of "ever
closer union" between EU member states
and what they see as moves towards the
creation of a "United States of Europe".

Who wanted the UK to stay in the EU and


what were their reasons?
Then Prime Minister David Cameron was
the leading voice in the Remain campaign,
after reaching an agreement with other
European Union leaders that would have
changed the terms of Britain's membership
had the country voted to stay in.
He said the deal would give Britain "special"
status and help sort out some of the things
British people said they didn't like about the
EU, like high levels of immigration - but
critics said the deal would make little
difference.
Sixteen members of Mr. Cameron's Cabinet,
including the woman who would replace
him as PM, Theresa May, also backed
staying in. The Conservative Party was split
on the issue and officially remained neutral
in the campaign. The Labour Party, Scottish
National Party, Plaid Cymru, the Green
Party and the Liberal Democrats were all in
favour of staying in.
US president Barack Obama also wanted
Britain to remain in the EU, as did other EU
nations such as France and Germany.
Those campaigning for Britain to stay in the
EU said it gets a big boost from membership
- it makes selling things to other EU

countries easier and, they argued, the flow


of immigrants, most of whom are young and
keen to work, fuels economic growth and
helps pay for public services.
They also said Britain's status in the world
would be damaged by leaving and that we
are more secure as part of the 28-nation
club, rather than going it alone.

GOODS AND SERVICES TAX


online, which would make compliance easy
and transparent.
B. Uniformity of tax rates and structures
GST will ensure that indirect tax rates and
structures are common across the country,
thereby increasing certainty and ease of
doing business. In other words, GST would
make doing business in the country tax
neutral, irrespective of the choice of place of
doing business.

What is GST? How does it work?


GST is one indirect tax for the whole nation,
which will make India one unified common
market.
GST is a single tax on the supply of goods
and services, right from the manufacturer to
the consumer. Credits of input taxes paid at
each stage will be available in the
subsequent stage of value addition, which
makes GST essentially a tax only on value
addition at each stage. The final consumer
will thus bear only the GST charged by the
last dealer in the supply chain, with set-off
benefits at all the previous stages.

What are the benefits of GST?


The benefits of GST can be summarized as
under:
# For business and industry
A. Easy compliance:
A robust and comprehensive IT system
would be the foundation of the GST regime
in India. Therefore, all tax payer services
such as registrations, returns, payments,
etc. would be available to the taxpayers

C. Removal of cascading
A system of seamless tax-credits throughout
the value-chain, and across boundaries of
States, would ensure that there is minimal
cascading of taxes. This would reduce
hidden costs of doing business.
D. Improved competitiveness:
Reduction in transaction costs of doing
business would eventually lead to an
improved competitiveness for the trade and
industry.
E. Gain to manufacturers and exporters:
The subsuming of major Central and State
taxes in GST, complete and comprehensive
set-off of input goods and services and
phasing out of Central Sales Tax (CST)
would reduce the cost of locally
manufactured goods and services. This will
increase the competitiveness of Indian
goods and services in the international
market and give boost to Indian exports.
The uniformity in tax rates and procedures
across the country will also go a long way in
reducing the compliance cost.

# For Central and State Governments


A. Simple and easy to administer:
Multiple indirect taxes at the Central and
State levels are being replaced by GST.
Backed with a robust end-to-end IT system,
GST would be simpler and easier to
administer than all other indirect taxes of
the Centre and State levied so far.
B. Better controls on leakage:
GST will result in better tax compliance due
to a robust IT infrastructure. Due to the
seamless transfer of input tax credit from
one stage to another in the chain of value
addition, there is an inbuilt mechanism in
the design of GST that would incentivise tax
compliance by traders.
C. Higher revenue efficiency:
GST is expected to decrease the cost of
collection of tax revenues of the
Government, and will therefore, lead to
higher revenue efficiency.
# For the consumer
A. Single and transparent tax proportionate
to the value of goods and services:
Due to multiple indirect taxes being levied
by the Centre and State, with incomplete or
no input tax credits available at progressive
stages of value addition, the cost of most
goods and services in the country today are
laden with many hidden taxes. Under GST,
there would be only one tax from the
manufacturer to the consumer, leading to
transparency of taxes paid to the final
consumer.
B. Relief in overall tax burden:
Because of efficiency gains and prevention
of leakages, the overall tax burden on most
commodities will come down, which will
benefit consumers.

Which taxes at the Centre and State level


are being subsumed into GST?
# At the Central level, the following taxes
are being subsumed:
A. Central Excise Duty,
B. Additional Excise Duty,
C. Service Tax,
D.Additional Customs Duty commonly
known as Countervailing Duty, and

E. Special Additional Duty of Customs.


# At the State level, the following taxes are
being subsumed:
A. Subsuming of State Value Added
Tax/Sales Tax,
B. Entertainment Tax (other than the tax
levied by the local bodies), Central Sales Tax
(levied by the Centre and collected by the
States),
C. Octroi and Entry tax,
D. Purchase Tax,
E Luxury Tax and,
F. Taxes on lottery, betting and gambling.

What are the major chronological events


that have led to the introduction of GST?
GST is being introduced in the country after
a 13-year long journey since it was first
discussed in the report of the Kelkar Task
Force on indirect taxes.
A brief chronology outlining the major
milestones on the proposal for introduction
of GST in India is as follows:
A. In 2003, the Kelkar Task Force on
indirect tax had suggested a comprehensive
Goods and Services Tax (GST) based on
VAT principle.
B. A proposal to introduce a National level
Goods and Services Tax (GST) by April 1,
2010 was first mooted in the Budget Speech
for the financial year 2006-07.
C. Since the proposal involved reform/
restructuring of not only indirect taxes
levied by the Centre but also the States, the
responsibility of preparing a Design and
Road Map for the implementation of GST
was assigned to the Empowered Committee
of State Finance Ministers (EC).
D. Based on inputs from Govt of India and
States, the EC released its First Discussion
Paper on Goods and Services Tax in India in
November, 2009.
E. In order to take the GST related work
further, a Joint Working Group consisting of
officers from Central as well as State

Government was constituted in September,


2009.
F. In order to amend the Constitution to
enable
introduction
of
GST,
the
Constitution (115th Amendment) Bill was
introduced in the Lok Sabha in March 2011.
As per the prescribed procedure, the Bill
was referred to the Standing Committee on
Finance of the Parliament for examination
and report.
G. Meanwhile, in pursuance of the decision
taken in a meeting between the Union
Finance Minister and the Empowered
Committee of State Finance Ministers on
8th November, 2012, a Committee on GST
Design, consisting of the officials of the
Government of India, State Governments
and the Empowered Committee was
constituted.
H. This Committee did a detailed discussion
on GST design including the Constitution
(115th) Amendment Bill and submitted its
report in January, 2013. Based on this
Report, the EC recommended certain
changes in the Constitution Amendment
Bill in their meeting at Bhubaneswar in
January 2013.
I. The Empowered Committee in the
Bhubaneswar meeting also decided to
constitute three committees of officers to
discuss and report on various aspects of
GST as follows:
(a) Committee on Place of Supply Rules and
Revenue Neutral Rates;
(b) Committee on dual control, threshold
and exemptions;
(c) Committee on IGST and GST on imports.
J. The Parliamentary Standing Committee
submitted its Report in August, 2013 to the
Lok Sabha. The recommendations of the
Empowered
Committee
and
the
recommendations of the Parliamentary
Standing Committee were examined in the
Ministry
in consultation with the
Legislative Department. Most of the
recommendations made by the Empowered
Committee and the Parliamentary Standing

Committee were accepted and the draft


Amendment Bill was suitably revised.
K.
The
final
draft
Constitutional
Amendment Bill incorporating the above
stated changes were sent to the Empowered
Committee for consideration in September
2013.
L. The EC once again made certain
recommendations on the Bill after its
meeting in Shillong in November 2013.
Certain
recommendations
of
the
Empowered Committee were incorporated
in
the
draft
Constitution
(115th
Amendment) Bill. The revised draft was
sent for consideration of the Empowered
Committee in March, 2014.
M. The 115th Constitutional (Amendment)
Bill, 2011, for the introduction of GST
introduced in the Lok Sabha in March 2011
lapsed with the dissolution of the 15th Lok
Sabha.
N. In June 2014, the draft Constitution
Amendment Bill was sent to the
Empowered Committee after approval of
the new Government.
O. Based on a broad consensus reached with
the Empowered Committee on the contours
of the Bill, the Cabinet on December 17,
2014, approved the proposal for introduction
of a Bill in the Parliament for amending the
Constitution of India to facilitate the
introduction of Goods and Services Tax
(GST) in the country. The Bill was
introduced in the Lok Sabha on December
19, 2014, and was passed by the Lok Sabha
on May 6, 2015. It was then referred to the
Select Committee of Rajya Sabha, which
submitted its report on July 7, 2015.

How would GST be administered in India?


Keeping in mind the federal structure of
India, there will be two components of GST
Central GST (CGST) and State GST
(SGST). Both Centre and States will
simultaneously levy GST across the value
chain. Tax will be levied on every supply of
goods and services. Centre would levy and
collect Central Goods and Services Tax
(CGST), and States would levy and collect

the State Goods and Services Tax (SGST) on


all transactions within a State. The input
tax credit of CGST would be available for
discharging the CGST liability on the
output at each stage. Similarly, the credit of
SGST paid on inputs would be allowed for
paying the SGST on output. No cross
utilization of credit would be permitted.

How would a particular transaction of goods


and services be taxed simultaneously under
Central GST (CGST) and State GST
(SGST)?
The Central GST and the State GST would
be levied simultaneously on every
transaction of supply of goods and services
except on exempted goods and services,
goods which are outside the purview of GST
and the transactions which are below the
prescribed threshold limits. Further, both
would be levied on the same price or value
unlike State VAT which is levied on the
value of the goods inclusive of Central
Excise.

Will cross utilization of credits between


goods and services be allowed under GST
regime?
Cross utilization of credit of CGST between
goods and services would be allowed.
Similarly, the facility of cross utilization of
credit will be available in case of SGST.
However, the cross utilization of CGST and
SGST would not be allowed except in the
case of inter-State supply of goods and
services under the IGST model which is
explained in answer to the next question.

How will be Inter-State Transactions of


Goods and Services be taxed under GST in
terms of IGST method?
In case of inter-State transactions, the
Centre would levy and collect the Integrated
Goods and Services Tax (IGST) on all interState supplies of goods and services under
Article 269A (1) of the Constitution. The
IGST would roughly be equal to CGST plus
SGST. The IGST mechanism has been
designed to ensure seamless flow of input
tax credit from one State to another. The
inter-State seller would pay IGST on the
sale of his goods to the Central Government
after adjusting credit of IGST, CGST and

SGST on his purchases (in that order). The


exporting State will transfer to the Centre
the credit of SGST used in payment of IGST.
The importing dealer will claim credit of
IGST while discharging his output tax
liability (both CGST and SGST) in his own
State. The Centre will transfer to the
importing State the credit of IGST used in
payment of SGST. Since GST is a
destination-based tax, all SGST on the final
product will ordinarily accrue to the
consuming State.

How will IT be used for the implementation


of GST?
For the implementation of GST in the
country,
the
Central
and
State
Governments have jointly registered Goods
and Services Tax Network (GSTN) as a notfor-profit, non-Government Company to
provide shared IT infrastructure and
services to Central and State Governments,
tax payers and other stakeholders. The key
objectives of GSTN are to provide a
standard and uniform interface to the
taxpayers, and shared infrastructure and
services
to
Central
and
State/UT
governments.
GSTN is working on developing a state-ofthe-art comprehensive IT infrastructure
including the common GST portal providing
frontend services of registration, returns
and payments to all taxpayers, as well as
the backend IT modules for certain States
that include processing of returns,
registrations, audits, assessments, appeals,
etc. All States, accounting authorities, RBI
and banks, are also preparing their IT
infrastructure for the administration of
GST. There would no manual filing of
returns. All taxes can also be paid online. All
mis-matched
returns
would
be
autogenerated, and there would be no need
for manual interventions. Most returns
would be self-assessed.

How will imports be taxed under GST?


The Additional Duty of Excise or CVD and
the Special Additional Duty or SAD
presently being levied on imports will be
subsumed under GST. As per explanation to
clause (1) of article 269A of the Constitution,

IGST will be levied on all imports into the


territory of India. Unlike in the present
regime, the States where imported goods
are consumed will now gain their share from
this IGST paid on imported goods.

What are the major features of the


Constitution (122nd Amendment) Bill,
2014?
The salient features of the Bill are as
follows:
A. Conferring simultaneous power upon
Parliament and the State Legislatures
to make laws governing goods and
services tax;
B. Subsuming of various Central indirect
taxes and levies such as Central Excise
Duty, Additional Excise Duties, Service
Tax,
Additional
Customs
Duty
commonly known as Countervailing
Duty, and Special Additional Duty of
Customs;
C. Subsuming of State Value Added
Tax/Sales Tax, Entertainment Tax
(other than the tax levied by the local
bodies), Central Sales Tax (levied by the
Centre and collected by the States),
Octroi and Entry tax, Purchase Tax,
Luxury tax, and Taxes on lottery,
betting and gambling;
D. Dispensing with the concept of declared
goods of special importance under the
Constitution;
E. Levy of Integrated Goods and Services
Tax on inter-State transactions of goods
and services;
F. GST to be levied on all goods and
services, except alcoholic liquor for
human consumption. Petroleum and
petroleum products shall be subject to
the levy of GST on a later date notified
on the recommendation of the Goods and
Services Tax Council;
G. Compensation to the States for loss of
revenue
arising
on
account
of
implementation of the Goods and
Services Tax for a period of five years;

H. Creation of Goods and Services Tax


Council to examine issues relating to goods
and
services
tax
and
make
recommendations to the Union and the
States on parameters like rates, taxes,
cesses and surcharges to be subsumed,
exemption list and threshold limits, Model
GST laws, etc. The Council shall function
under the Chairmanship of the Union
Finance Minister and will have all the State
Governments as Members.

What are the major features of the proposed


registration procedures under GST?
The major features of the proposed
registration procedures under GST are as
follows:
i. Existing dealers: Existing VAT/Central
excise/Service Tax payers will not have to
apply afresh for registration under GST.
ii. New dealers: Single application to be filed
online for registration under GST.
iii. The registration number will be PAN
based and will serve the purpose for Centre
and State.
iv. Unified application to both tax
authorities.
v. Each dealer to be given unique ID GSTIN.
vi. Deemed approval within three days.
vii. Post registration verification in risk
based cases only.

What are the major features of the proposed


returns filing procedures under GST?

The major features of the proposed returns


filing procedures under GST are as follows:
A. Common return would serve the purpose
of both Centre and State Government.
B. There are eight forms provided for in the
GST business processes for filing for
returns. Most of the average tax payers
would be using only four forms for filing
their returns. These are return for supplies,
return for purchases, monthly returns and
annual return.
C. Small taxpayers: Small taxpayers who
have opted composition scheme shall have
to file return on quarterly basis.
D. Filing of returns shall be completely
online. All taxes can also be paid online.

What are the major features of the proposed


payment procedures under GST?
The major features of the proposed
payments procedures under GST are as
follows:
i. Electronic payment process- no generation
of paper at any stage.
ii. Single point interface for challan
generation- GSTN.
iii. Ease of payment payment can be made
through online banking, Credit Card/Debit
Card,
NEFT/RTGS
and
through
cheque/cash at the bank.
iv. Common challan form with autopopulation features.

v. Use of single challan and single payment


instrument.
vi. Common set of authorized banks.
vii. Common Accounting Codes.

7 TH PAY COMMISSION
employees will get arrears from January
this year.

Minimum Pay
Based on the Aykroyd formula, the
minimum
pay
in
government
is
recommended to be set at Rs 18,000 per
month.

Maximum Pay

The Union Cabinet in June approved all the


recommendations of the Empowered
Committee of Secretaries, which was
formed to look into recommendations of the
Seventh Pay Commission. The Seventh
Central Pay Commission recommended
changes in the pay of around 1 crore
individuals 33 lakh central government
employees, 14 lakh armed forces personnel,
and 52 lakh pensioners.

Date of implementation
The recommended date of implementation
is January 1, 2016. So, government

Rs 2,25,000 per month for Apex Scale and


Rs 2,50,000 per month for Cabinet
Secretary and others presently at the same
pay level.

What are the financial implications?


The total financial impact in the FY 2016-17
is likely to be Rs 1,02,100 crore, over the
expenditure as per the Business As Usual
scenario. Of this, the increase in pay would
be Rs 39,100 crore, increase in allowances
would be Rs 29,300 crore and increase in
pension would be Rs 33,700 crore.
Out of the total financial impact of Rs
1,02,100 crore, Rs 73,650 crore will be borne

by the General Budget and Rs 28,450 crore


by the Railway Budget.
In percentage terms the overall increase in
pay & allowances and pensions over the
Business As Usual scenario will be 23.55 per
cent. Within this, the increase in pay will be
16 per cent, increase in allowances will be
63 per cent, and increase in pension would
be 24 per cent.
The total impact of the Commissions
recommendations is expected to entail an
increase of 0.65 percentage points in the
ratio of expenditure on (Pay+ Allowances+
Pension) to GDP compared to 0.77 per cent
in case of 6th Central Pay Commission.

What is the New Pay Structure?

case of those employees who are not able to


meet the benchmark either for MACP or for
a regular promotion in the first 20 years of
their service.
* No other changes in MACP recommended.

Military Service Pay (MSP)


The Military Service Pay, which is a
compensation for the various aspects of
military service, will be admissible to the
Defence forces personnel only. As before,
Military Service Pay will be payable to all
ranks up to and inclusive of Brigadiers and
their equivalents. The current MSP per
month and the revised rates recommended
are as follows:

Short Service Commissioned Officers

The present system of pay bands and grade


pay has been dispensed with and a new pay
matrix has been designed. Grade Pay has
been subsumed in the pay matrix. The
status of the employee, hitherto determined
by grade pay, will now be determined by the
level in the pay matrix.

Short Service Commissioned Officers will be


allowed to exit the Armed Forces at any
point in time between 7 and 10 years of
service, with a terminal gratuity equivalent
of 10.5 months of reckonable emoluments.
They will further be entitled to a fully
funded one year Executive Programme or a
M.Tech. Programme at a premier Institute.

Fitment

Lateral Entry/Settlement

A fitment factor of 2.57 is being proposed to


be applied uniformly for all employees.
The rate of annual increment is being
retained at 3 per cent.

The Commission is recommending a revised


formulation for lateral entry/resettlement of
defence forces personnel which keeps in
view
the
specific
requirements
of
organization to which such personnel will be

Modified
(MACP)

absorbed. For lateral entry into CAPFs an


attractive severance package has been
recommended.

Annual Increment

Assured

Career

Progression

* Performance benchmarks for MACP have


been made more stringent from Good to
Very Good.
* The Commission has also proposed that
annual increments not be granted in the

Headquarters/Field Parity
Parity between field and headquarters staff
recommended for similar functionaries e.g.
Assistants and Stenos.

Cadre Review
A systemic change in the process of Cadre
Review for Group A officers recommended.

Allowances
The
Commission
has
recommended
abolishing 52 allowances altogether.
Another 36 allowances have been abolished
as separate identities, but subsumed either
in an existing allowance or in newly
proposed allowances. Allowances relating to
Risk and Hardship will be governed by the
proposed Risk and Hardship Matrix.

Any allowance not mentioned in the report


shall cease to exist.
Emphasis has also been placed on
simplifying the process of claiming
allowances.
ADVANCES: a. All non-interest bearing
Advances have been abolished. b. Regarding
interest-bearing Advances, only Personal
Computer Advance and House Building
Advance (HBA) have been retained. HBA
ceiling has been increased to Rs 25 lakh
from the present Rs 7.5 lakh.

RISK
AND
HARDSHIP
ALLOWANCE: Allowances relating to Risk
and Hardship will be governed by the newly
proposed nine-cell Risk and Hardship
Matrix, with one extra cell at the top, viz.,
RH-Max to include Siachen Allowance.

CENTRAL
GOVERNMENT
EMPLOYEES
GROUP
INSURANCE
SCHEME (CGEGIS): The Rates of
contribution as also the insurance coverage
under the CGEGIS have remained
unchanged for long. They have now been
enhanced suitably. The following rates of
CGEGIS are recommended:

The current Siachen Allowance per month


and the revised rates recommended are as
follows:

Medical Facilities

House Rent Allowance


Since the Basic Pay has been revised
upwards, the Commission recommends that
HRA be paid at the rate of 24 percent, 16
percent and 8 per cent of the new Basic Pay
for Class X, Y and Z cities respectively. The
Commission also recommends that the rate
of HRA will be revised to 27 per cent, 18
percent and 9 percent respectively when DA
crosses 50 percent, and further revised to 30
percent, 20 per cent and 10 per cent when
DA crosses 100 per cent.
In the case of PBORs of Defence, CAPFs and
Indian Coast Guard compensation for
housing is presently limited to the
authorized married establishment hence
many users are being deprived. The HRA
coverage has now been expanded to cover
all.

Introduction of a Health Insurance Scheme


for Central Government employees and
pensioners has been recommended.
Meanwhile, for the benefit of pensioners
residing outside the CGHS areas, CGHS
should empanel those hospitals which are
already empanelled under CS (MA)/ECHS
for catering to the medical requirement of
these pensioners on a cashless basis.
All postal pensioners should be covered
under CGHS. All postal dispensaries should
be merged with CGHS.

Pension
The Commission recommends a revised
pension formulation for civil employees
including CAPF personnel as well as for
Defence personnel, who have retired before
01.01.2016. This formulation will bring
about parity between past pensioners and
current retirees for the same length of
service in the pay scale at the time of
retirement.
The past pensioners shall first be fixed in
the Pay Matrix being recommended by the

Commission on the basis of Pay Band and


Grade Pay at which they retired, at the
minimum of the corresponding level in the
pay matrix.

of NPS. It has also recommended


establishment of a strong grievance
redressal mechanism.

This amount shall be raised to arrive at the


notional pay of retirees, by adding number
of increments he/she had earned in that
level while in service at the rate of 3 percent.
In the case of defence forces personnel this
amount will include Military Service Pay as
admissible.

The Commission has recommended a


consolidated pay package of Rs 4,50,000 and
Rs 4,00,000 per month for Chairpersons and
Members respectively of select Regulatory
bodies. In case of retired government
servants, their pension will not be deducted
from
their
consolidated
pay.
The
consolidated pay package will be raised by
25 percent as and when Dearness Allowance
goes up by 50 percent. For Members, of the
remaining Regulatory bodies normal
replacement pay has been recommended.

Fifty percent of the total amount so arrived


at shall be the new pension. An alternative
calculation will be carried out, which will be
a multiple of 2.57 times of the current basic
pension. The pensioner will get the higher of
the two.

Gratuity
Enhancement in the ceiling of gratuity from
the existing Rs 10 lakh to Rs 20 lakh. The
ceiling on gratuity may be raised by 25
percent whenever DA rises by 50 percent.
Disability Pension for Armed Forces
The Commission is recommending reverting
to a slab based system for disability
element, instead of existing percentile based
disability pension regime.

Ex-gratia lump sum compensation to next of


kin
The Commission is recommending the
revision of rates of lump sum compensation
for next of kin (NOK) in case of death arising
in various circumstances relating to
performance of duties, to be applied
uniformly for the defence forces personnel
and civilians including CAPF personnel.

Martyr Status for CAPF Personnel


The Commission is of the view that in case
of death in the line of duty, the force
personnel of CAPFs should be accorded
martyr status, at par with the defence forces
personnel.

New Pension System


The Commission received many grievances
relating to NPS. It has recommended a
number of steps to improve the functioning

Regulatory Bodies

Performance Related Pay


The
Commission
has
recommended
introduction of the Performance Related
Pay (PRP) for all categories of Central
Government employees, based on quality
Results Framework Documents, reformed
Annual Performance Appraisal Reports and
some other broad Guidelines.

CYRUS MISTRYS OUSTER FROM TATA SONS

Clash

of

ideas

with

Ratan

Tata

Sources claim that there is ice between


Mistry and Ratan Tata which was becoming
more and more obvious with passing time.
There were differences in their ethos,
principles, revelation and perception of the
way the company was supposed to be led.
Tata Sons and Tata Trusts Chairperson at
clash were seen as something that brought
bad air.

Decisions clashed
Almost four years after he took charge as
the Chairman of Tata Sons, Cyrus Mistry
was asked to step down from his post on
Monday. Mistry, who was tasked to find a
successor to Ratan Tata to head the over
USD 100 billion Tata Group, had himself
become a surprise selection saw his tenure
cut short abruptly. 78-year-old Ratan Tata
is now the interim chairman till a successor
is selected in the next four months. The
reasons for Mistrys ouster by the Tata Sons
board is not clear yet. However, according to
sources, the decision was taken on the
suggestion of Tata Trusts.
In a statement on Monday, Tata Sons said,
Tata Sons today announced its board has
replaced Mr. Cyrus P Mistry as Chairman of
Tata Sons. The decision was taken at a
board meeting held here today. Mistry was
only the second non-Tata to take charge of
one of countrys oldest business empires
after Nowroji Saklatvala in 1932.
Cyrus Mistry, born in Ireland, is the second
person outside of the Tata family to hold the
esteemed position in the Tata group. His
family gave up the Indian Citizenship to
take up the Irish identity since it wasnt
permitted at the time to have dual
nationality. His father Shapoorji Pallonji is
the largest shareholder at the Tata group.

Here are some possible reasons why Mistry


could have been ousted:

Mistry went ahead to clear Tata Powers


$1.4-billion acquisition of Welspuns solar
farms without consulting or waiting for an
approval with Tata or the main
shareholders. His decision to dispose Indian
Hotels Cos overseas properties was also a
major blow to Tata. Shutting down of UK
steel operations was like adding fuel to fire.
These were in debt but were old legacies
that needed the approval of Tata. His ideas
of letting go of the legacy of old guard and
embracing the idea of tough love was also
not well received.

Docomo dispute
Mistry took it upon him to declare war on
NTT Docomo to challenge international
arbitration court yet another move that
garnered
ill
air.
The
Japanese
telecommunication major has a 26.5% stake
in Tata Teleservices that it acquired for $2.7
billion. The agreement called for Tata to find
a buyer for its stake when it wanted to exit.
The court claims a huge $1.12 billion in
damage from Tata for which the board
blames Mistry.

Bad performance
During Mistrys reign, it was found that the
performance of the Tata was not what it was
expected to be. Apart from Tata
Consultancy services and UK based Jaguar
Land Rover, none of its companies were
doing well enough. With Tata Steel facing
tough time Tata Motors also saw a huge
decline in demands. Critics are of the view
that Mistry was not capable of good
leadership.

New ventures over existent business

Dividing assets

His visions extended to building new


infrastructure and collaborating new
ventures like e-commerce and defense.
While that was positive his ignorance on
savaging the old companies that needed
pruning was seen as negative impact on the
expansion of the giant name garnered to
fame over the years. The shareholders were
agitated by his decisions that he made
without consultations.

An abrupt change was brought forth in the


way the assets were divided earlier during
the Tata reign. Ratan Tata was driven to
expand his hands to overseas purchase like
tea maker Tetley in 2000 and Jaguar Land
Rover in 2008. Mistry was more towards
handling the mounting debt by plotting
strategies to raise cash, refinancing loans
and quick selling of assets after writing
them down. His selling of assets definitely
did not go well with the moguls who were
always in the run to buy and conquer.

DE-MONETIZATION OF RS. 500 AND RS. 1000 NOTES

Prime Minister Narendra Modi on


November 8, 2016 said in a surprise address
to the nation that Rs. 500 and Rs. 1,000
notes will cease to be legal tender from
November 8 midnight.
This decision was taken to root out the
menace of black money, fake currency,
corruption and to stop terror funding. All
notes in lower denomination of Rs. 100, Rs.
50, Rs. 20, Rs. 10, Rs. 5, Rs. 2 and Re. 1 and
all coins will continue to be valid.
All banks and ATMs to be closed on
November 9 and ATMs in some places on
November 10 as well. Once the ATMs start
functioning, there will be a withdrawal limit
of Rs. 2,000 per debit card, which will be
increased to Rs. 4,000 later. There will be an
overall limit on withdrawal from banks of
Rs. 10,000 a day and Rs. 20,000 a week,
which will be increased in the coming days.
The existing Rs. 500 or Rs. 1,000 notes can
be deposited in an individuals bank or post
office accounts between November 10 and
December 30. Currency value of up to Rs.
4,000 can be exchanged from any bank or
post office a day till November 24 by
showing a government identity card. This
limit will be hiked from November 25 till
December 30.

The banks are equipped to issue new high


security Rs 500 and Rs 2,000 currency
notes. The Reserve Bank of India will
monitor and regulate the circulation of the
higher denomination currencies. Over 3000
paramilitary and police personnel, quick
reaction teams are deployed in Delhi for
security in banks.
For 72 hours from November 8, government
hospitals, railway, air and government bus
ticket booking counters will continue to
accept the old notes. Old notes will also be
accepted till November 11 at petrol, diesel
and gas stations authorised by public sector
oil companies, consumer co-operative stores
authorised by State or Central government,
milk booths authorised by States as well as
crematoriums.
The Reserve Bank of India will issue new
Rs. 500 and Rs. 2,000 notes starting from
November 10. The new Rs. 500 note will
feature the Red Fort and the new Rs. 2,000
note will feature Mangalyaan. These notes
will become available from November 10.
There will be no restriction of any kind on
non-cash payments by cheques, demand
drafts, debit or credit cards and electronic
fund transfer.
As per RBIs latest Annual Report, out of the
total Rs 16.42 lakh crore value of bank notes
in circulation as on March 31, 2016, as much

as Rs 14.18 lakh crore, i.e. over 86 per cent,


consisted of Rs 500 and Rs 1,000 notes. In
terms of volumes, out of the total 9026.6
crore banknote pieces, 2,203 crore or 24 per
cent-plus were of Rs 500 and Rs 1,000
denomination.

Rahul Gandhi said Modis move shows how


little he cares about ordinary people of this
country.
India was earlier 100 on global ranking of
corruption. Today it stands at 76th position
out of 168 countries. Denmark ranks 1st.
While the decision will adversely impact
sectors which deal with unaccounted money
such as real estate, stock market and gems
and jewellery, it will also hit the livelihood
of neighbourhood vegetable vendors who
borrow overnight funds from moneylenders,
kirana stores, small traders and even the
labour class. The Prime Minister admitted
there may be temporary hardships for
honest citizens, but exhorted all to seize the
moment.

Pros:
Reduction in the amount of Black
Money: This policy acts as an ultimate
punishment for the black money holders.
This move will definitely see their black
wealth reduced to its fraction.
Reduction in the amount of fake money: Due
to this move fake Rs. 500 Rs. 1000 are now
a complete waste thus leading to them being
reduced in the market.
Helps
to
fight
terrorism
funding
activities: Since funding of terrorist
organizations relies on fake currency, this
policy will help in fighting it.
Paper
Money
replaced
by
Plastic
Money: This policy also issues an upper

limit on withdrawal of money from ATMs


and bank accounts, thus slowly leading to
paper transactions being replaced by card
transactions.
Financial Intelligence Unit will track all
details of the transactions from the banks.
So now it is really difficult to get rid of the
black money.
Cons:
Inconvenience to the people: This move
definitely leads to some amount of
inconvenience for the common people.
Initially, banks and post offices will be filled
with people trying to exchange notes.
By replacing all the Rs.500 and Rs.1000
denomination notes, as ordered by the
government, could be a costly affair for the
RBI.
It will be very difficult for the population
who are not well versed with the card
transactions.
The major problem is that big fishes will be
left out whose black money is in the form of
foreign currency, gold and property and
stashed in tax havens.

US PRESIDENTIAL ELECTIONS - DONALD TRUMP


payments to the worlds number one state
sponsor of terrorism. Does not support
apologizing to the enemies like Obama &
Clinton. Believes in easing tensions and
improving relations with Russia.

Donald J. Trump, 70, a real estate


developer-turned-reality television star and
author with no government experience,
becomes the 45th President of the United
States on 9th November, 2016.
Affiliation: Republican Party
Out of 540 total votes, Trump 279, Clinton
228
Donald Trumps Ideology
On Immigrants: Interests of the Americans
must come first. Immigration laws will be
enforced at the border and the workplace.
Send criminal aliens home. Extremely
against Mexican immigrants calling them
as rapists, bringing drugs and crime with
them. Favors building a wall to end the
illegal immigration.
On Abortion: Believes in pro-life. Opposed to
abortion except for rape, incest and when
the mothers life is endangered. Oppose the
use of government funds to pay for
abortions.
On Guns: Supports the Second Amendment
right to keep and bear arms. Get gang
members and drug dealers off the streets to
make the cities and communities in US a lot
safer. Empower law-abiding gun owners to
defend themselves. Expand mental health
programs and keep the violent mentally ill
off the streets.
On Foreign Policy: Focus on destroying the
radical Islamic Terrorist Groups. End
nuclear deal with Iran and end the ransom

On Taxes: The Trump Plan will lower the


business tax rate from 35 percent to 15
percent, and eliminate the corporate
alternative minimum tax. This rate is
available to all businesses, both small and
large, that want to retain the profits within
the business. Reduce taxes across-theboard, especially for working and middleincome Americans who will receive a
massive tax reduction. Ensure the rich will
pay their fair share, but no one will pay so
much that it destroys jobs or undermines
our ability to compete. Reduce the cost of
childcare by allowing families to fully
deduct the average cost of childcare from
their taxes, including stay-at-home parents.
In contrast with Hillary Clintons ideologies
on Tax: The Trump Plan protects all lowincome and middle-income Americans and
lowers their taxes. His plan is a tax cut for
all income groups, while Hillary Clintons
plan is a tax increase on selected income
groups. On average, taxpayers will receive a
tax cut of $1,818 under the Trump Plan, but
a tax increase of $176 under the Clinton
plan.
Donald J. Trumps tax plan will increase the
economy and grow jobs by almost 2 million,
while Hillary Clintons tax plan will shrink
the economy and lose 300,000 jobs. In
combination with the total economic reform
agenda, the Trump economic plan will
create at least 25 million jobs over the next
10 years.
On Healthcare: Aims to repel Obamacare
and supports the need for a patient-centered
healthcare system, allowing families and
their doctors to be the primary decision
makers.

Impact of Donald Trumps win:


Access to the US market is expected to
become harder for countries like China,
South Korea and Japan, with high import
duties already being mulled on products
coming
from
these
Asian
export
powerhouses.
During the campaign, Trump repeatedly
lambasted the North American Free Trade
Agreement (NAFTA) between the US,
Canada and Mexico, criticizing that the pact
had had a negative effect on the American
economy and workforce. Mocking NAFTA as
the "worst trade deal in history," Trump
pledged that he would negotiate better
terms with Mexico and Canada, and if they
didn't agree, he'd pull out altogether.
The divisive rhetoric about Muslims,
Mexicans and illegal immigrants could
prompt a rise in racial tensions.

Impact of Donald Trumps win on India:


Trump terms H1B visa programme as
'unfair', and his stated purpose is to end the
programme. If Trump wins, Indian
IT stocks and IT companies like CS
and Infosys are likely to be the first victims
of this policy. Bringing jobs back to America
could mean harsher conditions for entry of
immigrants from India. Trump's promise to
reduce the US corporate tax rate from 35 per
cent to 15 per cent could result in companies
like Ford, GM and Microsoft rushing back to
the US. This rush of US firms will hit Modi's
Make in India push. Trump's hard stance on
terrorism could also result into deeper IndoUS defence and strategic ties.
High volatility is expected in the currency
market not just for the rupee, but also other
currencies across the globe.

STATISTICS, FACTS AND TRIVIA


A survey by MIT and IBM reported that companies with a high level of HR analytics had

89% of recruiters have hired someone


through LinkedIn.
70% of candidates who use mobile device to
find jobs
The average time spent by recruiters
looking at a resume: 5 to 7 seconds. (Source:
business2community.com)
Did you know that 76% of resumes are
discarded for an unprofessional email
address?
(Source:
business2community.com)
In 2000, 22% of resumes were submitted via
email or posted on the web. In 2016, over
90% of resumes are now posted online or
sent via email.
Almost half of employers (45 percent) said
that the time to fill open positions has
grown since 2014. (Source: DHI)
Nearly half (47 percent) said unfilled posi

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