Annual Report 2015-2016

GOVERNMENT OF INDIA Annual Report 2015-16 Ministry of Finance (Budget Division)Annual Report 2015-16 Ministry of Finance (Budget Division)Contents Page No. INTRODUCTION vi CHAPTER I Department of Economic Affairs 1. Economic Division 1 2. Budget Division 3 3. Financial Markets Division 6 4. Financial Action Task Force (FATF) Cell 15 5. Financial Stability and Development Council (FSDC) Secretariat 15 6. Financial Sector Legislative Reforms Commission (FSLRC) Division 17 7. Commodity Derivatives Markets Division 18 8. Infrastructure and Energy Division 22 9. Investment Division 26 10. Multilateral Institutions Division 30 11. Multilateral Relations Division 36 12. Aid Accounts & Audit Division 39 13. Administration Division 40 14. Bilateral Cooperation Division 43 15. Integrated Finance Division 48 16. Directorate of Currency 49 Annexures 53 Organisation Chart 55 iCHAPTER II Department of Expenditure 1. Establishment Division 57 2. Pay Research Unit (PRU) 57 3. Plan Finance-I Division 58 4. Plan Finance-II Division 59 5. Procurement Policy Division 60 6. Staff Inspection Unit 61 7. Controller General of Accounts (CGA) 61 8. Office of Chief Adviser Cost 67 9. Use of Official Language (Hindi) 70 10. Integrated Finance Unit (IFU) 71 11. Chief Controller of Accounts 72 12. National Institute of Financial Management 72 Annexures 75 Organisation Chart 77 CHAPTER III Department of Revenue 1. Organization and Functions 79 2. Revenue Headquarters Administration 80 3. Narcotics Control (NC) Division 82 4. State Taxes 94 5. Adjudicating Authority under Prevention of money Laundering Act, 2002 97 6. The Appellate Tribunal under Prevention of money Laundering Act 98 7. Appellate Tribunal for Forfeited Property (ATFP) 98 ii8. Setup for Forfeiture of Illegally Acquired Property 98 9. Central Board of Excise and Customs 99 10. Customs, Excise & Service Tax Appellate Tribunal (CESTAT) 144 11. Customs, Central Excise & Service Tax Settlement Commission 145 12. Authority for Advance Rulings (Central Excise, Customs & Service Tax) 146 13. Central Board of Direct Taxes (CBDT) 149 14. Income Tax Settlement Commission 256 15. Authority for advance Ruling (Income Tax) 258 16. Central Economic Intelligence Bureau (CEIB) 260 17. Directorate of Enforcement 263 18. Financial Intelligence Unit, India (FIU-IND) 270 19. Integrated Finance Unit (IFU) 271 20. National Committee Promotion of Social and Economic Welfare 273 21. National Institute of Public Finance and Policy (NIPFP) 274 22. Implementation of Official Language Policy 275 23. Implementation of the Right to Information Act, 2005 277 24. Swachh Bharat Campaign 279 Annexures 280 Organisation Chart 306 CHAPTER IV Department of Disinvestment 1. Functions 307 2. Vision 307 3. Mission 307 4. Organisational Structure 307 iii5. Policy and Approach to Disinvestment 307 6. Benefits of Disinvestment 308 7. Reform measures and policy initiatives 308 8. Performance/achievements 308 9. Utilization of disinvestment Proceeds 309 10. Initiatives Undertaken for Persons with disabilities Schedule Castes, Scheduled Tribes and other backward classes 309 11 Initiatives Relating to Gender Budgeting and Empowerment of Woman 310 12. Official Language Policy 310 13. E-Governance 310 14. Redressal of Public Grievances 310 15. Vigilance Machinery 310 16. Right to Information Act, 2005 310 17. Initiatives for Good Goverance 311 18. Audit Paras/Objections 311 19. Integrated Finance Unit 311 Appendix 313 CHAPTER V Department of Financial Services 1. Work Allocation among Sections 315 2. Banking Operations and Accounts 319 3. Regional Rural Banks 320 4. Financial Inclusion 321 5. Agriculture Credit 323 6. Debts Recovery Tribunal 325 7. Non-Performing Assets (NPAs) 326 iv8. Prime Minister Mudra Yojana 326 9. Financial Institutions 327 10. Representation of SCs, STs, OBCs and PWDs 343 11. Priority Sector Lending and Lending to Women and Minorities 343 12. Education Loan 344 13. Vigilance 346 14. Insurance Sector 347 15. Disposal of Public Grievances 359 16. Audit Paras 359 Annexures 361 Organisation Chart 382 vIntroduction Introduction The Ministry comprises of the five Departments 92 per cent of its LPA over Northeast (NE) India and 85 namely:— per cent of its LPA over South Peninsula. South West Monsoon (June to September 2015) rainfall for the  Department of Economic Affairs country as a whole and the four broad geographical  Department of Expenditure regions is given in the table below:  Department of Revenue  Department of Disinvestment Table 1: Rainfall  Department of Financial Services Region Actual Long Actual (mm) Period % of 1. Department of Economic Affairs Average LPA (LPA) (mm) Economic Growth All India 887.5 760.6 86 As per the Advance Estimates released by the Northwest India 615.0 510.6 83 Central Statistics Office (CSO), the growth rate of the gross domestic product (GDP) at constant market prices Central India 975.5 815.5 84 has been estimated at 7.6 per cent in 2015-16, which is Northeast India 1437.3 1317.5 92 higher than the growth of 7.2 percent growth recorded in South Peninsula 715.1 605.7 85 the previous year. The growth of the gross value added (GVA) at constant basic prices has been estimated at Source: India Meteorological Department. 7.3 per cent in 2015-16 —as opposed to 7.1 per cent in 2014-15—, with agriculture and allied sectors, industrial Out of the total 36 meteorological subdivisions, 1 sector and services sector growing at 1.1 per cent, 7.3 subdivision received excess season rainfall, 18 per cent and 9.2 per cent respectively. The growth of subdivisions received normal season rainfall and the GDP at constant basic prices for the first, second and remaining 17 subdivisions received deficient season third quarters of 2015-16 has been estimated at 7.6 per rainfall during the South West Monsoon Season (June- cent, 7.7 per cent and 7.3 per cent respectively. September), 2015. On the demand side, the growth in final As per the First Advance Estimates (AE) released consumption expenditure at constant (2011-12) prices is by Ministry of Agriculture on 16.09.2015, production of estimated to have remained strong at 6.9 per cent in 2015- kharif foodgrains during 2015-16 is estimated at 124.1 16, as compared to 7.2 per cent in 2014-15. The growth million tonnes compared to 120.3 million tonnes in in gross fixed capital formation at constant prices 2014-15. increased from 4.9 per cent in 2014-15 to 5.3 per cent in Table 2: Production of Major Kharif Crops 2015-16. Exports and imports of goods and non-factor (in Million Tonnes) services declined (at constant prices) by 6.3 per cent each in 2015-16; the former mainly on account of the S. 2014-15 2015-16 sluggishness in the global economy and the latter on No. Crops (First AE) (First AE) account of decline in international petroleum and other 1 Rice 88.0 90.6 commodity prices. Total Coarse 27.1 27.9 Information on saving and investment is available 2 Cereals only till the year 2014-2015. Gross saving as proportion of GDP at current market prices is estimated at 33.0 per 3 Total Pulses 5.2 5.6 cent in 2014-15 and 2013-14. Gross capital formation, 4 Total Kharif 120.3 124.1 also known as investment, was estimated to be 34.2 per Foodgrains cent of the GDP at current market prices in 5 Total Oilseeds 19.7 19.9 2014-15, as compared to 34.7 per cent in 2013-14. 6 Sugarcane 342.8 341.4 Agriculture and Food Management Unit 7 Cotton@ 34.6 33.5 During the South West Monsoon Season (June- @ Production in million bales of 170 kg each September) of 2015, the country as a whole received rainfall of 86 per cent of its long period average (LPA). Source: Directorate of Economics & Statistics, Seasonal rainfall was 83 per cent of its LPA over Department of Agriculture, Cooperation & Northwest India, 84 per cent of its LPA over Central India, Farmers Welfare. viiAnnual Report 2014-2015 During 2015-16, area sown upto 18.09.2015 under Government considering the recommendation of the all kharif crops taken together was 1021.9 lakh hectares Commission for Agricultural Costs & Prices (CACP), as compared to 1005.8 lakh hectares in the corresponding views of the State Governments, concerned Ministries/ period of last year and it was higher than 2014-15 by 1.6 Departments and other relevant factors. Substantial hikes per cent. in MSPs were given in 2012-13 as compared to the previous year. However, in 2013-14, 2014-15, Minimum Support Prices (MSPs) for major 2015-16 MSPs were increased moderately. agricultural commodities have been raised by the Table 3: Minimum Support Prices Fixed in 2015-16 (Crop Year) and percentage changes during previous years MSP (Rs per quintal) % change Commodity 2015-16 12-13/ 13-14/ 14-15/ 15-16/ 11-12 12-13 13-14 14-15 Industry December), was 3.1 per cent as compared to 2.6 per cent growth achieved during the corresponding period of The Central Statistics Office(CSO) under the the previous year. Out of the three broad sectors, Ministry of Statistics and Programme electricity sector has recorded the highest growth that Implementation (MOSPI) releases the monthly data grew at 4.5 per cent although 10.0 per cent growth was on the Index of Industrial Production((IIP). achieved during this period of the previous year. The Index of Industrial Production (IIP) based Manufacturing and mining sectors grew at 3.1 per cent industrial growth during 2015-2016 (April- and 2.3 per cent respectively against the corresponding viii S P O R C F I R A H K Paddy Common 1410 15.7 4.8 3.8 3.7 Paddy (Grade ‘A’) 1450 15.3 5.1 4.1 3.6 Jowar-Hybrid 1570 53.1 0.0 2.0 2.6 Jowar-Maldandi 1590 52.0 0.0 2.0 2.6 Bajra 1275 19.9 6.4 0.0 2.0 Maize 1325 19.9 11.5 0.0 1.1 Ragi 1650 42.9 0.0 3.3 6.5 Tur (Arhar) 4625 4.1 11.7 1.2 6.3 Moong 4850 10.0 2.3 2.2 5.4 Urad 4625 13.2 0.0 1.2 6.3 Groundnut 4030 37.0 8.1 0.0 0.8 Sunflower Seed 3800 32.1 0.0 1.4 1.3 Soyabean (Yellow) 2600 32.5 14.3 0.0 1.6 Sesamum 4700 23.5 7.1 2.2 2.2 Nigerseed 3650 20.7 0.0 2.9 1.4 Cotton (Medium) 3800 28.6 2.8 1.4 1.3 Cotton (Long) 4100 18.2 2.6 1.3 1.2 S P O R C I B A R Wheat 1525 5.1 3.7 3.6 5.2 Barley 1225 0.0 12.2 4.5 6.5 Gram 3500 7.1 3.3 2.4 10.2 Lentil (Masur) 3400 3.6 1.7 4.2 10.6 Rapeseed/ mustard 3350 20.0 1.7 1.6 8.1 Safflower 3300 12.0 7.1 1.7 8.2 Source: Commission for Agricultural Costs and Prices. (bonus is included wherever applicable)Introduction figures of 1.8 percent and 1.8 per cent of the previous products, fertilizers, cement and electricity sectors year (Table 4.0). achieved positive growth and remaining three sectors i.e, crude oil, natural gas and steel sectors have recorded negative growth. Table 4.0: Growth of IIP in April-December, 2015-16 (Per cent) Prices (Base 2004-05=100) The average headline inflation measured in terms Industry Weight April-December of Wholesale Price Index (WPI) declined from 6.0 per Group 2014-15 2015-16 cent in 2013-14 to 2.0 per cent in 2014-15 and further to -3.0 per cent in 2015-16 (Apr-Dec) and reached -0.7 per Mining 141.57 1.8 2.3 cent in December 2015. Similarly, inflation measured in terms of Consumer Price Index-New Series moderated Manufacturing 755.27 1.8 3.1 to 4.8 per cent in 2015-16 (Apr- Dec) as compared to 5.9 Electricity 103.16 10.0 4.5 per cent in 2014-15 and stood at 5.6 per cent in December Growth by use-based industrial group 2015. Basic Goods 456.82 8.0 3.4 WPI Food inflation (food articles + food products), which remained high at 9.4 per cent in 2013-14 moderated Capital Goods 88.25 5.1 1.7 to 4.9 per cent in 2014-15. It stood at 1.9 per cent in Intermediate 156.86 1.8 1.9 2015-16 (Apr-Dec) and recorded 6.2 per cent in Goods December 2015. Inflation measured in terms of Consumer 298.08 -4.9 4.0 Consumer Food Price Index (CFPI) declined to 4.6 per Goods cent in 2015-16 (Apr-Dec) from 6.4 per cent in 2014-15 and is currently placed at 6.4 per cent in December 2015. Durables 84.60 -15.2 12.4 Non-durables 213.47 2.3 -1.0 Table 5: Inflation in WPI and CPI (in per cent) General Index 1000 2.6 3.1 WPI CPI-NS As may be seen from above table, the basic goods All Food All Food (CFPI) sector showed a growth of 3.4 per cent as compared to a growth of 8.0 per cent during the corresponding period Base 2004-05=100 2012=100 of previous year. Capital goods sector showed a growth Weight 100 24.3 100 39.1 of 1.7 per cent during 2015-16(April-December) as compared to 5.1 per cent growth achieved during the 2013-14 6.0 9.4 9.5 11.3 corresponding period of previous year. Intermediate 2014-15 2.0 4.9 5.9 6.4 goods achieved a growth of 1.9 per cent during 2015- 16 (April- December) as compared to the corresponding 2015-16 figure of 1.8 percent of the previous year. For the (Apr-Dec) -3.0 1.9 4.8 4.6 consumer goods sector, the growth during 2015-16 (April- Apr-15 -2.4 3.6 4.9 5.1 December) was 4.0 per cent as against (-) 4.9 per cent in corresponding period of last year. Similarly, in the May-15 -2.2 1.7 5.0 4.8 consumer durables sector, the growth rate was 12.4 per Jun-15 -2.1 2.0 5.4 5.5 cent during this period as compared to (-) 15.2 per cent of the previous year. In contrast, consumer non-durables Jul-15 -4.0 -1.4 3.7 2.2 sector recorded a growth rate of (-) 1.0 per cent in 2015- Aug-15 -5.1 -1.4 3.7 2.2 16 (April-December) as against 2.3 per cent achieved during the corresponding period of the previous year Sep-15 -4.6 0.4 4.4 3.9 Oct-15 -3.7 2.4 5.0 5.2 Infrastructure Nov-15 -2.0 3.8 5.4 6.1 The index for eight core industries (comprising coal, crude oil, natural gas, petroleum refinery products, Dec-15 -0.7 6.2 5.6 6.4 fertilizers, steel, cement and electricity with a combined Source: Office of Economic Adviser, DIPP and weight of 37.90 per cent in the IIP grew by 1.9 per cent Central Statistics Office. during 2015-16 (April- December) as compared to growth Note: WPI inflation for last two months and CPI-NS rate of 5.7 per cent achieved during the corresponding inflation for last one month are provisional; CPI-NS period of 2014-15. During 2015-16 (April-December), five inflation for 2013-14 is based on 2010=100 base. out of the eight core sectors namely coal, refinery ixAnnual Report 2014-2015 The government has taken various fiscal and f) Export of edible oils in bulk is prohibited except administrative measures to control food inflation and to coconut oil and other edible oil in branded protect vulnerable sections of society from inflation. consumer packs of up to 5kgs is permitted with Government of India has signed an Agreement with the a minimum export price of USD 900 per MT w.e.f. Reserve Bank of India (RBI) on Monetary Policy 6.2.2015. Framework in February 2015 wherein RBI will aim to bring g) A new Plan Scheme titled Price Stabilization inflation, based on Consumer Price Index, below 6 per Fund (PSF) has been implemented for regulating cent by January 2016 and the inflation target for financial price volatility of agricultural commodities. year 2016-17 and all subsequent years shall be 4 percent with a band of +/- 2 per cent. Commodity specific fiscal h) Advisory to State Governments issued to take and administrative measures have been taken to contain strict action against hoarding & black marketing profiteering/ exploitation of consumers. Some of the and effectively enforce the Essential measures taken by the Government recently include: Commodities Act, 1955 & the Prevention of Black-marketing and Maintenance of Supplies a) Export of onion is calibrated through imposition of Essential Commodities Act, 1980. of appropriate Minimum Export Price (MEP) and Monetary Development during 2015-16 Import is allowed at zero duty. The Reserve Bank of India (RBI) further eased its b) The stock limits in respect of onion has extended monetary policy stance during the year 2015. Headline by one more year i.e. up to 2nd July 2016 under inflation based on the consumer price index (CPI) fell to the Essential Commodities Act. below 6 per cent much ahead of the January 2016 target. c) Export of all pulses is banned except kabuli The RBI reduced the statutory liquidity ratio by 0.50 per channa and up to 10,000MTs in organic pulses cent to 21.50 per cent in February 2015 and further eased the policy repo rate during the year to 6.75 per cent, in all and lentils. making a substantial cut of 125 basis points (bps) d) Zero import duty on pulses has been extended between January 2015 and September 2015 (Table 3.1). till 30.9.2016. In the bank’s latest monetary policy review held on 2 February 2016, the policy repo rate remains unchanged. e) Stock limits on pulses extended till 30.9.2016. Table 6: Revision in Policy Rates Bank Repo rate Reverse Cash reserve Statutory rate/MSF (per cent) repo rate ratio liquidity ratio Effective date rate* (per cent) (per cent of (per cent of (per cent) NDTL) NDTL) 09-08-2014 9.00 8.00 7.00 4.00 22.00 15-01-2015 8.75 7.75 6.75 4.00 22.00 07-02-2015 8.75 7.75 6.75 4.00 21.50 04-03-2015 8.50 7.50 6.50 4.00 21.50 02-06-2015 8.25 7.25 6.25 4.00 21.50 29-09-2015 7.75 6.75 5.75 4.00 21.50 Source : RBI. Notes: *: Bank Rate was aligned to MSF rate with effect from February 13, 2012. NDTL is net demand and time liabilities. xIntroduction The easing of the policy repo rate has been reserve money, net foreign exchange assets (NFA) have accompanied by a pick-up in the growth rates of reserve been a major determinant of the growth, modulated by money (M0) and narrow money (M1) in 2015.The growth net domestic assets. There was a seasonal pick-up in in M0 has been higher owing to a substantial growth of M0 growth to above the 14 per cent mark to accommodate 17.9 per cent in bankers’ deposits with the RBI, while the the festive demand at end-December 2015; it has since increase in M1 has been due to a higher rate of growth in moderated to a 12 per cent level. However, the growth of demand deposits with banks. In terms of sources of broad money (M3)has not picked up (Table 3.2). Table 7: Year-on-Year Change in Monetary Aggregates as on December of Each Year (per cent) 2015 2014 2013 2012 2011 2010 1. Currency in circulation 13.0 9.6 11.1 12.0 12.4 18.2 2.Cash with banks 11.0 15.6 8.3 17.3 12.8 31.5 3. Currency with the public 13.0 9.3 11.2 11.8 12.4 17.7 4. Bankers' deposits with the RBI 17.9 7.4 9.0 -15.3 12.1 35.3 5. Demand deposits 11.9 10.4 7.4 0.1 -0.1 22.4 6. Time deposits 10.6 10.9 16.3 12.6 19.2 18.4 7. Reserve money (M0) (1+4) 14.3 9.4 10.7 4.6 12.2 22.1 8. Narrow money(M1)(3+5) 12.8 10.0 9.8 6.8 6.7 19.6 9. Broad money (M3) (6+8) 11.0 10.7 14.8 11.2 16.0 18.7 Source: RBI. The year-on-year growth in time deposits fell to 10.6 years, the non-food credit issued in 2015 is indicative of per cent in December 2015. The real rate of interest on the shift in sectoral share of credit off take; in particular, deposits turned positive in late 2013 after inflation dropped the share of personal loans has increased to 34.2 per to below 9 per cent but time deposits have not picked up, cent in 2015 as compared to 15.3 per cent in 2011. Thus, partly because households savings are channelized to consumption expenditure has been the key driver of the other avenues like gold and real estate. The slowdown in economy during the current financial year. However, it is time deposits has been slowing the growth of bank credit a cause for concern that the share of industry has come as time deposits remain the most important source of down significantly from 53 per cent in 2011 to just 25 per bank funding. Time deposits are cheaper relative to other cent in 2015. The decline reflects the muted market sources of funding and allow banks to afford higher sentiments leading to slowdown in private investment interest rate spreads. demand and industrial growth, poor earnings growth of the corporate sector, and risk aversion on the part of During the current financial year also, year-on-year banks in the background of rising gross NPAs. growth in bank credit has remained below 10 per cent. For the fortnight ended December 2015, credit growth Liquidity Management stood at 9.2 per cent. The sluggish growth can be Liquidity conditions were generally tight during the attributed to several factors: (a) incomplete transmission first quarter (Q1) of 2015-16, mainly due to restrained of the monetary policy as banks have not passed on the government spending. In the second quarter (Q2) of entire benefit to borrowers; (b) unwillingness of banks to financial year (FY) 2015-16, however, liquidity conditions lend credit on account of rising non-performing assets eased significantly as public expenditure picked up and (NPA); (c) worsening of corporate balance sheets, forcing deposits exceeded credit substantially. In the third quarter them to put their investment decisions on hold; (d)more (Q3) of FY 2015-16, liquidity conditions tightened mainly attractive interest rates for borrowers in the bond market due to the festive season currency demand. The RBI .It is also instructive to note that bank credit explains only anchored its policy rate to achieve the domestic inflation about a half of the resource flow to productive sectors. target consistent with growth, and concurrently it used A careful look at the sector-wise break up of liquidity management tools effectively to preserve the incremental loan share shows that, as compared to earlier external value of the rupee. xiAnnual Report 2014-2015 Consistent with the accommodative monetary policy Primary Market stance since January 2015, the RBI has been actively In 2015-16 (April-December), resource mobilization managing liquidity to ensure adequate liquidity in the through public and right issues has surged rapidly as system and accordingly the weighted average call rate compared to the last financial year. During 2015-16 (April- (WACR),or the operating target of monetary policy, December), 71 companies have accessed the capital remained closely aligned to the policy repo rate. The market and raised `51,311crore, compared to `11,581 RBI conducted variable rate repo and reverse repo crore raised through 61 issues during the corresponding (overnight and term) auctions in order to address the day- period of 2014-15. to-day liquidity requirements arising out of frictional factors, besides regular liquidity operations. The WACR The small and medium enterprises (SME) platform declined by130 bps in response to the 125 bps cut in of the stock exchange is intended for small and medium repo rate by the RBI since January2015, pointing to sized companies with high growth potential, whose post perfect transmission at the first leg of the term structure. issue paid-up capital is less than or equal to `25 crore. However, post the 29 September 2015 rate cut, call rate During 2015-16 (April-December), 32 companies were remained above repo rate for some time, implying listed on the SME platform, raising a total amount of `278 tightening of liquidity conditions. Other short-term money crore as compared to`229 crore raised through 28 issues market rates, in particular market repos and call money, in the corresponding period of 2014-15. also co-varied with the WACR. The revised liquidity Resources mobilized by mutual funds during April- management framework put in place by the RBI since December 2015 also increased substantially to `1,61,696 5September 2014 has helped in containing volatility in crore from `87,942crore mobilized during the same period the WACR. Under the new framework, the RBI used of the previous year. Table 3.4 provides a picture of variable rate repo/reserve repo for fine tuning operations resource mobilization in the primary market. of varying tenors as well as outright open market operations, apart from normal liquidity operations under Source: Securities and Exchange Board of India the liquidity adjustment facility (LAF) to manage liquidity. (SEBI). Developments in the Government Securities Table 8: Resource Mobilization in the Market Primary Market (Rs. crore) Ten-year government bonds reflect the long end of 2013- 2014- 2014- 2015- the yield curve and are also proxy for assessing the credit 14 15 15 16 risk of the sovereign. The yields on government securities April-December were affected by a number of factors in the current Debt 42383 9713 7348 30421 financial. The benchmark 10-year yield started the year at 7.78 per cent, reached its highest level of 7.99 per Equity 13269 9789 4233 20890 cent on 12 May 2015, before falling to a two-year low of of which 12.6 3039 1401 12259 7.48 per cent after a 50 bps rate cut by the RBI on 29 IPOs September 2015.The hardening bias on yields till early Private May 2015 was primarily on account of an increase in placement of crude prices from their multi-year low level in mid-March corporate 276054 404137 269245 341420 2015, a global rise in government bond yields including bonds in advanced countries, turbulence witnessed by global financial markets and a depreciating rupee. It saw a return Note: IPO stands for initial public offering. to some stability post the announcement of a new 10- Secondary Market year paper on 19 May 2015 and continued positive developments on the inflation front. The market witnessed During 2015-16 so far, the Indian securities market another round of volatility in August 2015, caused by has remained subdued. The Bombay Stock Exchange developments in China. The new ten-year benchmark (BSE) Sensex declined by 8.5 per cent (up to 5 January paper breached the 7.91 per cent level towards August 2016) over end-March 2015, mainly on account of turmoil end. Subsequently, the RBI’s policy repo rate cut by 50 in global equity markets in August 2015 following bps on 29 September 2015 and announcement of a slowdown in China and its currency devaluation and slump medium-term framework (MTF) for staggered increase in stocks. On 4 January 2016, weak Chinese of foreign portfolio investment (FPI) limits in debt manufacturing data again led to a global sell-off which securities increased buoyancy in the market. However, caused the BSE Sensex also to decline by 538 points the market continued to lose some of its gains after mid- (2.1 per cent). The downward trend in the Indian stock October, owing to fresh concerns on global cues and market was also guided by mixed corporate earnings for some domestic concerns. Q1 and Q2 of 2015-16, FPIs’ concern over minimum xiiIntroduction alternative tax (MAT), weakening of the rupee against External Sector the US dollar, investor concern over delay in passage of India’s Merchandise Trade developments during the Goods and Services Tax (GST) Bill, uncertainty over 2015-16 interest rate hike by US Fed and selling by FPIs. However, the Indian equity market has been relatively resilient Reflecting the slowdown in terms of value of global during this period compared to the other major EMEs. trade owing to the decline in global commodity prices The Indian stock market withstood the US Fed increase and weak demand, Indian trade performance in gross in interest rates in December 2015. terms indicate a decline. India’s merchandise exports (customs basis) declined by 1.3 per cent to US$ 310.3 Services Sector billion in 2014-15. In 2015-16 (April-February), exports declined by 16.7 per cent to reach a level of US$ 238.4 Services sector performance shows a mixed billion vis-à-vis US$ 286.3 billion in the corresponding picture. While it is performing well in terms of GDP period of the previous year. despite some slowdown, on the export front there is a major slowdown. As per the Provisional Estimates (AE) Imports declined by 0.5 per cent US $448.0 billion in 2014-15, growth of the services sector (GVA at basic in 2014-15. Imports for 2015-16 (April-February) were at constant prices) accelerated further to 10.2 per cent from US$ 351.8 billion, which is lower by 14.7 as compared 9.1 per cent in 2013-14. This is mainly due to growth US$ 412.6 billion in the corresponding period of the acceleration in financial, real estate, and professional previous year. Petroleum, Oil and Lubricant (POL) imports services to 11.5 per cent from 7.9 per cent and Transport, declined by 40.5 per cent in 2015-16 (April-February) to storage, communication & services related to US$ 77.9 billion as compared US$ 130.9 billion in the broadcasting to 8.9 per cent from 7.3 per cent in the corresponding period of the previous year. Non-POL previous year. There was also good growth in Trade, imports for 2015-16 (April-February) declined by 2.8 per repair, hotels and restaurants services at 11.6 per cent in cent to a level of US$ 273.4 billion as compared to US$ 2014-15 though it was lower than the 13.3 per cent growth 281.7 billion in the corresponding period of the previous in 2013-14. year. Gold and silver imports increased by 2.8 per cent 2015-16 (April-February) to US$ 34.3 billion as against The quarterly estimates of services sector growth US$ 33.4 billion in the corresponding period of the during 2014-15 show a fluctuating trend from Q1 to Q4. previous year. The growth rate of services sector during Q1 and Q2 of 2015-16 was at 8.9 per cent and 8.8 per cent respectively In 2014-15, trade deficit increased US$ 137.7 billion compared to 8.7 percent and 10.4 per cent respectively which was higher than the level of US$ 135.8 billion in recorded in the same period of previous year. Among the 2013-14. However, during 2015-16 (April- February), major broad categories of services, the combined growth trade deficit decreased to US$ 113.4 billion from US$ 126.3 billion in the corresponding period of previous year. of ‘Trade, Hotel, Transport, communication & services related to broadcasting’ achieved the highest growth rate Balance of Payments (BoP) Developments at 10.6 per cent during Q2 of 2015-16 followed by during 2015-16 Financial, real estate & professional services’ with growth After high and near unsustainable level of Current rate at 9.7 per cent. Account Deficit (CAD) from 2011-12 to 2013-14 Q1, Services Trade India’s balance of payments situation since has been benign and comfortable. The recent weakness in external In 2014-15 growth of services exports of US$ 155.5 demand has adversely affected exports. Nevertheless, billion was positive though low at 2.6 per cent. Services current account deficit (CAD) as a proportion of GDP has imports grew by 1.6 per cent to US$ 79.7 billion resulting remained at comfortable levels in 2014-15 & in net services of US$ 75.7 billion with 3.7 per cent growth. 2015-16 (first half). As per the latest RBI data, India’s services export growth, services import growth and net services growth are still During, 2015-16 (April-September), merchandise positive in Q1 of 2015-16, though they are very low. exports (on BOP basis) decreased by 17.6 per cent to US$ 135.6 billion from a level of US$ 164.6 billion in 2014- Sector-wise performance of Services exports shows 15 (April-September). Imports fell by 13.4 per cent to US$ that among the major services exports of India, Software 207.2 billion in 2015-16 (April-September) as compared Services Exports had a positive though low growth of 4.6 to US$ 239.4 billion in the corresponding period of % in Q1 2015-16, while Business Services (10.3 %) and previous year. Both exports and imports declined due to Travel (7.9 %) have reasonably high growth rates. But subdued demand in the global market and steep fall in transportation (-13.1 %) and financial services (-18.6 %) international crude oil prices, respectively. This led to have negative growth rates reflecting the world trade lower trade deficit to US$ 71.6 billion in 2015-16 (April- situation and world growth respectively. September). xiiiAnnual Report 2014-2015 Net invisibles’ earning was placed at US$ 118.1 Foreign Exchange Reserves billion in 2014-15 as against US$ 115.2 billion in 2013- Capital flows in excess of CAD has led to relative 14. During 2015-16 (April- September), net invisibles’ stability in exchange rates in India, even in volatile global earning was placed at US$ 57.2 billion as against US$ capital movements in late 2015. In contrast, currencies 56.3 billion over corresponding period of the previous of some other EMEs have depreciated. Foreign exchange year. Current account deficit (CAD) narrowed to US$ 14.4 reserves stood at US$ 351.5 billion on 5th March 2016 billion (1.4 per cent of GDP) in 2015-16 (April-September) as against US$ 348.4 billion at end-February 2016, US$ from US$ 18.4 billion (1.8 per cent of GDP) in 349.6 billion at end January 2016, US$ 353.5 billion at corresponding period of the previous year. end-August 2015 and US$ 356.0 billion at end-June 2015. The current position is, however, more comfortable than the foreign exchange reserves of US$ 341.6 billion at Table 9: Major Components of Balance of end-March 2015. Payments (US$ billions) Exchange Rate of Rupee 2014-15 2015-16 In the current fiscal 2015-16 (April-February), the (April- (April- average monthly exchange rate of rupee (RBI’s reference September) September) rate) was in the range of `62 – 68 per US dollar (`62.75 Items PR P per US dollar in April 2015 and `68.24 per US dollar in Exports 164.6 135.6 February 2016). During 2015-16 (April-February), the Imports 239.4 207.2 average monthly exchange rate of rupee depreciated by 6.6 per cent against US dollar. However, the rupee Trade Balance -74.7 -71.6 appreciated against the euro and pound sterling from Net Invisible 56.3 57.2 September 2010 onwards. On a long term basis during Current Account the piriod, (April 2015-February 2016) the rupee has Deficit (CAD) -8.4 -14.4 performed better than the currencies of most of the emerging market economies except the Chinese External Assistance 0.2 currency. (Net) 0.7 Commercial Borrowing Table 10: Monthly Average Exchange of (Net) 0.8 -0.9 Rupee per Foreign Currency FDI (Net) 15.1 16.7 Month US Euro Pound Japanese Portfolio -7.7 -8.7 Dollar Sterling Yen** short Term Debt -1.4 -1.2 Apr-15 62.75 67.79 93.91 52.53 NRI Deposits 6.5 10.1 May-15 63.80 71.21 98.82 52.83 Errors & Omissions 0.1 -0.4 Jun-15 63.86 71.59 99.36 51.65 Capital Account Balance (Including Jul-15 63.63 70.03 99.08 51.61 errors & omission) 36.5 24.9 Aug-15 65.07 72.51 101.49 52.87 Overall Balance 18.1 10.6 Sep-15 66.22 74.39 101.60 55.15 Change in reserves (- indicates increase; Oct-15 65.06 73.06 99.76 54.19 -18.1 -10.6 + indicates decrease) Nov-15 66.12 71.09 100.62 54.01 (on BoP basis) Dec-15 66.60 72.46 99.94 54.68 Net capital inflows, however, increased to US$ 88.2 billion (4.3 per cent of GDP) in 2014-15 from US$ 47.9 Jan-16 67.25 73.08 97.11 56.87 billion (2.6 per cent of GDP) in 2013-14 owing largely to Feb-16 68.24 75.77 97.66 59.40 higher net inflows of FDI, portfolio investment and NRI deposits. However, it declined to US$ 24.9 billion (2.5 Source: Reserve bank of India, RBI’s reference per cent of GDP) in the first half of 2015-16 from US$ rate. ** Per 100 Yen. 36.5 billion (3.6 per cent of GDP) in the first half of 2014-15. On a BoP basis, there was a net accretion to External Debt India’s foreign exchange reserves by US$ 61.4 billion and US$ 10.6 billion respectively in 2014-15 (full year) and India’s external debt stock stood at US$ 483.2 billion 2015-16 (April-September). at end-September 2015 recording an increase of US$ xivIntroduction 8.0 billion (1.7 per cent) over the level at end-March 2015. 2030 from 2005 level and to create an additional carbon The maturity profile of India’s external debt indicates sink of 2.5 to 3 billion tonnes of CO equivalent through 2 dominance of long-term borrowings. The rise in external additional forest and tree cover by 2030. debt during the period was due to long-term debt, The recently concluded 21st Conference of Parties particularly commercial borrowings and NRI deposits. At (CoP) to the United Nations Framework Convention on end-September 2015, long-term external debt was US$ Climate Change (UNFCCC) in Paris agreed to keep the 397.1 billion (accounting for 82.2 per cent of total external global temperature rise this century well below 2 degrees debt) showed an increase of 1.9 per cent over the end- Celsius and to drive efforts to limit the temperature March 2015 level of US$ 389.7 billion. increase even further to 1.5 degrees Celsius above pre- US dollar denominated debt continued to be the industrial levels. Additionally, the agreement aims to strengthen the ability to deal with the impacts of climate major component of external debt stock accounting for change. The Paris Agreement for the first time brings all 57.7 per cent at end-September 2015, followed by the nations into a common cause based on their historic, Indian rupee (28.3 per cent), SDR (5.8 per cent), current and future responsibilities. Japanese yen (4.0 per cent) and Euro (2.4 per cent). Government (Sovereign) external debt at end-September Social Infrastructure, Employment and 2015 stood at US$ 88.8 billion. The shares of Government Human Development and non-Government debt in the total external debt were 18.4 per cent and 81.6 per cent respectively, at end- Social infrastructure like education and health are September 2015. critical inputs for improving the output productivity of the population. The lack of access to affordable and quality India’s foreign exchange reserves provided a cover health and educational facilities leads to economic of 72.5 per cent to the external debt stock at end- impoverishment and lowers the potential human September 2015 (71.9 per cent at end-March 2015). The capabilities. Economic development needs to be inclusive ratio of short-term external debt to foreign exchange by involving all sections of society, the deprived and reserves was 24.6 per cent at end-September 2015, as marginalized groups like women and children, scheduled compared to 25.0 per cent at end-March 2015. The ratio tribes, scheduled castes, differently abled and senior of concessional debt to total external debt was 8.7 per citizens. Population projections indicate that in 2020 the cent at end-September 2015 (8.8 per cent at end-March average age of India’s population is expected to be the 2015). lowest in the world and the bulk of this population will be added to the younger age group as ‘demographic The external debt management policy, followed by dividend’. Additionally, skill gaps in various productive the Government of India emphasizes monitoring of long sectors in India are large and will require up-scaling of and short-term debt, raising sovereign loans on training and skill development to maximize the benefits concessional terms with longer maturities, regulating of this demographic dividend and make India’s external commercial borrowings through end-use, all-in- development trajectory more inclusive and productive. cost and maturity restrictions and rationalizing interest Thus, India has to address the challenges of not just rates on Non-Resident Indian (NRI) Deposits. As a result, providing employment but of increasing the employability external debt has remained within manageable limits. of the labour force which is correlated to knowledge and Climate Change skills developed through quality education and training along with ensuring good quality of health. Climate change and issues related to the environment have gained prominence in the last few Expenditure on social infrastructure: Expenditure decades as the magnitude of the problem has become on education as a percentage of GDP has hovered around clearer with greater scientific evidence being revealed in 3 percent during the period 2008-09 to 2014-15. Similarly, this regard. Governments around the world have started there has not been any significant change in the taking initiatives in this regard at the domestic as well as expenditure on health as a percentage of GDP, which the international level. India on its part has been taking has remained stagnant at less than 2 percent during the concrete steps to ensure sustainability of its economic same period. The increase in expenditure may not always growth as well as to adapt to the adverse impacts of be a guarantee for appropriate outcomes and climate change. achievements. The efficiency of expenses incurred so far can be assessed by the performance of various social India announced its Intended Nationally Determined indicators. Contribution (INDC) for the period 2021 to 2030 on 2nd October, 2015. India’s INDC includes reduction in the Progress in Education: Though India has made emissions intensity of its GDP by 33 to 35 per cent by considerable progress in education over the years, there xvAnnual Report 2014-2015 still persist inequalities in access and achievements positive impact on the skills ecosystem in India. Besides across regions and populations. As per ASER 2014, the under the Pradhan Mantri Kaushal Vikas Yojana aiming trends in enrolment reflect a decline in the percentage of to offer 24 lakh Indian youth meaningful, industry relevant, enrolment in government schools from 72.9 per cent in skill based training, 4.38 lakh persons have successfully 2007 to 63.1 per cent in rural areas, while learning levels completed training throughout India. of the children in Class V who can read Class-II text Health and Sanitation: There are innumerable declined during the same period. There has been challenges in the delivery of efficient health services in perceptible improvement in the education of girls with India given the paucity of resources and the plethora of gender parity index becoming favourable at all levels of requirements in the health sector. The Indian health sector school education, except for scheduled caste students has a mix of both public and private providers of health in higher education and for scheduled tribe students at services. According to the Universal Health Coverage all levels of education, for which special efforts have to (UHC) index (World Bank) which is developed to measure be made. the progress made in health sectors in select countries Employment and Unemployment: As per the of the World, India ranks 143 among 190 countries in fourth Annual Employment-Unemployment Survey terms of per capita expenditure on health ($146 PPP in conducted by the Labour Bureau during the period 2011) while 157th position according to per capita January, 2014 to July 2014, the Labour Force Participation government spending on health which is just about $44 Rate (LFPR) (usual principal status) is 52.5 for all persons. PPP. The LFPR of women is significantly lower than males in Though, the India’s mortality rate under five has both rural and urban areas. The Worker Population Ratio declined from 126 in 1990 to 49 in 2013, much faster (WPR) also reflects similar pattern. Female participation than global rate of decline during the same period, still in the labour force and employment rates are affected by immunization is one of the thrust areas of the child health economic, social and cultural issues and unpaid work by programme of the Government to achieve Goal 4 of women remain unaccounted for by the conventional Millennium Development Goals (MDGs) of reducing the employment surveys. A notable aspect of employment child mortality. With an aim to cover all those children by situation in India is the large share of informal employment 2020 who are either unvaccinated, or are partially and growth in informal employment in organized sector. vaccinated against seven vaccine preventable diseases, The share of informal employment has remained above the Mission Indradhanush was launched in December 90 per cent in total employment throughout the period 2014 which covered 352 districts of the country so far. 2004-05 to 2011-12. The informal sector has to be given due consideration to achieve the stated development Health is closely related to sanitation and hygienic objectives. In a major initiative for bringing compliance in environment. The progress in sanitation has witnessed a the system, Central government and the State spurt since the launch of Swachh Bharat Mission. More governments have initiated reforms in the labour markets. than 122 lakh toilets have already been constructed in the rural areas since the beginning of Swachh Bharat Skill Development: At present there is Mission (Gramin). It is also imperative that the constructed preponderance of unskilled workers in India, mainly toilets are maintained and utilised by the beneficiaries engaged in less productive informal sectors. According after the construction to reap the benefits of Swachh to the NSDC (National Skill Development Corporation) Bharat Mission. In order to improve availability of drinking report, there is a severe quality gap and lack of availability water in rural areas, National Rural Drinking Water of trainers in the vocational education and training sector. Programme (NRDWP) initiated a new project supported The skill gap within the vocational training sector including by World Bank-‘Rural Water Supply and Sanitation both teachers and non-teachers will be to the tune of 211 Project–Low Income States’. thousands by the 2017. The workforce requirement is projected to increase to 320 thousands by 2022. With Poverty: The poverty estimates based on the employment slowing down, Government has to invest on Tendulkar Committee methodology using household bridging the skills gap in the vocational education and consumption expenditure survey data collected by NSSO training sector to improve the employability of people. A in its 68th round (2011-12) shows that the incidence of multipronged policy approach to enable skills poverty declined from 37.2 per cent in 2004-05 to 21.9 development including but not limited to initiatives such percent in 2011-12 for the country as a whole, with a as setting up of SSCs (Sector Skill Councils), definition sharper decline in the number of rural poor. The high of Occupation Standards, definition of National Skills rural poverty can be attributed to lower farm incomes due Qualification Framework (NSQF), funding initiatives such to subsistence agriculture, lack of sustainable livelihoods as STAR scheme are likely to create a widespread in rural areas, impact of rise in prices of food products on xviIntroduction rural incomes, lack of skills, under employment and Division, Direct Benefit Transfer Division, Staff Inspection unemployment. Unit, Office of Chief Advisor Cost, Controller General of Accounts and the Central Pension Accounting office. Technology for efficient delivery of services: Technology will play a crucial role as an enabler for 3. Department of Revenue inclusiveness and provider of efficient services by preventing leakages. The Government has introduced 1. The Department of Revenue exercises control the game-changing potential of technology-enabled Direct in respect of revenue matters relating to Direct and Benefits Transfers (DBT), viz. the JAM (Jan Dhan- Indirect Union taxes. The Department is also entrusted Aadhaar-Mobile) Number Trinity solution, which offers with the administration and enforcement of regulatory possibilities to effectively target public resources to those measures provided in the enactments concerning Central who need it most, and include all those who have been Sales tax, Stamp duties and other relevant fiscal statutes. deprived in multiple ways. The progress is already evident Control over production and disposal of opium and its with overhauling of the subsidy regime and moving to products is vested in this Department. Aadhaar-DBT. It is paving way for expenditure rationalization and is ensuring the removal of, so far 2. The Department is also facilitating taxation undetected, fake and duplicate entities from the reforms in the indirect taxes sector for goods and services beneficiary lists, resulting in to substantial savings of in coordination with the States. These cover an extended public money for giving renewed focus on social welfare ambit, encompassing the switch-over from erstwhile State schemes. Sales tax to Value Added tax, phasing-out of Central Sales tax, rationalization of Additional Excise duties on goods 2. Department of Expenditure of special importance and eventual evolution of a frame work for dual Goods and Service tax. The Department of Expenditure is the nodal 3. Tax policies are formulated in order to mobilize Department for overseeing the public financial financial resources for the nation, achieve sustained management system in the Central Government and growth of the economy, macro-economic stability and matters connected with State finances. The principal promote social welfare by providing fiscal incentives for activities of the Department include pre-sanction appraisal investments in the social sector. The underlying theme of major schemes/projects (both Plan and non-Plan of the tax proposal for the Budget 2015-16 has been clarity expenditure), handling bulk of the Central budgetary in tax laws, a stable tax regime, a non- adversarial tax resources transferred to States, implementation of the administration leading to widening and deepening of tax recommendations of the Finance Commission and base and a fair mechanism for dispute resolution. Central Pay Commission, overseeing the expenditure 4. The Income Tax Offices throughout the country management in the Central Ministries/Departments continued their drive against tax evaders. During the F.Y. through the interface with the Financial Advisors and the 2015-16 (upto 30.11.2015), searches were conducted in administration of the Financial Rules/Regulations/Orders, 249 groups resulting in seizures of assets worth `469.71 monitoring of Audit comments/observations, preparation crore and admission of undisclosed income of `6167.12 of Central Government Accounts, managing the financial crore. During the same period, 1802 surveys conducted aspects of personnel management in the Central resulted in detection of undisclosed income of `3577.12 Government, assisting Central Ministries/Departments in crore. Prosecutions were filed in criminal courts in 105 controlling the costs and prices of public services, cases (upto September 2015) and 345 prosecutions were assisting organizational re-engineering through review of compounded. As regards assessees, the number of new staffing patterns and O&M studies and reviewing systems assessees added during the F.Y. 2014-15 was 76.04 and procedures to optimize outputs and outcomes of Lakh. public expenditure. The Department coordinates all matters concerning the Ministry of Finance as a whole 5. The Customs and Central Excise offices including Parliament-related work of the Ministry. The continued their drive vigorously against duty evasion. Department has under its administrative control the During the F.Y. 2015-16 (Jan. - Dec. 2015), 2304 cases National Institute of Financial Management (NIFM), of Central Excise duty evasion involving `5106.41 crore Faridabad, which is an autonomous body. were detected. In respect of Service Tax 7050 cases were registered involving Service Tax evasion amount of The business allocated to the Department of `17435.15 crore. Similarly, 2989 cases were registered Expenditure is carried out through its Establishment evading Customs duty during the F.Y. Division, Plan Finance-I and Plan Finance-II Divisions, 2015-16 (Jan - Dec 2015) involving a duty recovery of Finance Commission Division, Public Procurement `2237.47 crore. The drive against smuggling continues xviiAnnual Report 2014-2015 unabated. All Commissionerates along the coast, land their functioning, appointment of Chairman, Managing borders and in charge of international airports remain fully Director and Chief Executive Officers (MD & CEOs), alert to prevent smuggling of contraband, both into and Executive Directors (EDs), Chairman cum Managing out of the country. As a result, during F.Y. 2015-16, 28588 Directors (CMDs), legislative matters, international outright smuggling cases were detected and contraband banking relations. Appointment of Governor/Deputy goods worth `9516.83 crore were seized. Governor of Reserve Bank of India, matters relating to National Bank for Agriculture and Rural Development 4. Department of Disinvestment (NABARD), Agriculture Finance Corporation, Co- operative Banks, Regional Rural Banks (RRBs) and The Department of Disinvestment was set up as a Rural/Agriculture Credit. The Department also separate Department on 10th December 1999 and later administers the Financial Inclusion programme of the renamed as Ministry of Disinvestment from 6th Government, Social Security Schemes and other targeted September 2001. From 27th May 2004, the Department schemes aimed at facilitating flow of credit. Matters of Disinvestment is one of the Departments under the relating to Insurance Sector and performance of Public Ministry of Finance. Sector Insurance Companies, administration of various Insurance Acts. Matters relating to Insurance Regulatory 5. Department of Financial Services & Development Authority of India (IRDAI). Matters relating to Pension Reforms including the New Pension System The Department of Financial Services (DFS) is (NPS), legislative and other issues regarding the Pension mainly responsible for policy issues relating to Public Fund Regulatory and Development Authority (PFRDA) Sector Banks (PSBs) and Financial Institutions including etc. xviiiChapter - I Department of Economic Affairs I Department of Economic Affairs 1. Economic Division on important policy issues and provides briefs for meetings of the Consultative Committees and Working 1.1 The Economic Division tenders expert advice Groups set up by the Government. The officers of the to the Government on important issues of economic Economic Division participate in consultations with various policy. missions from international institutions, such as International Monetary Fund (IMF), the World Bank and 1.2 The Division monitors economic developments, WTO etc. The Division works in close cooperation with domestic and external, and advises on policy measures the Reserve Bank of India, the Planning Commission, relating to macro management of the economy. the Central Statistical Organisation, the Ministry of 1.3 As part of its regular activities, the Economic Commerce and Industry and the Economic and Statistical Division brings out the Economic Survey annually, which Wings of their Ministries. An international Seminar the is placed in the Parliament prior to the presentation of 6th Delhi Economics Conclave-(2015) on “Realising the Central Government Budget. The Economic Survey India’s JAM vision” was inaugurated by Hon’ble Prime provides a comprehensive overview of important on 6th November 2015 wherein researchers, policy developments in the economy. It also analyses recent makers, industry leaders, bankers and economists & economic trends and provides an in-depth appraisal of academicians from India and abroad participated. policies. Over the years, the Economic Survey has The work of the Economic Division is organized acquired the status of an authoritative source and a useful under the following units: compendium of the annual performance of the Indian economy. Further, the Fiscal Responsibility and Budget  BoP, Trade and External Debt Management (FRBM) Act, 2003 requires the Ministry of  Industry and Infrastructure Finance to review every quarter the trends in Receipts and Expenditure in relation to the Budget and place it  Macro Indicators before both Houses of Parliament. As part of this exercise,  Agriculture and Food Management the Economic Division prepares the Mid-Year Economic Analysis in the second quarter of each year for placing it  Financial Intermediation and Monetary before Parliament. In addition, at the end of first quarter Management and third quarter a Macro-Economic backdrop statement  Public Finance is prepared and provided to the Budget Division for incorporating in the review of quarterly receipts and  Prices expenditure.  Social Infrastructure, Human Capital and 1.4 The Division also brings out the Economic and Development the Functional Classification of the Central Government’s  Services Budget, which is circulated among the Hon’ble Members of Parliament. The publication presents an estimate of  Climate Change Finance the savings of the Central Government and its  Coordination departmental undertakings, gross capital formation and the magnitude of the development and consumption expenditure broken up under broad functional heads. 1.2 Trade & BoP Unit 1.5 The Division also brings out every month an 1.2.1 The Trade & BoP Unit is responsible for analyzing abstract entitled “Monthly Economic Report”, which gives external sector developments and offering policy advice the latest available data on the key sectors of the on related issues. The Unit monitors India’s foreign trade economy. The Division prepares, from time to time briefs and developments on BoP indicators closely through an on the performance of the infrastructure sector, agriculture institutional set-up of a special monitoring group and industrial production, trends in tax collection, the comprising stakeholders in Ministry of Finance, other balance of payments and the monetary situation. It also Ministries concerned and the Reserve Bank of India. The monitors the price situation on a weekly basis. In addition, Unit tracks movements in the exchange rate of the rupee, the Division undertakes short term forecasting of key monitors India’s foreign exchange reserves and India’s economic variables. foreign trade. This Unit also monitors and analyses issues 1.6 As part of its advisory functions, the Economic related to global developments and institutions like IMF, Division prepares analytical notes and background papers World Bank. 1Annual Report 2015-2016 1.3 External Debt Management Unit production, progress of monsoon and reservoir storage (EDMU) of water resources, pricing of major Rabi and Kharif crops, agricultural credit and insurance. The Unit examines 1.3.1 The External Debt Management Unit (EDMU) is issues pertaining to development of dairy, poultry and involved in the collection, compilation and publication of fisheries as well as food processing sector and Quarterly External Debt Statistics in compliance with recommends policies. It is also responsible for issues Special Data Dissemination Standards (SDDS) of IMF related to Public Distribution System and food security, and Quarterly External Debt Statistics (QEDS) of World public procurement, buffer stock norms, Central Issue Bank. The Unit also brings out an Annual Status Report Price, Open Market Sales Scheme, storage and on India’s External Debt. The management information warehousing. The Unit critically examines proposals system on external debt management and coordination related to the agricultural and allied sector, food of Commonwealth Secretariat Debt Recording and management and food processing, analyses recent Management System (CS-DRMS) with the office of developments and suggests appropriate policy directions. Controller of Aid, Audit and Accounts and the RBI is handled in the unit. 1.7 Financial Intermediation and Monetary Management 1.4 Industry & Infrastructure 1.7.1 The Money Unit is responsible for monitoring of 1.4.1 Industry and Infrastructure Unit advises the money market trends, developments in monetary policy Government on policy issues relating to Industry at both of the Reserve Bank of India, and aggregate trends in macro and sectoral levels. The unit monitors and reviews credit flows. It analyses movements in monetary on a continuous basis industrial growth and investment, parameters and also of yields on G-Sec/ Treasury bills, developments in the industrial sector, investment / call money rates and Liquidity Adjustment Facility (LAF) financing of public sector, industrial relations and operations. The Unit also tracks developments in banking sickness. The Unit is also responsible for monitoring and financial markets, including the primary and trends in production of core infrastructure industries. It secondary markets and derivative market. undertakes analysis of developments in infrastructure policy, investment and financing and renders advice on 1.8 Public Finance infrastructure sector policy issues. 1.8.1 The Public Finance Unit deals with matters 1.5 Macro Indicator relating to public finance and budgetary operations of the Central Government. It is responsible for the publication 1.5.1 The Macro Unit is responsible for: (a) analyzing of Economic and Functional Classification of Central and monitoring India’s macroeconomic parameters, (viz. Government Budget, Indian Public Finance Statistics gross domestic product, saving, investment, etc.); (b) which includes budgetary transactions of Centre, State country coordination for Special Data Dissemination and Union Territories. The unit monitors Central fiscal Standard of the International Monetary Fund; (c) parameters, such as, fiscal deficits, revenue deficits, and maintaining the National Summary Data Page on a routine analyses policies relating to central plan outlays, basis (d) compilation of the Macroeconomic Framework resources and expenditure. The unit also undertakes Statement that forms part of the Union Budget and the review of fiscal position and analysis of fiscal issues Macroeconomic Backdrop for the FRBM (Fiscal including those relating to tax measures. Responsibility and Budget Management) statements that are laid in the Parliament every quarter; (e) some 1.9 Prices calculations and projections related to annual budget exercise; (f) drafting the portions of Economic Survey 1.9.1 The Price unit is responsible for monitoring and and Mid-year Economic Analysis related to macro- maintaining database on WPI, CPI & International economic parameters; (g) preparation of the Monthly Commodity prices and gives policy advice on price related Economic Report; (h) attending to requirements of inputs, matters. briefs, speeches, Parliamentary references, etc. related 1.10 Social Infrastructure, Human Capital to the state of economy. and Development 1.6 Agriculture & Food Management 1.10.1 The Social Infrastructure, Human Capital and 1.6.1 The Agriculture and Food Management Unit Development Unit prepares analytical notes on poverty, advises the Government on policy issues relating to employment, rural development and other topics on the Agriculture, Animal Husbandry and allied sectors, Food issues like health, education, employment including and Public Distribution and Food Processing. The Unit labour market etc. The unit also advises the Government monitors and appraises on a continuous basis agricultural on specific policy issues in social infrastructure, human growth and investment, agricultural research, agricultural capital and development. 2Department of Economic Affairs I 1.11 Services Sector and of States under President’s Rule. The Division is also responsible for dealing with issues relating to Public Debt, 1.11.1 Services sector unit deals with the issues related Market Loans of the Central Government and State to services sector in Indian Economy. It monitors and Government’s borrowing and lending, guarantees given analyses the performance of India’s Services Sector by the Government of India and the Contingency Fund of including services trade on an ongoing basis. This unit India. The responsibility of the Division also extends to also prepares comments on notes related to trade in regulate the flow of expenditure by processing proposals services, WTO, negotiation in services, etc. for from other Ministries/Departments for re-appropriation of Department of Commerce. savings in a Grant where prior approval of the Ministry of Finance is required. The Division also deals with National 1.12 Climate Change Savings Institute (NSI), Small Savings Schemes and 1.12.1 Climate Change Finance Unit serves as the nodal National Defence Fund. The work relating to Treasurer, point on all financing matters related to climate change Charitable Endowment is also handled in the Budget in the Ministry of Finance. It helps shape the firming up Division. of India’s stand on financing issues related to climate 2.2 This Division also deals with matters relating to change and sustainable development in fora like United Duties, Powers and Conditions of Service of the Nations Framework Convention on Climate Change, G20, Comptroller and Auditor General of India and submission Rio+20. It is vested with the task of preparing submissions of the Reports of the Comptroller and Auditor General of on behalf of India as well as assessing submissions of India relating to the accounts of the Union to the President other member countries in these fora. The Unit provides for being laid before Parliament. From 1st January, 2015 inputs on an ongoing basis to Ministry of Environment, to 31st December, 2015, 40 Reports of the C&AG of Forests and climate change on issues related to National India were laid before the Parliament and 22 Action Plan on Climate Change and in the capacity entrustments/re- entrustments of audit of various bodies development efforts on emerging issues like green to the C&AG of India were dealt by this Division. growth, innovative financing options for sustainable 2.3 The Budget Division is also responsible for development by preparing positions papers and analysis administration of “Fiscal Responsibility and Budget of technical issues and policy options. Management Act, 2003” which was brought into force 1.13 Coordination w.e.f. 5th July, 2004. The Rules made under the Act were also made effective from that date. Quarterly Reviews 1.13.1 Coordination Unit is responsible for organizing including Mid-term Review were presented in Parliament the pre-budget consultations of Finance Minister with in accordance with the requirements of the FRBM Act. different stakeholder groups like Agriculture Sector, Social Sector related Group, Industry and Trade Sector, Trade 2.4 Budget Division also oversees/facilitates the Unions, Banking and Financial Institutions, Economists implementation of ‘Gender Budgeting’ in various and IT(Software & Hardware). The Unit is also responsible Ministries/Departments. for Organizing Delhi Economics Conclave (DEC). The 2.5 The work relating to form of Accounts kept under Administrative and coordination work for production and Article 150 of the Constitution of India is also handled in submission of Economic Survey and Mid Year Economic this Division. Advice on the classification of Government Analysis to the Parliament are also done by this unit. receipts and expenditure and on the accounting Inputs/materal for Finance Minister’s Speeches on procedure drawn up for implementation of new schemes different occasions and for Annual/Spring Meetings of the of the Government is also rendered World Bank & IMF, ADB and Credit Rating Agencies; 2.6 Supplementary Demands: briefs for Economic Editor’s meet, Consultative Committee meetings and Parliamentary Standing 2.6.1 Supplementary Demands Section is concerned Committee meetings are collected and put together by with the coordination and presentation of Supplementary this unit. Apart from these the unit is involved in the all Demands for Grants and Demands for Excess Grants administrative and Parliament related matters. and the connected Parliamentary work. Other activities of the Section relate to administration of the Contingency Fund of India Act. 2. Budget Division 2.6.2. This Section is also concerned with the overall 2.1 Budget Division is responsible for the preparation policy related to Central Government Guarantees/ of and submission, to Parliament, the Annual Budget Guarantee Fees and Estimates of Loan Repayments and (Excluding Railways) as well as Supplementary and Interest Payments in respect of Public Sector Units/ Excess Demands for Grants of the Central Government Financial Institutions. 3Annual Report 2015-2016 Responsibilities: crore during the same period last year. An amount of `58749.95 crore has been transferred as share of net  Supplementary Demands for Grants. small savings collections to the States and Union  Demands for Excess Grants. Territories (with legislature) during the current fiscal, as against the sum of `48128.29 crore transferred last year.  Central Government Guarantees/Guarantee Fees. 2.7.3. National Small Savings Fund:  Estimates of Loan Repayments and Interest In order to account for all the monetary Payments in respect of Public Sector Units/ transactions under small savings schemes of the Central Financial Institutions. Government under one umbrella, “National Small Savings  Administration of the Contingency Fund of Fund” (NSSF) was set up in the Public Account of India India Act and Rules w.e.f. 1st April, 1999. The net accretions under the small savings schemes are invested in the special securities of various States/Union Territories (with legislature)/ 2.7 National Small Savings: Central Governments. The minimum obligation of States to borrow from the National Small Savings Fund (NSSF) 2.7.1. Small Savings Scheme: was brought down to 50 percent of net collections w.e.f. The Small Savings Schemes currently in force 1st April, 2012. are: Post Office Savings Account, Post Office Time Deposits (1,2,3 & 5 years), Post Office Recurring 2.7.4. Interest Rates on Small Savings Deposits, Post Office Monthly Account, Senior Citizens Instruments Savings Scheme, National Savings Certificate (VIII- Issue), Public Provident Fund, Kisan Vikas Patra and (i) The rate of interest on small savings Sukanya Samriddhi Account. schemes has been aligned with G-Sec rates of similar maturity. 2.7.2. Small Savings Collections: (ii) The rate of interest on various small savings The gross deposits under various small savings schemes for current financial year on the schemes during 2015-16 (upto December, 2015) were basis of the interest compounding/payment ` 283614.96 crore as against the deposit of ` 199483.69 built in the schemes, is shown in table below: Rate of interest % Rate of interest % Rate of interest % Instrument After 1.4.2014 After 1.4.2015 After 1.4.2016 (for first quarter of FY 2016-17) Savings Deposit 4.0 4.0 4.0 1 Year Time Deposit 8.4 8.4 7.1 2 Year Time Deposit 8.4 8.4 7.2 3 Year Time Deposit 8.4 8.4 7.4 5Year Time Deposit 8.5 8.5 7.9 5 Year Recurring Deposit 8.4 8.4 7.4 5 Year SCSS 9.2 9.3 8.6 5 Year MIS 8.4 8.4 7.8 5 Year NSC 8.5 8.5 8.1 PPF 8.7 8.7 8.1 Sukanya Samriddhi Account 9.1 9.2 8.6 7.8 (will mature in Kisan Vikas Patra 8.7 8.7 110 months) 4Department of Economic Affairs I 2.8 Government Borrowing 2) Disclosure statements such as- a) Tax Revenues raised but not Presented 2.8.1 The Central Government’s normal borrowing realised. as a part of through issue of dated securities for financing the fiscal Receipts deficit was budgeted in BE 2015-16 at `6,00,000 crore b) Arrears of Non-Tax B u d g e t (Gross) and `4,56,405 crore (net). Revenues. 2015-16 2.8.2 During the year, Government continued with the c) Asset Register. policy of announcement of half yearly indicative market borrowing calendar based on its core borrowing 3) Quarterly Statements on Review of the trends in requirements. receipts and expenditure in relation to the budget at the 2.8.3 During the financial year 2015-16, Government end of- has curtailed gross borrowing by `15,000 crore (approx) (a) Third Quarter of the financial year 2014-15 Government dated securities. 2.8.4 The weighted average yield and maturity of dated (b) Fourth Quarter of the financial year 2014-15 securities issued during 2015-16 (April 2015 to March, (c) First Quarter of the financial year 2015-16 2016) were 7.88% and 15.99 years respectively, as compared to 8.51% and 14.66 years in the corresponding (d) Second Quarter of the financial year 2015-16 period of the financial year 2014-15 (Presented to Parliament as a part of Mid-year 2.8.5 Detailed analysis of existing debt and liabilities Economic Analysis 2015-16) of the government is brought out in the annual debt papers, published during 2011-12, 2013-14, 2014-15 and 4) Medium Term Expenditure Framework (MTEF) 2015-16 (These are available in www.finmin.nic.in). Statement for the year 2015-16. 2.9 Fiscal Responsibility and Budget 2.9.3 Fiscal position in FY 2014-15 and fiscal targets Management (FRBM) Cell: for FY 2015-16 is as below: 2.9.1 Administration of Fiscal Responsibility and (% of GDP) Budget Management Act (FRBM), 2003 and the Rules framed thereunder is the prime function of the FRBM Fiscal Indicator/ 2014-15 BE RE Cell. The FRBM Act provide for the responsibility of the Year (Actuals) 2015-16 2015-16 Central Government to ensure inter-generational equity in fiscal management and long-term macro-economic Fiscal Deficit 4.1 3.9 3.9 stability by achieving sufficient revenue surplus and Revenue removing fiscal impediments in the effective conduct of monetary policy and prudential debt management Deficit 2.9 2.8 2.5 consistent with fiscal sustainability through limits on the Effective Central Government borrowings, debt and deficits, Revenue Deficit 1.9 2.0 1.5 greater transparency in fiscal operations of the Central Government and conducting fiscal policy in a medium- Total outstanding term framework and for matters connected therewith or liabilities at the incidental thereto. end of the year* 47.0 46.1 47.6 2.9.2 During the period from January 1, 2015 to Note : GDP at current prices, 2011-12 series. December, 31 2015, in compliance with the relevant provisions of the FRBM Act and Rules framed thereunder * “Total outstanding liabilities” include external public debt the following documents were prepared by the FRBM Cell at current exchange rate. Liabilities do not include part of NSSF and total MSS liabilities which are not used and presented in the Parliament. for Central Government deficit. 1) Statements of fiscal policy such as 2.10 Public Debt a) Medium-Term Fiscal Polic y Presented Statement 2015-16 along with 2.10.1 With the objective to improve the Cash b) Fiscal Policy Strategy the Management System in the Central Government, a Statement 2015-16 General modified cash management system, including exchequer Budget control based expenditure management system was c) Macro-Economic Framework 2015-16 introduced in respect of 15 Demands for Grants in Central Statement 2015-16 Government w.e.f. April 1, 2006 vide this Ministry's O.M. 5Annual Report 2015-2016 No.21(1)-PD/2005 dated January 10, 2006. The system Analysis FRBM Question Reports which were laid before was later extended to 23 & 46 Demands for Grants w.e.f. the Parliament. April 1, 2007 and April 1, 2012. It has now been made applicable to all the Demands for Grants of the Union 2.12.2 The translation of other documents as envisaged Government vide this Ministry's O.M. No.21(1)-B(PD)/ in the Official Language Act, 1963 and Rules made there 2014 dated July 22, 2015. As per the guidelines of the under was also undertaken by the Hindi Branch during system all the Demands for Grants are required to prepare the year under report. These include agreements with and send their Monthly Expenditure Plans (MEP) and Foreign Governments and International Agencies, Quarterly Expenditure Allocations (QEA) to Cash Cabinet Notes, Parliament questions/assurances, Management Cell for better monitoring and compliance notifications, Standing Committee papers, monthly of the guidelines of the Ministry of Finance regarding summary for the Cabinet, Official letters and External expenditure management. The guidelines also provide Assistance Report etc. that the expenditure in the last quarter of the financial year may not exceed 33 per cent and MEP for the month 3. Financial Markets Division of March may not exceed 15% of Budget Estimate. 3.1 Primary Markets 2.11 Debt Management Office 2.11.1 The Government set up a Middle Office (MO) in 3.1.1 Simplified Framework for Capital the Department of Economic Affairs consequent upon Raising by technological start-ups the announcement to establish an independent debt and other companies on Institutional management office (Union Budget 2007-08). The major Trading Platform focus of Middle Office is on skill building and developing expertise required for a fully functional debt management 3.1.1.1 SEBI undertook a review of the extant regulatory office. The major functions of the Middle Office included framework in the primary market and noted the works related to draft legislation of the Public Debt suggestions of market participants on making the existing Management Agency of India, developing debt avenues for capital raising amenable for accommodating management strategy, issuance calendars for a larger number of start-up companies. Government securities, forecasting cash and borrowing requirements, developing and disseminating debt related 3.1.1.2 Based on the same, the SEBI approved the information, etc. following proposals to amend the regulations concerning the Institutional Trading Platform (ITP): 2.11.2 The Middle Office publishes regular debt statistics on Central Government Debt and a Quarterly i. The platform shall now be called as Institutional Report on Public Debt Management. It also brings out Trading Platform (ITP) and shall facilitate capital an annual Status Paper on Government Debt. Starting raising as well. 2013-14 (November, 2013), a Handbook of Statistics on Central Government Debt is also being published. The ii. The said platform will be made accessible to: a) Second Edition of the Handbook was released in companies which are intensive in their use of November, 2015. The fifth edition of the status paper was technology, information technology, intellectual published in January 2016. Government of India, in property, data analytics, bio-technology, nano- consultation with RBI, in December 2015, placed in public technology to provide products, services or domain Debt Management Strategy for a period of three business platforms with substantial value addition years (2015-16 to 2017-18). The strategy document and with at least 25% of the pre-issue capital contains the objectives, risk analysis of Government being held by QIBs (as defined in SEBI [(Issue borrowings and strategy to be followed. of Capital and Disclosure Requirements) ICDR] 2.12 Hindi Branch Regulations, 2009), or b). any other company in which at least 50% of the pre-issue capital is held 2.12.1 All Budget documents are presented to by QIBs. Parliament in Hindi and English. Besides Budget documents, Hindi Branch has also prepared Hindi iii. No person (individually or collectively with versions of Supplementary Demands, Economic persons acting in concert) in such a company Classification Report, Reports on Public Statics and shall hold 25% or more of the post-issue share Status Report of External Debt, Mid-year Economic capital. 6Department of Economic Affairs I iv. Considering the nature of business of companies Funds (AIFs), which are required under the SEBI which may list on the said platform, disclosure (Alternative Investment Funds) Regulations, may contain only broad objects of the issue and 2012 to invest a certain minimum amount in there shall be no cap on amount raised for unlisted securities, investment in shares of General Corporate Purposes. Further, the lock companies listed on this platform may be treated in of the entire pre-issue capital shall be for a as investment in 'unlisted securities' for the period of 6 months from the date of allotment purpose of calculation of the investment limits. uniformly for all shareholders. 3.1.2 Streamlining the Process of Public v. As the standard valuation parameters such as Issues: P/E, EPS, etc. may not be relevant in case of many of such companies, the basis of issue price may include other disclosures, except 3.1.2.1 In order to reduce the post-issue timeline for projections, as deemed fit by the issuers. listing from existing T+12 days to T+6 days, increase the reach of retail investors and reduce the costs involved in vi. Companies intending to list on the proposed ITP, public issue of equity shares and convertibles, SEBI took shall be required to file draft offer document with the following decisions: SEBI for observations, as provided in SEBI (ICDR) Regulations, 2009. i. Presently more than 99.5 % applications are received from centres where Applications vii. Only two categories of investors, i.e. (i) Supported by Blocked Amount (ASBA) facility is Institutional Investors (QIB as defined in SEBI available. Based on an analysis of a few public (ICDR) Regulations, 2009 along with family issues, in terms of amount, ASBA applications trusts, systematically important Non-bank account for 99.90% of the total bid amount financial companies (NBFCs) registered with RBI received from all investors. Considering the reach and the intermediaries registered with SEBI, all and advantages of ASBA, it shall now be with net-worth of more than `500 crore) and (ii) mandatory for all investors to make ASBA Non-Institutional Investors (NIIs) other than retail applications. Amongst many other significant individual investors can access the proposed ITP. advantages, ASBA enables investors to give the viii. In case of public offer, allotment to institutional mandate for payment of application money in the investors may be on a discretionary basis application form itself without suffering loss of whereas to NIIs it shall be on proportionate basis. interest for the intervening period. It also obviates Allocation between the said two categories shall the hassle of refund of money by the issuer as be in the ratio of 75% and 25%, respectively. per the difference in application amount and the amount for which shares are finally allotted. ix. In case of discretionary allotment to institutional investors, no institutional investor shall be allotted ii. In order to substantially enhance the points for more than 10% of the issue size. All shares submission of applications, Registrar and Share allotted on discretionary basis shall be locked-in Transfer Agents (RTAs) and Depository in line with requirements for lockin by Anchor Participants (DPs) shall also be allowed to accept Investors i.e. 30 days at present. application forms (both physical as well as online) x. The minimum application size in case of such and make bids on the stock exchange platform. issues shall be `10 lakhs and the minimum This will be over and above the stock brokers trading lot shall be of `10 lakhs. and banks where such facilities are presently available. xi. The number of allottees in case of a public offer shall be 200 or more. iii. To help intermediaries and banks to modify their existing systems and train their staff and also xii. Th company will have the option to migrate to enable the investors to adapt to the new system, main board after 3 years subject to compliance there will be a phase-in period of 6 months. with eligibility requirements of the stock Accordingly, a public issue which opens on or exchanges. after January 01, 2016 will have to follow the new xiii. For Category I and II Alternative Investment system. 7Annual Report 2015-2016 3.1.3 Anchor investors in public issues Trends in Resource Mobilization (net) by MFs (` crore) 3.1.3.1 SEBI has approved the removal of current Sector 2013-14 2014-15 Till Dec 2015 restriction on the maximum number of anchor investors (currently 25) for anchor allocation of above `250 crore 1. Public 4,644 -413 43, 838 public issue. While the requirement of number of anchor 2. Private 49,138 1,03,700 1, 17,858 investors for allocation of upto `250 crore remains the same i.e. 15 anchor investors, in case of allocation beyond Total (1+2) 53,782 1,03,287 1, 61,696 `250 crore there can be 10 additional investors for every additional allocation of `250 crore, subject to minimum Source: SEBI allotment of `5 crore per anchor investor. Resource mobilization through the primary market 3.1.4 Tax pass through for (Alternative (` crore) Investment Fund) category I and II 2015-16 (Till 3.1.4.1 Under the SEBI (Alternative Investment Fund) Mode 2012-13 2013-14 2014-15 December Regulations, 2012 Alternative Investment Funds (AIFs) 2015) have been classified under three separate categories as 1. Debt 16,982 42,383 9,713 30,421 Category I, II and III AIFs. Category I AIFs are funds that 2. Equity 15,473 13,269 9,789 20,889 invest in start-up or early stage ventures or social ventures of which or SMEs or infrastructure or other sectors or areas which 6,528 1,236 3,039 12,258 IPOs the Government or regulators consider as socially or Number 33 38 46 50 economically desirable. Category II AIFs are funds of IPOs including private equity funds or debt funds which do not 3. Private 3,61,462 2,76,054 4,04,137 3,41,420 fall in Category I and III and which do not undertake Placement Total leverage or borrowing other than to meet day-to-day 3,93,917 3,31,706 4,23,639 3,92,730 (1+2+3) operational requirements. In the Union Budget 2015-16, tax pass through has been provided for AIF Category I Source: SEBI and Category II. 3.1.7 Financial Literacy: 3.1.5 Corporate Bond Market Developments 3.1.7.1 National Strategy for Financial Education: 3..15.1 In context of Indian Economy, a vibrant Debt Market will help in channelizing the flow of capital towards 3.1.7.1.1 The process of drafting a National Strategy for the areas where it is required most i.e. investments in Financial Education was initiated by SEBI under the aegis infrastructure sector which has long gestation periods. of Financial Stability and Development Council (FSDC) in FY 2011-12. With a vision of ‘a financially aware and Further in a bank dominated financial system providing empowered India’, National Strategy for Financial an alternate source of financing through debt markets is Education had been finalized under which various crucial. activities have been undertaken. 3.1.6 Resource Mobilization by Mutual 3.1.7.1.2 The national level exam for school students, Funds and Initial Public Offer (IPO) National Financial Literacy Assessment Test (NFLAT) had during 2015 been conducted consecutively for the second year under the aegis of National Centre for Financial Education (NCFE), a part of National Institute of Securities Markets 3.1.6.1 Till December 2015, Mutual Funds (MFs) (NISM). The NFLAT for the year 2014-2015 was held on mobilised `1, 61,696 crore. Public sector MFs and Private December 6-7, 2014 and around a lakh students from all sector MFs mobilised `43,838crore and `1,17,858crore over the country appeared for the test held at more than respectively. The market value of asset under 250 test centers across the country. Further, the NFLAT management stood at `12,74,835 crore as on December for the year 2015-2016 was held on November 28-29, 31, 2015 compared to `10,82,757 crore as on March 31, 2015 and the result would be declared December 16, 2015, indicating an increase by 17.8 percent. 2015. 8Department of Economic Affairs I 3.1.7.1.3 The portal of NCFE (www.ncfeindia.org) levels on 29th January, 2015 (For BSE-Sensex as it contains information on various aspects of financial touched 29681.77) and on 3rd March, 2015 (Nifty touched market including banking, pension, insurance and 8,996.25). However, after scaling historic high levels, securities market. The content inputs are being provided there has been some correction in the later months of by various regulators including SEBI and the website is 2015. The indices closed at 26,117.54 (Sensex) and at being updated with videos, audio and other material. 7,946.35 (Nifty) on 31st December, 2015. Indian markets have recorded a negative growth of over 5% (Sensex 3.2. Secondary Markets down by 5.03% and Nifty down by 4.06%) till 31st 3.2.I Indian markets performance (Jan 2015 December, 2015 (as compared to levels on December 31, 2014). Among the major world indices, Straits Times – Dec 2015) Index registered highest percentage change of (-) 14.34% 3.2.1.1 Indian benchmark indices reached historic high during the calendar year 2015. Table 1: Performance of Major Markets in the World (level and percentage change) Last Trading Last Trading Last Trading % change in Index Day of 2013 Day of 2014 Day of 2015 2015 over 2014 S&P BSE SENSEX 21170.68 27,499.42 26117.54 -5.03 NSE CNX NIFTY 6304 8282.7 7946.35 -4.06 S&P 500 1848.36 2058.9 2043.94 -0.73 DAX 9552.16 9805.55 10743.01 9.56 FTSE 100 6749.09 6566.09 6242.32 -4.93 NIKKEI 225 16291.31 17450.77 19033.71 9.07 HANG SENG 23306.39 23605.04 21914.4 -7.16 BRAZIL IBOVESPA 51507.16 50007.41 43349.96 -13.31 KOSPI 2011.34 1915.59 1961.31 2.39 DOW JONES INDUS. AVG 16576.66 17823.07 17425.03 -2.23 Straits Times STI 3167.43 3365.15 2882.73 -14.34 SHANGHAI SE 2115.98 3234.68 3539.18 9.41 CAC 40 4295.95 4272.75 4637.06 8.53 Sou rce: Bloomberg,WSJ 3.2.1.2 Since the secondary market is a barometer of Market sentiments in India during the calendar year were the country’s financial health, global and domestic factors affected by FPI flows in the Indian markets and pertinent have a sizable impact on the Indian markets performance. economic data releases. The total net FII flows during 2015 stood at US $ 10.6 billion. Table 2 Net FPI/FII Investment in India in 2008-2015 (calendar year wise) (in US $ Billion) Segments 2008 2009 2010 2011 2012 2013 2014 2015 Equity -12.0 16.9 29.4 -0.4 24.4 20.1 16.1 3.2 Debt 2.6 1.6 10.1 8.7 6.6 -8.0 26.2 7.4 Total -9.3 18.5 39.5 8.3 31.0 12.1 42.4 10.6 Source: SEBI, NSDL 9Annual Report 2015-2016 3.3. External Markets reviewed and finally released a new, liberal and revised External Commercial Borrowing (ECB) Framework which 3.3.1 Investment by Foreign Portfolio has come into effect from December 2, 2015. The new Investors (FPI) in Government ECB framework is more attuned to the current economic Securities and business environment and is also a more simplified 3.3.1.1 With the objective of having a more predictable and streamlined. From regulatory perspective, three main regime for investment by the foreign portfolio investors clear-cut categories/tracks have been created which (FPI), the medium term framework (MTF) for FPI limits include in debt securities has been set out. The limits for FPI Track-I- Medium-term foreign currency denominated investment in debt securities will henceforth be ECB (with minimum average maturity of 3/5 years), announced/ fixed in rupee terms. The limits for FPI investment in the central government securities will be Track–II- Long-term foreign currency denominated ECB increased in phases to 5 per cent of the outstanding stock (with minimum average maturity of 10 years) by March 2018. In aggregate terms, this is expected to Track-III- Indian Rupee denominated ECB (with minimum open up room for additional investment of `1,200 billion average maturity of 3/5 years). in the limit for central government securities by March 2018 over and above the existing limit of `1,535 billion The new framework has an expanded list of for all government securities (G-sec). The existing recognized lenders comprising overseas regulated requirement of investments being made in G-sec with a financial institutions, Sovereign Wealth Funds, Pension minimum residual maturity of three years will continue to Funds, Insurance Companies, etc. and has an exhaustive apply to all categories of FPIs. Aggregate FPI investments list of permissible end-uses with only a small negative in any Central Government security would be capped at list for long-term foreign currency denominated ECB and 20% of the outstanding stock of the security. INR denominated ECB. 3.3.2 Framework for overseas issuance of 3.4 International Cooperation Division Rupee denominated bonds 3.4.1 Sovereign Credit Rating 3.3.2.1 In order to facilitate Rupee denominated borrowing from overseas, it has been decided to put in 3.4.1.1 The following six international Sovereign Credit place a framework for issuance of Rupee denominated Rating Agencies (SCRAs) do Sovereign Credit Rating bonds overseas within the overarching External for India: Commercial Borrowings policy. Any corporate body, • Standard and Poor’s (S&P) including REITS and InvITs, are eligible to issue Rupee denominated bonds overseas and any investor from a • Moody’s Investors Service FATF compliant jurisdiction is eligible to invest. Only plain vanilla bonds issued in FATF compliant financial centres • Fitch Ratings will be the eligible instrument. The minimum maturity • Dominion Bond Rating Service (DBRS) period of these bonds will be 5 years and the all-in-cost of such borrowings should be commensurate with • Japanese Credit Rating Agency (JCRA) prevailing market conditions. There will be no end-use • Rating and Investment Information, Japan restrictions except for a negative list which includes (R&I) investment in real estate and capital markets. Withholding tax of 5% will be applicable on interest income from these 3.4.1.2 These agencies usually visit DEA every year for bonds and the capital gains arising in case of appreciation conducting their annual sovereign credit rating review of rupee would be exempted from tax. wherein a meeting takes places. Indian side is usually 3.3.3 New External Commercial Borrowings headed by Secretary-DEA/CEA and attended by senior Framework officers of various Departments/ Divisions to answer queries of the agency. The latest sovereign ratings issued 3.3.3.1 RBI in consultation with Ministry of Finance has by these agencies are given below: 10Department of Economic Affairs I Rating Date of Foreign Currency Local Currency Agency affirmation of ratings Ratings Outlook Ratings Outlook Moody’s 08.04.2015 Baa3 Positive Baa3 Positive (revised from (revised from Stable) Stable) Fitch 07.12.2015 BBB- (LT) Stable BBB- Stable F3 (ST) S&P 19.10.2015 BBB- (LT) Stable No ratings were given for local A-3 (ST) currency JCRA 12.02.2015 BBB+ Stable (revised BBB+ Stable (revised from Negative) from Negative) R&I 13.3.2015 BBB (LT) Stable No ratings were given for A-2 (ST) local currency DBRS 3.11.2015 BBB (LT) Stable for both BBB (LT) Stable for both R-2 High LT & ST R-2 High LT & ST (upgraded from (upgraded BBB low) from BBB low) LT-Long Term, ST-Short Term 3.4.1.3 The Government has taken a number of steps various schemes of erstwhile UTI, as per the provisions with a view to improve our sovereign credit ratings. These of UTI Repeal Act, 2002. SUUTI is managed by an include measures taken to improve the level and structure Administrator, appointed by the Central Government. for the interaction between the Government and the major Sovereign Credit Rating Agencies. During the interactive 3.5.3. The Cabinet on 5.12.2014 approved the meetings, Government presents its perspective to SCRAs introduction of the Indian Trust Amendment Bill, 2014 to about the strengths of the Indian economy and recent amend to the Sections 20 and 20A of the Indian Trust initiatives taken by it. We encourage SCRAs to also Act, 1882 to enable Government to notify securities or consider the long-term credit strengths of the Indian class of securities as eligible for investment by trust, economy in a holistic manner, and, in view of such delete references to obsolete clauses and to provide the strengths, consider upgrading the rating of India’s trustees greater autonomy and flexibility to take decisions sovereign debt. As a result, we have been able to secure on investment of trust money. The Indian Trust upgrades in rating/outlook from S&P, Fitch, DBRS and Amendment Bill, 2015 was passed by Lok Sabha on 9th Moody’s during the past two years. December, 2015 and is now pending in the Rajya Sabha. 3.5 UTI & JPC 3.6 Securities Appellate Tribunal (SAT) 3.5.1 UTI Section under the Financial 3.6.1 Securities Appellate Tribunal was established under Section 15K of the Securities and Exchange Board Market Division deals with the of India Act, 1992, to exercise the jurisdiction, powers followings: and authority conferred on the Tribunal by or under the SEBI Act, 1992 or any other law for the time being in (i) UTI Repeal Act. 2002 force. By Notifications dated May 27, 2014 and March 23, 2015 respectively, the scope and ambit of the (ii) Specified Undertaking of Unit Trust of India, jurisdiction of SAT has been widened to include appeals SUUTI against orders passed by the authorities under PFRDA and IRDA respectively. (iii) Indian Trusts Act, 1882 (Section 20) 3.6.2 SAT comprises of one Presiding officer (who has 3.5.2 Specified Undertaking of Unit Trust of India been a sitting/retired Judge of the Supreme Court or a (SUUTI) has been created under the Unit Trust of India sitting/retired Chief Justice of a High Court; or a sitting or (Transfer of Undertaking and Repeal) Act, 2002. Since retired Judge of a High Court who has completed not then SUUTI has been managing assets and liabilities of less than 7 years of service as a Judge of a High Court) 11Annual Report 2015-2016 and two Members who are having ability, integrity and an appeal to Supreme Court. SAT is empowered to standing and shown capacity in dealing with problems review its own decisions. relating to securities market and has qualification and 3.6.6 SAT started functioning in 1997 as a single experience of corporate law, securities law, finance, member Tribunal and thereafter was reconstituted as economics or accountancy. They are appointed by the three members Tribunal in 2003. Central Govt. for a term of five years and are eligible for re-appointment, subject to Presiding Officer not Mostly cases of following regulations are of SEBI exceeding age of 68 years and Members the age of 62 filed before SAT : years.  Issue of Capital and Disclosure Requirements. 3.6.3 SAT is not bound by procedure laid down by Code  Collective Investment Schemes of Civil Procedure but are guided by principles of natural  Euro Issues and other Guidelines justice and has powers to regulate its own procedure, including the places at which it shall have its sittings.  Prohibition of insider Trading  Intermediaries 3.6.4 Appellant may appear in person or authorize chartered accountants, company secretaries, cost  Merchant Bankers accountants and legal practitioners or any of its officers  Stock Brokers/Sub-brokers and Stock to present his or its case before the Securities Appellate Exchanges Tribunal.  Takeover Regulations, 3.6.5 Civil Courts do not have jurisdiction to entertain  Prohibition of Fraudulent and Unfair Trade any suit or proceeding in respect of any matter which Practices SAT is empowered to determine and no injunction can be granted by any court or any other authority, in respect  Venture Capital Funds of any action taken or to be taken, in pursuance to any As on 31.12.2015, 613 appeals are pending power conferred upon SAT under the SEBI Act. Any before SAT and its breakup with time period wise is given person aggrieved by any decision/order of SAT may file as follows:- Pendency of Cases Month & Total Less Over 3 Over 6 Over Over 2 Over Disposal New Year Appeals than 3 Months months 1 Years 11 Total institution Pending Months year Years Pendency of Cases under SEBI Act, 1992 December 2015 608 86+1 74 225 217 4 1* 24 44 Pendency of Cases under IRDA Act, 1999 5 3 2 0 0 0 0 1 1 Note: *A. No. 56/2004 remanded by the Hon’ble Supreme The main functions of SEBI include registration, regulation Court on 24.11.2015. and supervision of intermediaries operating in the securities market, promoting and regulating self- 3.7 Securities & Exchange Board of India regulatory organizations, prohibiting fraudulent and unfair (SEBI) trade practices relating to securities markets, calling from or furnishing to other authorities, whether in India or 3.7.1 The Securities and Exchange Board of India abroad, such information as may be necessary for the (SEBI) was established under the Securities and efficient discharge of its functions. Exchange Board of India Act, 1992 to regulate the securities markets in India. The objectives of the SEBI 3.7.2 On September 28, 2015 the Forwards Market are to protect the interest of the investors and to regulate Commission, the commodities market regulator, was and promote development of securities markets in India. merged with the Securities and Exchange Board of India. 12Department of Economic Affairs I The merger seeks to strengthen financial sector reforms issuer. However, all relevant disclosures shall be available to strengthen regulation of Commodities derivatives on the website of the issuer. Also, the product market and enable its development to its full potential. advertisements of an issuer will not be required to give details of public/rights issue. 3.7.3. SEBI in order to effect the merger, has amended Securities Contracts (Regulation) (Stock Exchanges and 5. Streamlining the Process of Public Issue of Equity Clearing Corporations) Regulations, 2012 (SECC Shares and Convertibles: In order to reduce the post- Regulations) and SEBI (Stock Broker and Sub-Broker) issue timeline for listing from existing T+12 days to T+6 Regulations, 1992 and SEBI (Regulatory Fee on Stock days, increase the reach of retail investors and reduce Exchanges) on September 09, 2015. These regulations the costs involved in public issue of equity shares and would enable functioning of the commodities derivatives convertibles. ASBA applications were mandatory along exchanges and its brokers under SEBI norms and with RTA’s & DP’s (to be accepted both physical & online format) integration of commodities derivatives and securities trading in an orderly manner. 6. Revision in allocation to anchor investors in public 3..7.1 Significant developments/policy issues: The restriction of maximum of 25 anchor decisions taken during the year 2015 investors for anchor allocation of above ` 250 crore in a public issue has been removed. While the requirement 3.7.1.1 During the calendar year 2015, SEBI of number of anchor investors for allocation of up to implemented certain important reforms relating to primary `250 crore remains the same, in case of allocation market and also other regulations on delisting, takeover beyond `250 crore there can be 10 additional investors and buy-back. Details of the major initiatives are outlined for every additional allocation of `250 crore, subject to below: minimum allotment of `5 crore per anchor investor. 1. Relaxations for conversion of debt into equity 7. AIFs to invest in equity and equity linked under Strategic Debt Restructuring Scheme: T h e instruments: SEBI allowed AIFs to invest in equity and provisions related to preferential allotment in SEBI (ICDR) equity linked instruments only of off-shore venture capital Regulations, 2009 and open offer requirements as per undertakings, which have an Indian connection, subject Takeover Regulations shall not apply to conversion of to overall limit of USD 500 million (combined limit for AIFs debt into equity by the consortium of banks and financial and Venture Capital Funds registered under the SEBI institutions, as part of the Strategic Debt Restructuring (Venture Capital Funds) Regulations, 1996). Such investments cannot exceed 25% of the investible funds (SDR) scheme of RBI. of the scheme of the AIF. 2. Fast Track Issuances - Follow on Public Offerings 8. Change in investment restrictions in Corporate (FPO) and Rights Issues: In order to enable more Debt securities: With effect from February 03, 2015, number of listed companies to raise further capital using FPIs are required to invest in Corporate Bonds having a fast-track route, the minimum public shareholding minimum residual maturity of 3 years. FPIs have also requirement has been reduced from `3000 crore to been prohibited from investing in liquid and money market `1000 crore in case of FPO and to `250 crore in case of mutual fund schemes. Since Commercial Papers are rights issue. short term instruments having maturities of less than 1 3. Simplified framework for capital raising by year, FPIs have also been prohibited from investing in technological start-ups and other companies on Commercial Papers. Institutional Trading Platform: SEBI introduced a 9. Change in investment conditions in Government rationalized framework for listing of companies including debt securities: With effect from February 05, 2015, FPIs start-ups vide amendments carried out to the SEBI (ICDR) have been permitted to invest in Government securities, Regulations, 2009 on August 14, 2015. Various the coupons received on their investments in Government consequential amendments to other SEBI regulations securities. Such investments shall be kept outside the pertaining to Takeover, Listing, Delisting and AIFs were applicable limit (currently USD 30 billion) for investments also undertaken in this regard. by FPIs in Government securities. 4. Rationalization of disclosures for ITP as well as 10. Clarification regarding grant of FPI registration main board: Further, in order to rationalize the disclosure to registered Foreign Venture Capital Investor (FVCI): requirements for all issuers whether intending to list on SEBI clarified that FPI registration may be granted to the main board or the proposed ITP, it has been decided entities already registered as FVCIs subject to compliance that the disclosures in offer document with respect to with the provisions of FPI Regulations, FVCI Regulations group companies, litigations and creditors shall be in and the circulars etc. issued there-under from time to accordance with policy on materiality as defined by the time. 13Annual Report 2015-2016 11. Enhancement in debt limits for investment by 3.7.1.3 Following Regulations notified during FPIs: Limit for investment by FPIs in Central Government 2015 securities were increased to INR 129,900 cr. on October 12, 2015 from the existing limit of INR 124,432 cr. This 3.7.1.3.1 Amendment to the SEBI (Issue and Listing limit has been further increased to INR 135,400 cr. on of Debt Securities) Regulations, 2008 January 01, 2016. The incremental limits were made 3.7.1.3.1.1 During January 2015, SEBI approved available to FPIs through auction mechanism over the amendment to the (Issue and Listing of Debt Securities) stock exchanges platform. Limit for Long Term FPIs in Regulations, 2008 to include a clause on Consolidation Central Government securities were increased to INR and re-issuance of Debt Securities and Right to early 36,600 cr. from the existing limit of INR 29,137 cr. on redemption by ways of callable and puttable bonds. The October 12, 2015. This limit has been further increased enablement of consolidation and re-issuance is likely to to INR 44,100 cr. on January 01, 2016. The incremental avoid fragmentation of debt market with multiple issues limit was made available for investment by FPIs on tap. A and re-issuances can help in creation of large floating separate additional limit was also created on October 12, stocks which is needed to enhance market liquidity. While a puttable bond gives flexibility to the investors, a callable 2015 for investment by all FPIs in State Development bond gives flexibility to the issuer. In a scenario of falling Loans (SDL). This limit has been further enhanced by an interest rates, the callable bond may provide benefit to additional INR 3,500 cr. on January 01, 2016. the issuer as the issuer would like to take advantage of a lower interest regime and reduce his cost of debt. In the 3.7.1.2 Amendment to Acts scenario of rising interest rates, the put table bond may provide benefit to the investors who would like to take 3.7.1.2.1 Pursuant to the Finance Act, 2015, whereby it advantage of a higher interest regime and make was decided to merge FMC with SEBI, amendments were investment in new instruments. made to Securities Contracts (Regulation) Act, 1956 and certain regulations framed by SEBI to facilitate the 3.7.1.3.2 Amendment to the SEBI (Public offer and changes required for regulating the commodity derivatives Listing of Securitised Debt Instruments) Regulations, market. The regulations which were amended are as 2008. under: 3.7.1.3.2.1 SEBI (Public offer and Listing of Securitised i. Securities Contracts (Regulation) (Stock Debt Instruments) Regulations, 2008 have been amended Exchanges and Clearing Corporations) during April 2015. These amendments involve Regulations, 2012 (‘SECC Regulations’). rationalizing and clarifying roles & responsibilities, terms of appointment, capital requirement and the code of ii. SEBI (Stock Brokers and Sub-Brokers) conduct of a Securitisation Trustee. As per the Regulations, 1992. amendment, the code of conduct, inter-alia, include fullfilment of obligations by the Securitisation Trustee/ iii. SEBI (Regulatory Fee on Stock Exchanges) Special Purpose Distinct Entity (SPDE) in ethical manner, Regulations, 2006. making appropriate disclosures to investors, non- indulgence in insider trading, having internal control 3.7.1.2.1 Through these amendments, SEBI has revised procedures, good corporate governance etc. regulatory fee on entities relating to stock exchanges and clearing corporations, stock brokers and sub-brokers in 3.7.1.3.3 Regulatory Framework Governing Municipal Borrowings in India through SEBI (Issue and listing the commodity derivatives market. Under the new norms, of Debt Securities by Municipalities) Regulations, a regional commodity derivatives exchange should pay 2015 to SEBI an annual regulatory fee of `50,000 within 30 days of conclusion of the relevant financial year. 3.7.1.3.3.1 SEBI (Issue and Listing of Debt Securities by Municipalities) Regulations, 2015 have been notified 3.7.1.2.2 In the case of national commodity derivatives on July 15, 2015, thereby providing a comprehensive exchanges, the net worth for a self-clearing member regulatory framework for issuance and listing of debt should be ` 1 crore and for a clearing member, the same securities by municipalities. These regulations will provide should be ` 3 crore. The deposit amount in the case of a regulatory framework, governing the issuance and national commodity derivative exchange would be `50 listing of bonds by the Municipalities and will enable the lakh for both self-clearing and clearing members. With investors to make an informed investment decision before regard to regional commodity derivatives exchanges, the investing in the municipal bonds. The regulations also net worth level and deposit amount for self-clearing and prescribed disclosures to be made by the prospective clearing members would be specified by SEBI from time issuers. The framework provides for public issuance of to time. These new norms have come into force from municipal bonds and also listing of privately placed municipal bonds. September 28, 2015. 14Department of Economic Affairs I 3.7.1.3.3.2 Development of smart cities would entail special rights through any formal or informal substantial expenditure for creation of urban infrastructure arrangements. All shareholding agreements such as water supply, sanitation, public health, roads granting special rights to such outgoing transportation etc. One of the principal concerns for such promoters shall be terminated. development of smaller towns into smart cities would be the source of financing. This new framework provides 4. Financial Action Task Force another avenue to municipalities for financing (FATF) Cell infrastructure in smart cities. 3.7.1.3.4 Review of SEBI (Delisting of Equity Shares) 4.1 India, as a member of the Financial Action Task Regulations, 2009 Force (FATF) and the Eurasian Group on Combating 3.7.1.3.4.1 As a part of SEBI’s constant endeavour to Money Laundering and Financing of Terrorism (EAG), review the existing regulatory framework to align with the actively participated in their Plenary and Working Group changing market realities, amendments to SEBI (Delisting meetings held in 2015. of Equity Shares) Regulations, 2009 (‘Delisting 4.2 India was the Chairman of EAG from 2013 to Regulations’), SEBI (Substantial Acquisition of Shares 2015, during which period all the activities set forth were and Takeovers) Regulations, 2011 (‘Takeover achieved successfully. All the member countries of EAG Regulations’) and SEBI (Buy-back of Securities) appreciated the Chairmanship of India in this regard. Regulations, 1998 (‘Buy-back Regulations’) have been notified on March 24, 2015. 4.3 A Memorandum of Understanding (MoU) was signed in 2015 between the Department of the Treasury 3.7.1.3.5 Modified format for encumbrance related of the United States of America and the Ministry of disclosure by the Promoter(s) under regulation 31 of Finance of the Republic of India to enhance cooperation Takeover Regulations to combat money laundering and the financing of 3.7.1.3.5.1 A field on ‘reasons for encumbrance’ was terrorism. This MoU seeks the participants’ resolve to added to the aforesaid format of disclosure. For example, pursue areas of cooperation where joint expertise can the reason may be for the purpose of collateral for loans accelerate progress towards shared goals. taken by the company, personal borrowing, third party pledge, etc. The field for ‘name of entity in whose favour 5. Financial Stability and shares were encumbered’ would henceforth also require Development Council (FSDC) the disclosure of name of both the lender and the trustee who may hold shares directly or on behalf of the lender. Secretariat 3.7.1.3.6 Provisions for re-classification of promoters 5.1 With a view to strengthening and institutionalizing as public (Notified as regulation 31A in Listing the mechanism for maintaining financial stability, Regulations on September 02, 2015) enhancing inter-regulatory coordination and promoting 3.7.1.3.6.1 Existing promoter of a listed entity may cease financial sector development, the Financial Stability and to be a promoter and/or re-classify itself as public under Development Council (FSDC) was set up by the the following conditions: Government as the apex level forum in December 2010. The Chairman of the Council is the Finance Minister and i. When a new promoter replaces the previous its members include the heads of financial sector promoter subsequent to an open offer or in any Regulators [Reserve Bank of India (RBI), Securities and other manner, re-classification may be permitted Exchange Board of India (SEBI), Pension Fund subject to approval of shareholders in the general Regulatory and Development Authority (PFRDA) & meeting. Insurance Regulatory and Development Authority of India ii. Shareholders need to specifically approve (IRDAI)], Finance Secretary and/or Secretary, Department whether the outgoing promoter can hold any Key of Economic Affairs, Secretary, Department of Financial Management Personnel (“KMP”) position in the Services, and the Chief Economic Adviser. The Council company. In any case, the outgoing promoters monitors macro prudential supervision of the economy, and their relatives may not act as KMP for a including functioning of large financial conglomerates, and period of more than 3 years from the date of addresses inter-regulatory coordination and financial shareholders’ approval. sector development issues, including issues relating to iii. The outgoing promoter along with promoter financial literacy and financial inclusion. group and PACs should not hold more than 10% 5.2 During the year 2015-16, so far, the Council held shares of the company. two meetings on 15th May 2015 and 5th November 2015. iv. The outgoing promoter should not have any In these meetings, apart from assessment of macro- 15Annual Report 2015-2016 economic financial stability related issues, it has 5.3.2 India is an active Member of the FSB having three discussed issues such as Corporate Bond Market seats in its Plenary represented by Secretary, DEA, Development, Fraud in Banks - Building Effective Deputy Governor-RBI and Chairman-SEBI. DEA, through Deterrence through Expeditious Action, Bank Non- Secretary (DEA), is also represented in two of the Performing Assets (NPAs) and Corporate Sector Balance Standing Committees of the FSB viz. Standing Committee Sheet Stress, Report of the Activities under Financial on Budget and Resources (SCBR) and Standing Stability Board (FSB) and Financial Action Task Force Committee on Standards Implementation (SCSI). Deputy (FATF), SEBI- Forward Markets Commission (FMC) Governor-RBI is a member in the Standing Committee merger, Follow up on the Recommendation of Special on Assessment of Vulnerabilities (SCAV) and Standing Investigation Team (SIT) on Black Money, Collective Committee on Supervisory and Regulatory Co-operation Investment Scheme (CIS) Attachment of property by (SRC). India is also a member of the FSB’s Regional Multiple Agencies in refunding the money to investors Consultative Group for Asia (RCGA) and is represented etc. Finance Minister also holds FSDC meeting to have in the Group through Secretary (EA), Deputy Governor- pre-budget consultations with the financial sector regulators. The Council has met 14 times so far. The RBI and Chairman-SEBI. FSDC Secretariat in DEA provides Secretarial assistance 5.3.3 Regular interaction with FSB takes place through to the Council. formal meetings of the Plenary, Standing Committees and 5.2 FSDC Sub-Committee RCGs. Periodic conference calls are also held to discuss emergent issues. Information is exchanged with FSB 5.2.1 The FSDC Sub-committee set up under the member jurisdictions through FSB Secretariat as per chairmanship of Governor, RBI, meets to broadly discuss international requirements on request basis. The FSDC issues related to Assessment of Financial Stability, Inter- Secretariat of the Department of Economic Affairs regulatory Coordination, financial sector development and coordinates with the various financial sector regulators updates on the functioning of the various Technical and other relevant agencies to consolidate and share Groups of the Sub Committee. Members of the FSDC India’s views at the FSB which in turn shares it with the are the members of the Sub-committee and in addition, G20 forum as it monitors the working of the FSB. Deputy Governors of RBI and AS (Inv), DEA are also members of the Sub Committee. During 2015-16, so 5.3.4 FSB Members are committed to pursue the far, the year the Sub Committee held two meetings on maintenance of financial stability, enhance the openness 29th April 2015 and 10th September 2015. The Sub- and transparency of the financial sector, implement committee has met 16 times so far. In these meetings it international financial standards and agree to undergo has discussed major issues such as global and domestic periodic peer reviews. India is presently engaged in its factors impinging on financial stability, Financial Stability first ever FSB Peer Review, which is expected to be Report, Standards and Protocol for Setting up Account completed by July-Aug, 2016. Aggregation for Financial Assets, Allowing Insurance Companies and Mutual Funds as Protection Sellers in Credit Default Swaps (CDS), Corporate Bond Market 5.4 Financial Sector Assessment Development, Know Your Customer (KYC) Registry, Programme Compliance with non-legislative recommendations of FSLRC, pension funds, Inter Regulatory Co-ordination 5.4.1 The Financial Sector Assessment Program for Reporting under Foreign Account Tax Compliance Act, (FSAP) is a joint program of the International Monetary Orderly Growth of Pension Sector in India, Deposit Fund and the World Bank. In September 2010, IMF made Raising by Multi-State Cooperative Societies, Functioning it mandatory for 25 jurisdictions (including India) with of State Level Coordination Committees (SLCCs), systemically important financial sectors to undergo Curbing Mis-selling and rationalizing distribution financial stability assessments under the FSAP every five incentives in financial products etc. years. 5.3 Financial Stability Board (FSB) 5.4.2 India’s last assessment under FSAP was done 5.3.1 FSB, an international body, was established in during 2011-12. The next FSAP assessment is due in 2009 under the aegis of G20 by bringing together the 2016-17. national authorities, standard setting bodies and 5.4.3 India is actively participating in post crisis reforms international financial institutions. FSB’s core functions are to assess vulnerabilities affecting the financial system of the international regulatory and supervisory framework and to identify and oversee actions needed to address under the aegis of the G20. India remains committed to them and to coordinate in developing and implementing adoption of international standards and best practices, strong regulatory, supervisory and other policies in the in a phased manner and calibrated to local conditions, interest of financial stability. wherever necessary. 16Department of Economic Affairs I 6. Financial Sector Legislative 6.1.3 The report was discussed in various meetings of the Financial Stability and Development Council Reforms Commission (FSLRC) (FSDC) chaired by the Finance Minister and it was Division unanimously agreed that the financial sector regulatory agencies would implement the recommendations that can 6(i) The Financial Sector Legislative Reforms be adopted without legislative changes, and within a Commission (FSLRC), set up in March 2011 for re-writing reasonable timeframe. The FSDC also decided to set the financial sector laws to bring them in harmony with up Task Forces with a project approach to lay the the current requirements, submitted its Report to the roadmap for the establishment of new agencies proposed Government on March 22, 2013. The Report is in two by the FSLRC, such as Resolution Corporation (RC), parts: Volume I – titled “Analysis and Recommendations” Financial Sector Appellate Tribunal (FSAT), Public Debt and Volume II – titled the “Draft Law” consisting of the Management Agency (PDMA) and Financial Data Draft Indian Financial Code (IFC). The Commission inter Management Centre (FDMC). FSDC also decided to alia recommended a non-sectoral, principle-based create a Financial Sector Regulatory Appointment Search legislative architecture for the financial sector, by Committee (FSRASC) for recommending appointment restructuring existing regulatory agencies and creating of Chairpersons/ Members of financial sector regulatory new agencies, wherever needed, for better governance agencies. and accountability. 6.2 Non legislative recommendations 6(ii) A new Division namely, the FSLRC Division was (NLRs) of the FSLRC created in April 2013 to process implementation of the Report with the following mandate: 6.2.1 The financial sector regulatory agencies are implementing the governance enhancing principles for a) Firm up the views of the Government on the enhanced consumer protection, greater transparency in recommendations of the FSLRC following due their functioning on voluntary basis. With a view to consultative process with all the concerned facilitating the task of the regulators and help develop a stakeholders, Regulators/Ministries/State uniform rationale based understanding about the non- Governments/Union Territories and public at legislative governance enhancing principles, a detailed large. ‘Guidance Handbook’ for implementing the same was prepared and provided to the regulators. A Copy of the b) Implement the recommendations of the FSLRC, handbook was placed on the website of the Ministry of duly approved by the Government. Finance in December 2013. A two day workshop was c) All administrative and establishment matters held on 8-9 May 2014 for concerned middle and senior relating to FSLRC. level officers of the Department of Economic Affairs (DEA), Department of Financial Services (DFS) and the 6.1 Steps taken on the recommendations financial sector regulators, on implementation of the of the FSLRC Guidance Handbook. The workshop was inaugurated by the Finance Minister. 6.1.1 The Report was put in public domain on the 6.2.2 A Guidance Handbook on Management website of the Ministry of Finance >http://finmin.nic.in< Information System (MIS) to measure and benchmark on 28th March 2013. The Hindi Version of the Report compliance of the governance enhancing/transparency was placed alongside the English version on the website measures recommended by the FSLRC, was prepared of the Ministry in Sept 2013, after making a translation and circulated to the financial sector regulators in May thereof. Comments of stakeholders were invited through 2014. Copy of this Handbook also, was placed on the letters and a press release dated 6th June 2013. A website of the Ministry of Finance. An MIS software portal dedicated e-mail >feedback-fslrc@nic.in< was created for enabling the financial sector regulators to monitor to receive online comments. Copies of the report in implementation of the non legislative recommendations English and Hindi versions were also printed for of the FSLRC was prepared by the DEA and distribution. demonstrated to the officers of the regulatory agencies 6.1.2 The Report was circulated to the Ministries/ responsible for operating the portal, in a workshop on Departments, Governments of States/Union Territories, 17.4.2015. The online portal was inaugurated by the Finance Minister in the 12th meeting of the FSDC on Parliament Library and also to Universities, Research/ 15.5.2015. Academic Institutions, Bank Associations etc. for wide publicity and comments. Copies of the report in English 6.3 Draft Indian Financial Code (IFC) and Hindi versions were also sent to all Members of Parliament by the Hon’ble Finance Minister in October 6.3.1 Apart from inviting comments on the Report and 2014. Draft IFC as mentioned above, the Department of 17Annual Report 2015-2016 Economic Affairs in collaboration with Institute of stating that the objective of monetary policy is to primarily Company Secretaries of India (ICSI) organized a number maintain price stability, while keeping in mind the objective of small intense workshops and seminars on specific of growth. An amendment to the RBI Act, 1934 providing areas of the IFC for building consensus on the Draft. for statutory basis for the monetary policy framework and Work on fine tuning the Draft IFC with comments of a Monetary Policy Committee has been introduced in the stakeholders suitably incorporated to make it legally Lok Sabha in the Finance Bill 2016 on 29.2.2016. flawless was initiated and the Draft IFC has been revised in the light of the comments received and hosted 6.7 Merger of Forward Markets on the home page of the Ministry of Finance on 27.3.2015 Commission (FMC) with Securities inviting comments of stakeholders by 8th August 2015. and Exchange Board of India (SEBI) The comments received are being examined. 6.4 Regulatory Financial Architecture 6.7.1 The Forwards Markets Commission (FMC) was merged with the Securities and Exchange Board of India 6.4.1 The intention of the Government to examine the (SEBI) with effect from 28th September, 2015 to achieve recommendations of the FSLRC and implement the same convergence of regulations of Securities Market and was conveyed in the Finance Minister’s Budget Speeches Commodity Derivatives Market and to increase the in 2014-15 and 2015-16. The Government is determined economies of scope and scale for the exchanges, to bring in institutional reforms in the financial sector, financial firms and other stakeholders. based on the recommendations of the FSLRC. Following this and as per the decisions in the FSDC, as stated 6.8 Bankruptcy Law Reforms earlier, the Government set up four Task Forces for upgrading the existing Securities Appellate Tribunal (SAT) 6.8.1 A Bankruptcy Law Reforms Committee (BLRC) to FSAT and for establishing new agencies namely, the set up on 22.8.2014 for providing an entrepreneur friendly RC, the PDMA and the FDMC on 30th Sept 2014. These legal bankruptcy framework for India as announced in Task Forces have since submitted their report. A Task the Budget Speech (2014-15) submitted its Report and Force for creating a sector-neutral Financial Redress draft Bill to the Finance Minister on 4.11.2015. The Report Agency (FRA) as announced in the 2015-16 Budget is in two parts: Volume I – titled “Rationale and Design” Speech of the Finance Minister has been set up on and Volume II – titled “Draft Insolvency and Bankruptcy 5.6.2015 and it will complete its task in one year. Since Bill”. The Report, along with a brief summary of the moving the Draft IFC recommended by the FSLRC in recommendations, was placed on the website of the totality may take some time, key aspects of the IFC are Ministry of Finance at >www.finmin.nic.in< for stakeholder proposed to be fast tracked. To begin with it has been decided to establish FDMC, PDMA and RC as new consultation. financial agencies. 6.8.2 Based on the report as well as public/stakeholder 6.5 Financial Sector Regulatory consultation, a Bill relating to ‘The Insolvency and Appointment Search Committee Bankruptcy Code, 2015’ was introduced in the Lok Sabha on 21st December 2015. The Bill has been referred to a 6.5.1 The recommendation of the FSLRC to constitute Joint Committee of Parliament. a ‘Financial Sector Regulatory Appointment Search Committee’ (FSRASC) for recommending names of suitable persons for appointment to board level positions 7. Commodity Derivatives Markets of financial sector regulatory bodies which was agreed Division to in the 9th meeting of the FSDC held on 4th February 2014, was processed in consultation with the financial sector regulators and the Department of Financial 7.1 Strengthening of Commodity Futures Services. The constitution and composition of the Regulatory Framework FSRASC has been approved on 24.11.2015. 7.1.1 In the Union Budget speech of the Finance 6.6 Monetary Policy Framework Minister for 2015-16, it was proposed to merge the Agreement with RBI Forwards Markets Commission with SEBI. Pursuant to 6.6.1 Keeping in view the recommendations of FSLRC this, Government repealed the Forward Contracts and the Urijit Patel Committee (Expert Committee to (Regulation) Act, 1952 (FCRA) w.e.f. September 29, 2015 Revise and Strengthen the Monetary Policy Framework, paving the way for the merger of the Forward Market 2014) set up by the Reserve Bank of India (RBI), the Commission (FMC) with the Securities and Exchange Ministry of Finance and RBI signed a Monetary Policy Board of India (SEBI). SEBI in order to effect the merger, Framework Agreement (MPFA) on 20th February, 2015 amended Securities Contracts (Regulation) (Stock 18Department of Economic Affairs I Exchanges and Clearing Corporations) Regulations, 2012 in the two markets to make it easier for clients to (SECC Regulations) and SEBI (Stock Broker and Sub- register for trading and to avoid duplication of Broker) Regulations, 1992 and SEBI (Regulatory Fee on paper work with various intermediaries. Stock Exchanges) on September 09, 2015. These  KYC Registration Agencies (KRA’s): The KRA regulations enable functioning of the commodities System was introduced by SEBI so that clients derivatives exchanges and its brokers under SEBI norms do not undergo the process of providing KYC and integration of commodities derivatives and securities repeatedly, when they approach other trading in an orderly manner. Pursuant to the merger in intermediaries for trading. In this regard, the September 2015, SEBI has taken a number of policy Commission had taken up with SEBI, the matter initiatives to improve the regulation, and development of of allowing entities in the commodities derivatives the commodities markets. market to access the system of KRA’s registered 7.1.2 Through these amendments, SEBI has revised with SEBI. In this regard, SEBI issued a regulatory fee on entities relating to stock exchanges and notification in August, 2014, wherein entities clearing corporations, stock brokers and sub-brokers in regulated by other regulators in the financial the commodity derivatives market. Under the new norms, sector can access the system of KRA for a regional commodity derivatives exchange should pay undertaking KYC of their clients. A circular dated to SEBI an annual regulatory fee of `50,000 within 30 13.03.2015 was issued to all National Exchanges days of conclusion of the relevant financial year. In the and KYC Registering Authorities (KRAs) to case of national commodity derivatives exchanges, the enable all participants of commodity market to net worth for a self-clearing member should be `1 crore avail services of KRAs for client registration, and for a clearing member, the same should be `3 crore. uploading and downloading of client data. This The deposit amount in the case of national commodity will facilitate clients of commodity market as it derivative exchange would be `50 lakh for both self- will make it easy for the participants of the clearing and clearing members. With regard to regional commodities market to register and avoid commodity derivatives exchanges, the net worth level and duplication of paper work with various deposit amount for self-clearing and clearing members intermediaries. Guidelines for new clients, would be specified by SEBI from time to time. These new existing clients and KRA’s have been provided. norms have come into force from September 28, 2015. The KRA system will be made available to the new participants from 1.04.2015. However, for 7.2 Policy Initiatives (January 2015- existing clients the procedure should be completed by 1.12.2015. A circular dated December 2015) 17.03.2015 was issued to all National Commodity  Increase of spread margin benefits: With a Exchanges directing them to conduct awareness view to provide greater liquidity to the market campaigns all over the country in a time bound without compromising on risk management, and manner to ensure proper and timely as per feedback received from exchanges and implementation of the KRA system. market participants, FMC increased spread  Ease of Doing Business: The Commission vide margin benefits from the level of 50% to 75%. circular dated 30th April, 2015 decided that all (March, 2015) applications of National Exchange members for name change/director change/address change/  KYC related measures: Uniform KYC norms change in shareholding pattern/change in email had been prescribed and implemented by the ids/ change in type of membership of members Commission to enable clients to use only one which are presently approved by the Commission set of KYC documents to become members of will henceforth be approved by the Exchange. more than one exchange. The Commission The Exchange shall keep the Commission decided to include ‘Aadhar Card’ as a proof of informed of the changes approved by them in a identity and proof of address in KYC quarterly report to be submitted to the documentation. Further, in consultation with the Commission. market participants, the Commission also decided to accept e-KYC service launched by  Directives on Suspension of Trade, Refund (Unique Identification Authority of India) UIDAI of Member Liabilities and Revival of also as a valid process for KYC verification. The Exchange: In order to protect the interest of Commission on 26th February, 2015 issued a members and clients on suspension of trading circular making KYC form of the Commodity operation by a Commodity Exchange, FMC vide Derivatives Market identical to that prescribed circular dated 19th May, 2015 has issued by SEBI for the securities market. This has been following directives to all the Commodity done to enable uniform KYC registration process Exchanges-both National and Regional: 19Annual Report 2015-2016  After the suspension of trading, the trade suggestions received from the public were margin money of clients deposited with the examined and the matter was also Exchange shall be refunded within 15 days. deliberated upon in the meeting of the MDs and CEOs of National Exchanges held on  The Exchange shall invite complaints/ 10th June, 2015. In light of the public grievances from clients against members comments received and deliberations in the and resolve such complaints/grievances MD and CEO Meeting, FMC decided that a within 6 months from the suspension of WSP can be accredited with more than one trade. exchange and further, no exchange shall  Six months after the date of suspension of mandate that its WSP cannot provide trade, the Exchange shall refund the Trade services to another exchange. However, this Margin Capital (TMC) and Base Minimum will be subject to the condition that the same Capital (BMC) along with other deposits and warehouse will not be shared by more than collaterals, if any, to the members, provided one exchange. that there are no other claims against such  Registration of commodity derivatives member. brokers with SEBI: Vide circular dated  The membership registration of all the September 29, 2015 SEBI issued a circular members shall remain valid even after providing guidelines w.r.t. registration of the refunding the Trade Margin Capital and Base members of Commodity Derivatives Minimum Capital. In case of resumption of Exchanges with SEBI. trade, the membership of such registered  Risk management framework for national members can be re-activated and BMC/TMC commodity derivatives exchanges: With collected afresh, as per the bye-laws and an objective of aligning and streamlining the rules of the Exchange. risk management framework across National  In case, the Exchange is not in a position to Commodity Derivatives Exchanges, SEBI revive its trading operations within 12 vide circular dated October 01, 2015 months from the date of suspension of prescribed comprehensive risk management trading, then a Show Cause Notice (SCN) framework for National Commodity shall be issued by the Commission to the Derivatives Exchanges. The framework was Exchange to explain as to why its registration finalised after a due consultative process shall not be cancelled and why the with the exchanges. The framework includes Commission should not recommend norms for margins, deposits, types of withdrawal of its recognition to the Central collateral, collateral haircut, concentration Government. After considering the reply to limits and risk reduction mode. the SCN, the Commission shall take a view  Risk management norms for regional in this regard and act accordingly. commodity derivatives exchanges: To harmonise risk management practices across 7.2.1 The Reserve Bank of India, on 28th May, 2015 regional commodity derivatives exchanges, on issued a Notification advising banks to encourage large October 21, 2015 SEBI issued circular on risk agricultural borrowers such as agricultural commodity management for regional commodity derivatives processors, traders, millers, aggregators, etc., to hedge exchanges. The norms include deposits, their risks related to agricultural commodity prices. To margins, daily mark to market settlement, types improve awareness of hedging tools, such as derivatives, of collateral, client level computation and timings banks have also been advised to educate their customers for collection of margins. about the suitability and appropriateness of using various hedging tools so that the customers can take an informed  Investor Grievance Redressal System and decision. This measure would improve the integrity of Arbitration Mechanism: With an objective to the commodity futures market and provide better linkages streamline and strengthen the investor redressal with physical market. and arbitration mechanism at national commodity derivatives exchanges in line with the securities  WSP Exclusivity: The issue of market, SEBI has issued circular dated accreditation of the WSP with more than one November 16, 2015 for national commodity Exchange and the exclusivity clause derivatives exchanges. The circular was finalized mandated by any exchange, that if a WSP after receiving comments from the exchanges. is accredited with an exchange, it cannot be The circular includes the provisions for setting accredited with any other exchange was up investor service centre, investor grievances considered by the Commission. In this redressal committee, arbitration committee/ regard, FMC had invited views and panel and appellate arbitration, common pool of suggestions from the public vide its circular arbitrators and automatic selection of arbitrators dated 7th January, 2015. The views and from common pool. 20Department of Economic Affairs I  Annual System Audit, Business Continuity Commodity Derivatives Exchanges and Plan (BCP) and Disaster Recovery (DR): With within 3 years from the date of merger for an object to bring stability, integrity and continuity regional exchanges. of operation the commodity market, SEBI has iv. Shareholding - May 05, 2019, for National issued circular dated November 16, 2015 for Exchanges and within 3 years from the date national commodity derivatives exchange. The of merger for Regional Exchanges. circular was finalized after receiving comments Governing board norms - within 1 year from from the exchanges. The circular includes the the date of merger for National Exchanges provisions of conducting annual system audit, and within 3 years for regional exchanges. business continuity plan and disaster recovery.  Testing of software used in or related to  Timelines for Compliance with various Trading and Risk Management: SEBI extended provisions of Securities Laws by Commodity the norms related to testing of trading and risk Derivatives Exchanges: SEBI issued circular management software of stock brokers to be providing timelines for Commodity Derivatives complied with by national commodity derivatives Exchanges to comply with the provisions of SCRA exchanges for their members. The major and regulations, rules, guidelines or like provisions covered are as under: instruments made under SCRA. The timelines for a. Testing of Software. compliance with major provisions are as follows: b. Approval of Software of brokers/members. c. Undertaking to be provided by the brokers/ i. Corporatization and demutualization of members. Regional Commodity Derivatives Exchanges d. Sharing of Application Programming – 3 years from the date of merger. Interface (API) specifications by the brokers/ ii. Availing services of a clearing corporation – members. 3 years from the date of merger. e. Penalty on malfunction of software used by iii. Net-worth - May 05, 2017 for National brokers/members. 7.3 Plan and Non-Plan Expenditure (in `) S. Head of Account / Details of BE 2015-16 Actual expenditure from No. Scheme / sub Scheme / Other 1.4.2015 Details etc. to 28.9.2015 1 2 3 4 1 Salaries 10,00,00,000 2,56,63,943 2 Overtime Allowance 20,000 0 3 Medical Treatment 18,00,000 1,59,420 4 Domestic Travel Expenses 1,63,00,000 19,45,483 5 Foreign Travel Expenses 1,28,00,000 0 6 Office Expenses 5,02,00,000 41,27,662 7 Rent, Rates And Taxes 13,00,00,000 0 8 Other Administrative. Expenses 10,00,000 0 9 Advertising and Publicity* 60,00,000 12,79,277 10 Professional Service 7,35,80,000 1,02,78,978 11 Grants-in- aid-General 75,00,000 0 12 Contributions 25,00,000 0 13 Grants for Creation of Capital Assets 30,00,000 23,17,875 14 Secret Service Expenditure 1,00,000 0 15 Other Charges 77,00,000 94,130 16 IT - Office Expenses* 3,08,00,000 2,87,757 17 IT – Professional Services 10,00,000 0 TOTAL 44,43,00,000 4,61,54,525 21Annual Report 2015-2016 7.4 Posting of FMC Officials Infrastructure Finance Company Limited (IIFCL) and Indian Railways Finance Corporation (IRFC) 7.4.1 The Finance Act, 2015 inter alia, provided for as Government nominee on the Board of posting of officials of erstwhile FMC on deputation to SEBI Directors. in order to facilitate smooth transition of functions which  Participatyion in Standing Cost Committee for were being carried out by FMC. Infrastructure Projects of Central Ministries. 7.4.2 Accordingly, Ministry of Finance, vide notification  Coordination for Infrastructure and Energy Division. no. S.O. 2590(E) dated September 22, 2015 and letter no. F.No. 1/18/SM/2015 dated September 24, 2015,  India-Saudi Joint Investment Fund, Indo-Israeli posted 22 officers from various central services to SEBI R & D Fund. w.e.f. September 29, 2015 on deputation basis.  External charge- Bahrain, Oman, Saudi Arabia, Qatar, Kuwait, UAE, Yemen, Israel, Jordan and Lebanon. 8. Infrastructure & Energy Division 8.1.2 A summary of the major policy initiatives/reform The Infrastructure & Energy Division is headed measures dealt with by the Section during 2015-16 are by a Joint Secretary. The Division has three Sections and a Policy Cell each of which is headed by a Director. as under: 8.1.2.1 Infrastructure Debt Funds (IDFs): Government 8.1 Infrastructure Finance Section: had conceptualized IDFs to address the issue of sourcing 8.1.1 Infrastructure Finance Section, as a part of the long term debt for infrastructure projects. Potential Infrastructure and Energy Division, Department of investors under IDFs include off-shore institutional Economic Affairs, Ministry of Finance has been carved investors, off-shore High Net Worth Individuals, & other out with the objective of taking forward and conceiving institutional investors (Insurance Funds, Pension Funds, new initiatives related to infrastructure financing and Sovereign Wealth Funds, etc.). IDFs can be set up either promotion of investment in infrastructure sectors. The as a Trust (IDF-MF) or as a NBFC (IDF-NBFC). The section deals with: income of Infrastructure Debt Funds has been exempted from income tax. So far, 3 IDF-NBFCs and 3 IDF –MFs  Policy matters relating to Infrastructure Debt have been operationalized. Funds (IDFs), Real Estate Investment Trusts (REITs)/Infrastructure Investment Trusts (InvITs), 8.1.2.2 Real Estate Investment Trusts (REITs)/ Tax Free Bonds, Municipal Bonds and other Infrastructure Investment Trust (InvITs), - Government instruments meant for infrastructure financing, has announced a tax structure for REITs and InvITs, long- including Model Tripartite Agreements (MTAs) for term financing instruments for financing real estate and take-out financing of PPP projects by IDF- infrastructure projects. InvITs and REITs, the guidelines NBFCs. for which were issued by SEBI in September, 2014, are structures that optimize returns through efficient tax pass-  All international interface on infrastructure through and improved governance structures. financing (other than PPPs). 8.1.2.3 Municipal Borrowing- Government has initiated  Matters relating to Infrastructure and Investment a pilot project for developing a framework to build Working Group (IIWG) of G-20. capacities of Urban Local Bodies (ULBs) to raise financing  Issues relating to infrastructure investment through the Capital Markets for financing infrastructure including funds for long-term investment viz. projects (normally PPPs). The pilot initiative aims to Investment by Pension Funds, Insurance Funds, develop a replicable model and related documents and Sovereign Wealth Funds, etc. demonstration of the model through a successful pilot transaction for an ULB. Guidelines for issuance of  All policy matters relating to Project Monitoring Municipal Bonds in India have been notified by SEBI. Group (PMG). 8.1.2.4 Tax Free Bonds:-As announced in Government  India-Saudi Arabia Joint Commission for of India Budget 2015, Tax Free Bonds amounting to Technical and Economic Cooperation. `43,500 crore during 2015-16 allocated to Central Public  Matters relating to meetings of Board of Directors Sector Undertakings (NHAI, IRFC, HUDCO, IREDA, of ONGC-Videsh Limited (OVL), India PFC, REC, NTPC and NABARD). 22Department of Economic Affairs I 8.1.3 Financing Infrastructure in could be leveraged for raising a sub-debt G-20: category, priced somewhere between market and MDB rates may be considered. 8.1.3.1 India is a member of the G-20 Investment and Infrastructure Working Group (IIWG). When the G20 sub- 8.1.4 Financial Dialogues/Bilateral group that focuses on Infrastructure — i.e., the Engagements Infrastructure and Investment Working Group (IIWG) was originally set up, to include a focus on steps to improve  India-Saudi Arabia Joint Commission Meeting (JCM):- The 11th Session of India-Saudi Arabia domestic investment climate in member countries and Joint Commission was held in May, 2015 in New intermediate global private savings for productive Delhi under the Co-chair of Shri Arun Jaitley, investment. The group has commissioned expert papers Finance Minister, and Minister of Commerce & which have provided seminal inputs to member countries Industry of Saudi Arabia to discuss a wide range on these issues. More than 150 non-papers and of issues including cooperation in trade & approaches have been dealt with by in the IIWG, commerce, higher education, health, Development Working Group (DWG) and SAARC communication, culture and IT. Review meeting Meetings. of agreed recommendations of 11th India-Saudi a) Global Infrastructure Initiative (GII): Brisbane Arabia Joint Commission Meeting (JCM) was Summit announced the GII (a multi-year work held on 29th December, 2015 in Riyadh, Saudi programme to boost quality public and private Arabia. Both sides held extensive discussions infrastructure investment) in November 2014, in on all the issues covered in the agreed minutes line with India’s suggestion that knowledge- of the 11thJCM held in New Delhi in May 2015. sharing exercises should be taken up between member countries.  The first meeting of India-US Infrastructure Collaboration Platform (ICP) was held on 13th b) Improvement in best practices for PPP Model: January, 2015 in New Delhi. India has suggested that knowledge sharing exercises should be taken up between member 8.2 Energy Cell countries through standardized documentation and capacity building instruments like tool-kits 8.2.1 Energy Cell is part of the Infrastructure & Energy and training program for PPPs. It has further been Division of Department of Economic Affairs, Ministry of suggested that India, today, is in a position to Finance, which is headed by a Director, who is assisted offer help and learnings from its own experiences by an Under Secretary and a Section Officer. in PPPs to other countries and engage in knowledge sharing exercises that will help build 8.2.2 The major functions of Energy Cell, inter alia, such capacities in member countries. include the following: c) Combining SME (Small & Medium  All policy related issues pertaining to energy Enterprises) and Infra Financing: Various sector viz. Power, Petroleum and Natural Gas, papers were circulated for standard template for Coal, Atomic Energy and Renewable Energy; SME financing and common leading practices  Examination of the investment proposals in to support increased investment in SMEs. India energy sector requiring the approval of Cabinet/ had suggested that SMEs financing is essentially CCI/CCEA/CoS/PIB/EFC for their viability and local banks-sourced and shorter-term than Long justification; Term Investor (LTI) required for infrastructure. It was further suggested that combining SMEs and  All matters relating to power sector (including infrastructure projects in any data base should policy, projects, DCNs/CCEA Notes/EFC/SFC, be avoided. etc.,); d) Increase in MDB Exposure: There were further  Examination of proposals for grant of viability gap talks about increasing the exposure of MDBs to funding under the National Clean Energy Fund project lending through their sovereign lending (NCEF); windows. India had not supported this and had  Matters relating to OPEC Fund for International suggested that this may not address the problem Development (OFID); of raising non-traditional sources of finance: i.e., from LTIs. Instead, a facility where MDB-  Matters related to Committee on Allocation of expertise in administration and MDB – ratings Natural Resources (CANR); 23Annual Report 2015-2016  Sectoral Charge: Iran & Iraq. been examined and comments were furnished during the year. 8.2.3 Energy Cell is the Secretariat of Monitoring 8.4 PPP Cell Committee (MC) set up to review the implementation status of the recommendations of the Committee on 8.4.1 The Public Private Partnership (PPP) Cell Allocation of Natural Resources (CANR). Monitoring headed by a Director level officer was set up in 2006 for Committee chaired by Cabinet Secretary has reviewed developing multi-pronged, policy framework in respect 81 recommendations of Committee on Allocation of of PPPs and innovative interventions and support Natural Resource (CANR). 32 have been implemented, mechanisms for facilitating PPPs in the Country, including 40 are under implementation and 9 have not been Technical Assistance programmes from bilateral and accepted by Ministry/Department concerned. multilateral agencies on mainstreaming PPPs and support to State and local governments, managing 8.2.3.1.Fourteen (14) Cabinet/CCEA/CoS Notes/ training programmes, strategies, exposures for capacity proposals from the line Ministries/ Departments have building for PPPs etc. been examined during the year. 8.4.2 Government of India has been placing strong 8.3 Infrastructure Section emphasis on the use of Public Private Partnerships 8.3.1 Infrastructure Section is headed by Director (PPPs) as a strategy for expanding the provision of (Infra), who is assisted by Deputy Director (Infra) and infrastructure services. In order to bridge the infrastructure Section Officer (Infra). The functions/working of the gap, and to create an enabling environment for private Section includes the following: sector investment in infrastructure through PPPs, the Government has made a concerted effort to develop a  Providing inputs on Cabinet Notes, CCEA Notes, dedicated PPP programme, with several initiatives to CCS Notes, CoS notes and other Infrastructure support PPP development, details of which are as under: Policy related issues concerning Roads, Ports, Shipping, Inland Water Transport, Railways, i. The Public Private Partnership Appraisal Telecommunications, Civil Aviation, Power, Committee (PPPAC) that was set up for Urban Development Sector referred to the streamlined speedy appraisal of PPP projects Department of Economic Affairs (DEA) by the posed by Central Line Ministries and concerned Administrative Ministries. Departments projects, by adopting international best practices and for uniformity in appraisal  All matters relating to external territorial charge mechanism has in Calendar year 2015 approved of South Korea and China. 14 central projects proposal with TPC of  Analyzing the investment proposals in the above `24507.03 crore. infrastructure sectors requiring the approval of ii. The Government had created a Viability Gap EFC/PIB/CCEA for their viability and justification. Funding Scheme (VGF) for PPP projects.  Servicing Steering Committee, Inter-Ministerial Infrastructure projects are often not commercially Committees, High Level Committees, Group of viable on account of having substantial sunk Secretaries, Institutional Mechanism on the investment and low returns. However, they Harmonized Master List of Infrastructure Sub- continue to be economically essential. sectors, Board of Trustees of DMIC, Board Accordingly, the Viability Gap Funding Scheme meeting of National Highways Authority of India has been formulated which provides financial (NHAI), High Powered Inter – Ministerial support in the form of grants, one time or Committee on SARDP-NE etc. constituted to deal deferred, to infrastructure projects undertaken with policy issues on these sectors and providing through public private partnerships with a view inputs for formulation of DEA’s view on such to make them commercially viable. The Scheme issues. provides total Viability Gap Funding up to twenty percent of the total project cost. The Government  All matters relating to Projects (PPP and non- or statutory entity that owns the project may, if it PPP) of Ministry of Road Transport and Highways so decides, provides additional grants out of its including EFC/SFC/PPPAC and EI/EC under the budget up to further twenty percent of the total Government of India VGF Scheme. project cost. During the calendar year 2015, up to December 31, 2015 the Government has 8.3.2 Sixty Two (62) Cabinet/CCEA/CCS Notes/ granted in-principle approval for 8 projects proposals from the line Ministries/ Departments have 24Department of Economic Affairs I with a Total project cost of `1027.69 crore. be provided for Contract Management for Like-wise, Empowered Institution (EI) also efficient delivery of PPP projects. granted Final Approval to 9 projects of Department of Economic Affairs (DEA) has `1119.66 crore in various sectors with VGF developed Post-Award Contract Management component of `166.7 crore. Guidance Material for Highways, Ports and iii. Committee on Revisiting and Revitalizing School sectors and it includes Guidelines, Public Private Partnership model in Manuals and Online Toolkits. While the guidelines infrastructure: In the Union Budget 2015-16, the provide key principles of Post-Award Contract Finance Minister had announced that the PPP Management of PPP projects, these have been mode of infrastructure development has to be further adapted to sector specific Manuals based revisited and revitalized. In pursuance of this on the contractual obligations enshrined in the announcement, a Committee on Revisiting & concession agreements. These are further Revitalising the PPP model of Infrastructure supported by an interactive web-based toolkit, Development was set-up which was chaired by easily accessible through DEA’s PPP Cell Dr. Vijay Kelkar. The Report of the Committee website, i.e. www.pppinindia.com, and have been has been presented to the Government. The designed to provide practical application-oriented Report inter alia delved upon achievements in assistance to Project Authorities in undertaking infrastructure development under PPP project management. It is expected that the framework and has made several Toolkits will evolve as a one-stop resource base recommendations to better harness the PPP for all Project Authorities for Post-Award Contract route to infrastructure service delivery. The Management of PPP projects. The Guidance Committee has also recommended resolution of Material and the Online Toolkits will be available legacy issues, strengthening of Policy, to users on the Department’s website for PPPs, Governance and Institutional capacities etc. The i.e. www.pppinindia.com. Report is available on the Ministry of Finance’s vi. Development of Framework for Renegotiation website: of PPP Contracts (http://finmin.nic.in/reports/ReportRevisiting Although PPP concessions can be seen as RevitalisingPPPModel.pdf) contracts, they differ from the usual mutually iv. Knowledge Resources: As part of wide ranging negotiated contracts for delivery of commercial efforts for knowledge dissemination on PPPs, services, at least in three notable ways. First, they DEA has developed tool kits and knowledge are public procurements awarded through a products for use of PPP practitioners. competitive bidding process and, hence, ex-post changes in contract terms would need to v. Post Award Contract Management: PPP withstand the standards of equity, fairness, and contracts are often complex where both parties ensure best value-for-money for the government are expected to manage the uncertainties and under given circumstances. Second, they are complexities that arise over the long-term usually long term arrangements spanning 10-15 concession period of 15-30 years. Managing years or more and, hence, are not amenable for changing contexts over the concession period, writing ‘perfect’ contracts covering all the dealing with uncertainties and effectively handling situations and developments during the course disputes are critical for the overall success of of their life-time. Third, they are often intended the PPP projects. International experience shows to provide critical public service(s) and, hence, that lack of attention to Contract Management of can be neither paused nor disrupted until the PPP projects during the Post-Award phase contracting parties resolve the differences that means that the expected benefits from PPPs will may arise during the course of implementation. not be realized and the value-for-money would be eroded, through escalations in costs and Like in any contract, the prospect of decline in service performance. Hence, it is renegotiations in a PPP concession is not important to plan properly for Contract desirable but may not always be avoidable. Management during the upfront project Department of Economic Affairs (DEA) had preparation phase as much as during the post- developed a framework for renegotiation or award phase. In addition, proper resources must amendment of PPP Agreements with a particular 25Annual Report 2015-2016 focus on the National Highways and Major Port 9.2.2 A cell to maintain data on Overseas Direct Concessions (Renegotiations Report). The Investment (ODI) was created. This cell publishes framework identifies and categorizes several monthly ODI data on the Department’s website from issues that could be considered for renegotiation November, 2015. of PPP concessions and provides various options 9.3 Foreign Investment Unit and recommendations (triggers) for renegotiations. Based on the recommendations 9.3.1 The Foreign Investment Unit provides comments of the Renegotiations Report, DEA is, at present, on the Foreign Direct Investment Policy and the proposals working on identifying the requisite modifications/ placed before the Foreign Investment Promotion Board. amendments to the existing Model Concession It also suggests measures for improving investment Agreements (MCAs), identifying new clauses that environment in India with respect to FDI policy. need to be inserted in MCAs, as well as the regulatory and policy regimes which would be 9.3.2 Government of India embarked upon major necessary to implement such recommendations. economic reforms since mid-1991 with a view to integrate with the world economy and to emerge as a significant 9. Investment Division player in the globalization process. Reforms undertaken include de-control of industries from the stringent regulatory process; simplification of investment 9.1 Domestic Investment procedures, promotion of foreign direct investment (FDI), 9.1.1 During the Financial year 2015-16, the Budget liberalization of exchange control, rationalization of taxes Announcement regarding the National Investment and and public sector divestment. Infrastructure Fund (NIIF) was implemented. To maximize economic impact mainly through infrastructure 9.3.3 As per the extant policy, FDI up to 100% is development in commercially viable project, both allowed, under the automatic route, in most of the sectors/ Greenfield and Brownfield, including stalled projects, NIIF activities. FDI under the automatic route does not require has been created with an initial corpus of `40,000 Crore. prior approval either by the Government of India or the The Fund is set up as a Fund of Funds (Category II Reserve Bank of India (RBI). Investors are only required Alternate Investment Fund) with a proposed series of to notify and file documents to the Regional office Funds. NIIF solicits equity participation from strategic concerned of RBI. Under the Government approval route, anchor partners. The contribution of Government of India applications for FDI proposals are considered and to NIIF enables it to be seen virtually as a sovereign fund approved by the Foreign Investment Promotion Board and is expected to attract overseas sovereign/quasi- (FIPB). sovereign/multilateral/bilateral investors to co-invest in it. 9.3.4 The FDI policy has been liberalized progressively 9.1.2 The India Investment Summit was held on 3rd – through review of the policy on an ongoing basis and 4th Feb. 2016 in New Delhi. The summit showcased and allowing FDI in more industries under the automatic route. discussed the huge investment opportunities in India, Three major reviews were undertaken in the year 2000, especially in the field of infrastructure. The NIIF was 2006 and 2007-2008. A major policy stance defining formally launched in the summit. indirect investment was taken in 2009 which elaborated the Counting of indirect foreign Investment and guidelines 9.2 International Investment Agreements for downstream investments by foreign owned or 9.2.1 After holding extensive consultations with stake- controlled companies as also guidelines for transfer of holders over the past three years, the model Bilateral ownership from residents to non residents in sensitive Investment Treaty (BIT) text was finalized. The text was sectors. In a major development, the Government has approved by the Cabinet in December, 2015. The revised recently announced a number of measures to simplify Indian Model text will replace the existing Indian Model and liberalize the FDI policy vide Press Note 12 on BIT. The new Indian Model BIT text aims to provide November 24, 2015. appropriate protection to foreign investors in India and 9.3.5 Department of Industrial Policy & Promotion now Indian investors in the foreign country, in the light of brings out a Consolidated Foreign Direct Investment relevant international precedents and practices, while Policy Document and is available at http://dipp.nic.in . maintaining a balance between the investor’s rights and Government obligations. During the year, technical 9.3.6 Recent Initiatives discussions on BITs with Canada and USA were held and on investment chapters in trade agreements with  Enabling foreign investment in Real Estate Australia and the Regional Comprehensive Economic Investment Trusts (REITs) and Infrastructure Partnership (RCEP). Investment Trust (InvITs): Through Cabinet 26Department of Economic Affairs I decision, the Government had approved investors, the Govt. vide Press Note 2 of 2015 amendment in FEMA to facilitate foreign dated 5th January, 2015 has allowed FDI up to investment through Real Estate Investment 100% under the automatic route for Trusts (REITs) registered under SEBI (REITs) manufacturing of medical devices, which was regulation, 2014. Presently, foreign investment earlier placed in the Govt. approval route. in real estate business is not permissible and  Insurance Sector Vide Press Note 3/2015 dated therefore the Cabinet had also approved a carve 2nd March 2015, the Government has increased out for foreign investment in REITs under the real the FDI limit to 49% (up to 26% on automatic estate business. RBI vide Notification No. FEMA route and beyond 26% to 49% under approval 355/2015-RB dated 29.10.2015 has issued route) in respect of Insurance Company, necessary amendment in FEMA for enabling Insurance Brokers, Third Party Administrators, foreign investment through REITs and also Surveyors and Loss Assessors and Other enabling provision for foreign investment in Insurance Intermediaries appointed under the Infrastructure Investment Trust (InvITs) provisions of Insurance Regulatory and registered and regulated under SEBI (InvITs) Development Authority Act, 1999 subject to regulation 2014. compliance of Insurance Act and necessary license from IRDA for undertaking insurance  Enabling foreign investment in Alternative activities. Further, ownership and control of Investment Funds (AIF): The Cabinet had Indian Insurance Company should remains in the approved amendment in FEMA to facilitate hands of resident Indian entities at all times as foreign investment through Alternative defined under IRDA regulation. Investment Fund (AIF) registered under SEBI (AIF) Regulations, 2012. Necessary RBI  Pension Sector: In consultation with this Notification No. FEMA 355/2015-RB dated Department and Department of Financial 29.10.2015 has been issued to facilitate Services, DIPP vide Press Note 4/2015 dated investment in venture activities, start-ups, 24th April 2015, has allowed the FDI limit upto infrastructure sector, MSMEs, social sector and 49% (up to 26% on automatic route and beyond various other segment of the market through AIFs 26% to 49% under approval route) in respect of which are Private Equity or Debt fund or Hedge Pension fund set up under the provisions of fund and thus have positive spillover effects for Pension Fund Regulatory and Development the economy. Authority Act, 2013.  Relaxation of norms for Investment by Non  Composite Caps for foreign investments: Vide Resident Indian on Non-repatriation basis: Press Note 8/ 2015 dated 30 July, 2015, the The extant provisions of FDI policy for NRI Government has simplified the FDI policy by investment particularly on non-repatriation basis introducing composite cap to include all forms of has been rationalized. Vide Press Note No. 7/ foreign investment i.e. FDI, FII, FPI, NRI, QFI, 2015 dated 3rd June 2015 issued by Department FVCI, ADR & GDR and DR. This will bring clarity of Industrial Policy & Promotion (DIPP), the to the investor community and facilitate foreign Government has announced that Non-Resident investment. In addition, investment by FPIs /FIIs Indian (NRI) investment on Non-repatriation up to 49% in all sectors except Defence and basis, under schedule 4 of Notification No. FEMA Banking would not require FIPB approval, as 20 would be treated as domestic investment. This hitherto. step will encourage NRI investment on Non-  FDI by Partly paid Shares and Warrants: Vide repatriation basis in India. Press Note 9/2015 dated 15.09.2015 Partly Paid  NIC Code: Mapping of the sector specific FDI Shares and Warrants are treated as an eligible Policy in Consolidated FDI Policy 2014 in terms financial instruments for foreign investment under of National Industrial Classification (NIC)-2008 FDI Policy. has been done with the objective of improving  FDI in White Label ATM Operations: Vide Press ease of doing of business in India and published Note 11/2015 dated 1.10.2015, the Government vide Press Note 1 of 2015 dated 5th January, has allowed 100% FDI in White Label ATM 2015. Operations under automatic route subject to fulfilment of guidelines of RBI.  Pharma Sector: In view of difficulties of 27Annual Report 2015-2016  Changes vide Press Note 12 dated November (iv) Civil Aviation Sector: FDI in non- 24, 2015 : In a major development, the Scheduled Air Transport Service and Government vide Press Note No. 12 (2015 General Handling Service has been Series) dated November 24, 2015 amended the enhanced from 74% to 100% under the FDI policy (announcement in this regard was automatic route bringing it at par with made on November 10, 2015). The changes Helicopter services/seaplane services simplify and rationalize FDI policy in many sectors requiring DGCA approval, subject to by enhancing the limit of foreign investment and Sectoral regulations and security clearance placing some activities/sectors on automatic (v) Satellites- establishment and operation, route instead of earlier regulations of seeking FDI has been enhanced from 74% to 100% Govt. approval for such investment. In the Press subject to the Sectoral guidelines of Note, it is specified that amendments will touch Department of Space/ISRO : FDI would be 15 major sectors of Economy, including allowed under the approval route. amendments related to simplification of procedure and regulations also, which will spread (vi) Credit Information Companies: FDI across the sectors. The salient measures are: enhanced from 74% to 100%under the automatic route. (i) Agriculture and Animal Husbandry v. Plantation: Earlier, FDI in only tea (vii) Construction & Development Sector: plantations were allowed. Through PN 12/ Conditions of minimum floor area and 2015, 100% FDI is allowed on automatic minimum FDI amount have been done away route in Coffee, Rubber, Cardamom, Palm with. The exit norms of foreign investor have oil tree and Olive Oil tree Plantations. been simplified. Now the Non-resident Further, the term “under controlled investors can transfer their stake, without conditions” mentioned under Agriculture repatriation of investment, to the other Non- Sector has been defined / specified for resident Investors and this will not be subject floriculture, horticulture, Animal Husbandry, to either lock-in-period or Govt. approval. Rearing of animals under intensive farming Further, Non-resident investors can exit after systems, poultry breeding farms, lock-in-period of three years without pisciculture, apiculture. Government approval. (ii) Defence: Now, 49% FDI is allowed on (viii) Retail Sectors: Norms are simplified as automatic route in Defence Sector instead follows: of under Government route. FDI beyond (a) An Indian manufacturer is permitted 49% is placed on the approval route to sell its own branded products in any provided there is a likelihood of the foreign manner i.e. wholesale, retail, including investment proposal resulting in access to through e-commerce platforms. modern and ‘state-of-art’ technology in the country. (b) Government may relax sourcing norms for entities undertaking single (iii) Information & Broadcasting Sector: brand retail trading of products having (a) Teleports, Direct to Home, Cable ‘state-of-art’ and ‘cutting-edge’ Networks (Multi System Operators technology and where local sourcing (MSOs), Mobile TV, Head end-in-the is not possible. Sky Broadcasting Services(HITS): FDI (c) Single brand retail trading entity raised from 74% to 100% out of which operating through brick and mortar up to 49% on automatic route and stores, is permitted to undertake retail beyond it on approval route. trading through e-commerce. (b) Terrestrial Broadcasting FM (FM (ix) Duty Free Shops: 100% FDI is allowed on Radio), Up-linking of ‘News & Current automatic route. Affairs’ TV Channels: FDI raised from 26% to 49% under the approval route. (x) Wholesale Cash & Carry sector: A wholesale/cash & carry trader is also (c) Up-linking of Non-‘News & Current allowed to undertake single brand retail Affairs’ TV Channels/ Down-linking of trading. TV Channels: 100% FDI is now allowed under the automatic route. (xi) Limited Liability Partnerships (LLPs), 28Department of Economic Affairs I downstream investment and approval 9.3.7.3 In the current calendar year 2015 , the FDI equity conditions: Following relaxations in norms inflows upto December, 2015 are US $ 39,328 million have been made in case of foreign (`252,562 crores) compared to US $ 28,785 million investment through LLP: (`175,313 crores) during the corresponding period in 2014 representing a increase of 37 % in dollar terms and (a) FDI is now permitted under the an increase of 44 % in rupee terms. automatic route in LLPs operating in sectors/activities where100%FDIis 9.4 Foreign Investment Promotion Board allowed, through the automatic route and there are no FDI­ linked 9.4.1 The Foreign Investment Promotion Board is a single performance conditions. window clearance for FDI proposals and comprises the core Group of Secretaries of Department of Economic (b) An Indian company or an LLP, having Affairs, Department of Industrial Policy & Promotion, Min. foreign investment, will be permitted to of Small Scale Industries, D/o Revenue, D/o Commerce, make downstream investment in Min. of External Affairs and M/o Overseas Indian Affairs another company or LLP in sectors in and co-opt other Secretaries to the Central Government which 100%FDI is allowed under the and top officials of financial institutions, banks and automatic route and there are no FDI- professional experts of Industry and Commerce, as and linked performance conditions. when necessary. FIPB is chaired by the Secretary of the (c) Control and ownership in respect of Department of Economic Affairs and its meetings are held LLP are defined as below: regularly, within 3-4 weeks interval. 9.4.2 FDI proposals seeking FIPB approval are handled  ‘control’ will mean right to appoint majority of the in this Department and proposals of NRI Investment, designated partners, where such designated Foreign Technology transfer trademarks agreement and partners, with specific exclusion to others ,have FDI in 100% EOUs are handled in the Department of control over all the policies of the LLP. Industries Policy & Promotion (DIPP). The FDI Policy and  Ownership: A LLP will be considered be owned FDI Data are also handled in the DIPP. by resident Indian citizensifmorethan50% of the 9.4.3 During the year (upto 31.01.2016) 18 FIPB investment in such an LLP is contributed by meetings were held in which 229 proposals with NRI resident Indian citizens and/or entities which are inflow of approximately `57879.5 Crore were approved ultimately’ owned and controlled by resident (includes proposals recommended for CCEA approval Indian citizens’ and such resident Indian citizens of `16708.51 Crores). and entities have majority of the profit share. 9.5 Foreign Trade Section (xii) Enhancing the limit of FIPB approval: the Government has enhanced the approval 9.5.1 The Foreign Trade Section deals with various limit of FIPB, whose Hon’ble Finance matters related to foreign trade in the country. Inputs on Minister is the Chairman to `5000 Crores matters relating to financial services aspect of the WTO, from the earlier provision of `3000 Crores. and Regional Trade Agreements, Comprehensive Proposal having foreign investment greater Economic Cooperation Agreement (CECA) etc. which are than `5000 Crores now need to be approved negotiated under the aegis of Ministry of Commerce & by the Cabinet Committee on Economic Industry are provided by this section. The foreign Affairs. This will expedite the process of exchange aspects relating to the import and export of considering/approving the foreign gold and silver are also examined in this section. investment proposals. 9.5.2 Introduction of Gold Monetization Schemes 9.3.7 FDI Inflows and Sovereign Gold Bond Scheme: During the Financial year 2015-16, Gold Monetisation Scheme and 9.3.7.1 The cumulative FDI inflows from April 2000 to Sovereign Gold Bond Scheme was launched by Hon’ble December 2015 aggregate US $ 408,676 Million. The Prime Minister Shri Narendra Modi on 5th November, cumulative FDI equity inflows from April 2000 to 2015.These schemes will benefit the manufacturers of December 2015 aggregate to US $ 277,954 million gold jewellery who are largely small and medium scale (` 1,424,067 crores). enterprises, by making gold available to them. It will also 9.3.7.2 In the financial year 2015-2016, the FDI equity benefit the common man by allowing him/her to earn inflows from April 2015 to December 2015 are US $ interest on their holdings of gold. In the long-run, these 29,443 million compared to US $ 21,045 million during schemes will help in reducing the country’s demand for the corresponding period in 2014-15. import of gold, to a large extent. 29Annual Report 2015-2016 During the financial year 2015-16, three tranches international level deliberations to discuss policy issues of Sovereign Gold Bond Scheme were issued. Total pertaining to the World Bank Group as also to undertake Bonds equivalent of 4908 kg. amounting to `1320 crore projects with assistance from the World Bank (IBRD and (approx.) were purchased by approximately 4.50 lakh IDA). investor. Under the Gold Monetisation Scheme 1467 10.3 World Bank Reforms kilograms of gold have been deposited by 86 depositors so far. 10.3.1 In the recent Capital Increase in IBRD (Spring Meetings, April 2010), India has been allocated additional 9.5.3 Introduction of Indian Gold Coin: Hon’ble 24,092 shares (through General Capital Increase and Prime Minister introduced Indian Gold Coin on 5th Selective Capital Increase). As a result India will become November, 2015. MMTC is the nodal agency for selling the 7th largest shareholder in IBRD with voting power of of the coins, where as the minting of these coins being 2.91%. Before this revision, India’s voting power was done by the SPMCIL. 2.77% at 11th position among shareholders. India has commenced its subscription of additional shares allocated 10. Multilateral Institutions Division following 2010 reforms. As on 30th December, 2015, India holds 67,040 shares amounting to US $ 8087.37 million. 10.1 Introduction 10.4 World Bank India Portfolio 10.1.1 The MI Division is concerned with policy matters 10.4.1 At the end of December 31st, 2015, a total of of Multilateral Institutions like World Bank Group, 101 World Bank Projects are under implementation in International Monetary Fund (IMF), Asian Development India. Out of these, 33 are IBRD Projects (US$ 8986 Bank (ADB), African Development Bank, New million), 68 are IDA Projects (US$ 936 million and XDR Development Bank (NDB), Asian Infrastructure 6664 million) and 09 are blend projects. The World Bank Investment Bank (AIIB) and related Institutions. MI projects are spread across sectors like Urban, Transport Division is also the nodal point for facilitating and Education, Health, Rural Development, Panchayati Raj monitoring Externally Assisted Projects (Central & State Institutions, Irrigation, Water Supply Power, Environment Projects all over India) which are being implemented & Forest etc. through Multilateral Development Banks and other related Trust Funds / Loans / Grants. In addition, it also deals 10.5 Major activities pertaining to the World with Global Alliance for Vaccines and Immunization Bank in 2015 (GAVI), the Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM), International Fund for Agricultural 10.5.1 India as donor to IDA: India has recently Development (IFAD) and Global Environment Facility graduated from IDA and is being provided transitional (GEF). support during IDA 17. As a commitment to India’s shared objective of eliminating extreme poverty, reducing 10.2 World Bank Group vulnerability and increasing resilience across countries, India has decided to become donor to IDA with a 10.2.1 The World Bank is among the world’s leading contribution of US$ 200 million to IDA 17 replenishment. development institutions with a mission to fight poverty 10.6 The Global Environment Facility (GEF) and improve living standards for people in the developing world by promoting sustainable development through 10.6.1 The GEF operates as a mechanism for loans, guarantees, risk management products, and (non- international cooperation for the purpose of providing new lending) analytic and advisory services. The World Bank and additional grant and concessional funding to meet is one of the United Nations’ specialized agencies. The the agreed incremental costs of measures to achieve World Bank concentrates its efforts on achieving the agreed global environmental benefits. GEF provides grants to eligible countries in its five focal areas: Sustainable Development Goals (SDGs) aimed at Biodiversity, Climate change, Land Degradation, sustainable poverty reduction. international waters, chemicals and waste. It also serves 10.2.2 India is member of four institutions of the World as financial mechanism for the Convention on Biological Bank Group viz., International Bank for Reconstruction Diversity (CBD), United Nations Framework Convention and Development (IBRD); International Development on Climate Change (UNFCCC), Stockholm Convention Association (IDA); International Finance Corporation on Persistent Organic Pollutants (POPs), UN Convention (IFC) and Multilateral Investment Guarantee Agency to Combat Desertification (UNCCD), Minimart Convention (MIGA). India has been accessing funds from the World on Mercury and supports implementation of the Protocol Bank (mainly through IBRD and IDA) for various in countries with economics in transition for the Montreal developmental projects. MI division is the focal point for Protocol on Substances that Deplete the Ozone Layer India being represented in the WBG meetings for (MP). 30Department of Economic Affairs I 10.6.2 India has been actively involved with GEF financing and advising the private sector in the country. process right from its inception. It has been one of the India represents IFC’s single-largest country exposure donors to the GEF Trust Fund. The GEF Trust Fund is globally. IFC has committed over US$15 billion in India replenished every four years through a process in which since 1958. The IFC’s investments in India are spread countries that wish to contribute to GEF Trust Fund across important sectors like infrastructure, discuss and come to agreement on a set of policy reforms manufacturing, financial markets, agribusiness, SMEs to be undertaken, the programming of resources and also and renewable energy. Keeping in alignment with the pledge resources. The fifth cycle of the GEF Country Partnership Strategy (CPS) of the World Bank Replenishment ended on June 30, 2014 and the GEF-6 Group in India, IFC focuses on low-income States in India. (sixth replenishment of resources of the GEF Trust Fund) In last fiscal year, IFC invested US$ 1.4 billion in India will fund four years of GEF operations and activities from support infrastructure development, promoting financial July 1, 2014 to June 30, 2018. An amount of US $ 3 inclusion, and enhancing access to quality and affordable Million has been paid as India’s contribution in 2015-16 healthcare. In the current fiscal year, IFC has invested towards the payment of 2nd instalment of 6th US$ 490 million so far across sectors like financial Replenishment of GEF. inclusion, manufacturing, healthcare, etc. 10.7 Meetings of Fund Bank 10.8.2 The Government of India approved an off-shore rupee linked bond issuance by IFC for an amount of US$ 10.7.1 The Spring Meetings of the IMF-World Bank and 1 billion (INR 62 billion) in October 2013. The first tranche associated meetings at the sidelines were held during was issued in November 2013 and the programme was April 13-19, 2015. The Finance Ministry delegation was successfully closed, with the last of the six issuances, led by the Union Finance Minister and comprised of completed in April 2014. All issuances of maturities Finance Secretary, CEA and other officers of DEA. The ranging from 3-7 year received strong interest from global Development Committee deliberated on ‘From Billions investors. The programme showed that the main investor to Trillions - Transforming Development Finance Post- base for the rupee-linked bonds was in the US, followed 2015 Financing for Development - Multilateral by Europe and Asia and the investors were mainly asset Development Finance’. managers and private bankers. IFC global rupee bonds are denominated in Indian rupee but settled in U.S. 10.7.2 The Annual Meetings of the World Bank and the dollars, with all principal and coupon payments tied to IMF and other associated meetings on the sidelines took the U.S. dollar-rupee exchange rate. IFC converts bond place in Lima, Peru from October 9-11, 2015. Indian proceeds from dollars into rupees on the domestic spot Delegation was led by Union Finance Minister and exchange market, and uses the rupees to invest in the comprised of Governor RBI, Secretary (EA), Chief country. Economic Advisor, and other officers from Ministry of Finance and RBI. The focus of the Development 10.8.3 Government of India approved the request of IFC Committee was on the obstacles to ending poverty: for expansion of INR linked offshore bonds issuance by climate change, weak growth, and the ongoing crises in an additional amount of US$ 2 billion over the next five fragile states. These meetings also provided opportunity years in October 2014, subject to the conditions: (i) Bonds of holding various bilateral meetings with various countries issued by IFC should have a minimum maturity of three and organizations/ agencies. years and (ii) At least 50% of the total issuance should be of minimum five year tenor. 10.7.3 The Finance Minister Shri Arun Jaitley during the Annual meeting in Lima emphasized the need for bigger 10.8.4 IFC launched a US$ 2.5 billion rupee onshore financing and implementation plans by the World Bank bond programme in India on August 20, 2014 to Group to achieve the Sustainable Development Goals strengthen capital markets and support infrastructure (SDGs); and need for the significant increase in the capital development in India. IFC launched and priced the four of the World Bank Group to meet the developmental inaugural tranches of the Maharaja Bond Programme on objectives and review of the Bank’s shareholding to reflect September 23, 2014. The four tranches were issued in share of the developing countries in the global economy. total for INR 6 Billion (~USD100million). Proceeds from the Bonds will be invested in infrastructure projects in 10.8 International Finance Corporation (IFC) India. The programme is expected to provide an alternative source of investment in India. It would also 10.8.1 International Finance Corporation (IFC), a result in broadening of Indian capital market. member of the World Bank Group, focuses exclusively on investing in the private sector in developing countries. 10.8.5 Masala Bonds: IFC issued a 10-year, 10 billion Established in 1956, IFC has 184 members. India is Indian rupee bond (equivalent to $163 million) on founding member of IFC. IFC is an important November 8, 2014. The “Masala bonds” mark the first development partner for India with its operations of rupee bonds listed on the London Stock Exchange. The 31Annual Report 2015-2016 bonds yield 6.3 percent. They are the longest-dated bonds Ministers, or other officials of comparable rank, was held in the offshore rupee markets, building on earlier offshore at Washington D.C on April 18, 2015 and the 32nd rupee issuances by IFC at three-, five-, and seven-year Meeting of the IMFC was held on October 9, 2015 and maturities. The vast majority of investors in masala bonds chaired by Mr. Agustín Carstens, Governor of the Bank are European insurance companies. Proceeds from the of Mexico. offering were invested in infrastructure bond issuance by 10.10 India’s Quota and Ranking: Axis Bank. Further, on August 3, 2015, IFC issued a green Masala bond, raising 3.15 billion rupees—approximately 10.10.1 India’s current quota in the IMF is SDR (Special $49.2 million—for private sector investments that address Drawing Rights) 13,114.4 million, giving it a shareholding climate change in India. The bond, listed on the London of 2.75%. India is the eighth largest member of IMF. Stock Exchange, is the first green bond issued in the offshore rupee markets. IFC will invest the proceeds of 10.10.2 2010 IMF quota and governance reforms (14th the bond in a green bond issued by Yes Bank, one of General Reforms of quota) came into effect on January 26, 2016. India has paid for its quota increase. This India’s largest commercial banks. Yes Bank will invest entailed a payment of SDR 7292.90 million of which 25 the proceeds of its bond in renewable energy and energy % i.e. SDR 1823.225 million have been paid in reserve efficiency projects, mainly in the solar and wind sectors. assets (SDRs or hard currency) and 75 % of the total The bond yields 6.45% p.a. The bond is issued under increases i.e. SDR 5469.675 million in local currency. IFC’s $3 billion offshore rupee Masala bond program. India paid the Reserve Asset portion through its SDR Under the program, IFC has issued bonds worth over holdings and the local currency portion through creating 103 billion rupees ($1.66 billion) in a range of tenors, non-negotiable and non-interest bearing securities. The building a triple-A yield curve and attracting new investors new quotas because effective for India on February 18, to the offshore rupee markets. 2016. 10.9 International Monetary Fund 10.11 India’s contribution to borrowing arrangements of the IMF 10.9.1 India is a founder member of the International Monetary Fund, which was established to promote a 10.11.1 In April 2009, the G-20 agreed to increase the cooperative and stable global monetary framework. At resources available to the IMF by up to $500 billion (which present, 188 nations are members of the IMF. Since the would triple the total pre-crisis lending resources of about IMF was established, its purposes have remained $250 billion) to support growth in emerging market and unchanged but its operations - which involve surveillance, developing countries, viz. through bilateral financing from financial assistance and technical assistance - have IMF member countries; and by incorporating this financing developed to meet the changing needs of its member into an expanded and more flexible New Arrangements countries in an evolving world economy. The Board of to Borrow (NAB). In July 2010, India committed a Governors of the IMF consists of one Governor and one maximum of up to USD 14 billion for the New Alternate Governor from each member country. For India, Arrangements to Borrow (NAB). The new NAB became the Finance Minister is the ex-officio Governor on the effective on April 1, 2011 and was activated for a period Board of Governors of the IMF. There are three other of six months till September, 2011 for a maximum amount countries in India’s constituency at the IMF, viz. of SDR 211 billion. Since then the enlarged and amended Bangladesh, Sri Lanka and Bhutan. Governor, RBI is NAB has been activated nine times, latest activation from India’s Alternate Governor. October 1, 2015 to end-March 2016 with a maximum activation amount of SDR 183 billion. 10.9.2 Meetings of Board of Governors: The Board of 10.11.2 At the Los Cabos Summit of the G20 held on Governors usually meets twice a year to discuss the work June 19th, 2012, BRICS countries have announced their of the respective institutions, viz. the Spring meetings and contributions, including US$ 10 billion by India. The total the Annual meetings of the IMF and World Bank. At the commitments amount to US$ 461 Billion from 38 heart of the gathering are meetings of the IMF’s countries. The IMF has committed that these new International Monetary and Financial Committee (India resources will be drawn only if they are needed as a is represented by the Finance Minister in IMFC) and the second line of defense after resources already available joint World Bank-IMF Development Committee, which from quota and existing borrowing arrangements are discuss progress on the work of the IMF and World Bank. substantially used. If drawn, they would be repaid with The 2015 Spring Meeting of the International Monetary interest. It has been clarified that quota resources would Fund and World Bank Group was held in Washington remain the basic source of fund financing and that the D.C from April 17-19 2015. The last Annual Meeting of role of borrowing is to temporarily supplement the quota the IMF and World Bank was held during October 9-11, resources. 2015 at Lima, Peru. The 31st Meeting of the IMFC, which is an advisory body made up of 24 IMF Governors, 10.11.3 This bilateral borrowing arrangement is in the 32Department of Economic Affairs I form of Note Purchase Agreements (NPA) and will be US$163.12 billion of which India’s subscription is US$10.3 used as a second line of defence only if the resources billion. As of 21 July 2015, India is holding 6.3338% of under Quota and NAB are substantially exhausted. The shares, totalling 672,030 shares with 5.369% voting rights. Agreement for this borrowing programme 2012 has been 10.13.3 Payment of US$17,295,198.68 (`105,47,30,396 finalized in consultation with Reserve Bank of India (RBI) @ `60.984 per USD) in cash and Promissory Note of and International Monetary Fund (IMF). The Note `157,22,37,331.20 (equivalent of US$25,942,798.02 @ Purchase Agreement has been signed between RBI & ` 60.604 per USD) has been done to ADB in October IMF on 19.09.2013. A MOU has been signed between 2014 as the fifth & the last instalment towards the GCI-V. Government of India and RBI on 19th December, 2013. 10.11.4 Financial Transactions Plan (FTP): The Financial 10.13.4CPS for India covering five year period (2013 to Transactions Plan of the International Monetary Fund is 2017) was approved by ADB Board in October 2013. The the mechanism through which the Fund finances its CPS 2013-2017 aims to support government’s vision of lending and repayment operations, to its members, in faster, more inclusive, and sustainable growth envisaged the General Resources Account. The members of the under 12th plan. Over the last 8 years, ADB’s annual Fund can take loans from IMF with limits corresponding lending has been around $2 billion. The proposed 3-year to their quota. IMF lends to its members in both foreign lending program, reflected in the country operations exchange and SD` Credit extended in foreign exchange business plan, 2016-2018, proposes a is financed from the quota resources made available to scale-up. the IMF by members. The creditor gets benefited as their 10.13.5 The Annual meetings are statutory occasions for position gets increased. When extending credit in SDRs, Governors of ADB members to provide guidance on ADB the IMF transfers reserve assets directly to borrowing administrative, financial, and operational directions. India members by drawing on the IMF’s own holdings of SDRs participated in the 48th Annual Meeting of ADB during in the General Resources Account. 2-5 May, 2015 held in Baku, Azerbaijan. 10.11.5 India has agreed to participate in the FTP of the IMF with effect from the quarter Sept-Nov 2002. Effective 10.14 ADB’s Portfolio with India participation in the FTP made India a creditor member 10.14.1 ADB assistance to India commenced in 1986. with the IMF. Under this, India is asked to make a Average annual lending increased from US$586 million purchase (issuance of credit) or a repurchase (debt during 1986-96 to US$905 million during 1997-2002, to servicing by our debtor) under the FTP. By participation US$1.094 billion during 2003-07 and to about US$2 billion in FTP, India is allowing IMF to encash its rupee holdings during 2008-15. as part of India’s quota contribution, for hard currency which is then lent to other member countries who are 10.14.2 ‘The thrust of the ADB program in India is debtors to the IMF. infrastructure development through the energy, transport, 10.12 Article IV Consultations urban, and agriculture and natural resources sectors, with the finance and human development sectors providing 10.12.1Under Article IV of the IMF’s Articles of cross-cutting support. Agreement, the IMF holds bilateral discussions with 10.14.3 ADB’s transport sector program aims to improve members, usually every year, to review the economic connectivity and accessibility, promote safe and status of the member countries. Article IV consultations environmentally friendly practices, and enhance in- are generally held in two phases. During this exercise country and sub regional trade corridors and facilities. the IMF mission holds discussions with the RBI and The South Asia Sub regional Economic Cooperation various line Ministries / Departments of Central (SASEC) Road Connectivity Investment Program is Government. The Article IV Consultations are concluded working toward these objectives. with a meeting of IMF Executive Board at Washington DC which discusses the Article IV Report. The Annual 10.14.4 Energy sector initiatives continue to contribute Article IV Mission with International Monetary Fund to the strengthening of transmission and distribution concluded on December 15, 2015. networks in India. Initiatives at the national level, and in the states of Assam, Gujarat, Himachal Pradesh, Madhya 10.13 Asian Development Bank Pradesh and Rajasthan, aim to provide uninterrupted 10.13.1India is a founding member of Asian power supply to all, while promoting low-carbon solutions, Development Bank (ADB) that was established in 1966. renewable energy, and energy efficiency. The Bank is engaged in promoting economic and social 10.14.5 Key areas of focus for ADB in the urban sector progress of its developing member countries (DMCs) in are economic development through enhanced the Asia Pacific Region. competitiveness of cities; improved sanitation and 10.13.2ADB’s authorized & subscribed capital stock is drinking water coverage; and improved water 33Annual Report 2015-2016 management systems, institutions, regulations, and as well as Technical Assistance for Development Projects pricing. The urban program is aligned to better support and programs. To mobilize external resources stimulating Swachh Bharat Mission (Clean India Campaign), Atal growth and accelerating the pace of development in Mission for Renewal and Urban Transformation Regional Member Countries, AFDB opened its (AMRUT), and Smart Cities Initiative—flagship programs membership in 1982 to non-regional members of the of the government. Building on earlier ADB initiatives, the African Development Fund. With the overall objective of Rajasthan Urban Sector Development Program will fostering south-south cooperation and keeping in view contribute to sustainable urban development by the historical ties India had with African Sub continent, supporting policy reform, institutional development, and India was one of the first few countries to become non- improved governance and urban services in the state. regional member of AfDB. India was admitted to the membership of the African Development Bank on 6th 10.14.6 Contract award have also increased from $550.5 December, 1983. The headquarters of the bank is million in 2004 to about $2 billion in 2014, while loan located in Abidjan, Cote d’ Ivoire. disbursements have risen from $381 million to $1.4 billion over the same period. 10.15.3 Membership: The Bank has 78 countries spread all over the world as its members. Out of these, 53 10.14.7 The ADB program for the agriculture and natural (excluding South Sudan) are African Countries called resources sector supports water resource management, Regional Members and 25 are other countries called Non flood and coastal management, and agribusiness regional Members. All the members have been grouped development. into 20 Constituencies – 13 regional and 7 non-regional. 10.14.8 ADB’s human development sector program 10.15.4 Structural Set-Up : The President is the Executive includes support to the national urban health mission, Head of the Bank. He is also the Chairman of the Board and national and state-level efforts in skill development, of Directors. He is elected for a period of 5 years with a with a focus on quality and outcomes. The Supporting right to re-election. Under him, there are five Vice Additional Skill Acquisition Program in Post-Basic Presidents and entire staff of the Bank. The Bank has Education seeks to enhance the employability of youth two boards (1) Board of Governors and (2) Board of in Kerala, by imparting market-relevant vocational training. Directors. Each member country is represented in the Board of Governors by a Governor and an Alternate 10.14.9 The 2015 program comprised 8 loans totalling Governor. The Board of Governors is the highest policy $1.82 billion, spanning six sectors of ADB operations. In making body of the Bank and meets annually. addition, 14 technical assistance projects amounting to $16.6 million were approved during the year. Key loans 10.15.5 The Board of Governors gives general directives approved during the year are the Green Energy Corridor concerning operational policy, amendments to the Bank and Grid Strengthening Project, the Second Jharkhand Agreement, admittance of new members and election of State Roads Project, Supporting National Urban Heath the President etc. The Board of Directors comprises 20 Mission, Rural Connectivity Investment Program– Executive Directors representing 20 constituencies of the Tranche 3, and Accelerating Infrastructure Investment Bank. Out of these 13 are regional and 7 are non-regional. Facility–Tranche 2. The board is responsible for conducting general business of the Bank. 10.14.10 Technical Assistance (TA) program has evolved in line with the loan program. TA support is being used 10.15.6 India’s Partnership with African Development to build capacity, improve project preparedness and Bank Group: India became a State participant of the implementation, and undertake scoping studies and African Development Fund on May 6, 1982 and was knowledge products. admitted to the membership of the African Development Bank on December 6, 1983. Finance Minister and 10.15 African Development Bank Secretary, Economic Affairs are designated as Governor 10.15.1 The African Development Bank Group comprises and Alternate Governor respectively to represent India. of (i) African Development Bank, (ii) African Development 10.15.7 With 16,446 votes, India account for 16,021 of Fund and (iii) Nigeria Trust Fund. (iv) African Growing the total shares. India has only 0.257% of voting powers. Together Fund (AGTF). The Bank Group is headed by India supported and stands committed for 200% the President. enhancement in the share capital of the Bank. As a result, 10.15.2 African Development Bank: The African the capital of the Bank has increased from UA 23.947 Development Bank (AfDB) was established in 1963 with billion to UA 67.687 billion. Resultantly, India has been membership being open only to regional countries with a allocated 9,763 new shares (586 paid up and 9177 view to promote the Economic Development and social callable) having a capital value of UA 97,630,000. It has progress of its regional members by providing finances to pay eight annual instalments of UA 732500 (US$ 34Department of Economic Affairs I 10,94,033), against which five instalments have been paid replenishment contribution. In 2005, it was decided that in 2011-12, 2012-13, 2013-14, 2014-15 and IDA (International Development Association), the African 2015-16. During 2015-16, India was allocated 1744 Development Fund (ADF) & IMF would cancel 100% of additional shares and made payment of `5.19 Crore to their debt gains against countries which have reached or acquire these shares. will reach completion under the enhanced Highly Indebted Poor Countries (HIPC) initiative. This would be financed 10.15.8 Nordic-India Constituency: India joined the by MDRI of ADF. Nordic Constituency comprising Norway, Sweden, Finland and Denmark. As per the allocation of shares among the 10.15.12 India’s contribution to MDRI of African regional and non-regional member states, regional Development Fund is UA 14.11 million over a long period members account for 60% of the voting power in the from 2006-2054 against which a sum of `13,04 Crore AfDB. The non-regional members account for remaining has been paid during 2006-07 to 2014-15. During vote share. Among the non-regional member countries, 2015-16, `2.57 Crore will be contributed by India. USA is the leading stakeholder followed by Japan. India’s 10.15.13 Technical Cooperation Agreement: Technical share is only 0.257% of the voting power. However, Nordic Cooperation Agreement (TCA) was drawn up between + India (NI) together command 4.645% of voting power Government of India, African Development Bank (AfDB) (as on 30th November, 2015). and African Development Fund (ADF) in July 1998. Under this agreement, a sum of US$ 3.39 million (Indian Rupees 10.15.9 African Development Fund: Established in 1972, 15 crores) had been placed at the disposal of AfDB as a the African Development Fund (ADF) became operational grant. The grant was to be utilized for financing in 1974. It is administered by the African Development consultancy services, training and other techno-economic Bank and comprises State participants (donor countries) activities. The initial tenure of the agreement was for and recipient countries. Its main objective is to reduce three years, i.e. up to 26th July, 2001. The validation of poverty in Regional Member Countries (RMC) by TCA was extended up to December, 2010 and then upto providing loans and grants. The ADF contributes to the 2015. promotion of economic and social development in 41 least developed African countries by providing concessional 10.15.14 TCA was renewed in May, 2015 for a period of funding for projects and programs, as well as technical five years and India’s contribution has doubled from ` 30 assistance for studies and capacity-building activities. Crore to ` 60 Crore. A budget provision of ` 10.00 Crore India holds 0.177% of the voting power in African was made during 2015-16 to be released as first tranche Development Fund (ADF). under the Agreement. 10.15.10 Contribution to African Development Fund: India 10.16 International Fund for Agricultural is contributing to African Development Fund (ADF) in all Development (IFAD) its replenishment cycles. Efforts of India in salvaging the ADF 13 process were highly appreciated by the Bank. 10.16.1 International Fund for Agricultural Development Keeping in view India’s principled stand that (IFAD) was set up in 1977 as the 13th specialized agency replenishment of funds aimed at poverty reduction should of the United Nations. It is dedicated to eradicating poverty see a real growth over past replenishments and with a and hunger in rural areas of developing countries. 176 view to enhance its engagement with Africa and AfDB, countries are members of the IFAD, and these are India decided to opt for the consolidation (or medium) grouped into three countries, comprising List - A: scenario where our contribution would be UA 12,364,333 Developed Countries, List - B: Oil Producing Countries (or `104.58 crores), paid with the option of 10 year and List - C: Developing Countries. India is in List - C. standard encashment schedule. This meant a 57% 10.16.2 India is one of the founder members of increase over our ADF-12 contribution of `66.33 crores International Fund for Agricultural Development (IFAD), in INR terms (31% increase in UA terms over ADF-12 and has so far contributed US$ 147.0 million towards contribution of UA 9,427,031 – Unit of Account is the terms IFAD's resources. India has pledged to contribute an of replenishment). Out of total pledge of ` 104.58 crore amount of US$ 37 million to the 10th Replenishment cycle towards India’s contributions to the ADF-13, Promissory of IFAD (during 2016-18). Note of an amount of `68.33 crore have been issued in favour of ADF during 2013-14 and 10.16.3 During the 39th Session of Governing Council 2014-15 which will be encashed as per the India’s (GC) of IFAD, India's Governor to the Fund was encashment schedule of ADF-13. Third and Final unanimously elected as the Chairman of the GC for a instalment of India’s contribution will be paid in 2015-16. two year term. India is also a member of the Executive Board of IFAD. 10.15.11 Contribution to Multilateral Debt Relief Initiatives (MDRI) of ADF : India is also a participant in MDRI 10.16.4 Since 1979, IFAD has provided financial initiative of ADF. This is in addition to regular ADF assistance to 28 projects in India in the field of agriculture, 35Annual Report 2015-2016 rural development, tribal development, women's 10.18 The Global Alliance for Vaccines and empowerment and natural resource management with a Immunizations (GAVI Alliance): commitment of US$ 928.6 million (approx.). Out of these, 18 projects have completed. Presently, ten projects with 10.18.1The GAVI Alliance (formerly the Global Alliance a total assistance of US$ 452.04 million are under for Vaccines and Immunization) was founded in 2000 to implementation in various states. reduce the historical gap in access to life saving vaccines and reduce child mortalities. GAVI’s mission is to save 10.16.5 The Department of Economic Affairs had posed children’s lives and protect people’s health by increasing a proposal for a top-up assistance of US$ 21 million approximately for "Post Tsunami Sustainable Livelihood access to immunization in poor countries. GAVI is Programme, Tamil Nadu" in July, 2015 which has since estimated to have contributed to the immunization of been approved by the Fund. additional 500 million children and in prevention of approximately seven million future deaths with 10.16.6 Since 2013, IFAD loans are provided to India at contribution of about US$ 12 billion till 2015. a fixed interest rate of 1.25 percent plus a service charge of 0.75 percent per annum, and with a maturity period of 10.18.2 India is not only a recipient, but also a contributor period of 25 years including a grace period of 5 years. to GAVI Alliance. India has committed to contribute USD However, the project which were signed prior to the 1 million per annum for the years 2013 – 14 to 2016 – 17 introduction of a new Blend Term of loan by IFAD in 2013, to the GAVI Alliance. A ‘Contribution Agreement’ for this IFAD loans are repayable over a period of 40 years purpose between Department of Economic Affairs, on including a grace period of ten years and carry no interest behalf of Government of India, and GAVI Alliance was charges. signed in January, 2014. The third instalment of India’s 10.16.7 The Loan Agreement for a new Project "Odisha contribution GAVI Alliance for 2015-16 has been paid in PTG Empowerment and Livelihood Improvement November 2015. A framework agreement between the Programme (OPELIP)" was signed between Government Government of India and GAVI Alliance was signed on of India and the IFAD on 18th March, 2016 for an external 16.6.2015. assistance of US$ 51.2 million from the Fund. 10.17 Global Fund to Fight AIDS, 11. Multilateral Relations Division Tuberculosis and Malaria (GFATM) 11.1 G-20 10.17.1 The Global Fund to Fight AIDS, Tuberculosis and 11.1.1 G-20 is a premier forum for international Malaria (The Global Fund/GFATM) is an international cooperation on issues of global economic and financial financing organization that aims to attract and disburse agenda and to promote open and constructive policy additional resources to prevent and treat HIV and AIDS, discussions between developed and Emerging Market Tuberculosis and Malaria. The organization is a public– Economies. India as a member of G20 has been actively private partnership with Secretariat at Geneva, engaged in global economic governance and in shaping Switzerland. The organization began operations in the world order. January 2002. GFATM supported programs have estimated to have saved 17 million lives since 2002. 11.1.2 The first G20 Summit was held in November, 2008 in Washington DC under the shadow of the greatest 10.17.2 As per the ‘Multi-Year Contribution Agreement’ financial crisis in the postwar era. This was followed by signed between Government of India, GFATM and IBRD ten summits held in London (April, 2009), Pittsburg (as Trustee of the Trust Fund for Global Fund) on 27th (September, 2009), Toronto (June, 2010), Seoul January 2014, India has committed USD 16.50 million to (November, 2010), Cannes (November, 2011), Los Cabos GFATM for the period 2013 – 2016. India’s contributions (June, 2012), St. Petersburg, (September, 2013) for the year 2015 USD 4.5 million was paid in June 2015. ,Brisbane (November 2014) and Antalya (November 2015). The current Presidency of G20 is with China and 10.17.3 A country framework agreement has been signed the Summit is scheduled to be held in Hangzhou on 4-5 by the DEA with Global Fund on 30.9.2015 as per the September, 2016. requirement of Global Fund’s new funding model. The DEA has also signed Grant Confirmation Agreements for 11.2 Major Outcomes of the G20 Turkish incremental grant of US$ 189,486,644, US$ 195,921,415 Presidency in 2015 and US$ 61,062,277 in respect of HIV/AIDS, Tuberculosis and Malaria programs respectively with the Global Fund 11.2.1 The G20 Turkish Presidency in 2015 had pledged under the new funding model. These programmes are to structure leaders’ discussion around the following key implemented by Ministry Of Health and Family Welfare. pillars: 36Department of Economic Affairs I  Strengthening the Global Recovery and Lifting on agriculture, development, public stock holding the Potential as well as the prompt ratification and implementation of the Trade Facilitation  Enhancing Resilience Agreement.  Buttressing Sustainability  Leaders endorsed the package of measures developed under the ambitious G20/OECD Base 11.3 G20 Summit 2015 Erosion and Profit Shifting (BEPS) project to reach a globally fair and modern international tax 11.3.1 The G20 Summit 2015 was held on 15-16 system November 2015 in Antalya, Turkey. The Summit marks the culmination of a year long process of inter-  Leaders committed to building a global culture governmental negotiations and discussions among G20 of intolerance towards corruption by endorsing countries on issues of economic and financial the G20 High-Level Principles on Integrity and cooperation. India was represented in the Summit by Transparency in the Private Sector, G20 Anti- Hon’ble Prime Minister Shri. Narendra Modi accompanied Corruption Open Data Principles and the G20 by officials from DEA and MEA. Principles for Promoting Integrity in Public Procurement. 11.3.2 At this year’s Summit in Antalya, Leaders committed to undertake a number of concrete actions to  Leaders agreed to develop an action plan in 2016 strengthen the global economy, make global growth more to further align work with the 2030 Agenda and inclusive, enhance the resilience of the international endorsed the G20 Action Plan on Food Security financial system, mobilize investment to raise long-term and Sustainable Food Systems, to improve global growth, strengthen multilateral trading system and food security and nutrition. implement previous commitments on economic reform and labour markets.  Leaders agreed to take concrete actions towards commitments to reduce the global average cost 11.3.3 Significant decisions adopted at the recently of transferring remittances to five percent with a concluded G20 Summit 2015 includes: view to align with the SDGs and Addis Ababa Action Agenda  Leaders agreed to implement sound macroeconomic policies in a cooperative  Leaders also underscored their commitment to manner, implement fiscal policies flexibly to take underscore our commitment to reaching an into account near-term economic conditions, so ambitious agreement in Paris that reflects the as to support growth and job creation, and principle of common but differentiated promote financial stability through appropriate responsibilities and respective capabilities, in light frameworks, including by ensuring an adequate of different national circumstances. global financial safety net. 11.4 G20 Chinese Presidency 2016  Leaders agreed to the goal of reducing the share of young people who are most at risk of being 11.4.1 China has taken over the G20 Presidency from permanently left behind in the labour market by 1st December 2015. The Chinese Presidency will be 15% by 2025 in G20 countries. based on the following themes:  Leaders agreed to address current opportunities  Innovation as an important driving force for and challenges brought into the labour markets global sustainable growth. through such issues as international labour mobility and the ageing of populations.  An invigorated world economy based on and requiring the participation of all stakeholders.  Leaders encouraged Multilateral Development Banks (MDBs) to mobilize their resources,  A globalized world, with interconnectivity between growth and development in different countries optimize their balance sheets, and catalyze private sector funding  More inclusive growth, through concrete actions to reduce inequalities and imbalances in global  Leaders committed to working together for a development. successful Nairobi Ministerial Meeting that has a balanced set of outcomes, including on the 11.5 Chinese Presidency Priorities in G20 Doha Development Agenda, and provides clear guidance to post-Nairobi work. Leaders agreed 11.5.1 Under the theme of the Summit “Towards an on need to increase efforts to implement all the Innovative, Invigorated, Interconnected and Inclusive elements of the Bali Package, including those World Economy”, the Chinese Presidency has organized 37Annual Report 2015-2016 the agenda for G20 Sherpa Track in 2016 around four 11.7 Establishment of New Development baskets of priorities, namely: Bank (NDB) 1) Breaking a new path for growth: The proposed 11.7.1 New Development Bank has been established deliverable by China in this basket is to launch a by BRICS countries in Shanghai, China. The Bank will Blueprint / Framework focusing on mid-to-long- mobilize resources for infrastructure and sustainable term growth in Hangzhou incorporating the development projects in BRICS countries, other emerging following elements: innovation, structural reform, economies and developing countries. It will complement new industrial revolution and digital economy. the existing efforts of multilateral and regional financial 2) More effective and efficient global economic institutions. Mr. K.V. Kamath, has taken over as the first and financial governance; This agenda will President of the Bank. NDB is expected to make its first cover international financial architecture, financial lending by April, 2016. sector reforms, international tax, green finance, 11.8 Establishment of Brics Contingent energy and anti-corruption and aims at ensuring Reserve Arrangement (CRA) a fair, efficient and effective institutional environment that facilitates growth and enhances 11.8.1 Most of the foundation work for the establishment resilience of CRA by BRICS countries has been completed in 2015. 3) Robust international trade and investment; The Governing Council Procedural Rules and Standing The proposed deliverables under this basket are Committee Procedural Rules were approved by the a) Reinforcing Trade and Investment Cooperation Governing Council in its inaugural meeting held on Mechanism b) Supporting the Multilateral Trading September 4, 2015. The establishment of a self-managed System c)Promoting Global Trade Growth contingent reserve arrangement would have a positive d)Promoting Inclusive and Integrated Global precautionary effect, help BRICS countries forestall short- Value Chains e)Enhancing Cooperation and term liquidity pressures, provide mutual support and Coordination on Global Investment Policy further strengthen financial stability. It would also 4) Inclusive and interconnected development: contribute to strengthening the global financial safety net To implement the 2030 Agenda for Sustainable and complement existing international arrangements as Development, the G20 will prepare an Action an additional line of defense. Plan for leader’s consideration at the 2016 11.9 Concessional Financing Scheme Summit. 5) The G20 Summit 2016 will be held on 4-5 11.9.1 Government of India has approved the proposal September 2016 in Hangzhou, China. for providing a concessional financing scheme to support Indian companies bidding for strategically important 11.6 India Becomes a Signatory to Asia infrastructure projects abroad on 16th September 2015. The salient features of this Scheme are as under: Infrastructure and Investment Bank (AIIB) (a) The repayment of the loan would be guaranteed by the foreign Government. 11.6.1 AIIB is a multilateral development bank mooted by China, which will foster sustainable economic (b) The strategic importance of a project, to deserve development, create wealth and improve infrastructure financing under this scheme, will be decided, on connectivity in Asia by investing in infrastructure and other a case by case basis, by a Committee chaired productive sectors. On June 24th 2015, the Union Cabinet by Secretary (DEA) and will have members from approved that India may sign the Articles of Department of Expenditure, Ministry of External Association(AoA) of AIIB. India and 49 other Prospective Affairs, Department of Industrial Promotion and Founding Members of AIIB signed the AoA in a signing Policy, Department of Commerce, Department ceremony held in Beijing on June 29th, 2015. In its of Financial Services and Ministry of Home Cabinet Meeting held on 18th November, 2015 the Affairs. The Deputy National Security Adviser will proposal to ratify the AoA has also been approved. The also be a member of this Committee. Presidential assent has been received and the signed (c) The Committee will have powers on conditions instrument of ratification has been deposited with the within reasonable limits, on a case by case basis, Depository (Government of People’s Republic of China). during these first two years of implementation of The inaugural meetings of the Board of Governors and the Scheme. the Board of Directors and AIIB was held on January 16- 18, 2016 in Beijing, China. (d) The projects financed under these terms will be 38Department of Economic Affairs I monitored by the Committee. The Committee will resolved in the short-term itself. Bhutan had availed the also consider financing strategic projects through facility in 2013 and Sri Lanka availed it in 2015. India has Public Sector banks other than EXIM Bank on also provided adhoc/special swap facility worthUSD 1.1. the same terms. billion to Sri Lanka in 2015. (e) The Committee may insist on sourcing of at least 11.13 United Nations Development 75% of the project requirements from India, if it Programme (UNDP) is found compatible with the requests for bids. 11.13.1 Government of Indian and the United Nations (f) The experience with this scheme will be Development Programme have entered into an evaluated after two years. agreement to govern UNDP’s assistance to the Special Agreement concerning Technical Assistance between UN 11.10 Creation of Special Purpose Facility Organizations and the Government of India. The country- 11.10.1 This Facility has been set up following the specific allocation of UNDP resources is made every five announcement of the Hon’ble PM in the SAARC Summit years under the Country Programme Action Plan (CPAP) held in November, 2014. The Facility has been created which usually synchronizes with India’s five year plans. with the aim to finance infrastructure projects in the South The aim of the current CPAP 2013-2017, signed on Asian Region and has been set up in the new wing of 1.3.2013, is to support the Government’s efforts to EXIM Bank’s Delhi office. The operational policy promote rapid, inclusive sustainable growth that benefits guidelines of this Facility are being currently drafted. the most excluded through partnerships with Ministries, Departments and civil society. The ongoing CPAP 2013- 11.11 SAARC and SAARC Development 2017 is in harmony with the 12th five year Plan’s thrust Fund (SDF) on inclusive growth and concentrates on the four UN Development Action Framework (UNDAF) outcomes (i) The 7th Meeting of SAARC Finance Ministers namely: a) inclusive growth and poverty eradication; b) and Finance Secretaries were held on 19th and democratic governance; c) sustainable development; d) 20th of August, 2015. The Indian delegation for gender equality and inclusion. It primarily concentrates these Meetings were led by Shri. Jayant Sinha, on the goals namely: democratic governance; poverty Minister of State (Finance). Some of the major issues that were deliberated in these meeting reduction; HIV and Gender Equality and inclusion; were currency swap arrangements among disaster risk management and energy and environment SAARC member nations, facilitating greater flow focusing on nine states: Bihar, Chhattisgarh, Jharkhand, of capital and intra-regional investment and Madhya Pradesh, Orissa, Rajasthan, Assam, developments in SAARCFINANCE. Maharashtra and Uttar Pradesh. The total resource allocation for the Country Programme 2013-2017 stands (ii) The 4th Meeting of the SDF Governing Council at US $ 260 million out of which projects worth US$ 249.23 was held on 20th August, 2015. The meeting million has already been sanctioned. India’s annual mainly discussed on the ways of strengthening contribution to the UNDP has been to the extent of US $ SAARC Development Fund and establishing its 4.5 million. ways forward. (iii) The 21st and 22nd Board Meetings of SAARC 12. Aid Accounts & Audit Division Development Fund were held in April and August 2015 respectively in Kathmandu, Nepal. (AAAD) 11.12 Framework on Currency SWAP 12.1 Introduction Arrangement for SAARC Member Countries 12.1.1 AAAD under Department of Economic Affairs implements the financial covenants of external Loans/ 11.12.1 The Union Cabinet on 18th of November 2015 Grants obtained/ received by Government of India from has approved the extension of the validity of the various Multilateral and Bilateral donors. Main functions Framework on Currency Swap Arrangement for SAARC handled by this Division are processing claims received Member Countries with amendments for two more years from Project Implementing Authorities, to draw down upto November 2017. The Framework aims at providing funds from various donors and timely discharge of debt a line of funding for short term foreign exchange servicing liability of Government of India. Besides, this requirements or to meet balance of payments crises till Division is responsible for maintaining loan records, longer term arrangements are made or the issue is External Debt Statistics, Compilation of various 39Annual Report 2015-2016 management Information Reports, Publication of External 12.3.4 In order to familiarize the officers/staff of the PIAs Assistance Brochure on annual basis, and framing of training on E-submission is being organized by this estimates of External Aid Receipts and Debt servicing. Division periodically. 170 Officers/staff members of In addition, audit of Authorizations issued by DGFT offices different PIAs were imparted training during 2015-16. As for Export Promotion is also conducted by this Division. a result of these initiatives, 425 e- claims have been The division is ISO 9001:2008 certified since 2007 for its received, processed and disbursed in the financial year functions related to External Assistance. 2015-16. 12.2 Performance/Achievement during 12.4 Standards & Improvements in service Financial Year 2015-16 (till 15th delivery January, 2016) 12.4.1 All the activities of this Division have been 12.2.1 Receipt of External Loans/ Credits in the financial organized hierarchically and standards in terms of time year 2015-16 stands at `21993.13 crore and Assistance span at each level for their accomplishment have been in the form of Cash Grant was `1827.45 crore. Debt defined. The standards set out are being adhered to by service payments made during 2015-16 are `18660.91 close monitoring. Clients of this divisions are well defined crore on account of principal repayment, `2783.76 crore consisting of three group i.e. PIAs, Funding Agencies and on account of interest payment and `113.65 for other stakeholders. Service to be rendered to these commitment charges & other charges. groups is also well defined i.e. smooth and quick disbursal of the Loans/Grants, timely debt servicing and to provide 12.3 E-Governance managements information as and when required. 12.3.1 Activities of AAAD are computerized since April 12.4.2 As part of the ISO system, quarterly Management 1999. The “Integrated Computerised System” (ICS), review Meetings (MRMs) with all section heads are held covers all activities in the loan cycle including preparation where performance is critically reviewed and methods/ of budget Estimates for External Assistance receipt and suggestions for maintenance/improvement of the service debt servicing, processing of claims, repayment of debt delivery standards discussed. and maintenance of Debt records. The report generation system has been upgraded during 2013-14 to allow 12.4.3 Above system is being followed with a view to generating various reports using multiple options, to ensure quality service delivery in a defined time frame. provide more focused input for replies to Parliamentary Questions etc. 12.5 Audit under Export Promotion 12.3.2 The Division’s Web site hhtp://aaad.gov.in 12.5.1 AAAD carries out audit of Export Licenses issued disseminates data on External Assistance received and by Director General of Foreign Trade located at various repayment made along with status of various activities in stations. During the financial year 2015-16 (upto this division for benefit of Credit Divisions of DEA, State 31.12.2015) total 30374 Files relating to 25 regional Governments, PIAs, Donors, general public and other offices were audited and 1435 audit memos issued. A stakeholders. This website is updated on daily basis. sum of `13.50 Crore was recovered during the period, Comprehensive data about Disbursed and Outstanding by DGFT offices based on audit observations made by Debt (DOD) in respect of External Sovereign borrowing this office. and soft copies of Annual External Assistance Brochures are also available on the website for easy reference of all stakeholders. 13. Administration Division 12.3.3 E-Governance by way of accepting and 13.1 Functions processing/forwarding of the draw down claims has been initiated by this Division. PIAs for World Bank and ADB 13.1.1 Administration Division is responsible for projects submit e-claims along with Statement of personnel and office administration, implementation of Expenditure (SOE)/ Interim Unaudited Financial report Official Language policy of the Government, (IUFR). This results in avoidance of time/transit loss of implementation of the Right to Information Act, 2005 SOE claims and faster disbursals. Claims to World Bank, Grants-in-aid, redressal of public grievances, training of are also processed in E-disbursement mode through officials, Record Retention Schedule, Complaints World Bank software/client connection by this division. Committee on Sexual Harassment of Women Employees Claims disbursed by World Bank within seven days have etc. increased from 70% to 90%. Information capture under e-disbursement (viz. category-wise expenditure, details 13.2. Staff Strength or prior review contract) is more detailed as compared to before. 13.2.1 The staff strength in Department of Economic 40Department of Economic Affairs I Affairs and its attached/sub-ordinate offices/statutory (ii) Details of the Department’s functions along with bodies along with the representation of Scheduled Castes its functionaries etc. have been placed on the (SCs), Scheduled Tribes (STs), Other Backward Classes RTI portal of the Departments official website (OBCs) and persons with Disabilities therein is given in (www.finmin.nic.in) as required under section Annex. I & II respectively. 4(1) (b) of the RTI Act. 13.3. Complaints Committee on Sexual (iii) All Under Secretaries/Deputy Director/Assistant Director/Economic Officer level officers have Harassment of Women Employees been designated as Central Public Information 13.3.1 In compliance with the Supreme Court’s Officers (CPIOs) under section 5 (1) of the Judgment dated 13 August, 1997 in the Visakha Case Act, in respect of subjects being handled by them. relating to preventions of sexual harassment of women (iv) All Deputy Secretaries/Directors/Addl. Economic at work place, a Complaints Committee for considering Adviser have been designated as First Appellate complaints of sexual harassment of women employees Authorities in terms of Section 19 (1) of the Act, in Department of Economic Affairs is in existence in the in respect of US/DD working under them and Department. designated as CPIOs. 13.4 Training of Staff Members (v) To facilitate the receipt of applications under the RTI Act, 2005 a provision has been made to 13.4.1 Department of Economic Affairs deputes its receive the applications at the facilitation counter officials for training to ISTM and other institutes to of the Department at Gate No.8. The applications increase their efficiency and improvement in the quality so received are further forwarded by the RTI of their work. During the period 1.1.2015 to 31.12.2015, section to the CPIOs/Public Authorities a total of 29 officials/officers of this Department were Concerned. deputed to Institute of Secretariat Training and Management (ISTM), New Delhi for undergoing cadre (vi) During the calendar year 2015, 1990 RTI trainings and other trainings programmes. applications and 159 appeals, including 1537 online applications and 124 appeals, were 13.5 Redressal Of Public Grievances: received. An amount of `13,087/-(Rupees Thirteen thousand and eighty seven only) was 13.5.1 A Centralized Public Grievances Redressal And collected as fee under the RTI Act. Monitoring System (CPGRAM) is operational within the Government which attends to all the Public Grievances 13.7 Use of Hindi in Official work related to various Ministries/Departments. During the year 2015 a total of 5917 fresh public grievance cases were 13.7.1 During the year under report, progress made in received in the Department besides 416 brought forward the implementation of various provisons under the Official from the previous year. Out of these 6333 cases, 5701 Language policy of the Government continues to be cases were disposed off during the year. reviewed. 13.7.2 All documents were provided bilingually to the 13.5.2 Joint Secretary (ABC) has been nominated as Parliament. Section 3(3) of the Official Language Act, the Public Grievances Officer of Department of Economic 1963, and Rule 5 of Official Language Rules, 1976 made Affairs. His contact details have been displayed on the thereunder and other instructions issued by the PGRM portal (http:pgportal.gov.in) Department of Official Language were fully complied with. Following steps were taken in the Department to promote 13.6 Right To Information Act, 2005 the use of Hindi in official work during the year which includes : 13.6.1 In order to facilitate dissemination of information under the provisions of the Right to Information Act, 2005, i. Annual Programme for the year 2015-16 issued Department of Economic Affairs has initiated the following by the Department of Official Language was actions: circulated to all the attached/subordinate offices/ divisions /sections under the Department and all (i) An RTI Section has been set up to collect, efforts were made to achieve the targets fixed transfer the applications under the RTI Act, 2005 therein; to the Central Public Information officer/Public Authorities concerned and to submit the quarterly ii. Hindi Salahkar Samiti of the Department of returns regarding receipt and disposal of the RTI Economic Affairs (including Department of applications/appeals to the Central Information Financial Services) has been reconstituted vide Commission. F.11011/1/2014-HIC dated 7th October, 2015 41Annual Report 2015-2016 and published in the Gazette of India, part-I, Ad-hoc Committees and Commissions set from time to Section–I; time and research scholars from the various universities in India as well as abroad. This Library also serves as iii. In order to remove the hesitation amongst the Publications Section of the Ministry, coordinating in officials to do their official work in Hindi and to the procurement and distribution of official documents acquaint them with the rules and other with the various institutions/individuals on demand in India instructions regarding the Official Language and abroad. policy of the Government, Hindi workshop were organized. The participants were given rewards 13.8.1.2 Finance Library has been categorized as and reference and helping literature; Grade III Library on the basis of Department of iv. Hon’ble Minister of Finance in his “Message” on Expenditure’s O.M. No. 19(1)/IC/85 dated 24.07.1990. the occasion of Hindi day on 14th September, All the posts in the library are ex cadre posts. 2015 appealed to the officers and staff of the 13.9 Collection Ministry of Finance as well as the Offices under its control to do their official work in Hindi; 13.9.1 Library has specialized collection of more than two lakh documents on Economic and Financial matters v. To create a conducive atmosphere in the and subscribe to more than 800 periodicals/newspapers Department for promoting the progressive use annually and databases like Agriwatch and Indiastate. of Hindi, “Hindi Month” was celebrated during Access to e-journals and back-filed collection through 1st to 30th September, 2015; JSTOR is also available. vi The authors Under the Scheme of incentives on 13.10 Electronic Resources Original Book writing in Hindi on Economic subjects are awarded the first, second and third Electronic Resources Include The Following CD- prizes of `50,000/-, `40,000/- and `30,000/- ROM Databases respectively. It is an ongoing scheme; DDO Manual vii The website of the Department is bilingual. Besides other material, all Budget documents, DGCI&S - Foreign Trade Statistics of India Economic Survey and other publications and DGCI&S - Statistics of foreign Trade of India important circulars are uploaded simultaneously in Hindi and English; DGCI&S - Monthly Statistics of Foreign Trade of India vii Some of the sections of the Department and other offices under its control were inspected to Government Accounting Rules, 1990 see the extent upto which the Official Language IMF - Balance of Payments Statistics Act, the rules made thereunder, the Annual Programme and the orders and instructions etc. IMF - Direction of Trade Statistics relating to Official Language are being complied IMF - Government Finance Statistics with; and IMF - International Financial Statistics viii Meetings of the Official Language India - Civil Accounts Manual, rev. 2nd edition, Implementation Committee of the Department 2007 were held regularly in which the progress of implementation of Official Language policy was India - Economic Survey reviewed and appropriate action on the India - Pay Commission Report (1st, 2nd, 3rd, suggestions given therein was taken. 4th, 5th and 6th) 13.8 Finance Library & Publication India- Union Budget Section; 2015-16 List of Major and Minor Heads of Accounts RBI – Banking Statistics & Basic Statistical 13.8.1INTRODUCTION Returns 13.8.1.1 Finance Library & Publication Section was Receipts and Payments Rules established in 1945. Finance Library functions as the The World Bank - World Development Indicators Central Research and Reference Library in the Ministry and caters the needs of Officials of all the Departments, The World Bank - Global Development Finance 42Department of Economic Affairs I UN- International Trade Statistics Year Book 13.14.2 Other works: Modernization and infrastructure improvement was under taken by the Library and 90% Vigilance Manual work has been completed 13.11 Services 14 Bilateral Cooperation Division 13.11.1 Library provides different kinds of services viz. lending, inter-library loan, consultation, reprographic, circulation of newspapers and magazines, reference 14.1 Bilateral Official Development service, current awareness service through “WEEKLY Assistance policy: BULLETIN” as well as providing services through e-mail. The Finance Library also undertakes the work of 14.1.1 India has been accepting external assistance distribution of publications of Ministry of Finance and from bilateral partners in the form of loans, grants and Reserve Bank of India to State Governments, Foreign technical assistance for development of infrastructure, Governments and renowned institutions in India as well social sector and for enhancement of knowledge/skills as abroad. of Indian nationals at both Centre and States level. As per the guidelines issued by this Department in 2005, 13.11.2 A useful links is also being provided on intranet bilateral development assistance can be accepted from by the Library which helps the readers in search and download full text of reports and data. all G-8 countries, namely USA, UK, Japan, Germany, France, Italy, Canada and the Russian Federation as well 13.11.3 The Finance Library also undertakes the work as from the European Commission. European Union scanning the public grievances appearing in the leading countries outside the G-8 can also provide bilateral newspapers relating to the Department of Economic development assistance to India provided they commit a Affairs. minimum annual development assistance of USD 25 13.12 Publications million. 13.12.1 Finance Library brings out three (print + online) 14.1.2 The existing policy on bilateral Official publications i.e. “Weekly Bulletin”, “Current contents”, and Development Assistance (ODA) was reviewed in “Annual Bibliography”. November, 2015 and it has been decided that ODA may be accepted from other countries also. Finance Minister 13.13 Digitial Records: and External Affairs Minister, with the approval of Prime 13.13.1 Finance Library undertook a project in which the Minister have been authorized to accept any such full text of Ministry of Finance, Gazette Notifications proposal. It has also been decided to accept offers of published in the Pt. 2 Sec. 3 Sub-section (i) (ordinary)] bilateral assistance in the form of “special loans” (i.e. for the year 1975 to 1980 have been digitized. loans which have conditions for sourcing of procurement 13.13.2 The Library also undertook a project for full text or executing agency from the funding country) in addition digitization of Indian Official Documents relating to to the assistance on the normal route. A revised set of Economic and Finance Subject (Center and State). The guidelines have been issued in December, 2015. purpose of this project is that the whole document will be 14.2 Germany made available on line for the use of readers of this Ministry. The images of documents are being transferred 14.2.1 The Federal Republic of Germany is providing into server and server will be attached with intranet financial and technical assistance to India since 1958. website of the Library and thus the e-documents can be The present priority areas for bilateral Development access on finance.nic.in. The Library has digitized more Cooperation Programme are: energy; environmental than 21 lac pages so far. policy; protection and sustainable use of natural resources 13.14 Computerisation and sustainable economic development. The Government of Germany made total commitment of € 13.14.1The Library has computerized almost all its 1490.60 Million (approx. 10880 crore) in 2015 for financial activities. The Library uses LIBSYS Library package for as well as technical assistance for implementing various database management, retrieval, Library automation and projects in India. other in-house jobs. The internet facility is also available in the library through which information is provided to the 14.2.2 The agreements for € 310 million (approx. `2,263 officers of Ministry of Finance. crore) for five projects were signed during the year Accessibility of the online data is concern; a link from 2015-16 (up to December 2015). During 2015-16 (upto internet site “finance.nic.in” is made available to December 2015), Germany has disbursed financial access the information. assistance of `525.61 crore under the Government 43Annual Report 2015-2016 projects. The total disbursement including the Non- under implementation at Central and State level with DFID Government projects during this period was `994.34crore assistance. (approx.). 14.7 Agreements signed during 2015-16 14.3 France 14.7.1 During 2015-16 following three agreements have 14.3.1 The Government of France has been extending been approved: development assistance to India since 1968. The present  Energy Access Policy Fund (EAPF) with the French development assistance is being provided through DFID assistance of £ 5 million. the French Agency for Development (AFD). The Memorandum of Understanding in this regard was signed  Economic Policies & Prosperity Partnership between Department of Economic Affairs and AFD on Programme (EPPP) with the DFID assistance of 29.09.2008. This MoU was revised in May 2012. The £ 5 million. priority areas for AFD financing in India are projects contributing to the Sustainable Management of Global  Growth, Resources, Opportunities & Wealth creation in Bihar (GROW-Bihar) with the DFID Public Goods, inter-alia (i) energy efficiency and assistance of £ 5 million. renewable energy within the framework of the National Action Plan on Climate Change (NAPCC), (ii) urban 14.8 Brief on India-European Union (EU) infrastructures (public transport, water, etc., through Development Cooperation sustainable development projects and infrastructure development programmes such as JNNURM or 14.8.1 The European Union (EU) has been providing UIDSSMT, and (iii) the preservation of bio-diversity. AFD development assistance to India in the form of Grants. has proposed to make commitment of € 250 million The priority areas include environment, public health and (approx. `1,800 crore) in 2015 for financial assistance education. EU implements development cooperation for implementing two projects in India. programmes through Country Strategy Paper (CSP). 14.4. India-UK Bilateral Development 14.8.2 EU had committed to provide an amount of Euro Cooperation Programme 260 million and Euro 105 million for MIP-I and MIP-II respectively. The major programmes of Government of 14.4.1 The United Kingdom (UK) has been providing India which has received/has been receiving EU aid along development assistance to India since 1958. with other development partners include Sarva Shiksha Development assistance from UK in the form of grants, Abhiyan (SSA) (Euro 70 million) and National Rural Health is received mainly for achieving the Millennium Mission (NRHM)/Reproductive Child Health (RCH (Euro Development Goal (MDG) in the areas of health, 110 million). education, administrative reforms, slum development etc. 14.9 Investments in India by the European 14.4.2 The assistance from the UK, through its Investment Bank (EIB) Department for International Development (DFID), flows to mutually agreed government projects and programmes 14.9.1 The European Investment Bank is the European in the form of financial and technical assistance. Presently, Union’s financing institution which was established in Odisha, Madhya Pradesh and Bihar are the three focus 1958 under the Treaty of Rome (1957) to provide states of DFID. financing for capital investment. The members of the EIB are the Member States of the European Union, who 14.5 Changed arrangements in India-UK have all subscribed to the Bank’s capital. Outside the Development Partnership European Union, EIB financing operations are conducted principally from the Bank’s own resources but also, under 14.5.1 The UK Government announced on 9th mandate, from Union or Member States’ budgetary November 2012 that their financial grant aid to India will resources. Under these arrangements, the EIB’s funds end henceforth but the existing financial grant projects are utilised to finance investments in countries signatory will be completed responsibly as planned by 2015. All to Co-operation Agreements with the EU. new development cooperation programmes will be either Technical Assistance (TA) programmes focused on 14.10 EIB in India: sharing skills and expertise, or in investments in private 14.10.1 EIB’s activities in India emanate from the Joint sector projects focused on helping the poor. Both sides Action Plan (JAP) of the Strategic Partnership between have agreed to this arrangement. the EU and India. EIB intends to increase its lending 14.6 On-going projects and programmes activities focusing mainly on environmental sustainability and large infrastructure project through FDI, transfer of 14.6.1 Presently, there are 26 projects/programmes technology and know-how. 44Department of Economic Affairs I 14.10.2 EIB investments in India are governed by the 14.12.5The Government of India has identified North- Framework Agreement for Financial Cooperation. This Eastern Region as one of the key areas for development. agreement was signed between India and EIB on 25th Government of Japan has committed JICA ODA loan for November, 1993 by the Charged’ Affaires of India at North East Road Network Connectivity Improvement Brussels. The Framework Agreement was initially valid Project (Phase I) (I) of JPY 67170 million (= ` 3630 crore for a period of three years and later it was extended sine approx.) during FY 2015-16. die vide amendment dated 24th November, 1998. 14.13 Grant Aid 14.11 EIB loans The Government of Japan provides Grant Aid to 14.11.1 Unlike loans received from sovereign bilateral India under the following sectors and criteria: partners or multilateral institutions, EIB loans are not (i) Criteria: Official Development Assistance (ODA) loans and therefore, loans from EIB are less concessional in (a) Development impacts; comparison to ODA loans. ODA loan is meant only for (b) Utilization of Japanese technology/know- Central/State Government or PSUs projects, while EIB how and likelihood of its dissemination loans can be availed by both private and public sector to other areas. entities. It has been decided to provide Government of India’s Guarantee in respect of EIB loans to PSUs/State (ii) Sectors: entities on case to case basis. (a) Transport Sector, including projects using 14.12 Japan - Official Development information and communication technology Assistance (ICT) and road projects with slope protection measures (Potential line ministries could 14.12.1 Japan has been extending Official Development include Ministry of Road Transport and Assistance (ODA) to India since 1958. Japanese ODA in Highways, Ministry of Urban Development the form of loan assistance, grant aid and technical etc.) assistance to India is received through Japan International (b) Power Sector including small-scale hydro Cooperation Agency (JICA). Japan is the largest bilateral power project and solar power projects donor to India. (potential line ministry could include Ministry 14.12.2 The Japanese ODA loans to India are mostly of Power, Ministry of New and Renewable project tied. The interest rates are 1.4% per annum for Energy etc.) general projects with a 30 years tenure including a grace During 1st January, 2015 to 31st December, 2015, 4 period of 10 years. For environmental projects, the proposals were forwarded to the Embassy of Japan for interest rate is 0.30% per annum with a 40 years tenure the approval. including grace period of 10 years. In addition, Government of Japan has introduced Front End Fee which is payable one time @ 0.2% of the loan amount. If disbursement of the project is completed within the 14.14 Technical Cooperation Programme agreed period, JICA will reimburse 0.1% of Front End 14.14.1 Technical Cooperation aims at transfer of Fee to the borrower. The Front End Fee has been technology and knowledge in a bid to develop and introduced from April, 2013 onwards in place of the improve human resources and thus contribute to the commitment charges. Socio-Economic Development of India. The Technical 14.12.3 The Government of Japan has committed JPY Cooperation covers a broad spectrum of fields ranging 294.290 billion (`15597 Crores approx.) for eight projects from Basic Human Needs to Agriculture and Industrial to India from January 1, 2015 to December 31, 2015. As Development. Priority areas for JICA in India are (i) public on December 31, 2015, sixty five projects were under health and medical care, (ii) agriculture and rural implementation with Japanese loan assistance. The loan development, (iii) environmental conservation and amount committed for these projects is JPY 1851.818 protection, and (iv) improvement of economic billion (`99187 Crores approx.). The cumulative infrastructure. commitment of ODA loan to India has reached JPY 14.14.2 The main components of Technical Cooperation 4467.292 billion on commitment basis till December 31, are (i) Project Type Technical Cooperation Projects (ii) 2015. Development Study, (iii) Dispatch of Experts, (iv) 14.12.4The ODA loan disbursement to India from Japanese Overseas Cooperation Volunteers (JOCV) January 1, 2015 to December 31, 2015 was JPY 181.207 Programme, (v) Follow -up Cooperation Programme, (vi) billion (`9541.25 Crores). Training of Indian Government personnel, (vii) Third 45Annual Report 2015-2016 Country Training Programme involving training of Japanese experts to Indian organizations to impart personnel from different countries in India. training and conducts training programmes in Japan. 14.14.3 There are 3 ongoing projects under Technical 14.19 Norway Cooperation Programme. 14.19.1Till date, 24 NGO projects have been cleared 14.15 JOCV Programme since 2005. Bilateral meetings are periodically held between senior officials of Finance Ministries of India and 14.15.1 During 1st January, 2015 to 31st December, Norway. 2015, proposals from 3 Institutes have been posed to Embassy of Japan and 10 Japanese volunteers have 14.20 Switzerland been appointed under JOCV Programme. 14.20.1Switzerland has been extending economic and 14.16 JICA Partnership Programme technical assistance to India since 1964 in the form of grants and technical assistance. Switzerland had also 14.16.1 Recognizing the growing importance of NGOs provided mix credit comprising 40% grant and 60% loans in international cooperation, the JICA Partnership for power sector project. Bilateral meetings are Programme (JPP) was introduced in 2002. JPP is a periodically held between the two countries. technical cooperation program implemented by JICA to contribute to the social and economic development of 14.21 United States of America developing countries at the grass-roots level, in 14.21.1 Indo-US Financial and Economic collaboration with partners in Japan, such as NGOs, Universities, local governments and public interest Partnership corporations. While applying for JPP, Indian NGOs are 14.21.1.1 The fifth Cabinet level meeting of Indo-US advised to seek a Japanese partner to take part in the Economic and Financial Partnership (EFP) was held in scheme. This has two components:- New Delhi on February 12, 2015 under the co- 1. Japanese NGO/Institution/Local Government chairmanship of Mr. Jacob Lew, Secretary of the US through JICA will support Indian organization with Treasury and Shri Arun Jaitley, Finance Minister. During Japanese expert personnel, equipment provision the meeting, issues covered included Macroeconomic and financial support through FCRA route; scenario, Financial Regulatory Reforms, Tax Policy, US- India Investment Initiative, Anti-Money Laundering/ 2. Japanese NGO/Institution/Local Government Combating the Financing of Terrorism (AML/CFT) etc. through JICA will provide training of Indian 14.21.1.2 5th Sub-Cabinet level Meeting, under the aegis personnel in Japan. of Economic and Financial Partnership (EFP), between 14.17 Grassroots Funding India and USA was held on 8th January, 2016. The meeting discussed various issues such as India-US 14.17.1The Government of Japan also provides small Economic Outlook and Multilateral Issues, Global assistance to Indian NGOs under its Grassroots Funding Economic and Financial Developments & India-US Programme through FCRA route on receipt of no Economic and Financial Partnership Pillars covering objection from DEA. During 1st January, 2015 to 31st issues viz. India-US Investment Initiative, Taxation issues, December, 2015, total 24 proposals have been received AML/CFT Dialogue, Financial Markets Development. and DEA has cleared 15 proposals. In case of 5 proposals, clearance from Intelligence Bureau, Central 14.22 Indo-US Financial and Regulatory Line Ministry and MHA (FCRA) are awaited. Dialogue 14.18 Green Aid Plan 14.22.1The third Indo-US Financial & Regulatory Dialogue was held on January 15, 2015 at Washington 14.18.1The Government of Japan (Ministry of Economic D.C. During the Dialogue, issues covered included Trade and Industry) provides technical assistance under Banking Sector Developments, Capital Market Green Aid Plan through agencies like New Energy and Development, Insurance Sector Development, Pension Industrial Development Organization (NEDO), an Sector Development, Consumer Issues, Financial organization of METI. The areas of cooperation are Stability, Vulnerabilities and Reforms. prevention of water pollution, air pollution, treatment of wastes and recycling and energy conservation and 14.23 U.S. Agency for International alternative energy source. Model projects are carried Development (USAID) out by NEDO on the basis of the MoU signed by NEDO with Department of Economic Affairs, the concerned line 14.23.1 USAID is presently partnering with the ministry and the implementing agency. NEDO sends Government of India to strengthen health systems; food 46Department of Economic Affairs I security; accelerate transition to low emissions, and 14.25.2.1 IDRC extends grant assistance to various energy secure economy; reduce greenhouse gas Governments and Non-Government organizations for emissions through carbon sequestration by forests; and projects in the field of agriculture, health and family improve the quality of basic education through teachers welfare etc. During 2015-16, 11 proposals involving training and development. As on date there are seven grants assistance of CA$ 3.86 million were received by ongoing agreements in various areas of development DEA for approval. Out of these 11 proposals, five grants cooperation which are in operation. Apart from these, an of CA$ 2.06 million have been cleared by DEA. MOU was signed between USAID and Government of India to support Financial Inclusion through Expanded 14.25.3 Canada Fund for Local Initiative Payments Acceptance Networks and other Efforts under (CFLI) Pradhan Mantri Jan Dhan Yojana. 14.25.3.1 The CFLI is a responsive, flexible program, 14.24 United States Trade and Development directly managed by the High Commission of Canada in New Delhi, to fund small but visible, high impact, results- Agency (USTDA) oriented projects. Through contribution agreements, the 14.24.1 USTDA promotes economic growth in emerging CFLI provides monetary assistance that covers all or a economies by facilitating the participation of U.S. portion of the cost of projects that are comparatively businesses in the planning and execution of priority modest in scope, scale and cost and that are usually development projects in host countries. The Agency’s conceived and designed by local authorities or objectives are to help build the infrastructure for trade, organizations. During 2015, 28 grant proposals amounting match U.S. technological expertise with overseas to ``3.34 Crores were received by DEA for approval. development needs, and help create lasting business 14.25.4 Lines of Credit extended to partnerships between the United States and emerging market economies. In 2015-16, three USTDA grants for developing countries technical assistance were approved by DEA viz. – (i) 14.25.4.1 Lines of Credit (LoCs) form an important ProVision 2 Body Scanner System Pilot Project with component of India’s diplomatic strategy and have been Airport Authority of India (AAI) for US$ 7,12,456 (ii) very useful in generating goodwill and building long term Technical Assistance to Indian Railway to develop PPP partnerships. The scheme also attempts to promote and attract private capital for US$ 5,18,100 (iii) Feasibility India’s strategic political and economic interest abroad study of Bottoms Upgrading Project at Mumbai Refinery with BPCL for US$ 8,36,550 (iv) Technical Assistance by positioning it as an emerging economic power, investor Project Phase II under US-India Aviation Programme country and partner for developing countries. Indian (ACP) with DGCA for US$ 8,08,327. Development and Economic Assistance Scheme (IDEAS), initially known as “India Development Initiative” 14.25 Canada (IDI), flows from the announcement made by the Finance Minister in the Union Budget for FY 2003-04. GoI has 14.25.1 India – Canada Economic and been extending Lines of Credit to developing countries Financial Sector Policy Dialogue under IDEAS since 2005-06. Initially proposed to be (ICEFSPD) operated for five years from 2005-06 to 2009-10, the scheme was granted first extension in 2010 from 14.25.1.1 The first India-Canada Economic and Financial 2010-11 to 2014-15. Second extension to the scheme Sector Policy Dialogue was held on July 08, 2013 in has been granted in 2015 for another five years i.e. Ottawa, Canada.The second ICEFSPD was held in 2015-2016 to 2019-2020, with revised set of guidelines February 2015 at New Delhi. The Dialogue discussed with a view to improve efficiency and make the system various issues such as Economic and Financial Sector robust and transparent. The rate of interest and tenor Outlook in India and Canada, Infrastructure financing and offered to developing countries has also been made more Canadian pension Funds, recent reforms in investment, attractive. insurance and foreign ownership, Financial Sector Policy Initiatives covering FSLRC, new NBFI regulations in India, 14.25.4.2 Under the IDEA Scheme, MEA selects specific SEBI’s initiatives on financial inclusion and financial projects keeping in view diplomatic considerations and literacy, initiatives to increase bank account penetration; requests received from various developing countries. The & Global Trends and Challenges in Financial Services proposals are discussed and deliberated upon by a Regulation Reform. Standing Committee comprising officers of MEA and DEA. After obtaining the approval of External Affairs Minister, 14.25.2 Assistance from International MEA recommends the proposal to DEA for approval of Development Research Centre (IDRC) Finance Minister. DEA then issues a formal letter of Canada conveying approval of the Line of Credit. 47Annual Report 2015-2016 14.25.4.3 LoCs are being operated through Export-Import GoI also extends Interest Equalization Support (IES) to Bank of India, which raises resources from the market the lending bank for enabling it to lend on concessional and provides LoCs to recipient Governments at terms. concessional rates. GoI backs the LoCs through a Deed of Guarantee in favour of the lending bank to guard 14.25.4.4 During the year 2015-16 (i.e. from April 1, 2015 against any default by the borrowing Government in to December 22, 2015), Lines of Credit totaling USD payment of interest and principal to the lending bank. 2,292.18 million have been approved, which are as under: Sl. No. Countries Amount in US$ Approval Million African Countries 1 Tanzania 92.18 (In-principle Approval) 2 Belarus 100.00 (In-principle Approval) Sub-Total 192.18 Mn. Non-African countries 1 ASEAN Member States 1,000.00 (In-principle Approval) 2 Jordan 100.00 (In-principle Approval) 3 Mongolia 1,000.00 (In-principle Approval) Sub-Total 2,100.00 Mn. Total Amount – USD 2,292.18 Million (05 LOCs) 14.26 Foreign Trainings proposals involving expenditure in respect of DEA and DFS as well as their attached and 14.26.1 Department of Economic Affairs is the nodal subordinate offices e.g. Security Appellate point for administering short term foreign training courses Tribunal (SAT)/National Savings Institute/G-20 offered by some bilateral partner countries under bilateral Secretariat/Office of Special Court, Mumbai/ cooperation programme and some multilateral agencies. Office of Custodian/ Appellate Authority for These courses are intended for capacity building of the Industrial and Financial Reconstruction/ Board officers in various spheres/fields of activities including for Industrial and Financial Reconstruction/ Debt sectors such as Education, Health, Water Resources, Recovery Tribunals, Pension Fund Regulatory Disaster Management, Governance, Natural Resources and Development Authority and Office of Court and Energy, Agriculture, Nature Conservation, Liquidator, Kolkata. Environmental Management, etc. Nominations are invited from all Ministries/Departments, State Governments/ (ii) Exercising expenditure control and management, Union Territories. The nominations are screened by a ensuring rationalization of expenditure and Selection Committee in DEA and thereafter compliance of economy measures in accordance recommended to the sponsoring Government/Agency for with the instructions of the Department of acceptance. Expenditure including regular monitoring of expenditure through monthly/quarterly reviews and submission of reports to the concerned 15. Integrated Finance Division Secretaries. 15.1 The Division is responsible for the (iii) The Division also administers two Detailed Demands for Grants i.e. Grant No.29-Department following functions: of Economic Affairs and Grant No.30-Department (i) Tendering financial advice & concurrence to of Financial Services. This involves finalizing the 48Department of Economic Affairs I Budget Estimates/the Revised Estimates/ (vi) Monitoring of pending PAC/C&AG Audit Paras. estimating final requirements/surrender of (vii) Coordination, compilation, printing and savings, re-appropriations and vetting of Head presentation of Statements to be made by wise Appropriation Accounts etc. Hon’ble Finance Minister as required in terms of (iv) Coordination of all matters relating to the Rule 73-A, in Lok Sabha/Rajya Sabha in respect examination of the DDG by the Parliamentary of implementation of Reports of the standing Standing Committee on Finance. Committee. (v) Coordination, compilation, printing and laying of (viii) Budgetary position regarding the Grants the ‘Outcome Budget/Detailed Demand for administered by the Division is given below: Grants(DDG)’ of the Ministry of Finance in Parliament. 15.2 Budgetary allocation of the Grants (on net basis). (`in Crore) Grant BE 2015-16 RE 2015-16 BE 2016-17 29-Department of Economic Affairs Plan 8465.10 4152.10 4800.00 Non Plan 8599.46 9293.75 11246.15 Total 17064.56 13445.85 16046.15 30 - Department of Financial Services Plan 9805.00 28118.00 30625.00 Non Plan 15061.80 14943.25 1350.52 Total 24866.80 43061.25 31975.52 The best practices followed for effective 16 Directorate of Currency expenditure control includes: 16.1 Security Printing & Minting (a) Expenditure progress reviewed quarterly with Corporation of India Limited (SPMCIL) Major Head/Scheme wise details with concerned Secretaries. 16.1.1 Security Printing & Minting Corporation of India Ltd. (SPMCIL), a Miniratna Category-I, Schedule-'A' (b) The Major Head wise and Scheme wise Central Public Sector Enterprise (CPSE) was established expenditure progress as compared to BE figures, on 13th January, 2006 to manage four India Government posted on the web-site of the Ministry of Finance. Mints, two Currency Presses, two Security Presses and one Security Paper Mill, which were earlier being managed directly by the Government of India (Ministry (c) Strengthening of internal control mechanism by of Finance). The Corporation is wholly owned by the getting internal audits undertaken. Central Government with Authorized Share Capital of `2500 crore and its initial paid up share capital was `5 (d) Monthly monitoring of Major Schemes/ lacs. Consequent upon the finalization of Capital Structure Programmes of Department included in the of the Company by DEA, the paid-up share capital of the Outcome Budget. Company shall increase to `1182.49 crores by end of financial year 2015-16. (e) Regular and close monitoring resulted in finalization of substantial number of cases of 16.1.2 The Client of two Currency Presses, i.e. Bank Action Taken Notes (ATNs) in respect of C&AG Note Press (BNP), Dewas and Currency Note Press audit para during the year. (CNP), Nashik is RBI for currency notes. For other two 49Annual Report 2015-2016 Security Presses, i.e. Security Printing Press (SPP), the previous year. The Sales per employee during Hyderabad and India Security Press (ISP), Nashik, the 2014-15 has increased by 20.74% to 37.41 lacs from clients are State Governments for Non-Judicial Stamp 30.98 lacs during the year 2013-14 primarily due to Papers and allied stamps and Postal Department for increase in the production during 2014-15. Despite postal stationery, stamps, etc. Security Presses also increase in physical sale and total revenue the company produce various security items like cheques, railway has reported a net loss of 352.07 crores in the year warrants, income tax return order forms, saving 2014-15 as compared to a net profit of 214.63 crores in instruments, commemorative stamps etc. for various the year 2013-14 on account of price adjustment of coins clients and passports, visa stickers and other travel from the year 2008-09 to 2012-13 aggregating to 1090.58 documents for Ministry of External Affairs and Ministry of crores and price adjustment of postal items from the year Home Affairs. For four Mints at Mumbai, Kolkata, 2006-07 to 2013-14 aggregating to 71.45 crores. The net Hyderabad and Noida, the client is Department of impact of rate adjustment is 709.63 crores after writing Economic Affairs (DEA), Ministry of Finance for circulation back the rate difference provision pertaining to coins and of coins. The Security Paper Mill at Hoshangabad postal items for 455.94 crores created in the earlier years. manufactures security paper for use of currency / security Further, the amount of depreciation has also increased presses. in the year 2014-15 to 153.27 crores from 118.07 crores in the last year due to revision in depreciation rate 16.1.3 The Corporation has achieved nearly all targets consequent to reduction in useful life of assets as per in production of Bank Notes, Coins, Security Products, Schedule II of Companies Act, 2013. i.e. Passports, NJSPs, Postal Products and other Security Products. While achieving the ever highest production 16.1.6 As per Self-Evaluation Report, SPMCIL has targets SPMCIL has also increased productivity per achieved MoU 2014-15 Composite Score of 1.48 thus employee considerably. The Corporation has produced poised to achieve the Excellent rating in MoU 2014-15 8358 million pieces of the Bank Notes and supplied 8141 for the sixth year in succession. Further, as per quarterly million pieces to RBI during the year compliance reports of Corporate Governance guidelines 2014-15. This is 4.24% higher than the production of 8018 submitted to Administrative Ministry, the Company is million pieces of the Bank Notes during the last year. poised to achieve ‘Excellent’ grading for compliance of Production of the Bank Notes per employee has Corporate Governance guidelines issued by DPE for increased to 2.12 million pieces in 2014-15 as against 2014-15 for the fifth year in succession. 2.01 million pieces achieved during the previous year. 16.1.7 Continuing its momentum of modernization, the The Corporation has produced 7929 million pieces of the Company has taken-up various capital projects during Circulating Coins and supplied 7907 million pieces of the the year 2014-15. One Bank Note Printing Line each at Circulating Coins during the year 2014-15. This is 3.65% Currency Note Press (CNP), Nashik & Bank Note Press, higher than the production of 7650 million pieces achieved Dewas on replacement basis has been sanctioned by during the previous year. Production of Coins per SPMCIL Board and the procurement is in progress. In employee has increased to 2.47 million pieces in 2014- order to meet the enhanced demand of coins projected 15 as against 2.26 million pieces achieved during the by RBI, the modernization of Mints with 32 coining presses previous year. and finishing lines has been approved by the Board and 16.1.4 The Corporation has produced 524.88 Metric the procurement is in progress. Two Electronic Tonnes (MT) of the Security Inks in 2014-15 from the Ink Numbering Control (ENC) Systems have been installed Factory, Dewas against 604 MT of Inks produced during on Super Numerota machine at CNP, Nashik leading to 2013-14. Security Paper Mill, Hoshangabad has produced reduction in wastage. CNP, Nashik has procured Spectro 3266 MT of the Security Paper on old plant and has Densitometer for quality improvement of banknotes supplied 3110 MT Security paper to the presses during according to ISO Standards. Bank note simulation testing the year 2014-15. This is 0.80% higher than the equipment has been installed for estimating life of production of 3240 MT of the Security Paper during the banknotes at CNP, Nashik. One indigenously developed last year. Production of the Security Paper per employee Gravimetric filling machine has been installed and is 3.07 MT in 2014-15. This is the fifth year in succession commissioned at Bank Note Press (BNP), Dewas. Two that the Paper Mill has met with the target despite Viscometers and one Tack-o-Scope have been installed machinery being about 45 years old. and commissioned at BNP, Dewas. India Govt. Mint (IGM), Noida has commissioned the technology for PVD 16.1.5 The sales turnover of the Company has coating of dies for circulating coins for increasing life of increased to 4408.38 crores in 2014-15 from 3797.62 dies. IGM, Noida has also introduced TC Collars crores in 2013-14 registering a growth of 16.08% over 50Department of Economic Affairs I successfully which has improved the serrations of coins 16.1.10 Commemorative coins Released During and life of collar has been nearly doubled. Polishing lines 2015-16. The following Commemorative Coins were have been installed and commissioned at IGM, released during 2015-16: Hyderabad and IGM, Kolkata which are capable to pickle and polish with the single chemical as compared to three Year Name of the Date of Release chemicals in existing machines. ERP-SAP has been Commemorative Coin implemented across all Units of SPMCIL. 2015 Birth Centenary of Swami 16.1.8 In comparison to the preceding year, i.e. Chinmayananda 08-5-2015 2013-14, the Employees strength has come down from 12,257 to 11,784 as on 31.03.2015 due to rationalisation 2015 International Day of Yoga of manpower but the volume of production is constantly on 21-06-2015 21-06-2015 increasing. The Industrial Relations remained peaceful and cordial during the year 2014-15 in all the units of 2015 Birth centenary of Rani SPMCIL. Gaidinliu 24-08-2015 16.1.9 Indigenization: Presently, the annual 2015 125th Birth Anniversary of requirement of CWBN paper for printing banknotes in India is approximately 25000 MT. Therefore, the projects Dr. S. Radhakrishnan 04-09-2015 for indigenization for banknote paper requirement have already been set in motion. The new Bank Note Paper 2015 Golden Jubilee of Indo- line of 6000 MT capacity per year at Security Paper Mill, Pak War 1965 15-09-2015 Hoshangabad was inaugurated and the first consignment of 1000/- Bank Note paper made indigenously on this 2015 3rd India-Africa forum machine was flagged off to Currency Note Press, Nashik Summit 29-10-2015 by Shri Arun Jaitley, Hon’ble Union Minister of Finance, Corporate Affairs and Information & Broadcasting in the 2015 125th Birth Anniversary of august presence of Shri Shivraj Singh Chouhan, Hon’ble Dr. B.R. Ambedkar 06-12-2015 Chief Minister of Madhya Pradesh on 30.05.2015 at Hoshangabad. A JV Project in the name of Bank Note 2016 150th Birth Anniversary Paper Mill India Private Limited (BNPMIPL) at Mysore of Lala Lajpat Rai 28-01-2015 with an installed capacity of 12000 MT per annum to bring two state of the art technology paper lines is at advanced 2016 Birth Centenary - stage and production trials are under progress. These Biju Patnaik 05.03.2016 projects shall lead to indigenous production of major CWBN paper requirement, import substitution thereby saving valuable foreign exchange and further aiding India 2016 150th Anniversary of becoming self-reliant in banknote paper production. Allahabad High Court 13.03.2016 51G B Department of Economic Affairs I Annexure-I SECURITY PRINTING & MINTING CORPORATION OF INDIA LTD., (SPMCIL) REPRESENTATION OF SCs, STs and OBCs as on 31.12.2015 (For the period from 01.01.2015 to 31.12.2015) Groups Number of Employees Number of appointments Made During the Previous Calendar Year By Direct Recruitment By Promotion By Other Methods Total SCs STs OBCs Total SCs STs OBCs Total SCs STs Total SCs STs 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Group A (Managerial/ Executive level) 320 46 17 58 12 1 1 1 18 12 6 - - - Group B (Supervisory Level) 1142 189 103 124 5 1 - 2 89 17 6 - - - Group C (Workmen/ Clerical Level) 9742 2183 906 1022 66 13 1 40 1344 263 121 14 3 -- TOTAL 11204 2418 1026 1204 83 15 2 43 1451 292 133 14 3 - Annexure-II SECURITY PRINTING & MINTING CORPORATION OF INDIA LTD., (SPMCIL) Representation of Persons with Disabilities in r/o SPMCIL (During the period of 01.01.2015 to 31.12.2015) Groups Number of Employees DIRECT RECRUITMENT PROMOTION No. of No. of No. of No. of Vacancies reserved Appointments made Vacancies reserved Appointments Total VH HH OH VH HH OH Total VH HH OH VH HH OH Total VH HH OH 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Group A 320 - 1 1 - 1 1 - - - - - - - - - - - Group B 1142 1 - 17 - 0 1 4 - - - - - - 43 - - - Group C 9742 41 82 206 2 2 1 70 1 2 - - - - 569 4 3 15 Total 11204 42 83 224 2 3 3 74 1 2 - - - - 612 4 3 15 53 G BG B Annual Report 2015-2016 Annexure-I REPRESENTATION SCs, STs and OBCs IN RESPECT OF DEPARTMENT OF ECONOMIC AFFAIRS (MAIN) AS ON 31.12.2015 Groups Number of Employees Number of appointments made during the previous calendar year By Direct Recruitment By Promotion By Other Methods Total SCs STs OBCs Other SCs STs OBCs Other SCs STs OBCs Other SCs STs OBCs Other 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Group A 145 15 08 16 - - - - - - - - - - - - 02 Group B 291 43 32 22 - - - - - - - - 02 - - - - Group C 384 101 08 22 - - - - - - - - 02 - - - - (Excl.Safai Karamcharis) Group C - - - - - - - - - - - - - - - - - (Safai Karamcharis) TOTAL 820 159 48 60 - - - - - - - - 04 - - - 02 Annexure-II REPRESENTATION OF PERSONS WITH DISABILITIES IN RESPECT OF DEPARTMENT OF ECONOMIC AFFAIRS (MAIN) AS ON 31.12.2015 Groups Number of Employees DIRECT RECRUITMENT PROMOTION No. of Vacancies No. of Appoint- No. of Vacanicies No. of Appoint- ments made ments made Total VH HH OH VH HH OH VH HH OH VH HH OH VH HH OH 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Group A 145 - - - - - - - - - - - - - - - Group B 291 - 04 04 - - - - - - - - - - - - Group C 384 - - 04 - - - - - - - - - - - - (Excl.Safai Karamcharis) Group C - - - - - - - - - - - - - - - - (Safai Karamcharis) TOTAL 820 - 04 08 - - - - - - - - - - - - 54 G BB C 55 Department of Economic Affairs I B C ORGANISATION CHART IN THE DEPARMENT OF ECONOMIC AFFAIRS Secretary (EA) Sh. Shaktikanta Das Tele No. 23092611 IC 5000/5001 AS (EA) AS(Inv) Chief Economic Sh. Dinesh Sh. Ajay Tyagi Advisor Sharma Tel. No. Dr. Arvind Tel. No. 23094413 Subramanian 23092734 IC 5012 Tele No. 23093610 IC 5758 IC 5008 Sr D.E 2r T I3.c M Ce 0Ao l a 9e 5r. tA c 2 0h Nh 2d 5ua o 5v 1rn . 4is aer S 2D T Ie 3Pr Ce.n 0 r l H a 9i e 5o s 3 . 0NAr a 5 1 .E od 1 8C .A 0. A. 2S TA I3. CeSd 0lS a 9ev 5h c 4 i 0Ns . h 1 3e d o 4 6r e . 0va Dr. 2 KA T I3 Ce.d 0 l L 9ev 5. 4 i 0 Ns P 5 5e or 2 3ar . 6sad S 2hA T I3. C eGd 0l 9ev 5.S 3 i 0Ns 5. 1e N o 5 7r .e 2gi 2SA T I3P Cehd 0a l. 9ev 5rR m 2 i 1Ns . 4 0a e oK 6 0rr . 9. SJS 2h IT 3. C G( eP 0B lo 9 5r .u a y 3 0Nd s a 1 0ohg l 8 4.ae 3nt) t S 2J Te I3S e ClS v 0l( a eh 9 5A k .. 3 0 B uS N 8 3mC . 8o 91) .ar Sh 2. T IJ 3e CS KS 0la eh 9( 5mM .a 4 0 Nr 9e 1R e 0oe 5) 5.r K. Sh 2. IT 3J R Ce 0S a l 9 5.( j 3 M 0NK 2 5oI u 8) 0.m 7ar M 2TJ IS 3s e CS 0. w l e 9 5M& a . 2 6 r e N 3F u 8e 3opA 5r 2.a M 2s CJ IT 3 C.S eS h 0 l( a 9h 5.I v 2& a 0Na 1r 3E om l 5 4y) . 4ila S 2hJ IT 3 C.S eG 0P l 9 5aa .( 2F rr 0Ngv 3M 0e o, 4 7e .) 1n Adv Vis ace ar n( tCM) ShJ . 2S S IT 3 C( C a e 0I u ln 9& 5.r v 2 0b NC. 4h 4 o)a 2 3G .n 0ad rg S 2.GC T 3 Ie C. 7A DS l 1 .A 5a h 2N 0& s. 1ot 1A 3id . 0ar A Md s 2Tv I. 3e Ci M 0s l e 9 5o a . 2 0 lr a N 5 2( 0o 6I DE 0.uS tt) S 2hA T I3. e Cd S 0V ld ei 9 5nil .r 3 0. ge N 8 5E hn 2o 4A d 4.er M 2sA T I3. C d e 0R R ld 9e 5a al 2 1. j N ys 0 5E h o 5 1A r . 9ee A Sd hd 2T. IK 3l C. eP 0aE l. 9erK 5. eA 2 0. NeA 6d 0m o 8b 2v . 4dis ue lr D 2rA T. I3 Cd eR 0ld 9e. 5 l 2 S 0. N 7 5E a o 5 7tA i . 2sh S 2A T Ih 3 CC ed . 0 l A yd 9e 5rn. 2 0i Nat 4E 4o c o 4 8A n . 9y Dir Se 2rc S T I3r Ct eih 0o v l . 9er 5a ( H 2 0sB N 7t. 2u aK o 4 4d v .. 4g aet) J M.D 2Ts& 3Ni e I.r C 0 A. laP e( 9 5rE r .M 2ec 2 u N 3h 2sUr 5h 0a oo ) 0n .p ae Di 2r T I3 c CV e 0t a l o 9e 5cr 2 0a N 2( 5n o 5M 1t . 4R) ND M oir . Ise 2 CB.c 3Th At 5e 0ao p 0l 9etr a i 54 ar( 94nM 5aI 2) D SS 2h T 3. IK( Ce 0RF u l 9i ea m 5n 3 v 2Na a 5i 4nn r o 1, 4dc . 3ee r) D Si hr 2.e T I3BMc Ce 0t e lr o 9e 5u hr 2 0t e N( y 5 7I run oa 2 5n .f 8r jaa y.) D Si 2hr T I3. M. C e 0( A lS i 9e 5snM 2 h 0u N 5r 9, p aU o 9 8a . 4T mI) NA M od . IDv a C2i hrs 3. a 5 e 0C p 0r 9a 3 5S( t 3F r 0aS 33) D Si hr. 2.( TA IF 3 CeT . 0K l 9e 5& . 3 2 NMC 5 3o 5i 6o s . 8o hr rd a) D S 2y h T I3( K C. e C 7G u l 5e 2A mi 3 5r NA e 7a 0oe& 6r 5.s 3A h) Dir. (Budget) Director(Japan) Director(MR-I) Dir(MI) Advisor (I&E) Dir DS (CD) Dir (DI) Sh. N.M. Jha Dr. Prem Singh Vacant Sh. Rishikesh Sh. V.K Jindal (RE&Coord) Sh. K.N. Mishra Sh. Naveen Tele No. Tele No. Tele No. Singh Tele No. Sh. Amit Ray, Tele No. Agarwal 23092326 23092981 23093542 Tele No. 23092912 Tele 23092836 IC 5243 IC 5005 IC 5742 23093542 IC 5088 No.23092685 IC 5091 IC 5747 IC 5023 DS (Budget) Dir(Coord) Jt. Dir (MR-I) Dir. (MI) Dir.(PPP) Dir.(FSLRC) OSD (FIU) Dir (FIPB) Sh. Saurabh Sh. Swarn Ms. Archana Sh. Bhaskar Ms. Abhilasha Ms. S. B. Sh.Harish K. Sh. Gaurav Shukhla Dass Naresh Dasgupta Mahapatra, Sharan Gutam Masaldan Tele No. Tele No. Tele No. Tele No. Tele Tele No. Tele No. Tele. 23092473 23092519 23748805 23092883 No.23094045 23093558 23094172 No.23092247 IC 5041 IC 5052 IC 203 IC 5069 IC 5028 IC 5098 IC 5037 IC 5838 D 2S S TT 3 eh( h 0B lo. 9e u mS 2 Nd 6i ag og 4sy . 9et) D Rir ae TAmc ent e lSo eis yhr h e N( .H b r oyai .n bd ui) Ms. 2 D P T I3 CeeS 0l t 9e 5a( 2 M 2l N 4 4DR o 9 3h .) 4illon SD h 2i aS Tr 3ne eh 0kc l. 9ea t A 3 o r N 7jr Sa o( 7y iM .n 4gI) h SD 2hS T. 3. S e 0( lu PE 9em a 4 n Nl 4ae o 4nr .g 3tr. a) S Nh o.D . IJ 2 Ci ir 3Tt . e 5e 0( s 1lE 9eh 54M 3J 1) o 5h 4n O 2MS T 3S eD s 0h l. 9e( a F S 3 r NA a. 5 onT B 5. 8F .) S Nh oC.D . 2.C i T 3Sr eh 0a( la 9eI rI n k 2.A c a 9) h r 0a 8l IC 5042 23095070 IC 5062 IC 5032 IC 5098 IC 5194 IC 5070 OSD (FSLRC) DS (MR) Director(MI) Sh. Parveen Sh. Jayant Sh. Lekhan Trivedi Narlikar Thakkar Tele Tele No. Tele No. No.230953576 23092076 23094193 IC 5749 IC 5016 DS (MI) Ms. Bandana Preyashi Tele No. 23094452G B Chapter - II Department of Expenditure II Department of Expenditure 1. Establishment Division 1.5 The Expenditure Management Commission which was set up vide Resolution dated 4th September, 1.1 The Establishment Division works under the Joint 2014 has submitted three reports so far in January 2015, Secretary(Personnel) and deals with matters related to September 2015 and December 2015 and will be determination of salary structure and service conditions submitting its final report before the Budget of 2016-17 of all Central Government employees including i.e. by the end of February, 2016. recommendation of Sixth Central Pay Commission, wage, policy determination, revision of pay scales, creation of 1.6 Pay Related Issues: During the year 2014-15, posts, basic principles of fixation of pay, pay research, various problems relating to pay matters, arising out of House Rent Allowance, Travelling/Daily Allowance, implementation of the recommendations of the 6th Central Dearness Allowance, various other compensatory Pay Commission or otherwise for Central Government allowances in respect of Central Government employees, employees and out of its extension to the employees of productivity linked bonus, General Financial Rules, Autonomous Bodies and legal/court matters thereon, Delegation of Financial Power Rules, Staff Car Rules, which were referred from time to time by various Screening Committee proposals, on foreign visit of Ministries/Departments/ Organisations, were addressed Government Officials, Economy Instructions etc. It is also in an appropriate manner. responsible for administrative matters concerning the 1.7 Right to Information Act: The Right to Department of Expenditure. Information Act, 2005 is implemented in its true spirit and 1.2 This Division issues instructions/directions on the information required to be disclosed under the Act has been uploaded on the website of the Department. preparation of outcome budget, which indicate the The Central Public Information Officers (CPIOs) ensure physical dimensions of the financial budget as also the timely supply of information to applicants and prompt actual performance of the preceding year. action is taken on appeals by Appellate Authorities. The 1.3 With a view to containing the non-developmental quarterly returns are submitted to the Central Information expenditure and releasing additional resources for priority Commission by the RTI Cell. Suo-Moto disclosure has schemes, this Division has been issuing guidelines of been made mandatory as per orders of Department of Ministry of Finance on expenditure management and Personnel & Training. economic measures and rationalisation of expenditure from time to time. Such measures are intended at 1.8 During the year 2015, total number of 2033 promoting fiscal discipline without restricting the applications and 94 appeals under RTI Act, 2005, operational efficiency of the Government. The last such received in physical form and 2216 applications and 109 instructions were issued on 29TH October 2014. appeals, received through online portal, were disposed off within the specified time frame. 1.4 The Seventh Central Pay Commission which was set up on 28th February, 2014 submitted its 2. Pay Research Unit (PRU) recommendations to the Government on 19th November, 2015. The date of its effect is 1st January, 2016 with a 2.1 The Pay Research Unit was established in 1968 minimum basic pay of Rs.18000/-. The present system and is mainly responsible for collection, compilation and of pay bands and grade pay has been replaced by a new analysis of data on actual expenditure incurred on pay pay matrix in respect of both civilians and defence and various types of allowances as well as data pertaining personnel. The additional financial implications as to the strength of the Central Government Civilian estimated by the Commission is likely to be Rs.1,02,100/- Employees and Employees of Union Territory crore in the financial year 2016-17. The Department of Administration. This unit brings out an annual publication Expenditure, Ministry of Finance has commenced the titled “Annual Report on Pay and Allowances of process to have the recommendations of the Commission Central Government Civilian Employees”. The processed expeditiously. While the views of all the brochure provides statistical information regarding Ministries/Departments have been invited on the various expenditure incurred by the different Ministries/ recommendations of the Commission concerning the Departments of the Central Government on pay & various issues falling under their purview, a dedicated types of allowances such as Dearness Allowance, House Implementation Cell headed by a Joint Secretary has been set up to process the recommendations in a Rent Allowance, Transport Allowance, Overtime focussed manner. The recommendations would be Allowance, Compensatory Allowance etc. in respect of screened by an Empowered Committee of Secretaries its regular employees. It also provides information on in a holistic fashion before the final decisions of the Ministry-wise/Department-wise and Group-wise number Government thereon are arrived at. of sanctioned posts and number of incumbents in position. 57 G BG B Annual Report 2015-2016 2.2 The unit brought out the Annual Report on Pay it has been decided to provide assistance to States and Allowances of Central Government Civilian required in areas of critical nature viz. BRGF-State Employees for the year 2013-14 in August 2015. The component including KBK districts of Odisha, Special Plan work regarding the Annual Report/brochure for the year for Bihar, Special Plan for West Bengal, Bundelkhand 2014-15 is in progress. package for Madhya Pradesh & Uttar Pradesh and Uttarakhand Medium & Long term Reconstruction, PM’S 3. Plan Finance-I Division Reconstruction Plan (PMRP) 2004 & Flood Rehabilitation Plan 2014 for Jammu & Kashmir and support to states to BRIEF NOTES ON SCHEMES deal with post FFC related issues etc. Accordingly, an Plan Assistance allocation of Rs.20,000 crore has been made in the Union Budget (2015-16-BE) at the disposal of Ministry of 3.1 In accordance with the Annual Plans approved Finance for providing assistance to the States in the name by the erstwhile Planning Commission, Ministry of of Special Assistance under Central Plan, of which, Finance (Upto 2014-15) was designated to provide Rs.2562.60 crore has so far been released to the States Central assistance (tied and untied) to the State and Rs.7250 crore has been placed at the disposal of Governments for developmental activities under various Ministry of Water Resources, River Development and programmes/schemes covered under State Plan as per Ganga Rejuvenation (Rs.2500 crore), Ministry of Women the budgetary provisions made available with Department & Child Development (Rs.3548 crore) and Ministry of of Expenditure. The programmes/schemes for providing Health & Family Welfare and Ministry of Rural Central assistance to the States covered under State Plan Development (Rs.1202 crore) for funding of projects is the mandate of Ministry of Finance. The release of implemented by them. untied funds covers Block grants viz. Normal Central Assistance (NCA) and Special Central Assistance (SCA) Additional Central Assistance for Externally Aided whereas tied funds were released towards Special Plan Projects Assistance (SPA), Additional Central Assistance (ACA) 3.4 Additional Central Assistance for Externally- for Externally Aided Projects (EAPs), ACA for various Aided Projects (EAPs) is passed on to the General other projects/schemes, State Treasury Computerization Category States on back to back basis on the same terms under National e-Governance Programme (NeGP), State and conditions on which these loans are received by the Component of Backward Regions Grant Fund (BRGF) Central Government from donor agencies. However, in covering funding for Bundelkhand package and KBK case of Special Category States, special dispensation has Districts of Odhisa, Special Plan for Bihar, Special Plan been made whereby they receive the assistance for for West Bengal, Hill Areas Development Programme externally aided projects in grant:loan ratio of 90:10. (HADP), ACA for Left wing Extremism affected areas etc. Based on the recommendations of Office of Controller of 3.2 Following the spirit of cooperative federalism, the Aid, Account and Audit, an amount of Rs. 14,000.62 crore Union Government has accepted the biggest ever has been released to the State Governments during 2015- increase of 10% in the share of States in net proceed of 16 (upto 07.01.2016), as against Budget Estimates (2015- shareable pool of Union taxes from 32% to 42% as 16) of Rs.16,000 crore. recommended by Fourteenth Finance Commission Non-Plan Grants to States (FFC), enabling the States to have extra fiscal space and subsequently allowing them greater autonomy in 3.5 The States are also supported through Non-plan designing and financing of schemes as per their need grants as per the recommendations of Finance and local requirements and for creation of capital assets. Commissions. The FFC report covering the five year Accordingly, funding under schemes/programmes except period commencing 1st April, 2015 together with the for projects identified for external aids (EAPs) provided Explanatory Memorandum as to the action taken on the by Department of Expenditure, Ministry of Finance along recommendations of the Finance Commission was laid with 8 schemes for which funding was provided by other on the Table of both Houses of the Parliament on Union Ministries have been subsumed in larger devolution 24.2.2015. The year 2015-16 is the first year of the award Union taxes to the States and hence no budgetary period of FFC. provision for these schemes has been made in the Union Budget 2015-16. 3.6 FFC, making substantial increase in share of the States in the divisible pool of Union taxes from 32% to Special Assistance under Central Plan 42%, has recommended total grants–in–aid of Rs.5.38 3.3 However, taking into account considerable lakh crore for the period 2015-20 to cover Revenue Deficit amount of committed spill over liabilities for projects of States local body grants (both to rural and urban local sanctioned prior to implementation of 14th FFC award, bodies) and grants for augmenting the State’s Disaster considering varying socio-economic/geographical factors, Response Fund (SDRF), of which, grant of Rs. 1,94,821 crore is to meet Revenue deficit for eleven States 58 G BG B Department of Expenditure II comprising Andhra Pradesh, Assam, Himachal Pradesh, has contributed in bringing down aggregate Debt to GSDP Jammu & Kashmir, Kerala, Manipur, Meghalaya, ratio to 24.9% (2014-15 RE) as against the target of 30.3% Mizoram, Nagaland, Tripura and West Bengal, of GSDP by the end of the year 2014-15. During 2015-16 Rs.2,87,436 crore for Rural local bodies and Urban local (Upto 07.01.2016), the States have so far been permitted bodies together as basic grant (Rs.2,49,978 crore) and to raise borrowings to the tune of Rs. 3,66,814 crore as performance grant (Rs.37,458 crore) for all the States. against gross borrowings of Rs.4,56,932 crore (Net borrowing ceiling of Rs.3,78,903 crore) fixed for the year 3.7 In aggregate, Rs.61,219 crore has been 2015-16. recommended as corpus of State Disaster Response Fund (SDRF) for all States for the award period with Union 4. Plan Finance-II Division Government’s share to the extent of 90% (Rs.55,097 crore). The Government has, however, accepted this 4.1 Plan Finance – II Division is primarily concerned recommendation with the modifications that the with matters relating to the Central Plan. In respect of percentage share of the States in the corpus will continue development schemes and projects, the focus has been to be as before and that the flows will also be of the same on improving the quality of development expenditure order (linked to the extent of the cess), as in the existing through better project formulation, emphasis on outputs, system; and that, once GST is in place, the deliverables, impact assessment, projectisation (Mission recommendations of FFC on disaster relief would be fully approach) and convergence. implemented. 4.2 During the period 1st January, 2015 to 31st 3.8 Following the recommendations of FFC duly December, 2015, the Expenditure Finance Committee accepted by the Union Government, as against provisions (EFC) chaired by the Secretary (Expenditure) (BE-2015-16) of Rs.87,405 crore, an amount of recommended 56 Plan Investment proposals/Schemes of Rs.66,527 crore in aggregate (up to January 07, 2016) various Ministries/Departments costing Rs. 5,06,331.67 has been released under the heads of Non-Plan revenue crore. deficit grants (Rs.40,754 crore), Local Bodies grants 4.3 Also during the period, Public Investment Board (Rs.17,734 crore) and Centre’s share in State Disaster (PIB) chaired by the Secretary (Expenditure) considered Response Fund (Rs.8,038 crore). Further, in order to and recommended 11 proposals involving an amount of undertake post disaster relief and restoration measures, Rs.40,672.65 crore as per the following details:- wherever the States have reportedly faced natural disasters, the States have been provided Rs. 7172.84 S. Ministry/Department No. of Cost crore from National Disaster Response Fund (NDRF) No. projects (Rs.In during the reference period. recommended Crore) States’ Fiscal Consolidation (2015-20) for approval 3.9 Fourteenth Finance Commission (FFC) for its 1 Ministry of Road award period 2015-20 has also recommended a fiscal Transport & Highways 03 20,315.16 consolidation glide path for States to remain in revenue balance and anchor their fiscal deficit at 3 per cent of 2. Ministry of Urban Development 01 6,928.00 GSDP. FFC has further recommended for additional fiscal 3. Ministry of External Affairs 01 9,375.58 space upto 0.5 percent of GSDP subject to States fulfilling 4. Ministry of Power 06 4,053.91 the eligibility criteria of maintaining their IP/TRR ratio within 10 per cent, Debt/GSDP ratio within 25 per cent Total 11 40,672.65 and remaining in revenue balance. The additional space will allow States to incur more capital expenditure without 4.4 Plan Finance-II Division also deals with financial deviating from the fiscal glide path. Fiscal position of restructuring of Central PSUs on the recommendations States, in aggregate, as gleaned from 2015-16 (BE) in of Bureau for Restructuring of Public Sector Enterprises terms of revenue surplus, fiscal deficit and debt is 0.3% (BRPSE). It is also actively involved in working out of GSDP, 2.8% of GSDP and 24.4% of GSDP modalities for financial assistance to CPSEs, respectively. quantification of I&EBR generation for preparation of Borrowings budget, finalizing modernization of Plants & Equipments to ensure more efficiency in production. It is also the 3.10 The methodology for determining annual Secretariat of National Clean Energy Fund, in respect of borrowing ceilings of States during the period 2015-20 which, guidelines for appraisal/approval of the project has been devised in line with the recommendations of have been issued. Fourteenth Finance Commission. The borrowing limits of States are worked out by Ministry of Finance (MoF) in 4.5 Issues relating to Food, Fertilizers and Petroleum accordance with the prescribed fiscal reform path for each subsidies, including their quantification and extension of State. Compliance with the prescribed fiscal parameters assistance to the Stake holders are also handled in Plan 59 G BG B Annual Report 2015-2016 Finance-II Division. The Division is actively involved, along relating to public procurement and is accessible at with the concerned Department/Ministry, in shaping www.eprocure.gov.in. It is being used at present subsidy policy of the Government so as to ensure effective by various Ministries/ Departments, CPSEs and targeting coupled with minimum burden on the autonomous/ statutory bodies. e-Publishing of Government. tender enquiries, corrigenda thereto and details of contracts awarded thereon, on the Portal, has been 4.6 The funding pattern of the Centrally Sponsored made mandatory in a phased manner w.e.f 1st Schemes(CSS) has been rationalised, based on the January 2012. report of the Sub-Group of Chief Ministers on  Further, it has also been decided to implement e- Rationalisation of CSS. The decisions in this regard have Procurement in Ministries/Departments of the been circulated to all the Central Ministries on 28.10.2015 Central Government and instructions have also for compliance. been issued to all Ministries/Departments to 5. Procurement Policy Division commence e-procurement in respect of all procurements with estimated value of Rs.2 lakh or 5.1 A Public Procurement Cell (PPC) was set up in more in a phased manner. Use of e-procurement this Department in June, 2011 to take follow up action on would enhance transparency and accountability and the Report of the Committee on Public Procurement make procurement more efficient. This would also (CoPP) and drafting of the Public Procurement Bill and help in monitoring delays and reducing the other related matters such as drafting of rules and setting procurement cycle. up of a Central Public Procurement Portal. The Cell was  Currently, approximately 4000 tenders are floated gradually strengthened and a Division called Procurement per month using facility of CPP. This translates to Policy Division (PPD) was created under the overall around 30,000 crores worth procurement per supervision of OSD (PPD) with one Director, one Under annum through CPP only. Apart from it, many Secretary, one Assistant Director and one Assistant procurement organizations like Railways, PSUs like Section Officer. ONGC, BHEL etc. have their own e-procurement portals. 5.2 Subsequently, the scope of work in PPD was enlarged. The Division now deals with the following items  It is imperative that the executives/officers engaged of work:- in public procurement process have thorough knowledge of all the relevant rules, regulations and (i) Public Procurement legislation and rules, procedures of public procurement. For the purpose, notifications, orders there under; one week Training Programme on Public (ii) Policies relating to Public Procurement including Procurement is conducted through National Institute administration of General Financial Rules 2005 of Financial Management(NIFM) with a view to on procurement of goods and services and educate and familiarize the concerned executives/ contract management; policies relating to officers with all the relevant rules, regulations and mandatory or preferential procurement; procedures of public procurement. Around 2000 officers per annum are being trained. (iii) Matters relating to standardization of procurement related documents; 5.2.2 Swachh Bharat Kosh (iv) All matters related to Central Public Procurement The Kosh has been set up to achieve the objective of Portal set up for publishing information relating improving cleanliness levels in rural and urban areas, to Public Procurement; including in schools. It will also be enabled to bring out innovative/unique projects and girl toilets will be the priority (v) Matters relating to electronic procurement; area to start with. The following broad activities will be (vi) Professional standards to be achieved by officials financed from the Kosh: dealing with procurement and suitable training a) Construction of community/individual toilets in rural and certification requirements for the same; areas, urban areas, in elementary, secondary and (vii) Interface with International bodies on matters senior secondary government schools, aanganwaadis (Centre that provide support to relating to Public Procurement. children below 6 years and their mothers under the 5.2.1 Central Public Procurement Portal & e- Integrated Child Development Scheme, Ministry of Procurement Women and Child Development);  Pursuant to the recommendations of the Committee b) Renovation and repair of dysfunctional community/ on Public Procurement (CoPP), a Central Public individual toilets in elementary, secondary and Procurement Portal (CPP Portal) has been set up senior secondary government schools, for providing comprehensive information and data aanganwadis; 60 G BG B Department of Expenditure II c) Construction activity for water supply to the ii) Central Translation Bureau (CTB), CGO Complex, constructed toilets; New Delhi d) Training and skill development to facilitate iii) Ministry of Environment, Forests and Climate maintenance of constructed toilets and to ensure Change, New Delhi its inter-linkages with education on hygiene; 6.5 The SIU has been associated as Core Member e) Other initiatives of improving sanitation and with two Committees constituted by the respective cleanliness in rural and urban areas including solid Departments for assessing the manpower requirement and liquid waste management; for Scientific and Technical posts namely (i) Ministry of Environment, Forests and Climate Change, New Delhi f) Any other activity to improve sanitation in the country and (ii) Department of Electronics and Information as decided by the Governing Council. Technology, New Delhi. 5.2.3 The donations to the Kosh are covered under 7. Controller General of Accounts (CGA) “Corporate Social Responsibility(CSR) under sub-section (5) of Section 135 of the Companies Act, 2013”. 7.1 The Controller General of Accounts (CGA), in Donations other than sums spent for “Corporate Social the Department of Expenditure, Ministry of Finance, is Responsibility” are eligible for 100% deductions under the Principal Accounting Adviser to the Government of Section 80G of the income Tax Act, 1961. India and is responsible for establishing and maintaining a technically sound management accounting system. 6. Staff Inspection Unit 7.2 The Office of CGA prepares monthly and annual 6.1 The Staff Inspection Unit (SIU) is functional since analysis of expenditure, revenues, borrowings and 1964 with the objective to review the staffing of various fiscal indicators for the Union Government. The Annual Appropriation Accounts (Civil) and Union Finance government establishments/organisations through a Accounts are submitted to Parliament under Article 150 programme of inspections with a view to rationalising of of the Constitution. Along with these documents, an M.I.S posts and also evolve performance standards and work Report titled ‘Accounts at a Glance’ is prepared and norms. SIU also looks into work simplification in circulated to Hon’ble Members of Parliament. improving organisational effectiveness without sacrificing efficiency. The scientific and technical organisations are 7.2.1 Functions:- studied by SIU as a Core Member in the committee  Formulate policies relating to the general principles, constituted by the head of the respective organisation. form and procedure of accounting for the Central and State Governments. 6.2 The Financial Advisors are main links between the SIU and the Ministries/Departments/Offices/  Administer the process of payments, receipts and Organisations. All requests for staffing studies by SIU accounting matters in the Central Civil Ministries / are routed through the concerned FAs. The study reports Departments. are issued after discussion with the management of the  Prepare, consolidate and submit the monthly and organisation studied and are regarded as mandate annual accounts of the Central Government required to be implemented by the concerned through a robust financial report system aimed at organisation within the stipulated period. effective implementation of the Government fiscal 6.3 During the year 2015-16 SIU, has issued study policies. report on work study of Commission of Railway  Coordinate and assist in the introduction of Safety(CRS), Lucknow in the context of Ministry of Civil Management Accounting Systems in Ministries/ Aviation’s proposal for creation of two circle offices of Departments with a view to optimizing the utilization Commissioner of Metro Railway Safety (CMRS) as per of Government resources through efficient cash the Metro Railway (Operations and Maintenance) Act, management and an effective Financial 2002. The study covered a total number of 145 posts in Management Information System(FMIS). the office of Chief Commissioner of Railway Safety (CCRS), Lucknow and its 9 circle offices in other cities.  Administer banking arrangements for The study recommended strengthening of the existing disbursements of Government expenditures and set up of CRS by a total 37 additional posts in CCRS collection of government receipts and office at Lucknow and its circle offices. interact with the Central Bank for reconciliation of cash balances of the Union Government. 6.4 Further, work study of the following organizations  Establish a sound Human Resource Management were taken up during 2015-16 and the study reports are for recruitment, deployment and to improve the being finalized: career profile management of officers and staff, both i) National Institute for Visually Handicapped (NIVH), at the supervisory level and at the operational level Dehradun within the Indian Civil Accounts Organization. 61 G BG B Annual Report 2015-2016 7.2.2 Financial Reporting - Monthly and Annual stakeholders with a real time, reliable and meaningful management information system and  A detailed analysis of the monthly trends of receipts, an effective decision support system. NIC, DeitY is payments, revenue and fiscal deficit and its sources the technology partner. of financing are presented to the Union Finance Minister. This analysis has over a period of time  It is noteworthy that PFMS makes a direct and evolved into an extremely useful tool for monitoring significant contribution to the Digital India initiative budgetary compliance and for decision making. In of GoI by enabling electronic payment and receipts accordance with the Government’s policy towards for Ministries/Departments in GoI. imparting greater transparency, an abstract of the Union Government accounts is released every  PFMS was started (in 2009) as a Central Sector month and placed on the CGA’s website (http:// Scheme of Planning Commission with the objective www.cga.nic.in). of tracking funds released under all Plan schemes of GoI, and real time reporting of expenditure at all  Utilizing the advancements in technology, the O/o levels of Programme implementation. Subsequently CGA provides a report of weekly flash figures of (2013), the scope was enlarged to cover direct receipts, payments and deficit to Ministry of Finance payment to beneficiaries i.e. Direct Benefit so as to help in decision making. Transfers (DBT) under both Plan and non-Plan  As a best practice, the O/o CGA also submits the Schemes. The latest enhancement in the Provisional Accounts of the Government of India functionalities of PFMS commenced in late 2014, within two months of completion of each financial wherein it has been envisaged that digitization of year. The professionalism with which these accounts shall be achieved through PFMS. The accounts are prepared is evident from the high enhanced application would cater to all Plan and accuracy attained in the last few years, as only Non Plan payments of GoI, all tax and non-Tax marginal variations have been observed between receipts and also functions such as a the Provisional Accounts and the final audited Annual accounts. comprehensive HRMIS and self-contained pension as well as GPF modules. It is expected that over a  The O/o CGA undertakes an exercise aimed at period of coming few years, the various existing reconciliation of Reserve Bank Deposit and Public standalone systems currently catering to these Sector Banks Suspense, Authorization and Change functions shall be integrated into PFMS. of Accredited Banks for handling Government transactions i.e. for Civil and Non-Civil Ministries/  At present, the Financial Management functions Departments. Standing Committee Meetings, APEX being delivered by PFMS can be divided into Committee Meetings and Private Sector Banks four broad categories:- Meetings are periodically conducted to review the handling of Government transactions by Banks.  Fund Flow Tracking of GOI schemes (for nearly 100 schemes of GoI). 7.2.3Achievements:  Direct Benefit Transfer (DBT) (data provided in  The Union Government’s Finance and Appropriation Accounts for the year 2014-15 along with the Audit following section). Report of the Comptroller & Auditor General of India  Payment & Accounting of all GoI transactions were presented to Parliament on 22.12.2015. This (Plan & Non Plan) (under implementation in 150 is the second time since independence that the Pay and Accounts offices spread across nearly Annual Accounts of the Union Government have been tabled in Parliament in the same calendar year. 50 departments/ministries of GoI). 7.3 IT Initiatives:  Non Tax Receipt Portal (NTRP) for online collection of GOI non-tax receipts (under testing 7.3.1Public Financial Management System(PFMS) with 6 departments/ministries).  The Public Financial Management System (PFMS) 7.3.2Strengths/Achievements of PFMS is a web-based online software application designed, developed, owned and implemented by  Integration with the banking network in the country: the O/o CGA. The primary objective of PFMS is to The biggest strength of PFMS is its integration with facilitate sound Public Financial Management the banking system in the country. As a result, PFMS System for Government of India (GoI) by has the unique capability to push online payments establishing a comprehensive payment, receipt and to almost any beneficiary/vendor. At present, PFMS accounting network. PFMS provides various interface is completed with the Core Banking 62 G BG B Department of Expenditure II System (CBS) of 93 Banks in the Country: all Public 7.3.3Other IT initiatives Sector Banks (26), Regional Rural Banks (54),  Web Ratna Award 2014: The website of the office major private sector banks (9), Reserve Bank of of the Controller General of Accounts India, India Post and Cooperative Banks (2). www.cga.nic.in has been conferred with the  Capturing the entire span of a financial transaction: prestigious Web Ratna Award 2014 - Silver Icon in For both payment and receipt transactions, PFMS the category “Comprehensive Web presence – caters to all elements of an online financial Ministry/Department” by the Hon’ble Minister for transaction i.e. the user interface, the payment/ Communications and Information Technology, Shri receipt functionality, government banking Ravi Shankar Prasad in the Award ceremony held arrangement (agency banks and RBI), accounting on 25th March 2015 at India Habitat Centre, New of the transaction, reconciliation and audit trail. Delhi.  Online solution for Non Tax Revenue: the Non Tax 7.3.4Technical advice on Accounting matters:- Receipt Portal (NTRP), also known as the Bharatkosh, is the first online one stop solution for  The Technical Advice Wing of the O/o the CGA is electronic capture of non tax receipts of Government the repository of technical information on of India. Some of the immediate benefits of such a Government accounts and is consulted widely by portal would be: the Central Civil Ministries, Non Civil Ministries and State Governments on various budgeting,  Ease of business for the citizen accounting and financial issues for core technical  Proper accounting of receipts advice and guidance. With its technical competence, this section has been assisting these  Better monitoring of the receipts by the parent Ministries and Governments in formulating sound departments/ministries. accounting policies and procedures over the years  Availability of real time data for Decision Support within the realm of Receipt and Payment Rules, System for senior management in GoI: Pension Rules, Treasury Rules, Government Accounting Rules and Manuals or detailed  Number of DBT beneficiaries has been procedural guidelines based on such Rules. The increasing steadily. As of December 2015 nearly section has also been providing reasonable 13 crore beneficiaries have received payments assurance to the stakeholders on a variety of via different schemes. It is noteworthy that the accounting issues within the purview of rules and target for this purpose, as mentioned by Hon’ble FM in his budget speech for 2015-16, regulations to ensure a systematic accounting and was 10 crore beneficiaries. financial reporting.  DBT through PFMS is being done for other  The Technical Advice section administers the schemes across all the states and so far 12.82 Central Government Account (Receipt and crore beneficiaries with total benefit amount of Payment) Rules, 1983 in exercise of the powers Rs. 36,339 crore have been paid since conferred by Clause (1) of Article 283 of the 01.01.2013. Constitution of India regulating the custody of the Consolidated Fund of India and the Contingency  Data on float in the system is available(for all Fund of India and the Public Account. These Rules agencies registered on PFMS) on a daily basis. also regulate the withdrawal of money from such  As on December 2015, nearly 17.8 lakh funds and any other matter connected therewith. agencies are registered on PFMS.  It has strongly been felt over the past few years that  Pan-India roll out of MNREGS payments for these Rules require a thorough revision considering Bank Account holders started from 1st April, the changing requirements of the stakeholders with 2015 and 15.99 crore credits have been done the changes in Government policies and schemes. for Rs. 19,550 crore through PFMS up to Pan- There has also been revision of other ancillary Rules India roll out of Indira Awas Yojana (IAY) and procedures which are required to be reflected payments for Bank Account holders started and correlated properly in the Receipt and Payment from July, 2015 and 11.91 Lakhcredits have (R&P) Rules. With this view, a comprehensive been done for Rs. 3,483 crore through PFMS revision of the R&P Rules has been attempted and up to December, 2015. a draft has been prepared. A committee of officers  PDS Subsidy - Ministry of Food has has been formed to examine the Rules in the context implemented cash-transfer in lieu of food grains of changed requirement of the Governments and the for PDS cash subsidy in Chandigarh and report of the Committee is expected shortly. After Puducherry through PFMS. the examination of the Rules by the Committee, the 63 G BG B Annual Report 2015-2016 exposure draft would be circulated to the Ministries Performance Evaluation” for strengthening financial for their valuable comments. management and internal controls. The line Ministries are being encouraged to plan the audit  The TA section also administers the Civil Accounts assignments by adopting the Risk Based Auditing Manual (CAM)which is the repository of detailed approach. Risk Based Audit in selected Ministries procedural guidelines based on R&P Rules, 1983, is being conducted on pilot basis. Government Accounting Rules, 1990 and Pension Rules etc. The Manual has been amended from  The organization is also focusing on the use of time to time by issuance of correction slips to Computer Assisted Audit Tools for more incorporate the changed provisions of various transparency and accountability. Electronic Risk Rules. However, a complete revision of CAM is also Assessment Software (eRAS), a diagnostic tool for in the process to make it updated with the latest internal audit has been developed in collaboration Government policies and requirements. with NIC. This diagnostic tool [eRAS] is not only helpful to the audit in planning, sampling and  The list of Major and Minor Heads of Accounts is conducting the audit efficiently but it is also helpful updated timely by the TA section to cater to the to the management / stakeholders to have a review requirements of the Central Ministries and the State of the functioning of their entities [PAOs only] in Governments with new plans and schemes their offices instead of visiting these offices located launched and policies amended. at different places in different states.  As one of the milestones in the area of Information  The organization is also reviewing the performance Communication Technology (ICT), the O/o CGA is of the internal audit units of the line Ministries/ in the process of introducing the Cheque Truncation Departments. The Annual Review on the System (CTS) for Central Government transactions. performance of Internal Audit Wings of Civil Under this system, the cheques in physical form Ministries depicts the information on different shall be retained at the presenting bank and the shortcomings of the Civil Ministries in the form of payment shall be made by the drawee bank based observations. The Annual performance reports of on the electronic image of the instrument. This will ensure speedy clearance and reconciliation of the the different Ministries/Departments are analyzed receipts and payments in future. and summarized by the Internal Audit Division for the purposes of brevity and ease of presentation. 7.4 Internal Auditing The outcome of Internal Audit through recoveries effected in pursuance to the observations of the  The Controller General of Accounts is responsible Internal Audit is also included to reflect the impact for maintaining the requisite technical standards of of Internal Audit. Accounting in the Departmentalized Accounting offices and for monitoring of financial performance  The organization has also constituted a committee and effectiveness of various programs, schemes to examine the draft Gender Audit Guidelines and activities of the civil ministries through its circulated by the Ministry of Women & Child Internal Audit units in the respective Ministries/ Development so as to recommend the framework / Departments. The Internal Audit Division of office roadmap for the conduct of Gender Audit of of CGA is providing necessary guidance and Schemes of the Government of India. support to Internal Audit units of the line Ministries/ Departments on different aspects of risks to  For capacity building, a Seminar on “Enhancing establish effective internal controls for better Public Effectiveness of Internal Audit: Issues & Financial Management. Challenges” was organized on 24th November, 2015 at India Habitat Centre, New Delhi in collaboration 7.4.1Achievements/ New Initiatives under Internal with Institute of Chartered Accountants of India Audit (ICAI). The seminar was intended to achieve quality  The Controller General of Accounts has developed Risk Based Internal Audits that effectively and a risk based control framework in the form of consistently result in value addition to the Generic Internal Audit Manual to guide the internal organizations operations. The Seminar was audit engagements. The manual not only explains inaugurated by Finance Secretary. The participants the complexities associated with the internal audit in the Seminar included Financial Advisers of the functions but also facilitates the entire process by Govt. of India, Heads and other officers of providing audit process, templates and guidelines. Accounting Services (Defence /Railways/P&T/Civil) along-with professional bodies like ICAI / Institute  A directional shift in the scope and approach of of Internal Auditors (IIA) and Idea Software besides internal audit has been initiated by the organization representatives from National Institute of Financial by infusing two concepts- “Risk Assessment” and Management (NIFM). The speakers made some 64 G BG B Department of Expenditure II significant recommendations for strengthening of pivotal contribution for meeting training Internal Audit in Government of India. requirements of Civil Accounts Organisation (CAO) through its Regional Training Centers (RTCs) at 7.5 Monitoring Cell New Delhi, Mumbai, Chennai, Kolkata and Aizwal. The Monitoring Cell placed under the O/o CGA is Its training mandate includes capacity building at responsible for:- all levels of the personnel belonging to Civil Accounts Organisation.  Coordination and monitoring the progress of submission of corrective/remedial action taken  It also takes up sponsored or customized notes (ATNs) on the recommendations contained programmes for Ministries/Departments of in Public Accounts Committee’s reports. Government of India, State Governments, Union Territories and Public Sector Undertakings. In  Coordination, collection and monitoring the addition, it also conducts international programmes submission of corrective/remedial Action Taken for delegates from the Indian Technical and Notes on various paras contained in C&AG Reports Economic Cooperation (ITEC) and Special (Civil, Defence Services, Railways and other Commonwealth Assistance for Africa Program Autonomous Bodies). (SCAAP) in collaboration with Ministry of External  Coordination, collection and timely submission to Affairs, Government of India and bilateral programs the Public Accounts Committee of the relevant with neighboring SAARC countries. Explanatory Notes duly vetted by the Audit on  Its programs are academically rigorous, designed excess expenditure and savings of Rs.100 crores to catalyse change and stimulate active peer and above, appearing in the Annual Appropriation learning in areas as diverse as Government Accounts. Accounts, Financial Management, Cash  Following up matters with various Ministries/ Management, Treasury management, Fiscal and Departments of the Government of India to ensure Budgetary Reforms, Pension and Pensionary that, the recommendations made in PAC Reports Reforms, Internal Audit, Procurement, Project are finalized well within time given by the Lok Sabha Management Financing and Appraisal, Secretariat. Administrative Procedures, Service Rules, Public Policy, Human Resource Management, Leadership  Bringing to the notice of various Ministries/ and Change Management – using interactive Departments the observations made by the PAC in multimedia and advanced IT tools. its reports regarding the delay either in sending the Action Taken Notes or in their being vetted by the 7.7 Training Highlights 2015-2016: Audit.  Induction Programme for ICAS Officers. 7.5.1 Web Based Audit Para Monitoring System (APMS):-  Short term training programmes for officials of Civil Accounts Organisation.  On the recommendation of PAC, Audit Para Monitoring System (APMS) has been implemented  Sensitization workshops on PFMS. for computerized monitoring of the pendency of Action Taken Notes (ATNs) of C&AG Paras at  Outreach Programmes conducted by Regional various stages by the Ministries/Departments. Training Centres. Ministries/Departments are being also made aware  Customised Programmes for National Institute of of the new features/upgradation in the APMS Communication and Finance (NICF), National module by giving them regular training. Investigation Agency (NIA), National Sample Survey  Another centralized computerized online monitoring Organisation (NSSO), Enforcement Directorate and to check the status of the preparation and a host of other public sector entities. submission of the Explanatory Notes at every stage  Support to neighboring countries like Afghanistan, by various Ministries/ Departments is being Bhutan and Nepal etc. through bilateral workshops. developed in order to avoid delays on the recommendation of PAC. Position of ATNs in  International workshops on Public Expenditure respect of summary of audit observations is Management / Financial Management for delegates incorporated in the Annexure-III. from the ITEC/SCAAP consortium. 7.6 Training- Institute of Government Accounts and 7.8 Central Pension Accounting Office (CPAO): Finance (INGAF)  The Central Pension Accounting Office (CPAO) was  INGAF established in 1992 is presently in its 24th established w.e.f. 1st January, 1990 for Payment and year. It is the focal point of training initiatives of Accounting of Central (Civil) Pensioners and Controller General of Accounts (CGA). It is making Pension to Freedom Fighters etc. CPAO is a 65 G BG B Annual Report 2015-2016 subordinate office under the O/o Controller General seeded their Aadhaar numbers with their pension of Accounts, Department of Expenditure, M/o accounts &PPOs and they have been in a position Finance. It has been entrusted with the to avail the facility of getting their life authenticated responsibility of administering the scheme of on line by using digital life certification(Jeevan payment of pension to Central Government (Civil) Pramaan) in case they desired to do so. Pensioners through authorized Banks.  With the help of banks, media and Pensioners 7.8.1Functions:- Association, pensioners have been pursued to  Issue of Special Seal Authorities (SSAs) authorizing provide their contact details while submitting Life payment of pension in fresh as well as revision of Certificate for better service delivery to them. pension cases to the CPPCs(Central Pension  Life Certificate format for the pensioner has been Processing Centers) of pension disbursing Banks; modified and provision for acknowledgement by the  Preparation of Budget for the Pension Grant and bank has been introduced. Further, the bank has accounting thereof; to mention submission of Life Certificate by the  Audit of CPPCs of pension disbursing Banks; pensioner in the payment scroll to CPAO to enable monitoring of the same.  Maintenance of Data Bank of Central Civil Pensioners containing all details indicated in the  As a step towards making pensioner better informed PPOs and Revision Authorities; and empowered, facility of informing pensioner through SMS of receipt of fresh Pension Payment  Handle the grievances of Central Civil Pensioners; Order/Revision Cases from the PAO at CPAO and and sending Pension Payment Order (Special Seal  As an interim arrangement, payment of provisional Authority) to banks for arranging payment has been pension to the pensioners/family pensioners provided to those pensioners who have provided covered under New Pension Scheme as per orders their mobile numbers. As a result, pensioner can of Ministry of Finance easily track the movement of their pension case.  The primary function of CPAO is to issue SSAs to This is in addition to already available facility on the the CPPCs of Banks in fresh and revision of pension website of CPAO (www.cpao.nic.in) to pensioner cases. In 2015, CPAO has issued following number to track their pension processing status at CPAO of SSAs – by providing 12 digit PPO number.  In 2014-15, 40,715 and 1,24,598 authorities were  CPAO is now running fully functional Grievance issued in fresh and revision pension cases Redressal Mechanism (GRM) and a pensioner can respectively. In 2015-16, till 23 December, 2015 lodge grievance through telephone on Toll Free No, 24959 and 123170 authorities were issued in fresh website, e-mail, letters or personal visit. The queries and revision pension cases respectively. and grievances of pensioners are attended on  As per DP&PW OM dated 30.07.2015; according highest priority by qualified personnel. In 2014-15; to CPAO data base, 71,515 pensioners/family a total Rs. 87,553 grievances were received and pensioners have been entitled to get the benefit of settled whereas in 2015-16, till November, 2015 a revised pension from 01.01.2006 instead of total of 37,862 grievances were received and 24.09.2012. Upto 23 December, 2015, revision settled. authorities in 63,075 have already been sent to banks.  To integrate the tracking of pension processing and payment system, a link on CPAO’s website has 7.8.2 Significant Decision/Initiatives for improving been provided to ‘Bhavishya’ System of ‘Pension delivery of public services: Tracking’ developed by Department of Pension and  Reduction in paper movement of Authorities: Pensioners’ Welfare. This is a very good example Paperless movements of digitally signed e-Revision of collaboration between departments to provide Authority from Central Pension Accounting Office better services to pensioners by integrating existing (CPAO) to 4 Banks i.e. SBI, PNB, Bank of Baroda facilities. and Canara Bank has been implemented resulting in saving of time and operational cost and  Download facility of Special Seal Authority (PPO) improvement in efficiency. from CPAO’s website by using login and password  To make successful Digital India Mission of the provided by CPAO has been given to pensioners. Government, the pensioners have been made Consequently, they need not separately approach aware of the benefits of Aadhaar number seeding CPAO to provide copies of their SSAs issued to the in their accounts. Consequently, a considerable banks. This facility ensures digital presence and number of pensioners (about 44 percent) have got availability of records for pensioner. 66 G BG B Department of Expenditure II  With the implementation of e-scrolls, CPAO is now 8. Office of Chief Adviser Cost in a better position to audit the monthly payments to pensioners by banks. CPAO can also monitor 8.1 The Office of the Chief Adviser Cost (CAC) is the payment of first credit in fresh pension case responsible for advising the Ministries and Government through e- Scrolls. Undertakings on cost accounts matters and to undertake cost investigation work on their behalf. Office of Chief  Daily progress report on disposal of PPOs is being Adviser Cost is one of the divisions functioning in the reviewed through “Daily Status Report” generated Department of Expenditure. It is a professional body through PARAS (Pension Authorization Retrieval & staffed by Cost/ Chartered Accountants. Accounting System) Software. 8.2 The Chief Adviser Cost’s Office, is dealing with 7.8.3 E-Governance activities at CPAO matters relating to costing and pricing, industry level studies for determining fair prices, studies on user charges, central CPAO is a fully computerized office. A wide range of excise abatement matters, cost-benefit analysis of projects, softwares/packages have been developed/implemented studies on cost reduction, cost efficiency, appraisal of in this office for streamlining pension authorization, capital intensive projects, profitability analysis and accounting, grievance redressal etc. which include:- application of modern management tools evolving cost and (i) Pension Authorization Retrieval & commercial financial accounting for Ministries/ Department Accounting System (PARAS):- For processing of Government of India. of pension cases received in this office and issue of Special Seal Authority to banks. This software 8.3 It was set up as an independent agency of the is currently being upgraded. This software has Central Government to verify the cost of production and created digital database of pensioners. Various to determine the fair selling price for Government MIS reports are also generated by this software Departments including Defence purchases in respect of for monitoring purposes. the cases referred to it . The role of the office was further enlarged and extended to fixing prices for a number of (ii) COMPACT:- For compiling Monthly Accounts and products covered under the Essential Commodities Act, expenditure relating to this office. This software such as, Petroleum, Steel, Coal, Cement, etc. under the is provided by the O/o the CGA. Administered Price Mechanism (APM). Since cost/pricing (iii) Database Management Software:- Software for work in the Ministries increased significantly, various other comparison of bank’s database with CPAO’s Ministries/Departments started to have their in house database of pensioners has been developed and expertise by seeking posting of services of officers for exception reports are generated by it to clean up work needing expertise in cost/commercial accounts the database and establish a completely matters. In the post liberalization era, the office is matching database at both the ends. receiving and conducting studies in synchronization with (iv) Grievances Redressal Management the liberalization policy of the Government in addition to Software:- NIC, CPAO has developed a software the traditional areas of cost-price studies. for Grievance handling where grievances 8.4 The Chief Adviser Cost’s Office is also cadre received from pensioners are registered and processed in an organized manner. controlling office for the Indian Cost Accounts Service (ICoAS) and looks after training requirements of the (v) e-scroll software:- This software has been officers for continuous up-gradation of their knowledge developed and introduced recently for processing and skills, in addition to rendering professional guidance of payment and receipt scrolls from CPPCs and to the ICoAS officers working in different participating ‘put through statement’ from Reserve Bank of organizations. India for speedy accounting and reconciliation at CPAO 8.5 The major areas of professional functions of the office of the Chief Adviser Cost are as under: (vi) e-PPO/e-revision:- This system has been developed for sending online digitally signed (i) Assisting all Central Government Ministries/ authorities from CPAO to CPPCs of banks for Departments/ Organizations in solving complex arranging payment to the pensioners. At present, Price/Cost related issues, in fixing fair prices for under pilot run of this project, digitally signed various services/products and rendering advice revision authorities are being sent to four banks to various Ministries/Departments in cost matters. from CPAO. (vii) Bar-coding software:- Bar-coding system was (ii) Examination/Verification of claims between accommodated in PARAS this year with the help Government Departments/Public Sector of postal Department for speedy transmission of undertakings and suppliers arising out of pension papers to CPPCs. purchase contracts. 67 G BG B Annual Report 2015-2016 (iii) Determining prices of products and services e) Review of Benchmark of Civil Construction Cost supplied to Government, in order to enable etc. (CommitteeStudy) Government Departments to negotiate the prices with thesupplying organizations. (ii) Fair price of goods purchased/services purchased on Single Tender basis or from (iv) Unit specific as well as industry level studies for limited sources determining cost/ fair prices and making recommendations for fair prices/ rates for (a) Fixation of fair price of Bed Sheets produced and products and services and also to determine supplied by ACASH. reasonableness of prices charged duty structure, (iii) Fair selling price of products/service where etc. Government/Public Sector Undertaking is the (v) Valuation of assets and liabilities of business Producer/Service provider as well as the user taken over and shares of public sector a) Fixation of final price of DDT 50% supplied by undertakings. Hindustan Insecticides limited to NVBDCP for (vi) Functioning as Chairman/ Members of the year 2013-14, revision of fair price of DDT Committee constituted by Government/ different 50% for the years 2011-12 and 2012-13 and Departments related to Cost/financial and pricing provisional price for the year 2014-15. matters. b) Fixation of fair price of Coins supplied by India (vii) Cost and performance audit of industrial Govt. Mints at Hyderabad, Mumbai, Kolkata undertaking. and NOIDA to RBI during the year 2012-13 and 2013-14. (viii) Subsidy determination and verification of claims under Market Intervention Schemes (MIS) and c) Fixation of Rates of Compensation for NGADU Price Support Schemes (PSS) for sharing of supplied by IREL to BARC for the year 2012-13. losses by State and Central Government. d) Fixation of Fair Price of GSCN/SG Coaches (ix) Cost Accounting System for departmental supplied by M/s Bharat Earth Movers Limited, undertakings/Autonomous bodies. Bangalore to Indian Railways during the year 2013-14. (x) Time and Cost Overruns of major projects. e) Fixation of Fair Selling Price of the year 2014-15 (xi) Advise on matters relating to determination of in respect of Tear Gas Gun and Multi Barrel Abatement Rate for purposes of Central Excise. Launcher manufactured by CENWOSTO, BSF, Tekanpur, Gwalior. 8.6 During the period January to December 2015, 60 studies/ reports were completed by the Office of Chief f) Fixation of Fair Selling Price for the year 2014- Adviser Cost. The studies completed during the year 15 & 2015-16 in respect of Tear Smoke Munitions varied widely in nature and may be broadly categorized (TSMs) manufactured by Tear Smoke Unit (TSU) under the following heads: BSF, Tekanpur, Gwalior. (i) System Study g) Fixation of fair price of Rail Products of SAIL supplied to Indian Railways for the year 2012-13 a) Fixation of Common Hourly Rates and Overhead and 2013-14. percentages in respect of Government of India Presses at Temple Street, Kolkata, Nilokheri, h) Pricing of Digital Products of Survey of India Aligarh, Koratty, Rashtrapati Bhawan, Chandigarh, Santragachi, Faridabad and i) Fixation of fair price of ACEMU Transformers for Coimbatore for various years. BHEL Jhansi for the year 2011-12. b) Cost of production & Selling Price for items of j) Revision of prices of Topographical Maps of Postal Stationery produced and supplied by Survey of India for the year 2013-14. Security Printing Press Hyderabad to Department k) Recommendation of fair price of Electronic Voting of Posts and by ISP, Nashik for the year 2013- Machine (EVM) and Voter Verifiable Paper Audit 14. Trial(VVPAT) for the year 2013-14. c) Study on Warship Norms for Piping Work of l) Vetting of prices of Ayurvedic/Unani Medicines Defence Shipyards. supplied by M/sIndian Medicines Pharmaceuti- d) Review of Cost Methodology of Indian Remote cal Corporation Limited (IMPCL) to CGHS Sensing (IRS) Satellites. dispensaries for the pricing period 2013-14. 68 G BG B Department of Expenditure II m) Fixation of fair price of condoms for the year j) Report of Subsidy payable to Northern Railway 2012-13 and 2013-14. catering unit functioningin Prime Minister’s Office for the year 2014-15. n) Vetting of the cost of quoted items in the proposal of M/s GSL Ltd. for supplying 75 boats to MHA k) Report on Vetting of Claims for Price Support under Coastal Security Scheme, Phase II. Scheme (PSS) Gram for Rabi-2005 Season. (iv) Fixation of service charges for the services vi) Balance Sheet on accrual accounting rendered by a Govt. Department/Agency on principles in case of Departmental behalf of the other manufacturing units a) Vetting of claims under Market Intervention Performa Balance Sheet and Income & Scheme (MIS) for Procurement of Ginger in Expenditure Account of Tear Smoke Unit, Border Nagaland for the 2014-15 season. Security Force (BSF), Tekanpur (Gwalior) for the b) Determination of cost of Resident Identity Card year 2014-15. under the Scheme of creation of NPR in the (vii) User Charges coastal areas. a) Review of Non-Tax Revenue - User Charges in c) Fixation of rental charges in respect of Sirifort respect of Indian Rubber Manufacturer Research Auditorium Complex forthe year 2013-14. Association, Thane, Maharashtra. d) Assessment of fair rent for the space available b) Fee and User charges in respect of Jawaharlal in J.N. Stadium. Nehru Aluminium Research Development and e) Fixation of rentals to be charged by Prasar Bharti Design Centre (JNARDDC), Nagpur, (PB) for sharinginfrastructure with private FM Maharashtra. Broadcasters under Phase III. c) Fee and user charges in respect of National (v) Determination of subsidy Institute of Miner’s Health, Nagpur, Maharashtra. a) Payment of subsidy to Northern Railway for the d) Review of Fee and User Charges of Indian year 2013-14 with respect to Catering Unit in Bureau of Mines, Nagpur, Maharashtra. PMO. (viii) Other studies b) Payment of Subsidy to Northern Railway catering unit functioning in Parliament House Complex Valuation of compensation for Mine Infrastructure for the year 2013-14. of 108 coal Blocks. c) Price Support Scheme (PSS) of Special Grade 8.7 Major Committees Represented Milling Copra procured in Andhra Pradesh by NAFED during the season 2012. Officers of Chief Adviser Cost Office because of their expertise in costing/finance/commercial accounting have d) Vetting of Audited Accounts for MIS for ISKUT in also served as Chairman/Members on the following major order to determine the share of loss to be borne multi-disciplinary Inter-Ministerial/ Expert Committees: by central government for the state of Mizoram for the year 2012-13. 1. National Pharmaceuticals Pricing Authority, Department of Pharmaceuticals. e) Vetting of Subsidy rates for new LPG Bottling Plant commissioned in Dumad (Gujarat) and 2. Board of Governors and the society of the Muzzafarpur (Bihar) after 31st March 2002. National Institute of Financial Management (NIFM), Faridabad. f) Vetting of claim for Price Support Scheme (PSS) Ball Copra for 2012 season. 3. Governing Body of Tear Smoke Unit, BSF, Tekanpur. g) Vetting of claims for Price Support Scheme(PSS) sunflower seed for the kharif crop 2012-13 4. Rate Structure Committee under the season. Chairmanship of AS&FA, Ministry of Information h) Vetting of claims for Price Support Scheme(PSS) and Broadcasting to review the DAVP for Pulses 2012-13 Rabi season for SFAC (Small advertisement rates. Farmers Agri-Bussiness Consortium). 5. Committee on “Modernization of Costing System i) Report on vetting of claim for Price Support in India Post” in Department of Post, Ministry of Scheme (PSS) Cotton for 2009-10 season. Communications. 69 G BG B Annual Report 2015-2016 6. Advisory Committee for consideration of techno- nominated under the said act and the information sought economic viability of major/ medium, flood control by the applicants is provided within the stipulated time. and multipurpose projects, coordinated by Recent guidelines including su motu (Proactive) Central Water Commission. disclosure under Sec 4(1)(b) of the RTI Act is under implementation. 7. Committee under JS (Atomic Energy) for 8.11 Initiative undertaken for SC/ ST/ OBC/ examination of existing costing procedures and Disabled recommending modification in the methodology in respect of Nuclear Fuel Complex (NFC), Recruitment to the entry level of ICoAS i.e., Assistant Hyderabad. Director (Cost) is made on the recommendations of UPSC. All GoI policies on reservation for SC/ST/OBC/ 8. Committee for review of costing methods of Disabled categories are followed in the process. Heavy Water & also for reviewing the practices of accounting & pricing of Heavy Water Pool. 9. Use of Official Language(Hindi) 9. Committee to Review and Recommend Non Tax 9.1 Hindi Section of the Department of Expenditure Revenue (User Charges) generated by India is responsible for implementation of the provisions made Meteorology Department, New Delhi. under Official Language Act, 1963 and Official Languages Rules, 1976 as amended from time to time. It is also 10. Price Negotiation Committee for Electronic Voting Machines, Ministry of Law and Justice. responsible for coordinating follow-up action on the suggestions/directions given by Kendriya Hindi Samiti, 11. Committee of Ministry of Home Affairs for fixation Committee of Parliament on Official Language, Hindi of Deployment charges for Central Police Forces/ Advisory Committee and Central Official Language Rapid Action Force of CRPF. Implementation Committee. Other responsibilities of the 12. Standing Committee of Experts under Drugs section include implementation of various incentive (Prices Control) Order, 2013. schemes to enhance use of Hindi in official work, facilitation in nomination of officers/employees for Hindi 13. Standing Committees to examine the reasons for language training, Hindi stenography/typing training and time and cost overrun of various Ministries. organization of Hindi fortnight/day. In addition to these, 14. Standing Committees for Revision of Cost efforts for achieving annual targets fixed by Department Estimates (REC) established in various of Official Language with regard to usage of Hindi in Ministries. official work are made in association with the sections/ divisions/offices in the Department. 15. Committee to examine specific issues with regard to Price regime applicable on sale of DDT 9.2. Officers/staff of the Department are nominated by Hindustan Insecticides Ltd. for Hindi Language, Hindi Stenography/typing training. Hindi Section is facilitating Administration Division for 16. Special Committee for Inter-linking of Rivers. these training programs. During the year 2015, 6 officials 8.8 Training were nominated for Hindi Stenography training. 9.3. To increase original correspondence with other As per the extant training policy of DoP&T, this office organised first ever Mid-Career Training (Executive Offices/individuals in Hindi, circulars were issued to Development) Programme of 2 weeks duration from 26th Sections/Divisions/Offices from time to time. As per October to 8th November 2015 in India and abroad quarterly progress report for the quarter ended on involving 14 (fourteen) nominated Middle and Senior level December 31, 2015, original correspondence in Hindi Indian Cost Accounts Service officers. with Region “A”, “B” and “C” is 68.80%, 54.14% and 39.34% respectively while original Hindi correspondence 8.9 e-Governance activities during the quarter ended on December 31, 2014 stood The existing website www.cac.gov.in of the office at 68.50%, 58.85% and 36.86% respectively. of Chief Adviser Cost is proposed to be revamped 9.4. Regular Quarterly meetings of the Departmental thoroughly based on latest guidelines of GoI including Official Language Implementation Committee were held. RTI requirements. CAC intranet link for the internal use These were held on March 19, June 24, September 30 of Office of Chief Adviser Cost is also under updation/ and December 29, 2015. Discussions were held on revamping. quarterly progress reports received from various sections/ 8.10 Right to Information Act, 2005 divisions/offices of the Department and where Right to Information Act, 2005 is completely shortcomings found, it was advised to increase usage of implemented. PIO and Appellate Authority have been Hindi in official work. 70 G BG B Department of Expenditure II 9.5. In order to monitoring progress in implementation 15, 2015. As many as 164 officers and officials took part of provisions relating to Official Language,9 Sections/ in these competitions enthusiastically. All the winners of Offices viz. PF-II, FCD, E.Coord, E-III (B), IFU, Misc. first, second and third positions including two consolation Division, E-II (B), E.V and Office of CCA were inspected. prizes in these competitions were awarded cash prizes along with merit certificates by Hon’ble Minister of State 9.6. In order to overcome the practical difficulties for Finance in a prize distribution ceremony held on faced in doing Official work in Hindi and to increase use November 26, 2015. of Hindi, two workshops were organized on November 20, 2015. Officials of the Department were apprised of 9.10. Hindi translation of the documents falling under the Official Language Policy of the Govt. and were also section 3(3) of Official Language Act, 1963, replies to the imparted training on how to work in Hindi on computers. applications/appeals received under RTI Act, 2005 along 18 Officers/Officials participated in each of these with Brochure on Pay and Allowances by Pay and workshops. Research Unit of the Department was carried out. 10. Integrated Finance Unit (IFU) 9.7. Quarterly Progress Reports regarding progressive use of Hindi were regularly received from 10.1 The Integrated Finance Unit works under Joint Sections/Offices of the Department. A detailed review of Secretary & Financial Adviser (Finance) and deals with progress reports (Part-I & II) in respect of the quarter the expenditure and Budget related proposals under ending 31.03.2015 was done keeping in view the targets Grant No.40 - Department of Expenditure which includes prescribed in the Annual Program and Review Reports (i) Secretariat General Services covering the were sent to CGA, CPAO, INGAF and NIFM for follow up establishment budget for the Department of Expenditure, and necessary action. Direct Benefit Taxes Division, Controller General of 9.8. Replies of letters received from Members of Accounts, Central Pension Accounting Office, Finance Commission Division, Staff Inspection Unit, Cost Accounts Parliament and other VIPs were promptly sent and follow- Branch and Chief Controller of Accounts; (ii) Other up action ensured. During January, 2015 to December, Administrative Services covering the budget for Institute 2015, 02 applications received under RTI Act, 2005 were of Government Accounts and Finance, National Institute disposed off well in time. of Financial Management, 7th Central Pay Commission, 9.9. During the year 2015 “Hindi Fortnight” was Expenditure Management Commission, Contribution to organized in the Department from 01-15 September, International Body (AGAOA) and the budget relating to 2015. During “Hindi Fortnight” various competitions were payment of service charges to the Central Recordkeeping organized which included Hindi Essay Writing, Noting- Agency for the New Pension Scheme; and (iii) Other Drafting, Official Language and General knowledge, Hindi General Economic Services covering the budget for Stenography, Hindi Typing, Word Power, Dictation and Public Financial Management System (PFMS). Handwriting. In addition to this, a campaign was launched 10.2 This Unit also monitors the expenditure under for undertaking more and more work in Hindi (minimum Grant No.41 – Pension; and Grant No.42 – Indian Audit 2000 words) during the period of August 14 to September & Accounts Department. The allocations under the respective Grants are as under:- (Rs. in crore) Budget Estimates 2015-16 Revised Estimates 2015-16 Grant No. Plan Non-Plan Total Plan Non-Plan Total 40 – Department of Revenue Section 4.00 152.84 156.84 44.30 151.73 196.03 Expenditure Capital Section - - - - - - Total 4.00 152.84 156.84 44.30 151.73 196.03 41 – Pensions Revenue Section - 27285.00 27285.00 - 27785.00 27785.00 Capital Section - - - - - - Total - 27285.00 27285.00 - 27785.00 27785.00 42 – Indian Audit & Revenue Section - 3414.05 3414.05 - 3196.00 3196.00 Accounts Department Capital Section - 15.00 15.00 - 7.50 7.50 Total - 3429.05 3429.05 - 3203.50 3203.50 71 G BG B Annual Report 2015-2016 10.3 The Integrated Finance Unit has expeditiously in the Department of Economic Affairs, payments/ examined and disposed the financial and expenditure releases worth Rs. 2679.06 crore were made proposal pertaining to the Department of Expenditure electronically through more than 16740 authorisations for including the proposals for appointment of Consultants, electronic transfer of funds to the Bank accounts of vendors/beneficiaries, in addition to the Inter Government deputation abroad of officers, grants-in-aid to National Advice (IGA) issued to RBI for direct transfer of funds to Institute of Financial Management, duly observing State Governments and other bodies. In the PAO, austerity instructions issued by the Govt. from time to Economic Affairs, percentage of e- payment is 99.01%, time. whereas the PAO, Department of Expenditure made e- 10.4 The expenditure trend of Grant Nos.40, 41 and payment of 97.87% and issued 10844 authorisations for 42 have consistently been monitored and strict control electronic transfer of funds for an amount of Rs. 81.30 has been exercised over the Govt. expenditure. A report crore up-to Feb 2016 in the FY 2015-16. of the review is regularly submitted to the Secretary (c) During the year 2015-16 (up-to Feb 2016), the (Expenditure) on quarterly basis. performance in the settlement of outstanding verification cases of absorbed employees of SPMCIL was significant. 11. CHIEF CONTROLLER OF ACCOUNTS 14218 cases (99.93%) out of 14227 cases of Leave 11.1 The Chief Controller of Accounts (CCA) is in overall Encashment, 3051 cases (99.86%) out of 3055 cases of Combined Pension cases, 11,088 cases (99.8%) out of charge of the payment and accounting set up of the 11100 cases of Pro rata pension and 17350 cases Ministry. Some of the important functions of the CCA (97.36%) out of 17820 cases of Leave Salary and Pension (Finance) are: Contribution were achieved during this period. (i) Budget related work (d) During 2015 CPAO has uploaded 14128 Pre- (ii) Payments, accounting and internal audit in the 2006 pension cases for revision. Up to Feb 2016, 13924 Ministry of Finance cases (98.55%) have been revised by Pay and Account Offices. Rest of 204 cases are being revised (iii) Financial reporting to Chief Accounting Authority expeditiously. (i.e. the Secretary of the respective Department) and to the Controller General of Accounts 12. National Institute of Financial Management (iv) Preparation of monthly and quarterly reviews of receipt and expenditure 12.1 The National Institute of Financial Management (v) Settlement of Pension cases and Pension (NIFM) was set up in 1993 on the basis of a proposal authorization under various Pension Rules made by Ministry of Finance, which was approved by the (vi) Pension payment to foreign pensioners residing Union Cabinet. The Union Cabinet envisaged that NIFM in India on behalf of Sri Lanka, Singapore, UK would begin as a training institution for Officers recruited and Burma by the Union Public Service Commission (UPSC) through the annual Civil Service Examinations and allocated to (vii) Accounting and monitoring of Loans advanced to foreign countries the various services responsible for managing senior and top management posts dealing with accounts and finance (viii) Transfer of funds to and from CFI to Public in the Government of India. NIFM was to develop as a Account of India Centre of Excellence in the areas of Financial (ix) Formulation of detailed Accounting procedures Management and related disciplines, “not only in India in respect of the Funds maintained under Public but also in Asia”. In order to ensure that NIFM enjoys a Account of India greater degree of flexibility and autonomy than the 11.2 ACHIEVEMENTS departmental academies that existed at that time for officers training, it was decided that the Institute would (a) By using the technology, it was made possible to be a legal entity known as ‘Society’. Such societies are transfer the grants/loans to States within the same day of legally independent entities authorized to frame their own issuance of sanction and also to reflect it in the PFMS rules and regulations. This structure makes available portal of CGA. Sanctions and IGA advices to RBI are also greater autonomy in both academic and administration uploaded on the Finance Ministry web site http:// matters to the Institute, facilitating quick decision making finmin.nic.in/ state loan/state main.asp and are accessible in response to changing perceptions of desired goals and to all the States. objectives. (b) In the Pay and Accounts offices, most of the 12.2 Despite the legally autonomous character of the payments/releases are being made electronically and only Institute, making the Finance Minister of Government of few cheques are issued (like Government to India, the President of Society, ensured a very close linkage Government). During the FY 2015-16 (up-to Feb 2016), with Government. For administrative purposes, there is a 72 G BG B Department of Expenditure II Governing Board chaired by the Secretary (Expenditure). year Weekend Post Graduate Executive Programme in The Director appointed by the Appointments Committee Financial Markets and various short term programmes of the Union Cabinet is responsible for the administration for Central Government, State Government, PSUs, and academic programmes of the Institute. It will thus be Autonomous Bodies. Officers from different foreign seen that the Institute has close links and direct access to countries also participate in the said programmes. NIFM Government of India. The Institute recruits its Faculty either also provides consultancy services to various by deputation from civil services or by selection from the Departments and organizations of the Government of best in the academic field. The Institute therefore has a India, State Government, PSUs, Autonomous Bodies, distinct advantage of a mix of faculty from academic as Universities and Foreign countries. In 2014-15 (April 2014 well as Government sector. The Institute adheres to norms to March 2015), NIFM trained 1691 participants in 71 prescribed by the All India Council for Technical Education programmes. (AICTE) with respect of faculty qualifications and strength. 12.4 The Institute executed consultancy projects for 12.3 Currently, the Institute runs five long-term various Ministries and Departments of Government of programmes approved by AICTE -Professional Training India. The Institute publishes bi-annual Journal and a Course of one year for newly recruited probationers of Accounting services called Diploma in Public Financial Newsletter on monthly basis. Management; a one year Diploma Course in Government 12.5 NIFM has established collaborations with several Financial Management; a two-year Post Graduate National and International Institutions. The Institute has Diploma in Management (Financial Management) implemented e-office, bio-metric attendance, CCTV, programme for Officers of the Central Government, the Security Surveillance and Video Conferencing Systems State Governments, Public Sector Undertakings and other and tele lectures system. It is a matter of great pride that organizations under Government duly recognized as MBA equivalent by AIU and NBA accredited; and a one-year the NIFM has by now emerged as a “Centre of Post Graduate Diploma in Management (Financial Excellence” in training, education, research and Markets) to produce competent Researchers, Teachers consultancy in the area of Financial Management both and Consultants. In addition, NIFM also conducts a one within and outside India. 73 G BG B Department of Expenditure I Annexure-I DEPARTMENT OF EXPENDITURE REPRESENTATION OF SCs, STs and OBCs Groups Number of Employees Number of appointments made during the previous calendar year By Direct Recruitment By Promotion By Other Methods Total SCs STs OBCs Total SCs STs OBCs Total SCs STs Total SCs STs 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Group A 283 30 12 22 3 - 2 - 15 2 3 - - - Group B 462 72 17 27 16 4 - 4 25 2 3 - - - Group C 184 31 09 41 12 2 1 5 - - - - - - Group D 140 47 07 12 - - - - - - - - - - (Excl.Safai Karamcharis) Gr.D (Safai 08 07 - - - - - - - - - - - - Karamcharis) TOTAL 1077 187 45 102 31 6 3 9 40 4 6 - - - Annexure-II DEPARTMENT OF EXPENDITURE REPRESENTATION OF PERSONS WITH DISABILITIES Group Number of Employees DIRECT RECRUITMENT PROMOTION No. of No. of No. of No. of Vacancies reserved Appointments Made Vacancies reserved Appointments Made Total VH HH OH VH HH OH Total VH HH OH VH HH OH Total VH HH OH 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 A 258 1 - - - - - - - - - - - - - - - - B 325 3 - 3 - - - - - - - - - - - - - - C 116 1 1 1 - 1 - - - - - - - - 1 - - - D 24 - - - - - - - - - - - - - - - - - Total 723 5 1 4 - 1 - - - - - - - - 1 - - - Note: (i) VH stands for Visually Handicapped (persons suffering from blindness or low vision) (ii) HH stands for Hearing Handicapped (persons suffering from hearing impairment (iii) OH Sands for Orthopedically Handicapped (persons suffering from locomotors disability or cerebral palsy) 75 G BG B Annual Report 2015-2016 Annexure-III Details of the Paras/PA reports on which ATNs are pending Sl. Year No. of Paras/PA No. of ATNs not sent No. of ATNs sent No. of ATNs which No. reports on which by the Ministry even but returned with have been finally ATNs have been for the first time observations and vetted by Audit but submitted to PAC Audit is awaiting have not been after vetting by their resubmission submitted by the by the Ministry Ministry of PAC 1 2015 1350* 135** 276** 91** * As on 31.12.2015 ** As on 31.10.2015 76 G BB G 77 Department of Expenditure II B G ORGANISATIONAL CHART OF DEPARTMENT OF EXPENDITURE Secretary (Expenditure) Shri Ratan P. Watal Tel: 23092929 Controller General Special Secretary Additional Secretary Chief Advisor of Accounts (Expenditure) (Plan Finance-I) (Cost) Shri M.J. Joseph Shri Ajay Narayan Jha Shri G.C. Murmu Vacant Tel: 24617758 Tel: 23092919 Tel: 23094811 Joint Secretary Joint Secretary OSD Joint Secretary (Personnel) (Plan Finance-I) (Public Procurement & Financial Adviser Ms. Annie George Shri Arunish Chawla Division) Vacant Mathew Tel: 23093052 Shri Vivek Joshi Tel: 23093283 Tel: 23093382Chapter - III Department of Revenue III Department of Revenue 1. Organisation and Functions xvii. Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976; 1.1 The Department of Revenue functions under the overall direction and control of the Secretary (Revenue). xviii. Indian Stamp Act, 1899 (to the extent falling within It exercises control in respect of matters relating to all jurisdiction of the Union); the Direct and Indirect Union Taxes through two statutory xix. Conservation of Foreign Exchange and Boards namely, the Central Board of Direct Taxes (CBDT) Prevention of Smuggling Activities Act, 1974; and the Central Board of Excise and Customs (CBEC). Each Board is headed by a Chairman who is also ex- xx. Prevention of Money Laundering Act, 2002; and officio Special Secretary to the Government of India. xxi. Foreign Exchange Management Act, 1999. Matters relating to the levy and collection of all Direct taxes are looked after by the CBDT whereas those relating 1.2.1 The administration of the Acts mentioned at Sl. to levy and collection of Customs and Central Excise Nos. iii, v, vi and vii is limited to the cases pertaining to duties, Service Tax and other Indirect taxes fall within the period when these laws were in force. The Prevention the purview of the CBEC. The two Boards were of Money Laundering (Amendment) Bill, 2012 has been constituted under the Central Board of Revenue Act, passed by both the Houses of Parliament and the same 1963. At present, the CBDT and CBEC have six Members has also received assent of the President. each. 1.3 The Department looks after the matters relating to 1.2 The Department of Revenue administers the the above-mentioned Acts through the following attached/ following Acts: subordinate offices: i. Income Tax Act, 1961; i. Commissionerates/Directorates under Central ii. Wealth Tax Act, 1957; Board of Excise and Customs; iii. Expenditure Tax Act, 1987; ii. Commissionerates/Directorates under Central Board of Direct Taxes; iv. Benami Transactions (Prohibition) Act, 1988; iii. Central Economic Intelligence Bureau; v. Super Profits Act, 1963; iv. Directorate of Enforcement; vi. Companies (Profits) Sur-tax Act, 1964; v. Central Bureau of Narcotics; vii. Compulsory Deposit (Income Tax Payers) Scheme Act, 1974; vi. Chief Controller of Factories; viii. Chapter VII of Finance (No.2) Act, 2004 (Relating vii. Appellate Tribunal for Forfeited Property; to Levy of Securities Transactions Tax) viii. Income Tax Settlement Commission; ix. Chapter VII of Finance Act 2005 (Relating to Banking Cash Transaction Tax) ix. Customs and Central Excise Settlement Commission; x. Chapter V of Finance Act, 1994 (relating to Service Tax) x. Customs, Excise and Service Tax Appellate Tribunal; xi. Central Excise Act, 1944 and related matters; xi. Authority for Advance Rulings for Income Tax; xii. Customs Act, 1962 and related matters; xii. Authority for Advance Rulings for Customs and xiii. Medicinal and Toilet Preparations (Excise Duties) Central Excise; Act, 1955; xiii. National Committee for Promotion of Social and xiv. Central Sales Tax Act, 1956; Economic Welfare; xv. Narcotic Drugs and Psychotropic Substances xiv. Competent Authorities appointed under Act, 1985; Smugglers and Foreign Exchange Manipulators xvi. Prevention of Illicit Traffic in Narcotic Drugs and (Forfeiture of Property) Act, 1976 & Narcotic Psychotropic Substances Act, 1988; Drugs and Psychotropic Substances Act, 1985; 79Annual Report 2015-2016 xv. Financial Intelligence Unit, India (FIU-IND); xviii. Adjudicating Authority under Prevention of Money Laundering Act. xvi. Income Tax Ombudsman; 1.4 A comparison of the collection of Direct and xvii. Appellate Tribunal under Prevention of Money Indirect taxes during the financial year 2015-16 with that Laundering Act; and during the previous financial year is given below: Sl. Amounts collected Nature of Taxes No. during the Financial Year 2014-15 2015-16 % age of growth (Upto Dec, 14) (Upto Dec, 15) over last year 1. Corporate Income Tax 278205 305895 9.95% 2. Personal Income Tax 167769 185033 10.29% (excl STT & WT, etc.)) 3. Other Taxes (STT & WT) 5778 6064 4.95% 4. Central Excise* 119530 195618 63.7% 5. Customs 137563 160016 16.3% 6. Service Tax 119238 149233 25.2% TOTAL 828083 1001859 20.99% * Exclusive of Cesses not administered by Department of Revenue. 1.5 An Organisation Chart of Department of Revenue d. Chief Controller of Factories is given at the end. e. Central Bureau of Narcotics 2. Revenue Headquarters f. Customs, Excise and Service Tax Appellate Administration Tribunal (CESTAT) 2.1 The Department of Revenue looks after matters g. Appellate Tribunal for Forfeited Property (ATFP) relating to all administration work pertaining to the h. Customs and Central Excise Settlement Department, coordination between the two Boards (CBEC Commission (CCESC) and CBDT), the administration of the Indian Stamp Act i. Income Tax Settlement Commission (ITSC) 1899 (to the extent falling within the jurisdiction of the Union), the Central Sales Tax Act 1956, the Narcotic j. Authority for Advance Rulings (AAR) for Customs Drugs and Psychotropic Substances Act 1985 (NDPSA), and Central Excise the Smugglers and Foreign Exchange Manipulators k. Authority for Advance Rulings (AAR) for Income (Forfeiture of Property) Act 1976 (SAFEM (FOP) A), the Tax Foreign Exchange Management Act 1999 (FEMA) and l. National Committee for Promotion of Social and the Conservation of Foreign Exchange and Prevention Economic Welfare (NCPSEW) of Smuggling Activities Act, 1974 (COFEPOSA), the Prevention of Money Laundering Act, 2002 (PMLA) and m. Financial Intelligence Unit, India (FIU-IND) matters relating to the following attached/ subordinate n. Income Tax Ombudsman offices of the Department: o. Indirect Tax Ombudsman a. Enforcement Directorate p. Appellate Tribunal under Prevention of Money b. Central Economic Intelligence Bureau (CEIB) Laundering Act c. Competent Authorities appointed under SAFEM q. Adjudicating Authority under Prevention of Money (FOP) A and NDPSA Laundering Act 80Department of Revenue III The DG (CEIB) reports directly to the Revenue administration in the organisations under the Department Secretary. The Secretary (NCPSEW) reports to the of Revenue. The Unit continued to liaise with the Revenue Secretary through the Chairman, CBDT. Department of AR&PG and SIU, Department of Expenditure on the following: - 2.2 The following items of works are also undertaken by the Headquarters: (i) Compilation and consolidation of orders/instructions; I. Appointment of – (ii) Review of rules & regulations and Manuals;  Chairman and Members of CBEC and CBDT (iii) Review of periodical reports and returns;  Chairman and Members of ATFP (iv) Monitoring the progress of disposal of VIP and other pending cases; and  Chairman, Vice Presidents and Members of CESTAT (v) Annual Inspection of the sections in the  Chairmen, Vice Chairmen and Members of Department of Revenue. CCESC and ITSC 2.3.2 In addition to the above, the Induction Material  Chairmen, Vice-Chairman and Members of of the Department has been updated regularly. The AARs for Customs / Central Excise and progress of disposal of pending VIP/ MP references in Income Tax the Department has been monitored at the level of  Director General of CEIB Secretary (Revenue) and Additional Secretary (Revenue) with the officers concerned in the Department. The  Director of Enforcement pendency position of VIP references is compiled and  Competent Authorities (SAFEM (FOP) A and circulated to MOS (Revenue) and senior officers of the NDPSA) Department every fortnight. This has reduced the  Director (FIU-IND) pendency of VIP cases.  Income Tax Ombudsman 2.4 Economic Security (ES) Cell  Indirect Tax Ombudsman 2.4.1 Economic Security Cell is dealing with the  Chairperson and Member of Adjudicating administration and implementation of the Prevention of Authority set up under PMLA Money laundering Act, 2002. Based on PMLA, Economic  Chairperson and Member of Appellate Security Cell is also looking after framing / amendment Tribunal set up under PMLA of PMLA Rules on matters relating to Know Your II. Setting up of Commissions/Committees under Customer (KYC norms, setting up of special Courts under the Department PMLA, Section 66 of PMLA – authorities to whom information to be disseminated etc. from time to time. III. Foreign training and assignment of officers of the The ES Cell handles all issues related to FATF. Department IV. Processing of the cases of deputation of IRS/ 2.4.2 Prevention of Money laundering Act (PMLA) was ICCES officers to Central Government under enacted on 17th January, 2003 and brought into force on Central Staffing Scheme or any Board/PSU etc. 1st July 2005. The object of this Act is to prevent money laundering and to provide for confiscation of property V. Issue of sanction for payment of annual contribution derived from, or involved in, money – laundering and for to the Customs Cooperation Council, Brussels matters connected therewith or incidental thereto. Two (Belgium) and other international agencies. main objectives of the Act are: 2.3 Internal Work Study Unit (IWSU)  Criminalize money laundering and provide for 2.3.1 Being the Nodal Agency for dissemination of attachment, seizure and confiscation of property Government guidelines for bringing about improvement involved in money laundering [Implemented by and efficiency, cleanliness and for effecting cost economy Enforcement Directorate]; and in the administration, the Internal Work Study Unit (IWSU) of the Department of Revenue, during the year 2015-16,  Prescribe obligations on banks, financial Institutions continued its efforts to improve the quality of and intermediaries relating to KYC, record keeping 81Annual Report 2015-2016 3. Narcotics Control (NC) and furnishing reports [Implemented by Financial Division Intelligence Unit (FIU-IND)]. 2.4.3 PMLA was amended in 2005, 2009, 2012 and The Narcotics Control Division administers the 2015 to overcome the deficiencies and to meet the Narcotic Drugs and Psychotropic Substances Act,1985 international standards on Anti-Money Laundering as (61 of 1985), which prohibits ,except for medical and prescribed by Financial Action Task Force (FATF). scientific purposes, the manufacture, production, possession, sale, purchase, transport, warehouse, use, 2.4.4 Financial Action Task Force (FATF) consumption, import inter-State, export inter-State, 2.4.4.1 The Financial Action Task Force (FATF) is an import into India, export from India or transhipment of inter-governmental body which sets standards, and narcotic drugs and psychotropic substances. The policy develops and promotes policies to combat money of the Governments has thus been to promote use of laundering and terrorist financing. narcotic Drugs and psychotropic substances for medical 2.4.4.2 The Forty Recommendations and Nine Special and scientific purposes while preventing their diversion Recommendations of FATF provide a complete set of from licit sources, and prohibiting illicit traffic and abuse. counter-measures against money laundering covering the The Narcotic Drugs and Psychotropic Substances Act criminal justice system and law enforcement, the financial divides the powers and responsibility of regulation of system and its regulation, and international co-operation. licit activities. Section 9 of the Act has listed various These Recommendations have been recognized, activities which the Central Government can, by rules, endorsed, or adopted by many international bodies as regulate while Section 10 lists various activities which the international standards for combating money the State Governments can, by rules, regulate. laundering. India became the member of Financial Action Accordingly, Narcotic Drugs and Psychotropic Task Force (FATF) in June 2010. Substances Rules, 1985 have been framed by the 2.5 Extension of tenure of the High Level Central Government, which regulates cultivation of Committee to interact with Trade and Industry opium, manufacture, import/export of narcotic drugs and on Tax Laws: psychotropic substances. Further to prevent diversion A High Level Committee had been constituted of precursor chemicals, of wide industrial use, for illicit on 26.11.2014 for a period of one year under the manufacturing of, narcotic Drugs and psychotropic Chairmanship of Shri Ashok Lahiri with two Members to Substances, the Narcotic Drugs and Psychotropic interact with trade and industry on regular basis and to Substances(Regulations of Controlled Substances) ascertain areas where clarification in tax laws is required. Order,,2013 has been framed under Section 9A of the The High Level Committee will give recommendations NDPS Act. to the CBDT/CBEC for issuance of appropriate clarification by way of circulars, instructions etc. on tax 3.1. Functions/ Working of The Central Bureau of issues. An extension of term of the High Level Narcotics (CBN) Committee for another period of one year beyond 3.1.1. Licit Opium Cultivation 25.11.2015 has been given. As per Section 5(2) of the Narcotic Drugs and 2.6 Setting up of Committee with a view to Psychotropic Substances Act, 1985, the Narcotics Simplify the provisions of the Income Tax- Commissioner shall, either himself or through the officers Act, 1961 subordinate to him, exercises all powers and performs all Finance Minister, in his budget speech, 2015- functions relating to superintendence over cultivation of 16, has announced phased elimination of exemptions and opium poppy and production of opium. He shall also incentives. Therefore with a view to simplify the provisions exercise such powers and perform functions as may be of the Income Tax Act, 1961, a committee has been entrusted to him by the Central Government. The licit constituted on 27.10.2015 for a period of one year under cultivation of opium poppy is permitted only in certain the Chairmanship of Justice R. V. Easwar (Retd.) former districts and tehsils duly notified by the Central Judge, Delhi High Court and former President , ITAT with Government. 9 Members. 82Department of Revenue III 3.1.2. Control over trade of Narcotics Drugs, No. of NOC issued from 01.04.2015 to 31.12.2015 Psychotropic Substances and Precursor For export of Controlled Substance 992 chemicals For import of Controlled Substance 176 India is a signatory to Single Convention on No. of Pre-export Notifications issued 943 Narcotics Drugs, 1961, the Convention on Psychotropic Number of Stop Shipments of Substances, 1971 & United Nations Convention against Controlled Substances 4 illicit traffic in Narcotics Drugs & Psychotropic Substances of 1988. International Narcotics Control Board (INCB) has developed online PEN system to make exchange of In India, control over Narcotic Drugs and information between the competent National Authorities. Psychotropic Substances and precursor chemicals, are CBN had issued 943 PEN’s (01-4-2015 to 31-12-2015) exercised as per provisions of The Narcotics Drugs & to the competent authority of various importing countries, for verifying the legitimacy of the transactions. On the Psychotropic Substances Act, 1985 and the Rules and initiative, taken by Central Bureau of Narcotics, through Orders made thereunder. CBN is Competent National online PEN system, CBN has identified and stopped many Authority under above UN Conventions. suspicious transactions of Precursor Chemicals suspected to be diverted from the licit channels during As per NDPS Act & Rules, Narcotics Drugs & the year under report. Psychotropic Substances can only be exported out of Central Bureau of Narcotics in collaboration with India/ imported into India, under an export authorization/ the UNODC has started e-learning center for the drug import certificate, duly issued by the Narcotics law enforcement officer at the Central Bureau of Narcotics Commissioner (Rule 58 and Rule 55 of the Narcotics Headquarter office at Gwalior. Officer of CBN, Central Drugs & Psychotropic Substances Rules 1985). CBN is excise & police were given basic training in drug law also assigned the responsibility for registration of enforcement through CBT module. contracts for import of poppy seed. CBN has registered itself and started using the new secure online tool known by its acronym “PICS” – CBN is also the designated authority for control Precursors Incident Communication system, introduced of import and export of specified Precursor Chemicals. by the INCB, to enhance real time communication and The Narcotics Drugs & Psychotropic Substances information exchange between national authorities on (Regulation of Controlled Substances) Order, 2013 has precursor seizures and other incidents involving precursor chemicals. been issued by the Govt. of India on 26-03-2013. This order came into force on 26th March, 2013. As per this The performance/achievement with respect to order, 14 more substances, either Bulk or Preparation, issuance of Export authorization and Import Certificate issued by Central Bureau of Narcotics during the current and its salts, have been declared as controlled financial year and previous financial year for the export/ substances. Now, there are in total 17 Controlled import of narcotic drugs /psychotropic substances is as Substances which requires No Objection Certificate under: (NOC) from the Narcotics Commissioner, Gwalior for Psychotropic Narcotic Export or Import from/ in to India (Schedule ‘B’ & ‘C’). Substances Drugs Central Bureau of Narcotics also issues 2015-16 2015-16 manufacturing license & renews the manufacturing (up to 31st (up to 31st license for manufacture of synthetic narcotic drugs. Dec, 2015) Dec, 2015) 3.1.3. Achievements: No. of Export The performance/ achievement with respect to Authorization 2021 176 issuance of NOCs issued by Central Bureau of Narcotics Issued during the year 2015-16 and for the period from No. of Import 01.04.2015 to 31.12.2015 for the export/import of 346 107 Certificate issued Precursor Chemicals is as under: 83Annual Report 2015-2016 Number of Manufacturing license, issued/ number of Registrations for import of poppy seeds issued, renewed, for manufacture of synthetic narcotic drugs and are as under: No. of Registration certificates No. of Manufacturing license Quota Allocation issued for import of Poppy Seeds issued in calendar issued in calendar in calendar year 2015 year 2015 year 2015 15 20 455 The details of quota of narcotic drugs, allocated to consuming companies, during the year 2015, are as under: Name of Drug No. of total companies Quantity allocated to whom allocation has (in base) been made in 2015 (in kgs.) Codeine 101 63491.563 Cannabis 0 0 Diphenoxylate 9 4282.415 Ethylmorphine 4 172.125 Fentanyl (Ingram) 30 6618.058 Opium 57 6964.500 Morphine 24 331.551 Pethidine 11 224.46 Pholcodine 8 433.60 Thebaine 7 1643 Dihydrocodeine 3 1020.745 Oxycodone 14 11.717 Hydrocodone 4 0.0004102 Methadone 3 499.500 Hydromorphone 2 0.0003 Remifentanyl(In gram) 1 43.043 Oxymorphone 2 0.0003 Oripavin 3 42 Difenoxin 2 0.000552 Total 285 85778.2785622 84Department of Revenue III The Government of India has developed web- objective of the online application is to collect required based software for online registration of manufacturers data on manufacture and consumption of narcotic drugs and wholesalers of psychotropic substances, for both bulk for generation of Form “C” in respect of India for drugs and preparations, with the Central Bureau of submission to the International Narcotics Control Board Narcotics (CBN), under the guidance of the National (INCB), Vienna. This office has taken up the matter with Informatics Centre, New Delhi. The system has been National Informatics Centre (NIC), New Delhi. However, made functional to facilitate submission of data on development of web based online application for registration of manufacturers and dealers of narcotic manufacture, utilization, stock, import, export, sale drugs with the Central Bureau of Narcotics (CBN) are purchase and consumption of psychotropic substances still under process. in the country. 3.1.4. Enforcement of NDPS Act, 1985 The data collected through the system, will facilitate generation of periodical, statistical report on The Central Bureau of Narcotics undertakes psychotropic substances like form ’P’ form ‘A/P, form ‘B/ action to prevent the illicit trafficking of Narcotic Drugs P’ besides other MIS report for monitoring the and Psychotropic Substances. It also undertakes manufacture and consumption of psychotropic investigations and prosecution of drug related offences, substances in the country. tracing and freezing of illegally acquired property of drug traffickers, derived from illicit drug trafficking, for forfeiture The Government of India has decided to develop and confiscation. a web based online application for registration of manufacturers and dealers of narcotic drugs with the i). During the calendar year 2015, several seizures, Central Bureau of Narcotics (CBN) and submission of under NDPS Act, were affected by Central data on manufacture , utilization, stock trade and Bureau of Narcotics and details thereof is given consumption of Narcotic Drugs in the country. The as under: Sl. Date of Nameof Quantity No of Name & Address of accused Office in No Seizure Drug in Kgs. person whichcase arrested booked 1 05/01/15 Heroin 0.80 1 Gauri ShankarS/o Late shyamlal Gupta,R/oH.No.699, JatepurDakshini, Sumer Nagar, Dhararshala Bazar, DNC, Gorakhpur-U.P. Lucknow 2 18/01/15 Opium 5.11 2 Hemraj s/oJagannatDhaked r/o village Parlai, P.S. Singoli, Distt, Neemuch. Nathulal S/o Devilal r/o village Jawada, Namari, P.S.Bhesroadgarh, DNC, Distt, Chittorgarh- Rajasthan Neemuch 3 26/01/15 Opium 6.2 1 Jagdish S/o Chatarbhuj r/o village Rakoda The Dalauda, P.S. Bhavgarh, DNC, Distt. Mandsaur-M.P. Neemuch 4 30/01/15 MEK 32 Litre 0 Nil P & I Cell, Mumbai 5 29/03/15 Opium 0.38 1 Pawan Kumar Tiwari S/o Rudra Pratap DNC, Lucknow 6 22/04/15 Heroin 1.36 1 Anuj Kumar S/o Late Channgalal Verma r/o village Jai Pampurwa the Nawabganj, P.S. Zaidpur, Distt. DNC, Barabanki, U.P. Lucknow 85Annual Report 2015-2016 Sl. Date of Nameof Quantity No of Name & Address of accused Office in No Seizure Drug in Kgs. person whichcase arrested booked 7 12/05/15 Opium 4.43 2 Ashok Patidar or Kaka S/o Mangilal, r/o village Nataram, The–Sitamau, Distt. Mandsaur (2) Satnarayan orraju S/o Nirbhay ram r/o village Jhawal, P & I Cell, Distt. Mandsaur-M.P. Ratlam 8 13/05/15 Heroin 0.75 1 Sarvajeet S/o Jagesar R/o Mohalla, Mubarakpur, post Barayan, Distt. P & I Cell, Barabanki-U.P Delhi 9 27/05/15 Opium 2.70 4 Gurmit Singh S/o Balveer Singh, Gram- Enakheda, Distt. Muktsar- Mandsaur Sahib- Punjab 1stDivison 10 30/05/15 Heroin 0.48+ 0.45 1 Liyas S/o late Idrish r/o Moh. Gadhi, &White KadeemZaidpur, Distt. Barabanki-U.P. DNC, Intoxicatin Lucknow gpowder 11 25/06/15 Heroin 0.51 1 Usman Ali S/o Jaleel Ahmad r/o village DNC, Kanai kisarai, Lohta, Distt. Varanani-U.P. Lucknow 12 25/06/15 Opium 14.7 1 Shashi S/o Nikkuram r/o Galino.1 Basti Shakamali, Firozpur-Punjab. DNC, Kota 13 28/06/15 Poppy Husk 94 0 Unclaimed (Maruti WagonR No. P& I RJ-06-CA-5808) Chittorgarh Cell 14 30/06/15 Heroin 0.4 1 Mohd. Yusuf S/o Late Ali mohd. Gurkhu r/o H.N0.D-57, Gadda colony, DNC, P.S. Jaipur-Delhi Lucknow 14 07/07/15 Buprenor- 875 1 Ghasi Ram S/o Manohar Lal phine Injection r/oVillage Khanpur, Distt. DNC, Shahjanpur-U.P. Lucknow 15 07/07/15 Diazepam 0.800 1 Ghasi Ram S/o ManoharLal (400 r/oVillage Khanpur, Distt. DNC, Injections) Shahjanpur-U.P. Lucknow 16 15/07/15 Poppy 115 0 Unclaimed (MP-43-C-5677) P& I Husk Chittorgarh Cell 17 07/08/15 Opium 3.00 2 Surendra Singh S/o Chand Singh P&I Bhati, 2. Dinesh S/o Chittorgarh Harmanaram Panwar Cell 18 13/08/15 Poppy 1501.2 3 Truck UP-25-AT-1255 P& I Cell Straw Bareilly 86Department of Revenue III Sl. Date of Nameof Quantity No of Name & Address of accused Office in No Seizure Drug in Kgs. person whichcase arrested booked 19 19/08/15 Buprenor- 4500 1 Shiv Kumar Goyal S/o Late Teeka phine Injections Ram, r/o H.N0. 189-Katra Manray, P& I Cell Bara Bazar, Bareilly-U.P. Bareilly 20 27/08/15 Heroin 0.82 2 Mohd Ajad & Nagma Bibi W/oMohammad P& I Ajad r/o 96, Jabran colony, Cell Ujjain Begambagh, Ujjain 21 09/09/15 Heroin 0.27 1 Sajid Khan S/o Nisar Khan r/o Village P& I Behara- Faridpur-Bareilly(U.P.) Cell Bareilly 22 22/09/15 Pentazocin 769 & 1 Amarnath Yadav S/o Gopal Yadav &Buprenor- 43 r/o Ausanganj-Varanasi-U.P DNC, phine Injection (Activa Scooter UP 65-CA-8896) Lucknow 23 24/09/15 Aplrazolam 0.35 1 Mithunpardikar S/o Jagdish Chander, r/o Berdia, Amra-Distt. Mandsaur-MP P& I Cell (Pulsar MP 09-MG-0734) Bhawanimandi 24 25/09/15 Opium 1.00 2 Dhoop Singh S/o Inder Singh &Suresh Kumar s/o Fattu ram r/o Village Saman, Distt. Rohtak, Haryana(Hyundai Neemuch-II, Car HR-15-B-9413) Division 25 27/09/15 Heroin 0.206 2 Asharam S/o Saligram Mali r/oVillage Aera, Sitamau, Mandsaur- MP2. Hayum Mansoori s/o Kalu r/o village Kotda Bahadur, Sitamau, P& I Mandsaur-MP CellGaroth 26 30/10/15 Opium 1.55 0 Alto Car MP-14-CB-2834 Mandsaur III Divi. 27 31/10/15 Phensedly 10,000 0 ———————- P& I Cough Bottles CellIndore Syrup 28 05/12/15 Ganja 100.50 2 Om Prakash Gupta S/o Rajendra r/ovilla.Sinhs, Distt. Bhojpur-Bihar2- Vinod Kumar S/o Late Jawahar Shah, r/o 125-Udwant Nagar-Bihar P& I Cell (Flat Lines CG-13-UD-0184) Ghazipur 29 10/12/15 Opium 2.55 3 Jai Singh S/o Mool Singh 2. Raju Mohd. S/o Nanu Mohd3. Vikram Singh S/o Maan SinghRedwas, P& I Cell Kotadi, Distt. Bhilwara Jaipur 30 19/12/15 Pentazocin 2040 1 Ravi Kumar Kashari s/o Jiyut Prasad, (Fortvin) Injection r/o ward no.23-Bhabhuwa kaimur-Ujjain, DNC, Inj. (TVS motor cycle UP-65-BN-1328) Lucknow 87Annual Report 2015-2016 Sl. Date of Nameof Quantity No of Name & Address of accused Office in No Seizure Drug in Kgs. person whichcase arrested booked 31 22/12/15 Heroin 0.20 2 Arjunlal s/o Bagdiramparihera 2- Mohanlal s/o Kaniram r/oBaredia, Badnagar, Ujjain(TVS Apache P& I Cell without number) Indore 32 29/12/15 Heroin 0.34 1 Rajesh Kumar Mishra s/olate Ramji r/o Ward No.6 Mundipur- DNC, Pratapgarh-U.P. Lucknow i). Number of persons convicted/ acquitted in CBN cases, decided by various Courts, during the financial year 2015-16 (up-to-31.12.2015) are as under- Financial Total no. of persons who Total no. of Total no. of Conviction year were facing prosecution persons persons rate in % convicted acquitted 2015-16 563 32 23 58.18% ii). Number of cases, decided by various Courts, during the financial year 2014-15 (up-to 31.12.2015) are as under: Financial Total no. of Total no. of cases in Total no. of cases in Conviction year cases which conviction was which accused were rate in % decided obtained acquitted 2015-16 32 24 8 75% 3.1.5. Activities undertaken for Disability Sector, Pol.1/ dated 24-09-2013, has declared the offices of SCs, & STs and other weaker Sections of the Preventive and Intelligence Cell of CBN at Amritsar, Society. Mumbai, Chennai and Kolkata eligible for allotment of General Pool Office Accommodation and General Pool As per Ministry’s instructions, reservation for SC/ Residential Accommodation. Thus the officers and staff ST and Physically Handicapped are being maintained in of CBN posted in the afore said cells have become eligible the Central Bureau of Narcotics. During the period, Shri for allotment of General Pool Residential Accommodation Rajeev Kumar, Deputy Narcotics Commissioner, Gwalior on maturity of their turn in the waiting list subject to was appointed as a Liaison Officer to look after the fulfilment of other usual conditions. interest, representation and welfare of ST/ SC and physically handicapped employees. Shri Dinesh Boudh, 3.1.7. Gender Issues/ Empowerment of Women Deputy Narcotics Commissioner, Lucknow was appointed A Complaint Committee has been set up in as Liaison Officer to look after the interest, representation Madhya Pradesh, Rajasthan, Uttar Pradesh Unit and and welfare of OBC employees. Headquarters office, Gwalior to look after the complaints 3.1.6. Allotment of General Pool Office of working women’s in respect of any type of harassment Accommodation (GPO) & General Pool of women at work place. Residential Accommodation (GPRA). No representation or complaint has been Ministry of Urban Development, Directorate of received from any employee regarding discrimination on Estates, New Delhi vide their letter No. 11013/G/2012- ground of sex. 88Department of Revenue III 3.1.8. E-Governance Activities drawing big amount from Banks, carrying it to weighmentcenters, disbursing it to concerned cultivators As regards, E-Governance activities, it is stated /Lambardar’s and carrying it to villages by cultivators from that various instructions of the Government, on issue of weighmentcenters in late evening. Banking infrastructure e-governance, are noted for compliance and necessary has been improving in opium growing areas. Considering action. Use of CCTV’s Camera’s at Settlement and all these factors, cost of opium/ commission is being paid Weighmentcenters was also successfully carried out. through e-payment directly in Bank Accounts of cultivators Payment to cultivators was made through e-payment for during weighment operation. After receipt of computed the crop year 2012-13 for the first time. challans from Govt. Opium Factories, final payment to cultivators is being done without waiting for Settlement Computers have been provided, almost, in each Operation. section and have been inter-connected through Network. All urgent reports or replies to the references received 3.2. Government Opium and Alkaloid from the Ministry are being forwarded to the Ministry of Works (GOAW) Finance, New Delhi and other offices through e-mail, as 3.2.1. Chief Controller of Factories(CCF) far as possible. The Government Opium & Alkaloid Works The Deputy Narcotics Commissioner, Gwalior (GOAW) is engaged in the processing of raw opium for along with other officials visited New Delhi, Ahmedabad, export and manufacturing opiate alkaloids through its two and Mumbai and gave presentation on online e-filing of Factories viz Govt. Opium & Alkaloid Works (GOAW) at applications for issue of export/ import certificate. Ghazipur (U.P.) and Neemuch (M.P.). The Products Information given by the officials, explaining all the manufactured at GOAW are mainly used by aspects of online e filing, was appreciated by the trade pharmaceutical industry of India. The GOAW are sector. The drug associations of Mumbai, Ahmedabad & administered by a High Powered Body called the New Delhi requested that such seminars & workshops “Committee of Management” constituted and notified by be held on a regular basis. the Government of India in 1970. The Additional Secretary The Central Bureau of Narcotics web site has (Revenue), Department of Revenue, Ministry of Finance been updated and all the application forms for issue of is the Chairman of the Committee of Management. An export/ import authorization for export/ import of officer of the rank of Commissioner/Joint Secretary is the Psychotropic substances/ Precursor chemicals and Chief Controller of Factories who heads the Organization Controlled substances can be downloaded from the CBN and each of the two factories at Neemuch and Ghazipur website: www.cbn.nic.in. are managed by a General Manager of the rank of Additional Commissioner/Director. The Marketing and During the crop year 2014-15, a quantity of 335 Finance Cell of the factories are located at New Delhi. Metric Tons of opium at 70 degree consistence was The Opium Factories undertake the work of receipt of procured. The average yield at 70 degree consistence opium from the fields, its storage and processing for exports on basis of provisional results received from Madhya and domestic consumption. The Alkaloid Works are Pradesh, Rajasthan and Uttar Pradesh for the crop year engaged in processing raw opium into alkaloids of 2014-15 was 61.667, 61.860 & 60.06 kg/hectare pharmacoepial grades to meet the domestic demand of respectively. The All India average yield during 2014-15 the pharmaceutical industry. The GOAW have employed was 61.76 kgs./hectare at 70 degree consistency. The a total work force of about 1400 people at its two opium figures are for crop year 2014-15 as the crop cycle for and alkaloid plants. The work force comprises of officials the cultivation of opium is October to September next and staff drawn from the Central Board of Excise and year. Settlement/ Licensing operation for crop year 2015- Customs, Central Bureau of Narcotics, Central Revenues 16 has been completed during the month of December, Control Laboratory, apart from personnel selected by the 2015 and consequently 37514 cultivators and Area of Union Public Services Commission directly. The security 6983.020 hectares was settled. aspects of these factories are looked after by Central Industrial Security Force (CISF), a paramilitary force of 3.1.9. Payment to cultivators through e-Payment the Ministry of Home Affairs. Since crop year 2012-13, a new procedure for The overall performance/achievements for the payment has been adopted. There was high risk in calendar year 2015 are as follows: 89Annual Report 2015-2016 I. Performance of GOAF for the Calendar Year 2015 Production Total Production Sl. Production Particulars Unit January to for calendar year No. April to Dec, 2015 March,15 2015 A. PRODUCTION Drying of opium for 1 KG. 32815 88490 121305 Export at 90°C 2 a) Codeine Sulphate KG. 0 0 0 b) Morphine Sulphate KG. 0 292 292 c) Codeine Phosphate KG. 5979 8726 14705 d) Dionine KG. 0 0 0 e) Pure Thebaine KG. 832 320 1152 f) Noscapine BP KG. 534 2888 3422 g) Pholcodine KG. 41 111 152 Total Finished Drugs KG. 7386 12337 19723 h) IMO Powder KG. 2000 5000 7000 i) IMO Cake KG. 1247 2642 3889 j) Papavarine S.R. KG. 457 1416 1873 i) C.P. Import for Domestic 3. KG. 0 7500 7500 Market ii) C.P. Import for Vendor KG. 0 0 0 Specific (Rs. in Crore) Sales Sales Total Sales Sl. Particulars (April to (January to for calendar year No. Dec, 2015) March,15) 2015* Quantity Quantity Quantity Amount Amount Amount (in Kg.) ( in Kg.) (in Kg.) A. SALES 1 Export of opium for at 90°C 2987 2.64 51575 22.92 54562 25.56 2 a) Codeine Sulphate 0 0 50 0.45 50 0.45 b) Morphine Sulphate -6 -0.02 329 1.23 323 1.21 c) Codeine Phosphate (Ind. & Imp) 3932 15.28 32347 137.47 36279 152.75 d) Dionine 0 0 200 2.43 200 2.43 e) Pure Thebaine 275 0.98 894 3.38 1169 4.36 f) Noscapine BP 593 2.11 3974 14.21 4567 16.32 g) Pholcodine 0 0 153 0.86 153 0.86 h) IMO Powder(Dom. 6064 6.23 4735 4.70 10799 10.93 Sales+Export) i) IMO Cake (Dom. 0 0 3862 3.53 3862 3.53 Sales+Export) j) Papavarine S.R. 300 0.06 1250 0.25 1550 0.31 Total 2 (a to j) 11158 24.64 47794 168.51 58952 193.15 Grand Total (1+2) 14145 27.28 99369 191.43 113514 218.71 * Provisional 90Department of Revenue III C. Country-wise Export Of Opium (excluding IMO Powder & Cake) at 90ºC (Qty. in Kgs) Unit USA France Japan Switzerland Total 1 Ghazipur 99 2492 50023 1483 54097 2 Neemuch 465 0 0 0 465 Total 564 2492 50023 1483 54562 D. Revenue Receipts (on Realization Basis) (Rs. in crore) Opium Factory Alkaloid Works Total 1 Ghazipur 26.30 96.60 123.10 2 Neemuch 34.84 87.63 122.47 Total 61.34 184.23 245.57 GOAF - Projected Data for the period from January to March, 2016 for production Projected targets for 3 Full Year’s Target for months Remarks 2015-16 (January to March, 2016) Neemuch Neemuch Ghazipur Neemuch Neemuch Ghazipur without with OTA without with OTA OTA OTA A. ALKALOID PRODUCTION (IN Kgs.) A 1 Codeine Production 12650 13750 3910 3163 3438 978 Phosphate targets for 2015- 16 was fixed by 2 Codeine 0 0 0 0 0 0 the Committee Sulphate of Management 3 Ethyl Morphine and the 0 0 0 0 0 0 / Dionine projected target for the period 4 Thebaine Pure 682 935 187 171 234 47 from January to March, 2016 has 5 Noscapine BP 3410 3630 755 853 908 189 been calculated on pro-rata basis 6 Morphine 231 264 0 58 66 0 for three months Sulphate 7 Pholcodine 209 242 0 52 61 0 Total (1 to 7) 17182 18821 4852 4296 4707 1214 B 1 IMO Powder 0 0 10000 0 0 2500 2 IMO Cake 0 0 5000 0 0 1250 91Annual Report 2015-2016 B. Drying of Opium Prorata targets for 3 Full Year’s Target Particulars months Remarks for 2015-16 (Jan. to March, 2016) Production targets for 2015-16 Neemuch Ghazipur Neemuch Ghazipur was fixed by the Committee of Management and the projected target for the period from Drying of January to March, 2016 has 25 MT 25 MT 6.25 MT 6.25MT been calculated on pro-rata Opium basis for three months II Achievement of CCF Organisation up to the month of December 2015 with comparative data of previous year i.e. 2014 for the similar period Actual Production % age increase over Sl. No. Unit Up to December previous year Particulars 2014-15 2015-16 (1) (2) (3) (4) (5) (6) A. PRODUCTION Drying of opium for Export at 90°C MT 39 33 -15 1 Manufacture of Drugs : 2 0 0 0 a) Codeine Sulphate KG. 305 292 -04 b) Morphine Sulphate KG. 9347 8726 -07 c) Codeine Phosphate KG. 0 0 0 d) Dionine KG. 59 320 442 e) Pure Thebaine KG. 3382 2888 -15 f) Noscapine BP KG. 140 111 -21 g) Pholcodine KG. 13233 12337 -07 Total Finished Drugs KG. 6500 5000 -23 h) IMO Powder KG. 910 2642 190 i) IMO Cake KG. 1178 1416 20 j) Papavarine S.R KG. KG. 21821 21395 -02 Total Finished Drugs 3. i) Cod. Phos. Import for Domestic Market KG 15491 7500 ii) Import for Vendor Specific a) Codeine Phosphate U.S.P. KG. 0 0 0 b) Codeine Phosphate (SEZ) KG. 0 0 0 Total (ii) 0 0 0 92Department of Revenue III A. SALES Provisional 2014-15 2015-16 Sl. Qty. (Rs. in Qty. (Rs. in No. Particulars (Kgs.) Crore) (Kgs) Crore) (2) (3) (4) (5) (6) (1) 1 Export of opium on accrual basis 147564 73.65 51575 22.92 2 Domestic Sale of Drugs : (on actual basis) a) Codeine Sulphate 95 0.83 50 0.45 b) Morphine Sulphate 279 1.01 329 1.23 c) Codeine Phosphate (Indigenous & 33453 142.17 32347 137.47 Imported) d) Dionine 167 1.99 200 2.43 e) Pure Thebaine 1060 3.76 894 3.38 f) Noscapine BP 2980 10.60 3974 14.21 g) Papavarine S.R. 1430 0.29 1250 0.25 h) Pholcodine 170 0.91 153 0.86 i) Oxycodone HCl 11 1.62 0 0 j) IMO Powder(Domestic sale + Export) 2840 2.61 4735 4.70 k) IMO Cake(Domestic sale + Export) 2176 1.99 3862 3.53 Total (2) 44661 167.78 47794 168.51 3 Import (Vendor Specific) a) Codeine Phosphate U.S.P. 0 0 0 0 b) Codeine Phosphate (SEZ) 0 0 0 0 Total (3) 0 0 0 0 Grand Total (1+2+3) 192225 241.43 99369 191.43 C. Comparative country wise export of opium at 90°c (up to December of each financial year) (Qty. in Kgs) at 90ºC Unit USA FRANCE HUNGARY JAPAN SWITZERLAND TOTAL 2014-15 Ghazipur 0 0 0 77391 1097 78488 Neemuch 69076 0 0 0 0 69076 Total 69076 0 0 77391 1097 147564 2015-16 Ghazipur 99 988 0 50023 0 51110 Neemuch 465 0 0 0 0 465 Total 564 988 0 50023 0 51575 93Annual Report 2015-2016 D. Comparative Revenue Receipts on Realization basis (up to December of each financial year) OpiumFactories AlkaloidWorks Total Unit 2014-15 Ghazipur 25.15 71.44 96.59 Neemuch 15.59 96.62 112.21 Total 40.74 168.06 208.80 2015-16 Ghazipur 0.13 81.79 81.92 Neemuch 34.83 82.24 117.07 Total 34.96 164.03 198.99 3.2.2. E-Governance Activities may be dealt by Complaint Committee of the Ministry for dealing with the complaints received regarding sexual The Organization of Chief Controller of Factories harassment at workplace. has launched its own website which contains complete information about the organization, its activities, contact 3.2.5. Activities Undertaken for Disability Sector & details, etc. All tenders for procurement of material and SCs/STs & Other Weaker Sections of Society services are timely loaded in the website for information The CCF organization is strictly adhering to the and participation of the manufacturers / suppliers. The prescribed rules and regulations for the welfare and organization has also arranged to display various development of disabled, SCs, STs and other weaker information pertaining to production of drugs, sale of sections. With an objective to initiate prompt action on drugs, etc. online. grievances of such sections, a committee has been formed with members drawn from such sections. Roster 3.2.3. Grievances Redressal Machinery registers for this purpose are also being maintained. Public Grievances in the CCF’s Organization are 4. State Taxes dealt with promptly. The labour grievances are also dealt with expeditiously and the relation between the State Taxes Section of the Department of Management & workers during this period was Revenue handles legislative work relating to Central Acts harmonious and cordial. having significant interface with the States like the Central Sales Tax Act, 1956, and the Indian Stamp Act, 1899. 3.2.4. Gender Budgeting/Empowerment of Women Undertaking preparatory work pertaining to passage of Equal opportunity / status is enjoyed by women the Constitution (122nd Amendment) Bill, 2014, for the in CCF organization. In the case of gender bias / implementation Goods and Services Tax (GST) Bill as harassment reported if any, it is ensured that appropriate well as administrative & budgetary matters in respect of action is taken against the erring official. Internal Goods and Services Tax Network-Special Purpose Complaint Committee has already been formed at Vehicle incorporated for providing IT platform for smooth GOAW, Neemuch & Ghazipur for the purpose of dealing roll out of GST, are also linked by this section complaints received regarding sexual harassment at 4.1. State Value Added Tax (VAT) workplace. At the Headquarter Office, as there only three women employees (two at Delhi and one at Gwalior), the Under Entry 54 of List II (State List) of the Seventh Complaint Committee cannot be formed. Therefore, it Schedule of the Constitution of India, “tax on sale or has been suggested that complaint of the Headquarter purchase of goods within a State” is a State subject. 94Department of Revenue III Introduction of State Value Added Tax (VAT) to replace enabling provisions were made for States to levy Value the earlier Sales Tax systems of the States has been one Added Tax on Tobacco and Tobacco Products without of the important tax reform measures taken on indirect losing any part of the devolution of Central taxes to the tax side. Sales Tax/ VAT being a State subject, the Central States. For the residual losses thereafter, the Central Government played the role of a facilitator for successful Government has further been releasing CST implementation of VAT. compensation amount to States compensation for the loss due to reduction of rate of Central Sales Tax for 4.2. Central Sales Tax (CST) the claims years 2007-08, 2008-09, 2009-10, 2010-11 4.2.1. Entry 92A of List-I (Union List) empowers the and 2012-13, as agreed to with the Empowered Central Government to impose tax on inter-State sale of Committee of State Finance Minister. The CST goods. Further, Article 269 (3) empowers the Parliament Compenstion amount for the year 2012-13 will be to formulate principles for determining when a sale or released to the States/ UTs in 2016-17 purchase of goods takes place in the course of inter- 4.3. Goods And Services Tax (GST) State trade of commerce. Similarly, Article 286 (2) of Constitution empowers the Parliament to formulate 4.3.1. The proposal to introduce a national level Goods principles for determining when the sale or purchase of and Services Tax (GST) was first mooted by the then goods takes place outside a State or in the course of Finance Minister in his Budget Speech for the Financial imports into or exports from India. Besides, Article 286(3) Year 2006-07. The responsibility of preparing a design of Constitution authorizes the Parliament to place and road map for the implementation of GST was restrictions on the levy of tax by the States on sale or assigned to the Empowered Committee of State Finance purchase of goods, declared by the Parliament by law to Ministers (EC). be goods of special importance in the inter-State trade or 4.3.2. After a prolonged discussion with States, the commerce. Constitution (115th Amendment) Bill, to further amend the 4.2.2. The Central Sales Tax Act, 1956 imposes the constitution to enable introduction of GST, was introduced tax on inter-state sale of goods and formulates the in the Lok Sabha on 22.03.2011. The Bill, however, lapsed principles and imposes restrictions as per the powers with the dissolution of the 15th Lok Sabha In terms of the conferred by the Constitution. The Government of India broad consensus arrived at with the States, the has also framed the Central Sales Tax (Registration and Government introduced on 19.12.2014 the Constitution Turnover) Rules, 1957 in exercise of powers conferred (122nd Amendment) Bill, 2014 in the Parliament for by section 13(1) of the Central Sales Tax Act, 1956. amending the Constitution of India to facilitate the Though the Central Sales Tax Act 1956 is a Central Act, introduction of Goods and Services Tax (GST) in the the States collect and appropriate the proceeds of Central country. The same was passed by the Lok Sabha on 06.05.2015 and was referred to a Select Committee of Sales Tax as per Article 269 of the Constitution of India. the Rajya Sabha for examination on 12.05.2015. The 4.2.3. The Central Sales Tax however, being an origin- Select Committee submitted its report on 22nd July, 2015. based non-rebatable tax, is inconsistent with the proposed The Bill is since pending passage in the Rajya Sabha. destination based Goods & Services Tax (GST). Central After the Bill is passed in both the Houses of the Sales Tax rate had been reduced from 4% to 3% w.e.f. Parliament by two-thirds majority, the Constitutional 01.04.2007 and from 3% to 2% w.e.f. 1st June, 2008. Amendment Bill will be sent to State Legislatures for ratification. The ratification by at least 50% of the State 4.2.4. A package of compensation to the States for Legislatures will be required before the proposed revenue loss on account of phasing out of the Central amendments are brought in effect. Sales Tax had been agreed to. The States have been compensated through a combination of revenue 4.3.3. Several Committees have been formed to look enhancing measures and budgetary support. As into the various aspects of implementation of GST. Drafts measures for enhancing revenue and thereby reports on Registration, Returns, Refunds and Payments compensating the States for Central Sales Tax revenue relating to Business Processes for GST were hosted on loss, the facility of interstate purchases by Government the website of the Department of Revenue to invite Departments at concessional Central Sales Tax rate comments/suggestions from the Stakeholders, which are against Form-D was withdrawn w.e.f. 01.04.2007. Also, being looked into by a Committee. 95Annual Report 2015-2016 4.4. The salient features of the GST Bill are as some fiscal autonomy to the States and Centre, follows: there will a provision of a narrow tax band over and above the floor rates of CGST and SGST.  Power both to the Parliament and State legislatures to make laws for levying GST on the 4.5. Indian Stamp Act, 1899 supply of goods and services in the same transaction. 4.5.1. The Indian Stamp Act, 1899 (2 of 1899) is a fiscal statute laying down the law relating to tax levied in the  Creation of a Goods & Services Tax Council, a form of stamps on instruments recording transactions. joint forum of the Centre and the States under Briefly, the scheme relating to stamp duties, provided for the Chairmanship of the Union Finance Minister in the Constitution is as follows:- with State Finance/Taxation Ministers as members, to make recommendations to the i. Under Article 246, stamp duties on documents Union and the States on important issues like specified in Entry 91 of the Union List in tax rates, exemptions, threshold limits, dispute Schedule VII of the Constitution (viz. bills of resolution modalities etc. exchange, cheques, promissory notes, bills of  Subsumation of Central taxes like Central Excise lading, letters of credit, policies of insurance, Duty, Additional Excise Duties, Service Tax, transfer of shares, debentures, proxies and Additional Customs Duty (CVD) and Special receipts) are levied by the Union but under Additional Duty of Customs (SAD), etc. in GST. Article 268, each State, in which they are levied, collects and retains the proceeds (except in the  Subsumation of State taxes like VAT/Sales Tax, case of Union Territories in which case the Central Sales Tax, Entertainment Tax, Octroi and Entry Tax, Purchase Tax and Luxury Tax, etc. in proceeds form part of the Consolidated Fund GST. of India). At present duty is levied on all these documents except cheques.  All goods and services, except alcoholic liquor for human consumption, will be brought under ii. Stamp duties on documents other than those the purview of GST. Petroleum and petroleum mentioned above are levied and collected by the products have also been constitutionally brought States by virtue of the Entry 63 in the State List under GST. However, it has also been provided in the 7th Schedule of the Constitution. that petroleum and petroleum products shall not be subject to the levy of GST till notified at a future iii. Provisions other than those relating to rates of date on the recommendation of the GST Council. duty fall within the legislative power of both the The present taxes levied by the States and the Union and the States under Entry 44 of the Centre on petroleum and petroleum products, i.e. Concurrent List in the Schedule-VII of the Sales Tax/VAT and Excise Duty respectively will Constitution. continue to be levied the meanwhile. 4.5.2. The rates of stamp duty in respect of Debenture  Both Centre and States will simultaneously levy and Promissory Notes have been rationalized by the GST across the value chain. Centre would levy Central Government in September, 2008. A and collect Central Goods and Services Tax comprehensive Review of Indian Stamp Act, 1899 has (CGST), and States would levy and collect the been undertaken. Consultation with State Governments State Goods and Services Tax (SGST) on all and Central Ministries is complete. The Department is in transactions within a State. the process of seeking approval of the competent  The Centre would levy and collect the Integrated authority to send the final draft of the Bill for vetting to the Goods and Services Tax (IGST) on all inter-State Ministry of Law & Justice. supply of goods and services. The IGST mechanism has been designed to ensure 4.6. Highlights of the performance and seamless flow of input tax credit from one State achievements during the year: to another. 4.6.1. Action taken to implement the Programme and · GST is a destination-based tax. GST rates will other Important Policy initiatives announced in Budget be uniform across the country. However, to give Speech, 2015-16: 96Department of Revenue III The statements and status of implementation of para related to ST section is as follows: Sl. Para Status of Implementation Text of Announcement No. No. as on 31st Dec., 2015. 1 96 Goods and Services Tax (GST) For introduction of GST, the Constitution (122nd) We need to revive growth and investment to ensure that Amendment Bill has been more jobs are created for our youth and benefits of passed by the Lok Sabha on development reach millions of our poor. We need an 06.05.2015. Approval of the enabling tax policy for this. I have already introduced the Cabinet for consideration of the Bill to amend the Constitution of India for Goods and Bill, as reported by the Select Services Tax (GST) in the last Session of this august Committee of Rajya Sabha House. GST is expected to play a transformative role in was obtained on 29.07.2015. the way our economy functions. It will add buoyancy to The Bill is since been pending our economy by developing a common Indian market in the Rajya Sabha. and reducing the cascading effect on the cost of goods and services. We are moving in various fronts to implement GST from the next year. 4.6.2. E-Governance Activities: confirm/relief the provisional Attachment after hearing the aggrieved parties to ensure that property is not Special Purpose Vehicle for Goods & Services disposed off during the pendency of trial for scheduled Tax Network offences of money laundering or proceeds of crime The smooth roll out of GST would rest on a robust money laundered. computerized environment of tax administration. Accordingly, in pursuance of the Cabinet decision, an SPV 5.3. The Adjudicating Authority consists of a for GST Network, a not-for-profit, Non-Government Chairperson and two Members. The posts of Chairperson Company under section 25 of Companies Act, 1956, with & Members are tenure post after retirement from their 49 percent equity held by Government and 51% held by erstwhile job. The Adjudicating Authority received 148 nos. non-Government institutions; to take care of IT of Provisional Attachments and 148 nos. of Original requirement has been set up by the Government on 28th Complaints during the year. In addition, 16 nos. Original February, 2013. Application for retention of seized documents from 5. Adjudicating Authority Under Directorate of Enforcement was received during the year. Prevention of Money-Laundering Final Orders have been pronounced in 147 cases except Act, 2002: 17 cases where the Hon’ble courts granted stay in respect of Provisional Attachment orders Original applications 5.1. The Prevention of Money-laundering Act (PMLA), furnished by Directorate of Enforcement. 2002 was enacted by the Parliament to prevent money 5.4. The staff posted in the Authority is on deputation laundering and connected activities, confiscation of basis and all the posts are ex-cadre. No appointments proceeds of crime and setting up of agencies and made during the previous calendar year either by Direct mechanism for coordinating measures for combating Recruitment/Promotion. money laundering. 5.5. All the posts are ex-cadre post, hence the 5.2. The Director, Directorate of Enforcement has information with respect to SC, ST & PH be treated as been designated as the Director for exercising powers under the PMLA, 2002 and is authorized to provisionally nil. At present one Chairman and one Administrative attach the property allegedly involved in money Officer is only in position and all the remaining posts (Nine laundering. The Adjudicating Authority is empowered to nos.) are lying vacant. 97Annual Report 2015-2016 6. Appellate Tribunal Under 7.4. The appeals and petitions are decided by the Prevention of Money Laundering Benches consisting of at least Two Members and Act: constituted by the Chairman. During the period from 01.01.2015 to 31.12.2015, 47 appeals and 122 6.1. The Appellate Tribunal under Prevention of miscellaneous petitions were filled and 43 appeals and 44 Money-laundering Act, 2002 (PMLA) was brought into petitions were disposed under SAFEMA and NDPS Acts. force w.e.f. 1st July, 2005. 8. Set up for Forfeiture of Illegally 6.2. The Tribunal adjudicates appeals and allied Acquired Property: petitions filed against the attachment / forfeiture orders passed by the Adjudicating Authority for attachment / 8.1. The Smugglers and Foreign Exchange forfeiture of properties involved in money laundering Manipulators (Forfeiture of Property) Act, 1976 (SAFEM under PMLA. It also adjudicates appeals filed against (FOP) A), provides for forfeiture of illegally acquired the orders imposing fine passed by the Director – property of the persons convicted under the Sea Customs Financial Intelligence Unit India (FIU-India). The Benches Act, 1878, the Customs Act, 1962 and Foreign Exchange of the Appellate Tribunal sit at New Delhi. Regulation Act, 1974 and the persons detained under the Conservation of Foreign Exchange and Prevention 6.3. The Tribunal comprises a Chairperson and two of Smuggling Activities Act, 1974. The Narcotics Drugs members. and Psychotropic Substances Act, 1985 (NDPSA) 6.4. The appeals and allied petitions are disposed provides for tracing, freezing, seizure and forfeiture of off by the Benches as constituted by the Chairperson illegally acquired property of the persons convicted under with one or two Members as the Chairperson may deem that Act or any corresponding law of any foreign country, fit. During the period 01.01.2015 to 31.12.2015, 388 and those who are detained under the Prevention or Illicit appeals and 948 miscellaneous petitions were filed and Traffic in Narcotic Drugs and Psychotropic Substances 167 appeals and 468 miscellaneous petitions were Act, 1988 and Jammu and Kashmir Prevention of Illicit disposed. Traffic in Narcotic Drugs and Psychotropic Substances 7. The Appellate Tribunal for Act, 1988. Forfeited Property (ATEP): SAFEM (FOP) Act and NDPS Acts provide for appointment of Competent Authorities for carrying out 7.1. The Appellate Tribunal for Forfeited Property forfeiture of illegally acquired properties. At present, (ATFP) was constituted under the Smugglers and Foreign the Offices of Competent Authorities are located at Delhi, Exchange Manipulators (Forfeiture of Property) Act, 1976 (SAFEMA). It started functioning w.e.f. 03.01.1977. Mumbai, Kolkata and Chennai. SAFEM (FOP) A and Subsequently, the Tribunal was also constituted as the NDPSA envisage establishment of an appellate forum, Appellate Tribunal under the Narcotics Drugs and namely the Appellate Tribunal for Forfeited Property Psychotropic Substances Act, 1985 (NDPS) after its (ATFP) to hear appeals against the orders of the amendment in the year 1989. Competent Authorities. The ATFP is located at New Delhi 7.2. The Tribunal hears appeals and allied matters filed against the orders of the seizure or freezing and 8.2. The details regarding the number of reports forfeiture, or other Orders passed by the officers received by the Competent Authorities from enforcement designated as Competent Authorities in respect of illegally agencies, the number of show cause notices issued and acquired properties of the persons convicted under the the value of the property involved therein, the number of Customs Act, 1962 or NDPS Act, 1985 or detained under orders of forfeiture passed and the value of the property COFEPOSA, 1974 or PITNDPS Act, 1988 and also the involved therein, and the value of sale proceeds of the properties held by such persons in the names of their property disposed of, year-wise, from 2000-01 to 2015- relatives and associates and for seizure or freezing of 2016 are given below: illegally acquired property of the persons covered under 8.3. During the period from 01.01.2015 to 31.12.2015, NDPS Act. 47 appeals and 122 miscellaneous petitions were filed 7.3. The Tribunal is situated at New Delhi and and 43 appeals and 44 petitions were disposed of under comprises a Chairman and two members. SAFEMA and NDPS Acts. 98Department of Revenue III FORFEITURE OF ILLEGALLY ACQUIRED PROPERTY UNDER NDPSA AND SAFEM (FOP) A BY COMPETENT AUTHORITIES Number of Number of Notices for Value of Number of Forfeiture reports Forfeiture issued and sale Orders issued and value Financial received value of Property proceeds of of Property involved. Year from involved. Property Enforcement Value Value disposed off Number Number Agencies (in Rs. Lakh) (in Rs. Lakh) (in Rs. lakh) 1 2 3 4 5 6 7 2000-2001 491 159 2755 103 1662 201 2001-2002 228 89 7223.12 50 3202.39 107 2002-2003 995 72 1269.22 53 2498.60 18 2003-2004 1180 97 1547.75 25 977.01 51.6 2004-2005 1357 162 3251.64 25 650.93 73.67 2005-2006 607 214 10074.59 91 744.60 153.27 2006-2007 514 243 3017.27 112 868.57 2.63 2007-2008 507 210 12784.31 24 551.10 366.97 2008-2009 99 39 2065.88 28 1115.33 121.30 2009-2010 48 21 178.5 20 2153.20 Nil 2010-2011 128 19 1394.06 22 45.57 1123.49 2011-2012 112 17 690.85 22 391.58 191.27 Rs.1294.28 2012-2013 40 13 3091.48 10 101.10 lakhs + US $ 3400 2013-2014 61 5 73.55 3 118.73 608.37 2014-2015 54 24 643.908 18 3253.55 166 2015-2016 (Jan-Dec 83 16 769.74 11 293.93 5.90 2015) 9. Central Board of Excise and also ensures that applicable taxes on imported & domestically produced goods and services are Customs administrated as per law and the collection agencies 9.1. Organization and functions deposit the taxes collected to the public exchequer promptly. 9.1.1 Central Board of Excise & Customs (CBEC) deals with the tasks of formulation of policy concerning 9.1.1.1 Zones of Customs, Central Excise and levy and collection of Customs and Central Excise Customs (Preventive) duties, Service Tax, prevention of smuggling and Union Cabinet approved the plan for Cadre evasion of duties and all administrative matters relating Restructuring and Reorganization of the Field formations to Customs, Central Excise and Service Tax formations. under CBEC on 5th December, 2013. Reorganized The Board discharges the various tasks, with the help organizational set –up has been operationalized w.e.f. of its field formations namely, the Zones of Customs, Central Excise & Service Tax, Commissionerates of 15.10.2014. The details about reorganized organizational Customs & Central Excise and various Directorates. It set-up are furnished below:- 99Annual Report 2015-2016 9.1.1.2.Reorganization of the Field Formations: Gist of Reorganization Proposal as approved by the Union Cabinet Sl. No. Formations Pre-CR Number Post-CR Number 1 Central Excise & Service Tax Zones 23 23 CE + 4 ST 2 Central Excise Commissionerates 93 119 3 Service Tax Commissionerates 7 22 4 Audit Commissionerates 0 45 5 Customs Zones 11 11 6 Customs Commissionerates 35 60 7 Directorates Gen./ Directorates/ Other formations 19 19 9.1.1.3 Central Excise & Service Tax Formations: Tirunelveli, Tiruchirappally, Jaipur, jodhpur, Alwar, Udaipur, There are 23 integrated Central Excise & Service Tax Mysore, Mangalore, Belgaum, Meerut, Hapur, Ghaziabad, Zones, 4 exclusive Service Tax Zones, 119 Central Excise NOIDA-I, NOIDA-II, Dehradun, Mumbai-II, Mumai-III, Commissionerates and 22 Service Tax Belapur, Raigarh, Nashik-I, Nashik-II, Nagpur-I, Nagpur- Commissionerates. Each of the Central Excise and II, Aurangabad, Wardha, Pune-I, Pune-II, Pune-III, Pune- Service Tax Commissionerates normally has 5 Divisions IV, Goa, Kolhapur, Ranchi, Bokaro, Patna, Dhanbad, and 25 Ranges. Central Excise Commissionerates that Jamshedpur, Shillong, Guwahati, Dibrugarh, will do Service Tax work also will have an additional Vishakhapatnam, Kakinada, Nellor, Guntur, Thirupati. Division and 5 Ranges exclusively for Service Tax work. 9.1.1.5.Service Tax Zones (headed by Chief 9.1.1.4.The following are Integrated Central Excise & Commissioner):- Delhi, Mumbai, Chennai, Kolkata Service Tax Zones and Commissionerates:- 9.1.1.5.1. Service Tax Commissionerates (headed by 9.1.1.4.1. Central Excise Zones (head by Principal Principal Commissioner): Ahmadabad, Bangalore-I, Chief Commissioner): Chennai, Delhi, Hyderabad, Bangalore-II, Chennai-I, Chennai-II, Chennai-III, Delhi-I, Lucknow, Mumbai-I, Kolkata, Vadodara. Delhi-II, Delhi-III, Delhi-IV, Hyderabad, Kolkata-I, Kolkata- II, Mumbai-I, Mumbai-II, Mumbai-III, Mumbai-IV, Mumbai- 9.1.1.4.2. Central Excise Zones (headed by Chief V, Mumbai-VI, Mumbai-VII, NOIDA, Pune. Commissioners): Ahmedabad, Bangalore, Bhopal, Bhubaneshwar, Chandigarh, Cochin, Coimbatore, Jaipur, 9.1.1.6.Large Tax Payer Units (headed by Chief Mysore, Meerut, Mumbai-II, Nagpur, Pune, Ranchi, Commissioner): Bangalore, Kolkata, Chennai. Shillong, Vishakhapatnam. Commissioners at LTU, Mumbai, Chennai, Kolkata, Delhi and Bangalore 9.1.1.4.3. Central Excise Commissionerates (headed by Principal Commissioner): Chennai-I, Chennai-II, 9.1.1.7.Customs Formations: There are eleven (11) Chennai-III, Chennai-IV, Puducherry, Delhi-I, Delhi-II, Customs Zones and sixty (60) Customs/Customs Gurgaon-I, Gurgaon-II, Rohtak, Panchkula, Faridabad-I, (Preventive) Commissionerates after reorganization. Faridabad-II, Sonepat, Hyderabad-I, Hyderabad-II, They have been assigned the following functions:- Hyderabad-III, Hyderabad-IV, Lucknow, Allahabad, (a) Implementation of the provisions of the Customs Kanpur, Agra, Mumbai-I, Mumbai-IV, Thane-I, Thane-II, Act, 1962 and the allied acts, which includes levy Kolkata-I, Kolkata-II, Kolkata-III, Kolkata-IV, Kolkata-V, and collection of customs duties and Durgapur, Bolpur, Haldsia, Siliguri, Vadodara-I, Vadodara- enforcement functions in their earmarked II, Valsad, Surat-I, Surat-II, Daman, Bharuch, Silvassa, jurisdictions. Anand, Ahmedabad-I, Ahmedabad-II, Ahmedabad-III, Rajkot, Bhavnagar, Kutch, Bangalore-I, Bangalore-II, (b) Surveillance of coastal and land borders to Bangalore-III, Bangalore-IV, Bangalore-V, Bhopal, Indore, prevent smuggling activities. Marine and Raipur, Gwalior, Bilaspur, Jabalpur, Bhubaneshwar-I, telecommunications wings are available with the Bhubaneshwar-II, Rourkela, Chandigarh-I, Chandigar-II, Board to assist these Commissionerates in their Ludhiana, Jammu & Kashmir, Jalandhar, Cochin, Calicut, anti-smuggling work and surveillance of sensitive Thiruvanathapuram, Coimbatore, Madurai, Salem, coastline. 100Department of Revenue III 9.1.1.7.1. The following are the details of Zones and 9.1.2. Directorates General / Directorates: Commissionerates: 9.1.2.1.The functional requirements of the Department 9.1.1.7.1.1. Customs Zones (headed by Principal Chief needed strengthening of Directorates, which have pan- Commissioner): Mumbai-I, India jurisdiction and assist CBEC in policy formulation. Particular emphasis has been placed in the reorganization 9.1.1.7.1.2. Customs Zones (headed by Chief exercise on strengthening of the Directorate General of Commissioner): Delhi, Mumbai-II, Mumbai-III, Kolkata, Service Tax (now DG, GST), Directorate General of Chennai, Bangalore, Delhi Customs (P), Patna Customs Revenue Intelligence, Directorate General of Systems & (P), Tiruchirapalli Customs (P), Cochin Customs (P), Data Management, Directorate General of Central Excise Ahmedabad. Intelligence, Directorate General of Vigilance and the 9.1.1.7.1..3. Customs Commissionerates (headed by National Academy of Customs, Excise & Narcotics Principal Commissioner): ACC (Import) Delhi, ICD (NACEN). Tughlakabad Delhi, Mumbai General, NhavaSheva-I, 9.1.2.2.The following encapsulates the reorganization NhavaSheva-II, Mumbai Airport, Mumbai ACC Import, of the field formations: Mumbai Preventive, Kolkata Port, Kolkata Airport & ACC, Chennai-I Airport, Chennai-III, Chennai VII ACC, 9.1.2.2.1. Appellate and Tax Recovery Machinery: Bangalore Airport & ACC, Ahmedabad, Mundra, Presently, there are 60Commissioners of Central Excise Hyderabad, NOIDA, Vishakhapatnam. Customs (Appeals), and 1 Chief Commissioner & 6 Commissioner (TAR). The appellate machinery 9.1.1.7.1.4. Customs Commissionerates (headed by comprising the Commissioners (Appeals) deals with Commissioner):Delhi General, Delhi Airport, Delhi ACC appeals against the orders passed by the officers lower Export, ICD Tughlakabad Export, ICD Padpadgang& in rank than Commissioner of Customs and Central other ICDs, Mumbai Import-I, Mumbai-Import-II, Mumbai Excise under the Customs Act, 1962, the Central Excise Export-I, Mumbai Export-II, NhavaSheva-III, Act, 1944 and Service Tax laws. NhavaSheva-IV, NhavaSheva-V, NhavaSheva General, Mumbai Airport Special Cargo, Mumbai ACC Export, 9.1.2.2.2. Commissioners in CBEC: There are 4 Mumbai ACC General, West Bengal Customs (P), Principal Commissioners of Central Excise and Customs Chennai-II, Chennai-IV, Chennai-V, Chennai-VI, Chennai and 4 Commissioners of Central Excise & Customs in VIII General, Bangalore City, Mangalore, Delhi Customs Central Board of Excise & Customs, who assist the Board (P), Amritsar Customs (P), Jodhpur Customs (P), in various policy matters. Principal Commissioners and Ludhiana, Patna Customs (P), Lucknow Customs (P), Commissioners in the CBEC are assisted by 4 Addl. / Jt. Tiruchirapalli Customs (P), Tuticorin, Cochin, Cochin Commissioners and 22 Dy. / Asst. Commissioners. Customs (P), Jamnagar Customs (P), Kandla, Shillong Customs (P), Bhubaneshwar Customs (P), Vijaywada 9.1.2.2.3. Commissioners (Adjudication): There are Customs (P), Pune, Goa. presently 4 posts of Commissioner (Adjudication) (2 each in DGRI and DGCEI) to decide the cases having all-India 9.1.1.8.Strengthening of Audit Set-up in Central ramifications and high revenue stakes. These Excise and Service Tax Zones: In the present non- Commissioners will attend to Central Excise as well as intrusive indirect taxes administration, it was necessary Customs cases. to strengthen audit set-up in the Department in order to plug revenue leakages. Accordingly, 45 dedicated Audit 9.1.3. Attached/ Subordinate Offices Commissionerates, which are responsible for conducting Central Excise and Service Tax Audit as well as Post- In the performance of administrative and clearance Audit in Customs, have been created. executive functions, the following attached / subordinate offices assist the Board in the reorganized set up:- 9.1.1.8.1. Central Excise & Service Tax Audit Commissionerates (headed by Commissioner): A. Directorate General of Central Excise Intelligence Chennai-I, Chennai-II, Delhi-I, Delhi-II, Hyderabad, B. Directorate General of Revenue Intelligence Lucknow, Mumbai-I, Kolkata-I, Kolkata-II, Vadodara-I, Vadodara-II, Vadodara-III, Ahmedabad-I, Ahmedabad-II, C. Directorate General of Performance Ahmedabad-III, Bangalore, Bhopal-I, Bhopal-II, Management Bhubaneshwar, Chandigarh, Cochin, Coimbatore, Jaipur, D. Directorate General of Human Resource Mysore, Meerut-I, Meerut-II, Mumbai-II, Nagpur-I, Nagpur- Development II, Pune-I, Pune-II, Patna, Guwahati, Vijaiwada, LTU (Delhi), LTU (Mumbai), Service Tax Mumbai-I, Service Tax E. National Academy of Customs, Excise & Mumbai-II, Service Tax Mumbai-III, Service Tax Pune, Narcotics Service Tax Bangalore, Service Tax Delhi-I, Service Tax Delhi-II, Service Tax Chennai, Service Tax Kolkata. F. Directorate General of Vigilance 101Annual Report 2015-2016 G. Directorate General of Systems & Data (d) To alert field formations for interception of Management suspects and contraband goods H. Directorate General of Audit assessment of current and likely trends in smuggling; I. Directorate General of Safeguards J. Directorate General of Export Promotion (e) To advise the Ministry in all matters pertaining to anti-smuggling measures and K. Directorate General of Goods & Service Tax in formulating or amending laws, procedures L. Directorate General of Valuation and practices in order to plug any loopholes; M. Directorate General of Tax Payer Services and, N. Directorate of Logistics (f) To attend to such other matters as may be O. Directorate of Legal Affairs entrusted to the Directorate by the Ministry P. Office of Chief Commissioner (AR), CESTAT or the Board for action/ investigation. Q. Central Revenues Control Laboratory C. Directorate General of Performance Management 9.1.3.1.The functions of the Directorates, the Office of a) To study the working of the Customs, Central the Chief Departmental Representative and the Central Excise Departmental Machinery throughout Revenues Control Laboratory, under the Central Board the country. of Excise and Customs, in brief are as follows:- b) To suggest measures for improvement of A. Directorate General of Central Excise its efficiency and rectification of important Intelligence defects in it through inspection and by laying (a) To collect, collate and disseminate down procedures for smooth functioning. intelligence relating to evasion of central excise duties; c) To carry out inspection to determine whether the working of the field formations is as per (b) To study the price structure, marking Customs and Central Excise procedures patterns and classification of commodities and to make recommendations in respect vulnerable to evasion of central excise to the procedural flaws, if any noticed. duties; d) To suggest measures for improvement in (c) To coordinate action with other departments functioning of the field formations. like Income Tax etc. in cases involving evasion of central excise duties; e) To monitor performance of the field formations in key result areas through (d) To investigate cases of evasion of Central monthly performance report compilation in excise duties having inter-Commissionerate Customs, Central Excise and Service Tax. ramification; and f) To process rebate claims in terms of Board’s (e) To advise the Board and the Commissionerates on the modus operandi notification or a treaty. of evasion of central excise duties and g) To function as the nodal office for suggest appropriate remedial measures, implementation of the Rajbhasha (Official procedures and practices in order to plug Language) Policy of Government in the field any loopholes. formations. B. Directorate General of Revenue Intelligence h) To function as the Programme Manager to (a) To study and disseminate intelligence about implement Authorized Economic Operator smuggling; (AEO) Programme. (b) To identify the organized gangs of smugglers i) To conduct special studies as entrusted by and areas vulnerable to smuggling, targeting CBEC, namely various manual updations from of intelligence against them and their time to time, Result Framework Document immobilization; (RFD) formulation and monitoring etc. (c) To maintain liaison with the intelligence and j) To hold examinations for Customs Brokers enforcement agencies in India and abroad under Customs Broker Regulations 2013. for collection of intelligence and in-depth investigation of important cases having inter- k) To supervise preparation of manuals under Commissionerate and international Customs, Central Excise and Service Tax ramification; Law and procedure 102Department of Revenue III l) To assist the Board in setting CBEC m) To provide support to the CBEC in bringing performance monitoring and evaluation about uniformity/homogeneity in the system under the Results Framework administrative practices followed by field Document (RFD). formations across the country. m) Nodal office for implementation of Official (B) Performance Management Division Policy of Government. a) To develop an effective Management n) Work related to Tax Arrear Recovery Information System (MIS) and Performance Management System (PMS) for capturing D. Directorate General of Human Resource and assessing individual performances; Development b) To develop performance indicators for the I. HRM Wing: organization at the group and individual (A) Cadre Management Division levels based on objective goal setting, taking into account manpower and infrastructural a) To devise and design CBEC’s Human limitations; Resource Management plans in consonance with the goals and vision of the c) To design a scientific appraisal system and a department; scheme for performance measurement, etc.; b) To analyse and propose changes in the d) To coordinate receipt of annual performance Recruitment Rules; appraisals; c) To prepare a charter of duties for various e) To link rewards with performance and design posts and periodically review the charter; an appropriate reward policy; d) To provide support to CBEC in drawing its f) To liaison with “external consultants” for annual recruitment plan (ARP) or direct developing a suitable system to track, recruitment; support and monitor individual performance and maintain accountability, and e) To support CBEC in framing and implementation of its recruitment policy; g) To review formats for annual performance f) To design HR policies, processes and appraisal (APAR) for all cadres and suggest systems, including proposals where posts meaningful changes to it from time to time; are diverted temporarily from one functional (C) Capacity Building and Strategic Vision area to another; Division g) To maintain and update the Human a) To identify training needs for officers at all Resource Information System (HRIS) for levels and create a training needs inventory; recommending officers/staff for training, placement, skill up-gradation and b) To disseminate information regarding HRD succession planning; issues among officers and staff; h) To provide data support to CBEC for c) To coordinate in-service training programmes placement and transfer of officers as part of in consultation with DG, NACEN for officers the annual general transfer (AGT) and and staff of the department at various service otherwise; intervals (e.g. 6-9 years of service, 10-16, 17- 19 and 20-30 years of service) in consultation i) To receive feedback on the Transfer Policy with training institutions within and outside the and relay the same to CBEC for further action; country; j) To provide support to CBEC in its Cadre Review and Restructuring exercise for the d) To assist the Ministry in development of department in the context of changing viable models of ‘Training Needs Analysis’, economic scenario and needs; ‘Designs for Training’ etc, and nominate of officers for training based on Training Needs k) To assist the CBEC in preparing for periodic Analysis in consultation with DG, NACEN; interaction with associations of officers/staff; e) To recommend officers for foreign training l) To develop a Manual and other reference in those areas which are outside training literature on Human Resource Management programmes being conducted at present by (HRM)/Administration related matters; and NACEN; 103Annual Report 2015-2016 f) To provide support to CBEC in the f) To secure as a link between the CBEC and management of organizational relations its field formations by communicating the including vertical relationship (within observations/queries/ approvals/sanctions hierarchy), gender relations and prevention of the Ministry on the submitted proposals of discrimination and harassment on the to the field formations. basis of sex; (E) Welfare Division g) To manage changes for working of field a) To identify and recommend welfare formations under CBEC; measures to the CBEC; h) To form a Strategic Vision Group through b) To process proposals received from field inclusion of retired officers and outside formations for sanction of funds by the experts on the subject; Governing Body of the Welfare Fund; i) To forecast future developments and c) To coordinate with the Directorate of suggest changes in the organization, Logistics and Principal CCA’s office for personnel management and procedure to accounting of funds to be allocated between be able to respond to them; and the Welfare Fund and the Special Equipment j) To assist the Ministry in processing the Fund; requests of the officers and staff for training d) To manage superannuation of employees programmes under the Domestic Funding especially regarding their psychological, Scheme of the Government of India. emotional and financial aspects (by II. INFRASTRUCTURE & WELFARE Wing arranging training through NACEN and/ or outside experts to psychologically prepare (D) Infrastructure Division the employees on the verge of a) To function as the ‘nodal authority’ for superannuation for life after retirement from examination and processing of all service and proper management of infrastructure proposals received directly by retirement benefits); the Division from field formations and forward e) To prepare and maintain an inventory of them alongwith its recommendations to the specialization areas and skills of retiring CBEC/Ministry for further action; officers, and advise them about exploring b) To consider all issues pertaining to approval ministries and public sector undertakings, connected to their respective fields of and sanction of infrastructural proposals knowledge and experience; and including those for purchase and disposal of land, purchase and disposal of buildings, f) To disseminate information concerning hiring of accommodation and continuation welfare schemes/ measures being of hiring of already hired space, construction promoted/ implemented by the CBEC of office and residential buildings, repair/ among officers and staff. maintenance/renovation/modifications/ replacement/alternations in the III. Expenditure Management Cell department’s buildings, residential a) To issue the Budget Circular as prescribed complexes etc., by the Budget Division, Department of Economic Affairs; c) To account and document the assets of CBEC through the creation, maintenance b) To examine the Budget proposals received and regular updation of an Asset Register; from various constituent formations /units under the Grant; d) To consolidate and project budgetary requirement for ready built office space and c) To consolidate the position at each stage of residential accommodation for departmental the Budget exercise i.e. Budget Estimates staff to CBEC; (BE), Revised Estimates (RE) and Final Requirement (FR) and submit the same to e) To ensure conformity of infrastructure FA (Finance) for further action; proposals, (whether in process or sanctioned) with policy guidelines and d) To allocate object head wise approved administrative instructions pertaining to their provisions to respective Budget controlling sanction; authorities; 104Department of Revenue III e) To prepare the Statement of Budget H. Directorate General of Systems and Data Estimates (SBEs) for inclusion in the Management relevant Budget documents; (a) Directorate of Systems f) To monitor the progress in Expenditure vis- To look after all aspects of the implantation of à-vis Sanctioned Grant and submit the customs, central excise and service tax Monthly and Quarterly Expenditure Review computerization projects including acquisition of to FA (Finance) for further action; hardware, development and maintenance of g) To propose Re-appropriation orders, software, training of personnel and monitoring surrender of savings etc. to FA (Finance) for of expenditure budget on computerization at the central and field levels. concurrence/approval of the competent authority; (b) Directorate of Data management h) To finalize the Appropriation Accounts in i. To collect and consolidate data and statistics consultation with Principal CCA, CBEC and pertaining to realization of revenue from submit to FA (Finance) for concurrence; indirect taxes and advise the Ministry and the Board in forecasting budget estimates; and i) To take necessary action in respect of the examination by the Standing Committee on ii. To collect statistics for compilation of Finance on Detailed Demand for Grants; statistical bulletins and statistical yearbook in respect of revenue, arrears, seizures, j) To take action in respect of Audit references court cases etc. pertaining to indirect taxes. in Expenditure matters, for example Action Taken Notes on Audit Paras /PAC Paras etc. I. Directorate General of Audit k) Any other matter related to the above. a) To provide direction for evolution and improvement of audit techniques and F. National Academy of Customs, Excise and procedures; Narcotics b) To ensure effective and efficient (a) To impart training to direct recruits and to implementation of new audit system by arrange refresher courses for departmental periodic reviews; officers: c) To coordinate with the external agencies as (b) To assist in formulation of training policies well as other formations within the Department; and to implement the policies approved by d) To suggest measures to improve tax the Board by devising schemes and syllabi compliance; of studies for training of direct recruits and departmental officers; and, e) To gauge the level of audit standards and assesses satisfaction; (c) To arrange study tours of Customs and excise officers from neighboring countries f) To evolve the policy for development of a under United Nations Development sound database as well as enhancing the Programme. skills of the auditors with a view to making the audit effective and meaningful; G. Directorate General of Vigilance g) To aid and advise the Board in policy (a) To monitor the vigilance cases against the formulation and to guide and prove functional officers of Customs and Central Excise directions in planning, coordination and formations; supervision of audits at local levels; (b) To maintain proper surveillance on the h) To collate and disseminate the relevant officials of doubtful integrity; and, information; and, (c) To maintain close liaison with the Central i) To implement EA-2000 audits and related Bureau of Investigation, Directorate General projects like risk management, CAAP audits etc. of Revenue Intelligence and vigilance and anti-corruption in order to ensure that the J. Directorate General of Safeguards programmes on vigilance and anti- (a) To investigate the existence of serious injury corruption are implemented in all or threat of serious injury to the domestic Commissionerates of customs, central industry as a consequence of increased excise and narcotics formations. imports of an article into India; 105Annual Report 2015-2016 (b) To identify the article liable for safeguard duty; g) To work in close coordination with the Board with the Customs-IV Section and FTT (c) To submit the findings, provisional or Section of the Board’s office that deals with otherwise, to the Central Government 100% EOUs/EPZ Units/SEZ Units and regarding ‘serious injury’ OR ‘threat of various Technology parks and the schemes serious injury’ to the domestic industry relating to the export of gems and jewellery. consequent upon increased imports of an article from the specified country. L. Directorate General of Goods and Service Tax (d) To recommend the following; (a) All policy matters relating to GST including the related legislation. (i) The amount of duty which, if levied, would be adequate to remove the (b) To Formulate the CBEC’s views on the GST ‘injury’ or ‘threat of injury’ to the and also matters relating to the subsuming domestic industry; of the various Central taxes in the GST. (ii) The duration of levy of safeguard duty (c) Matters related to issues raised in and where the period so recommended Parliament including Parliamentary is more than a year, to recommend Questions connected to GST will be progressive liberalization adequate to handled. It will interact with EC (Empowered facilitate positive adjustment; and, Committee) and State Governments and will assist CBEC in finalizing its views in relation (e) To review the need for continuance of to various facts of the GST. safeguard duty. (d) It will also act as CBEC’s interface with the K. Directorate General of Export Promotion Trade and Industry on the matters relating a) To interact with the Export Promotion to GST and attend to any other matter Councils for various categories of export to relating to GST. sort out the difficulties being faced by the (e) It will inter alia discharge functions of genuine exporters; research and analysis, capacity building of b) To function in close liaison with allied officers, coordinating with various agencies concerned with the exports to Directorates of CBEC and State institutions ensure that genuine exporters get the full connected to GST and assist the GST in the advantages of the export schemes without Board on all matters related to GST. any difficulties; (f) It will also handle the transitional issues c) To monitor the performance of the field arising out of the metamorphosis of Service formations through monthly and quarterly Tax Directorate into GST Directorate. returns, like duty foregone statements, M. Directorate General of Valuation drawback payment statements and quarterly drawback payment statements and to a) To assist and advise the Board in the compare and compile the same to enable implementation and monitoring of the the Ministry to review the policy; working of the WTO Agreement on Customs Valuation; d) To carry out the appraisal studies to examine the efficacy of the existing legal provisions/ b) To build a comprehensive valuation rules and procedures and suggest to the database for internationally traded goods Ministry about the changes to be made, if using past precedents, published price any; information or prices obtained from other authentic sources; e) To conduct post-audit of the Brand Rate fixed by the concerned commissioners and c) To disseminate the price information on a carry out physical verification of selected continuing basis to all customs formations for cases independently or with the help of the online viewing as a means of assistance for central excise formations; day to day assessments with a view to detecting and preventing under valuation as also for f) To conduct post audit of the select cases of enabling assessments to be finalized speedily; duty free imports allowed under various Export Promotion Schemes in the customs d) To monitor valuation practices at various and central excise formations; and, customs formations and bring to the notice 106Department of Revenue III of the Board the significant and emerging Commissionerates and Custom Houses and pricing patterns and to suggest corrective take appropriate steps for improvement in policy or other measures, where needed; quality and timely delivery of services and e) To maintain liaison with the Valuation (i) Acting as a “Single Window Help Desk” for Directorates of other customs administrations interface between taxpayers and field and customs officers posted abroad; formations through a dedicated web based service portal In consultation with DGS&DM f) To study international price trends of sensitive commodities and pricing patterns (II) Publicity & Public Relations: of transnational corporations (e.g. transfer (a) Providing taxpayer information, taxpayer pricing) and Indian ventures with foreign education and taxpayer assistance and collaborations and help evolve a system to combat planned under valuation as well as designing and executing outreach programmes valuation frauds; and, in coordination with NACEN, DG GST; g) To carry out inspection of the field formations (b) Ownership, Content Management & to determine whether the valuation norms updating information on CBEC website as evolved by the Directorate of Valuation through content owners; are uniformly applied across the country. (c) Finalising an appropriate channel strategy N. Directorate General of Tax Payer Services to ensure that the service delivery is effective and is accessible to all The terms of reference of the newly formed Directorate are as follows: (d) Educating the tax payers as regards their rights and obligations in the matter of tax (I) Taxpayer Services, Stakeholder Consultation compliance & Grievance Redressal: (e) Compiling and issuing hand outs, Guidance (a) Laying down service standards and Notes, brochures, leaflets , FAQs etc. on monitoring, evaluating & reviewing the various subjects viz. baggage allowance, same from time to time to assess their refund, drawback, rebate, Project imports, effectiveness and efficiency, SSI exemptions, CENVAT scheme, (b) Monitoring and reviewing Citizen’s Charter and appellate remedies including alternate ‘Sevottam’ Programme at regular intervals and channels like AAR and Settlement suggest improvements. where required Commission for the benefit of taxpayers (c) Conducting customer satisfaction surveys, (f) Organizing interactive sessions with trade independent third party audit and impact and industry and based on the feedback analysis so as to monitor the quality and received suggest changes in tax laws and efficiency of tax administration, procedures to the CBEC (d) Assisting the CBEC in enhancing customer (g) Issuing internal communication aimed at understanding and maximizing voluntary attitudinal refinement of officials from that compliance of regulators to facilitators and service providers (e) Monitoring the functioning of PTFCs, RACs and Open House Meetings so as to share (h) Monitoring and executing the stakeholder good practices across Zones; consultation process for changes in policy and procedures; and (f) Monitoring of e-Helplines set up by Customs, Central Excise and Service Tax Zones; (i) Creating, putting in place and executing an appropriate media policy including social (g) Monitoring the implementation of directions media and awards given by Ombudsman to make this initiative more effective O. Directorate of Logistics (h) Monitoring the “Tax Payer Service Centers” (a) To inspect, assess and evaluate the in the Commissionerates and Custom effectiveness of the staff deployed on anti- Houses and analyzing the activities through smuggling duties in the Commissionerates periodic activity reports sent by the and in vulnerable areas; 107Annual Report 2015-2016 (b) To monitor, coordinate and evaluation the Directorate is restricted to making progress in cases of adjudications, recommendations only and the final decision prosecutions and rewards to informers and regarding approval of the panel / officers in various Commissionerates and to appointment of the Standing Counsels rests watch the progress in disposal of confiscated with the Ministry; and goods involved in prosecution cases; (g) To keep an approved panel of eminent (c) To plan and assess the need for staff lawyers well versed with customs and training, equipments, vehicles, vessels, central excise laws as well as administration, communications or other resources required who may not be on the regular panel of the government but may be engaged by the for anti smuggling work in various department for handling important cases. Commissionerates and to evaluate their operational efficiency; and, Q. Office of the Chief Departmental Representative (CDR), CESTAT (d) To deal with the matters concerning acquisition, procurement, purchase, repair (a) To receive the cause list of cases from the and reallocation of such equipment. Tribunal registry and distribute case files among Departmental Representatives P. Directorate of Legal Affairs (DRs); (a) To function as the nodal agency to monitor (b) To monitor the efficient representation by the legal and judicial work of the Board; DRs in all listed cases before the benches (b) To create a data bank of all the cases decided of the CESTAT; by the various benches of the Tribunal and (c) To coordinate with and call for cross monitor cases effectively in order to ensure objections, clarifications and confirmations that the field formations recommend filing of from the Commissionerates concerned; appeals only in deserving cases and not on the issues already decided by the Supreme (d) To maintain coordination with the President, Court or High Courts and accepted by the CESTAT, and department; (e) To exercise administrative control over DRs (c) To ensure that all orders of the Tribunal are and attend to the administrative matters examined by the field formations and timely pertaining to the CDR office including its proposal for filing appeal are sent to the regional offices at Mumbai, Kolkata, Chennai Board wherever necessary and the report and Bangalore. about acceptance of an order is sent to the R. Central Revenues Chemical Laboratory Chief Commissioner. To analyze samples of goods, and to render (d) To intimate the field formations about important technical advice to the Board and its field decisions of the various High Courts, which formations, in regard to the nature, characteristics are finally accepted by the Department, and and composition for various goods. about the important decisions of the Supreme 9.2. Revenue collections in F.Y 2014-15 Court so that unnecessary litigation work on the issues already settled is not created by 9.2.1 The total indirect tax collection during 2014-15 the field formations; was Rs. 544157crore (provisional figure) against the (e) To create a database pertaining to the cases Budget Estimate (BE) of Rs. 624902 crore and Revised Estimate (RE) of Rs. 542325 crore. The overall growth in pending in various High Courts. The indirect tax collection in 2014-15 was nearly 9.5% over appellant/respondent Commissioners will 2013-14. The tax head-wise details are given below. assist the Directorate in creating and updating the database pertaining to the High 9.2.1.1.Customs Duty Court cases; The RE was fixed at Rs. 188713 crore against (f) To prepare panels of standing counsels/ the BE of Rs. 201819 crore in 2014-15. The actual panel counsels for various High Courts on collection during 2014-15 was Rs. 187856 crore, the basis of feedback received from the field (provisional figure) represented a growth of 9.2% over formations. However, the role of the actual collection in 2013-14. 108Department of Revenue III 9.2.1.2.Central Excise Duty 9.2.2. Revenue collections in F.Y 2015-16 (April- December): In view of economic slowdown the R.E was lowered to Rs 185480 crore against BE of Rs. 207110 9.2.2.1.The Budget Estimate (BE) for indirect tax crore in 2014-15. The actual collection during 2014-15 revenue for F.Y 2015-16 is Rs. 646267 crore (exclusive was Rs. 188238 crore, (provisional figure) represented a of other cess, not administered by DoR). The total indirect growth of 10.6 % over actual collection in 2013-14. tax collection during 2015-16 (April-December) is Rs. 9.2.1.3.Service Tax 504867 crore, (provisional figure) which shows a growth of 34.2% growth over actual collection in the In view of low buoyancy in service tax, the R.E was fixed at Rs. 168132 crore against the BE of Rs. corresponding period of previous year. 215973 crore in 2014-15. The actual collection of service 9.2.2.2.The revenue collections from indirect taxes tax during 2014-15 was Rs. 168063 crore, represented a since 2011-12 are tabulated below: growth of 8.6% over actual collection in 2013-14. Year Wise Trends of Indirect Tax Revenue Collection (Rs. In Crore) Sl. 2014-15 #2015-16 Major Head 2011-12 2012-13 2013-14 No. (Prov.) [Apr-Dec.] (P) I. CUSTOMS BE 151700 186694 187308 201819 208336 RE 153000 164853 175056 188713 Actual 149328 165346 172085 187856 160016 % achievement of BE 98.4 88.6 91.9 93.1 76.8 % achievement of RE 97.6 100.3 98.3 99.5 % growth over last year 10.0 10.7 4.1 9.2 16.3 II. UNION EXCISE BE 164116 194350 197554 207110 228157 RE 150696 171996 179537 185480 Actual 145607 176535 170198 188238 195618 % achievement of BE 88.7 90.8 86.2 90.9 85.7 % achievement of RE 96.6 102.6 94.8 101.5 % growth over last year 5.3 21.2 -3.6 10.6 63.7 III. SERVICE TAX BE 82000 124000 180141 215973 209774 RE 95000 132697 164927 168132 Actual 97509 132601 154778 168063 149233 % achievement of BE 118.9 106.9 85.9 77.8 71.1 % achievement of RE 102.6 99.9 93.8 100.0 % growth over last year 37.3 36.0 16.7 8.6 25.6 IV. INDIRECT TAX BE 397816 505044 565003 624902 646267 RE 398696 469546 519520 542325 Actual 392444 474482 497061 544157 504867 % achievement of BE 98.6 93.9 88.0 87.1 78.1 % achievement of RE 98.4 101.1 95.7 100.3 % growth over last year 13.7 20.9 4.8 9.5 78.1 Source: Receipts Budget/PrCC/CGA. P=Provisional # Exclusive of cesses not administered by D/o Revenue 109Annual Report 2015-2016 9.3. Budget 2015-16: Some important 2) Registration in two days: Registration in initiatives Service Tax to be granted within two working days. [ORDER No. 1/2015-SERVICE TAX, 9.3.1. SIMPLIFICATION: dated 28.02.2015 refers]. Measures taken during Budget 2015-16 3) Time limit for taking CENVAT: Time limit for taking CENVAT Credit of duty/tax paid on inputs 9.3.1.1.EXCISE and input services has been extended from six 1) Reduction in number of levies: Education Cess months to one year. [Notification No.6/2015- and Secondary & Higher Education Cess leviable Central Excise (N.T.), dated 01.03.2015 refers]. on excisable goods were fully exempted. 4) Simplification in procedure for availment of 2) To ensure certainty and uniformity in valuation Cenvat Credit in certain cases: For availment of the goods, specified goods were notified for of CENVAT credit of service tax paid under the purposes of levy of excise duty w.r.t. the Retail reverse charge mechanism, the condition of Sale Price. having made the payment of consideration to the service provider has been done away with. 3) Excise duty on chassis for ambulances was [Notification No.6/2015-Central Excise (N.T.), reduced. dated 01.03.2015 refers]. 4) Clarifications were issued on various issues 5) Rationalisation of penal provisions: Penalty arising out of varied interpretations of exemption provisions in Service Tax have been rationalized notifications so as to ensure uniformity in to encourage compliance and early dispute assessment practice, eliminate litigation, reduce resolution. [Sections 113, 114, 115 of the compliance cost and provide a non-adversarial Finance Act, 2015 refer]. tax administration. 6) Digital signature and preserving records in 5) Excise duty was fully exempted on captively electronic form: Service Tax assessees have consumed intermediate compound coming into been allowed to issue digitally signed invoices existence during the manufacture of Agarbattis and maintain other records electronically. as Agarbattis attract Nil excise duty. [Notification No.18/2015-Central Excise (N.T.), 9.3.1.2.CUSTOMS dated 06.07.2015 refers]. 1) The scope of the exemption from Basic Customs 7) Withdrawal of Prosecution in certain Duty available for antiques intended for public circumstances: Instructions have been issued exhibition in a public museum or national providing for withdrawal of prosecution where a institution was extended to antiquities intended noticee has been exonerated in the quasi-judicial for public exhibition in any museum or art gallery. proceedings and such order has attained finality. [Circular No.998/05/2015-CX dated 28.02.2015 2) It has been clarified that benefit of excise refers]. exemptions available, subject to the condition that no CENVAT credit has been availed on 8) If the export proceeds are not received within inputs, is not available for claiming CVD the prescribed time period, the exporter has to exemptions. reverse the Cenvat Credit. Re-credit of such reversed Cenvat credit has been allowed, if such 3) The requirement of registration of Ship Repair export proceeds are received within one year Units with DG, Shipping so as to avail exemption from the specified period. [Notification No.6/ from Basic Customs Duty on Parts and inputs 2015-Central Excise (N.T.), dated 01.03.2015 required for use in ship repairs units has been refers]. done with. 9) Uniform abatement of 70% from gross value 9.3.1.3.SERVICE TAX prescribed for transport by rail, road and vessel. 1) Reduction in number of levies: Education Cess Service Tax in all these cases will now be charged and Secondary & Higher Education Cess on on 30% of the gross value of such service subject taxable services have been subsumed in Service to non-availment of Cenvat Credit on inputs, Tax with effect from 01.06.2015. [Sections 153, capital goods and input services. [Notification 159 of the Finance Act, 2015 read with No.26/2012-Service Tax, dated 20.06.2012 as notification No.14/2015-Service Tax, dated amended by the notification No.8/2015- 19.05.2015 refers]. Service Tax, dated 01.03.2015 refers]. 110Department of Revenue III 10) Exemption presently available on specified 15) Services by common affluent treatment plants services of construction, repair, maintenance, have been exempted from service tax w.e.f 1st renovation or alteration service provided to the April, 2015[Notification No.25/2012-Service Government, a local authority, or a governmental Tax, dated 20.06.2012, as amended by the authority is restricted to (a) historical monument, notification No.6/2015-Service Tax, dated archaeological site or remains of national 01.03.2015 refers]. importance, archaeological excavation or 16) In service tax, exemption has been extended to antiquity; (b) canal, dam, or other irrigation work; certain pre cold storage services in relation to and (c) pipeline, conduit or plant for (i) water fruits and vegetables so as to incentivise value supply (ii) water treatment, or (iii) sewerage addition in this crucial sector. [Notification treatment or disposal. [Notification No.25/2012- No.25/2012-Service Tax, dated 20.06.2012, as Service Tax, dated 20.06.2012, as amended amended by the notification No.6/2015- by the notification No.6/2015-Service Tax, Service Tax, dated 01.03.2015 refers]. dated 01.03.2015 refers]. 17) Service provided by way of admission to a 11) Exemption to construction, erection, museum, zoo, national park, wild life sanctuary commissioning or installation of original works and a tiger reserve has been exempted. These pertaining to an airport or port is being withdrawn services when provided by the Government or [Notification No.25/2012-Service Tax, dated local authority are already covered by the 20.06.2012, as amended by the notification Negative List. [Notification No.25/2012-Service No.6/2015-Service Tax, dated 01.03.2015 Tax, dated 20.06.2012, as amended by the refers]. notification No.6/2015-Service Tax, dated 01.03.2015 refers]. 12) Exemption to services provided by a performing artist in folk or classical art form of (i) music, or 18) The Negative List entry that covers “admission (ii) dance, or (iii) theatre, will be limited only to to entertainment event or access to amusement such cases where amount charged is upto Rs facility” has been omitted [section 66D]. The 1,00,000 for a performance [Notification No.25/ implication of these changes are as follows,- 2012-Service Tax, dated 20.06.2012, as Service Tax shall be levied on the service amended by the notification No.6/2015- provided by way of access to amusement facility Service Tax, dated 01.03.2015 refers]. providing fun or recreation by means of rides, gaming devices or bowling alleys in amusement 13) Exemption to transportation of food stuff by rail, parks, amusement arcades, water parks and or vessels or road will be limited to food grains theme parks. including rice and pulses, flour, milk and salt. Transportation of agricultural produce is  Service tax to be levied on service by way separately exempt, and this exemption would of admission to entertainment event of continue [Notification No.25/2012-Service Tax, concerts, pageants, musical performances dated 20.06.2012, as amended by the concerts, award functions and sporting notification No.6/2015-Service Tax, dated events other than the recognized sporting 01.03.2015 refers]. event, if the amount charged is more than Rs. 500 for right to admission to such an 14) Exemptions are being withdrawn on the following event. services:  However, the existing exemption, by way of (a) Services provided by a mutual fund agent the Negative List entry, to service by way of to a mutual fund or assets management admission to entertainment event, namely, company, exhibition of cinematographic film, circus, recognized sporting event, dance, theatrical (b) Distributor to a mutual fund or AMC, performance including drama and ballet (c) Selling or marketing agent of lottery ticket to shall be continued, through the route of a distributor. exemption. [Notification No.14/2015- Service Tax, dated 19.05.2015 refers]. Service Tax on these services shall be levied on reverse charge basis. [Notification No.25/2012- 19) The entry in the Negative List has been pruned Service Tax, dated 20.06.2012, as amended to exclude any service by way of carrying out any by the notification No.6/2015-Service Tax, processes for production or manufacture of dated 01.03.2015 refers]. alcoholic liquor for human consumption. 111Annual Report 2015-2016 Consequently, Service Tax shall be levied on 6. In order to give impetus to banking in rural areas contract manufacturing/job work for production under the Pradhan Mantri Jan Dhan Yojana of potable liquor for a consideration. [Notification [PMJDY] Scheme, specified services provided Nos.14/2015 and 16/2015-Service Tax, both by Business Facilitators/Business Correspondents dated 19.05.2015 refers]. with respect to a Basic Saving Bank Deposit has been exempted from service tax. [Notification 9.3.1.3.1. Measures taken in Post-Budget 2015-16 No.25/2012-Service Tax, dated 20.06.2012, as (Service Tax) amended by the notification No.20/2015- 1. Service tax on Pradhan Mantri Suraksha Bima Service Tax, dated 21.10.2015 refers]. Yojna, Pradhan Mantri Jeevan Jyoti Bima Yojana; 7. Detailed guideline have been issued for speedy Pradhan Mantri Jan Dhan Yojana; and on disbursal of pending refund claims of exporters services by way of collection of contribution under of services under rule 5 of the CENVAT Credit Atal Pension Yojana (APY) were exempted. Rules, 2004.[Circular No.187/06/2015-Service [Notification No.25/2012-Service Tax, dated Tax, dated 10.11.2015 –refers] 20.06.2012, as amended by the notification No.12/2015-Service Tax, dated 30.04.2015 8. Swachh Bharat Cess has been imposed at the refers]. rate of 0.5% on all services, which are presently 2. Services under Power System Development liable to service tax with effect from 15th Fund (PSDF) Scheme of Ministry of Power, November 2015 and not otherwise exempt or in namely, re-gasification of Liquefied Natural Gas the negative list.[Notification Nos.21/2015 and imported by the Gas Authority of India Limited 22/2015-Service Tax, both dated 06.11.2015, (GAIL); (B) transportation of the incremental Re- refers]. gasified Liquefied Natural Gas (RLNG) (e-bid 9. It has been clarified that all testing and ancillary RLNG) to the specified power generating activities to testing such as seed certification, companies or plants were exempted. technical inspection, technical testing, analysis, [Notification No.17/2015-Service Tax, dated tagging of seeds, rendered during testing of 19.05.2015- refers]. seeds, are covered within the meaning of testing’ 3. In regard to Good Transport Service it is clarified as mentioned in sub-clause (i) of clause (d) of that a single composite service need not be section 66D of the Finance Act, 1994. Therefore, broken into its components and considered as such services are not liable to Service Tax under constituting separate services, if it is provided section 66B of the Finance Act, 1994. [Circular as such in the ordinary course of business. Thus, No.189/8/2015-Service Tax, dated 16.11.2015- a composite service, even if it consists of more refers] than one service, should be treated as a single service based on the main or principal service. 10. Distinct nature of manpower supply service and [Circular No.186/05/2015-CX dated 05.10.2015 the service of job work have been clarified. refers]. [Circular No.190/9/2015-Service Tax, dated 15.12.2015 –refers] 4. It has been notified that the service tax payable under section 66B of the Finance Act, 1994, on 9.3.2. RATIONALIZATION: the service provided by an Indian Bank or other Measures taken during Budget 2015-16: entity acting as an agent to the MTSO in relation to remittance of foreign currency from outside 9.3.2.1.CUSTOMS India to India, in from the 1st day of July, 2012 1) Basic Customs Duty on certain inputs was and ending with the 13th day of October, 2014, but for the said practice, shall not be required to reduced to address the problem of duty inversion be paid. [Notification Nos.19/2015-Servce Tax, for sectors such as electronics & IT, dated 14.10.2015, refers]. telecommunication, steel, chemicals & petrochemicals, and renewable energy such as 5. Charitable activities relating to advancement of wind energy and solar energy. Yoga provided by an entity registered under Section 12 AA of the Income Tax Act have been 2) Special additional duty of customs (SAD) was be exempted from Service tax.[Notification reduced to address the problem of CENVAT No.25/2012-Service Tax, dated 20.06.2012, as credit accumulation for sectors such as amended by the notification No.20/2015- electronics, iron & steel, and chemicals & Service Tax, dated 21.10.2015 refers]. Petrochemicals. 112Department of Revenue III 9.3.2.2.EXCISE  An enabling provision was made to exclude all services provided by the Government or local The excise duty structure on mobile handsets, authority to a business entity from the Negative tablet computers and solar water heater and List. Once this amendment is given effect to, all system was restructured so as to induce service provided by the Government to business domestic value addition. entities, unless specifically exempt, shall become 9.3.2.3.SERVICE TAX taxable. 9.3.2.3.1. The underlying theme of the Budget 2015-16 9.3.2.3.5. The General Exemptions in service tax were indirect tax proposals was Job creation through revival reviewed and the following exemptions have been of growth and investment and promotion of domestic withdrawn: manufacturing and ‘Make in India’; Minimum government  Specified services of construction, repair of civil and maximum governance to improve the ease of doing structures, etc. when provided to Government business; Improving the quality of life and public health except such services provided to,- through Swachh Bharat initiatives; and stand-alone proposals to maximize benefits to the economy. a) a historical monument, archaeological site 9.3.2.3.2. In order to achieve the objective of job creation b) canal, dam or other irrigation work; through revival of growth and investment and promotion c) pipeline, conduit or plant for (i) water supply of domestic manufacturing and ‘Make in India’, the (ii) water treatment, or (iii) sewerage following measures were taken in the field of Service Tax: treatment or disposal. 9.3.2.3.3. The objective of improving the quality of life  Construction, erection, commissioning or and public health through Swachh Bharat initiatives was installation of original works pertaining to an achieved by the following measures: airport or port.  An enabling provision was made to empower the  Services provided by a performing artist in folk Central Government to impose a Swachh Bharat or classical art form of (i) music, or (ii) dance, or Cess on all or certain taxable services at a rate (iii) theater. Exemption will be limited only to such of 2% on the value of such taxable services. The cases where amount charged is upto Rs 1,00,000 provision has been implemented with effect from per performance (except brand ambassador). 15th November, 2015 and Swachh Bharat Cess at the rate of 0.5% has been made applicable on  Services provided by a mutual fund agent to a all services except those which are exempt from mutual fund or assets management company; Service Tax or are in the negative list. The distributor to a mutual fund or AMC; and selling proceeds from this Cess would be utilized for or marketing agent of lottery ticket to a distributor Swachh Bharat initiatives. of lottery.  Service provided by a Common Effluent 9.3.2.3.6. In order to give impetus to banking in rural areas Treatment Plant operator for treatment of effluent under the Pradhan Mantri Jan Dhan Yojana [PMJDY] was exempted. Scheme, specified services provided by Business Facilitators/Business Correspondents with respect to a 9.3.2.3.4. As a measure of broadening the Tax Base, the Basic Saving Bank Deposit (BSBD) Account covered by Negative List of services (i.e. services which are not Pradhan Mantri Jan Dhan Yojana in a banking company’s taxable) was reviewed and service tax was levied on the rural area branches have been exempted from service following services: tax.  Service provided by way of access to amusement 9.3.2.3.7. In keeping with the declaration of 21 June as facility such as rides, bowling alleys, amusement the International Day of Yoga by UN General Assembly, arcades, water parks, theme parks, etc. charitable activities relating to advancement of Yoga have  Service by way of admission to entertainment been exempted from Service tax. event of concerts, non-recognized sporting 9.3.2.3.8. With a view to promote ease of doing business, events, pageants, music concerts and award Cenvat Credit Rules, 2004 have been amended so as to functions, if the amount charged for admission allow credit of Education Cess and Secondary and Higher is more than Rs.500. Education Cess (subsumed under Service tax with effect  Service by way of carrying out any processes as from 1st June, 2015) paid on inputs/input services and job work for production or manufacture of capital goods to be utilized for payment of service tax in alcoholic liquor for human consumption. specified circumstances. 113Annual Report 2015-2016 9.3.3. WIDENING/DEEPENING OF TAX BASE / 2) Registration in two days: Registration in AUGMENTING TAX : GDP RATIO Service Tax to be granted within two working days. Measures taken during Budget 2015-16: 3) Time limit for taking CENVAT: Time limit for 9.3.3.1.CUSTOMS taking CENVAT Credit of duty/tax paid on inputs 1. Basic customs duty on metallurgical coke was and an input service was extended from six increased from 2.5% to 5%. months to one year. 2. Basic Customs duty on Commercial Vehicles was 4) Simplification in procedure for availment of increased from 10% to 20%. Cenvat Credit in certain cases: For availment of CENVAT credit of service tax paid under 9.3.3.2.EXCISE reverse charge mechanism, the condition of 1. Excise duty of 2% without CENVAT credit or 6% having made the payment of consideration to the with CENVAT credit was levied on condensed service provider was done away with. milk put up in unit containers. 5) Rationalisation of penal provisions: Penalty 2. Excise duty of 2% without CENVAT credit or 6% provisions in Service Tax have been rationalized with CENVAT credit was levied on peanut butter. to encourage compliance and early dispute resolution. 3. The rate of Clean Energy Cess levied on coal, lignite and peat was increased from Rs. 100 per 6) Digital signature and preserving records in tonne to Rs. 200 per tonne. electronic form: Service Tax assessees have been allowed to issue digitally signed invoices 4. Excise duty on sacks and bags of polymers of and maintain other records electronically. ethylene other than for industrial use was increased from 12% to 15%. 7) Withdrawal of Prosecution in certain circumstances: Instructions have been issued 5. Excise duty on cigarettes was increased by 25% for cigarettes of length not exceeding 65 mm and by providing for withdrawal of prosecution where a 15% for cigarettes of other lengths. Similar increases noticee was exonerated in the quasi-judicial are proposed on cigars, cheroots and cigarillos. proceedings and such order has attained finality. 6. Maximum speed of packing machine was 8) If the export proceeds are not received within specified as a factor relevant to production for the prescribed time period, the exporter has to determining excise duty payable under the reverse the Cenvat Credit. Re-credit of such Compounded levy Scheme presently applicable reversed Cenvat credit was allowed, if such to pan masala, gutkha and chewing tobacco. export proceeds are received within one year Accordingly, deemed production and duty from the specified period. payable per machine per month were notified with 9) To bring certainty in the determination of point of reference to the speed range in which the taxation in case of reverse charge mechanism, maximum speed of a packing machine falls. it was provided that point of taxation will be the 9.3.3.3.SERVICE TAX payment date or three months from the date of invoice, whichever is earlier. 1) Reduction in number of levies: Education Cess and Secondary & Higher Education Cess on 9.4. Central Excise taxable services have been subsumed in Service Tax with effect from 01.06.2015. 9.4.1. Major facilitation measures Sl. No. Circular / Date Facilitation Measures 1. 1011/18/2015-CX, 30.10.15 Clarification regarding self-sealing and self-examination of bulk cargo- The relaxation from sealing container for export was given in the case of bulk cargo, such permission may be given subject to safeguards by the Jurisdictional Principal Chief Commissioner or Chief Commissioner of Central Excise. 2. 1010/17/2015-CX, 23.10.15 Circular regarding revised monetary limit for arrest in Central Excise and Service Tax- Now arrest in Central Excise/ Service Tax offences may be made in cases where the evasion of Central Excise duty or Service Tax or the misuse of Cenvat Credit is equal to or more than rupees one crore. 114Department of Revenue III Sl. No. Circular / Date Facilitation Measures 3. 1009/16/2015-CX, 23.10.15 Guidelines regarding launching prosecution under CEA,1944 and Finance Act,1994- In this the many issues were clarified such as who is the person who is liable to be prosecuted, monetary limit for launching prosecution, guidelines regarding prosecution of habitual offenders, who are the authority to sanction prosecution, procedure to sanction prosecution, guidelines for monitoring prosecution, procedure for withdrawal of sanction order of prosecution. 4. 1008/15/2015-CX, 20.10.15 Clarification regarding essential component of wind operated electricity generators (WOEG)- Vide this various parts and components which constitute essential components of wind operated electricity generators and hence eligible for exemption under Central Excise were clarified. 5. 1006/13/2015-CX, 21.09.15 Clarification regarding binding nature of circular and instructions.-Vide this it was clarified that circular and instruction which are contrary to Court’s judgement are non-est in law and are not binding on officers. 6. 1004/11/2015-CX, 21.07.15 Clarification regarding detailed scrutiny of Central Excise returns.-Vide this guidelines for detailed regular scrutiny of returns based on risk based factors issued by DG, Audit were issued. 7. 1003/10/2015-CX, 05.05.15 Clarification regarding CENVAT credit in transit sale through dealer 8. 1001/08/2015-CX, 28.04.15 Clarification regarding rebate of duty on goods cleared from DTA to SEZ- vide this clarification regarding benefit of rebate of duty on goods cleared from DTA to SEZ and issue of refund of accumulated CENVAT credit when goods are cleared from DTA to SEZ were issued. 9. 999/6/15-CX, 28.02.15 Clarification regarding place of removal of goods in Central Excise-vide this a clarification regarding in the case of exports, for purposes of CENVAT credit of input services, the place of removal from where the goods are finally exported was issued. 10. 997/04/2015-CX, 28.02.15 Circular for simplification of registration procedure in Central Excise and Service Tax- Under the new simplified procedure, once duly completed application form is received online on ACES, registration would be granted within two working days and issued online without any examination of the documents and verification of documents or premises before the grant of registration, thus initiating trust based registration. Simultaneously, assessee would be enabled to electronically pay duty. Further, the assessee would not need a signed copy of Registration Certificate as proof of registration. Registration Certificate downloaded online from ACES system would be accepted as proof of registration. Verification of the documents and premises shall be carried out post facto. 11. F.No.224/44/2014- Instruction regarding maintenance of Records in electronic form and CX.6, 06.07.15 authentication of records by digital signature- Vide this maintenance of records in electronic form and use of digital signature to authenticate documents were allowed. 12. F. No. 96/85/2015 - Central Excise Tariff conference was held in Chandigarh, in which decisions CX.I, 07.12.15 on 53 points were taken and circulated to trade vide Instruction- F. No. 96/ 85/2015-CX.I, dated 07.12.15. 115Annual Report 2015-2016 9.5. Customs free Shipping Bill has been extended to Krishnapatnam Sea Port, Andhra Pradesh making it the 19th Sea-port in 9.5.1. Special Notified Zone for trading of rough the country where 24*7 Customs clearance is operational. diamonds: 9.5.5. Use of Digital Signature Consequent to Hon’ble Prime Minister’s announcement to make India into a hub for trading of In order to increase coverage of digitally signed rough diamonds, a ‘Special Notified Zone’ has been documents and subsequent phasing out of physical / operationalized at Bharat Diamond Bourse at Mumbai. manual submission of documents, Board has decided The procedure envisages major diamond mining that all importers, exporters using services of Customs companies bringing in rough diamonds for display and/ Brokers for formalities under Customs Act, 1962, shipping or auctions to be conducted within the customs area and lines and air lines shall file customs documents under re-exporting the unsold consignments. digital signature certificates mandatorily with effect from 01.01.2016. The importers/ exporters desirous of filing 9.5.2. Setting Up of Customs Clearance Facilitation Bill of Entry or Shipping Bill individually may however have Committee (CCFC): the option of filing declarations/ documents without using digital signature. Further, wherever the customs process To ensure expeditious clearance of EXIM goods documents are digitally signed, the Customs will not insist a high level administrative Committee i.e. ‘Customs on the user to physically sign the said documents. Clearance Facilitation Committee’ (CCFC) has been put in place at every major Customs seaport and airport under 9.5.6. Dispensing of SDF the chairmanship of Chief Commissioner of Customs/ Commissioner of Customs. This Committee would CBEC has dispensed away submission of SDF include the senior-most functionary of the other form and in lieu of it has incorporated a declaration to be government departments/agencies, such as the Food furnished by exporters as part of the declaration in the Safety Standards Authority of India/the Port Health Officer Shipping Bill as part of the Government’s measures to (PHO); the Plant Quarantine, Animal Quarantine enhance ease of doing business. Authorities; the Drug Controller of India (CDSO); the 9.6. Service Tax Textile Committee; the Port Trust / the Airport Authority of India / Custodians; the Wild Life Authorities; the 9.6.1. The following legal/ procedural changes were Railways/CONCOR; the Pollution Control Board. made in Service Tax in the year 2015:- Members from trade can be co-opted to this Committee on need basis. The CCFC is mandated to focus primarily (1) Simplification of the process of registration:- on ensuring and monitoring expeditious clearance of The process of registration has been simplified EXIM goods in accordance with the timeline specified by in such a manner that registration for single the parent ministry/Department concerned; identifying and premises would be issued within two working resolving bottlenecks, if any, in the clearance procedure days of the receipt of complete application form of imported and export goods; and resolving grievances without examination of documents before the of members of the trade and industry in regard to grant of registration. The applicant would not clearance process of imported and export goods. need a signed copy of the Registration Certificate Similarly, at Central level, a ‘Central Customs Clearance as proof of registration. The Registration Facilitation Committee’ has also been set up under the Certificate downloaded from the ACES web site chairmanship of Revenue Secretary to address the issue would be accepted as proof of registration. relating to customs clearance and infrastructure impacting (2) To reduce litigation and give opportunity to the clearance of goods. assessee for closure of proceedings if duty, 9.5.3. Green Channel Facility interest and penalty are paid, the following changes have been made in Sections 73, 76 CBEC has permitted Green Channel facility to and 78 of the Finance Act, 1994. all the International Passengers coming by Cruise vessels which would give a boost to the tourism industry. Besides, 9.6.1.1 Section 73 has been amended to insert a new Indian Nationals are permitted to travel from one Indian sub section (1B) to provide that the service tax amount port in a foreign cruise ships/ vessels during its domestic self assessed and declared in the return but not paid leg for tourism purpose. (either in part or full) shall be recovered under Section 87 thereof, without service of any notice under Section 73(1). 9.5.4. 24x7 Clearance 9.6.1.2 Section 76 has been amended to rationalize the In addition to the 18 Sea-ports and 17 Air-Cargo provisions relating to penalties in cases not involving fraud complexes, 24*7 Customs Clearance for specified or collusion or willful misstatement or suppression of facts imports/ exports covered by ‘facilitated’ Bills of entry and or contravention of any provision of the Act or rules with 116Department of Revenue III intent to evade payment of service tax in the following to service exporters, for claims pending as on manner:- 31.03.2015 has been introduced w.e.f. 10.11.2015. Exporters will get a provisional (a) Ceiling of 10% of service tax amount on penalty payment of 80% of the refund amount within 5 has been incorporated; days, subject to certain conditions. (b) No penalty leviable if service tax and interest is 9.7. Drawback Division paid within 30 days of issuance of Show Cause Notice under Section 73(1); 9.7.1. Functions of Drawback Division are as under: (c) Reduced penalty equal to 25% leviable if the (i) Fixation of All Industry rates of Duty Drawback; service tax, interest and reduced penalty is paid within 30 days of receipt of Order of the Central (ii) Monitoring of sanction and disbursal of drawback Excise Officer; and by the field formations; and (d) If the service tax amount gets reduced in any (iii) Liasoning with the DGFT on all Export Promotion appellate proceeding, then penalty amount shall (EP) Schemes, their operationalization and also stand modified accordingly, and benefit of monitoring (except SEZ, EOU and Gem and reduced penalty (i.e., 25%) shall be admissible Jewellery schemes which are being monitored if service tax, interest and reduced penalty is paid by the DGEP). within 30 days of such Appellate Order. 9.7.2. Achievements During The Year: 9.6.1.3 Section 78 has been amended to rationalize the The major work done by the Drawback Division provisions relating to penalties in cases involving fraud during the period 01.01.2015 to 31.12.2015 – or collusion or willful misstatement or suppression of facts or contravention of any provision of the Act or rules with (A) Issues raised in representations and feedback the intent to evade payment of service tax, in the following received from trade relating to All Industry Rates manner: of Duty Drawback that were made effective from 22.11.2014 were redressed on priority by certain (a) Penalty shall be 100% of service tax amount; amendments to the All Industry Rates were made (b) Reduced penalty equal to 15% shall be leviable (effective from 13.02.2015) vide Notification no. if service tax, interest and reduced penalty is paid 20/2015-Customs (NT) and 21/2015-Customs within 30 days of issuance of SCN under Section (N.T.) both dated 10.20.2015. 73(1); (B) To provide and maintain competiveness of export (c) Reduced penalty equal to 25% leviable if the goods in the international market, All Industry service tax, interest and reduced penalty is Rates (AIR) of Duty Drawback were revised w.e.f. paid within 30 days of receipt of Order of the 23.11.2015 vide notification no. 110/2015- Central Excise Officer; and Customs (NT) dated 16.11.2015 taking into account certain average parameters including (d) If the service tax amount gets reduced in any prevailing prices of inputs, input output norms, appellate proceeding, then penalty amount shall share of imports in input consumption, rates of also stand modified accordingly, and benefit of Central Excise and Customs Duties, incidence reduced penalty (i.e.,25%) shall be admissible if of Service Tax paid on taxable services which service tax, interest and reduced penalty is paid are used as input services in manufacturing and within 30 days of such Appellate Order. processing of export goods, value of export goods etc. For ease of the trade and the field (e) Guidelines for detailed manual scrutiny of ST-3 formations, Circular No. 29/2015-Customs dated returns have been issued to strengthen the 16.11.2015 issued highlighting some of the compliance verification. Selection of the units/ important changes in the AIR of Duty Drawback businesses for detailed manual scrutiny is done Schedule. on the basis of risk scores. (C) While revising AIR w.e.f. 23.11.2015, many (f) Sub Rule 4 has been added to Rule 5 of the products were differentiated for improved Service Tax Rules, 1994 to provide that records representation of average incidence of duty/tax under this Rule may be preserved in electronic e.g. suits, jackets and trousers are now shown form and every page of the record so preserved separately by trifurcating existing entry, filtration shall be authenticated by means of a digital fabrics and protective wear segregated by signature. constituent material etc. Granulated slag has (g) A scheme of fast track refunds of CENVAT credit been provided AIR. 117Annual Report 2015-2016 (D) Provision has been made through amendment verifications and duplication of work in substantial to the Rules and specification through Notification number of cases. No. 110/2015-Cus (NT) for payment of (J) Installation Certificate of Capital Goods under provisional drawback equivalent to customs EPCG scheme may now be obtained not only portion of All Industry Rate of duty to exporters from Central Excise authority but also from any who export under claim of drawback for brand Independent Chartered Engineer. This provides rate in case where All Industry Rate is considered choice and flexibility to manufacturers. insufficient by the exporter. This will improve cash flow of such exporters who were earlier required 9.7.3. Audit Related Work: to first file a complete application for fixation of brand rate with jurisdictional central excise Ministry’s Final Action Taken Note, on authorities to get provisional brand rate. observations/recommendations of 7th Report of the Public Accounts Committee (16th Lok Sabha) on ‘Duty Drawback (E) Electronic monitoring of realization of export Scheme’ based on Section-II of C&AG Report No. 15 of proceeds data received from RBI has been 2011-12, has been submitted to Hon’ble PAC on 17th July, introduced for exports from 01.04.2014 onwards. 2015. This has advantage of not requiring documentary submissions by compliant exporters thereby 9.8. Public Accounts Committee reducing transaction costs in the administration 9.8.1. During the year, PAC has selected 2 Performance of the rebate under Drawback scheme. Audit Reports No. 29 of 2014 Administration of (F) To operationalize the new Foreign Trade Policy Prosecutions & Penalties in Central Excise & Service 2015-20 announced by DGFT on 01.4.2015, Tax and Para No. 3.1 (Sub Para 3.1.1) and Para No. 5.2 Revenue Notifications for EPCG, Advance of Performance Audit Report No. 33 of 2014- Central Authorization, DFIA Schemes issued on Excise Administration in Automotive Sectors for detailed 01.4.2015 itself so as to provide seamless examination. Ministry’s Detailed Background Note on transition. For facilitation of trade and field these 2 reports has been sent to Lok Sabha Secretariat formations, Circular No. 14/2015-Cus dated on 24.6.2015 & 29.6.2015 respectively. 20.4.2015 issued to explaining the salient 9.8.2. Similarly, chapter II (Service Tax liability in changes in Foreign Trade Policy 2015-20. Insurance sectors) and Chapter III (Service Tax liability (G) Payment of duty on basis of self-calculation as in Port Sectors) were also selected for detailed per procedure prescribed in Circular 11/2015-Cus examination by the Public Accounts Committee. dated 01.04.2015 allowed for exporters who wish Ministry’s Detailed Background Note on these 2 chapters to regularize default in export obligations to was also sent to Lok Sabha Secretariat on 9th October, reduce interest burden as they need not wait for 2015 and 12th August, 2015 respectively. detailed calculation by Regional Authorities of 9.8.3. Further, Para 2.2.1 (Incorrect availing of DGFT before being able to deposit the duty exemption of Audit Report No. 12 of 2009-10 and Para involved. No. 3.4 to 3.8 (Scrutiny resulting in non-recovery of duty (H) Exporters relying partly on imported duty free and interest) of Audit Report No. 17 of 2013 was also material against Advance Authorization had to selected for detailed examination and Ministry’s Detailed obtain the domestic materials on payment of Background Note on these were also sent to Lok Sabha Central Excise duty and claim brand rate of Secretariat on 24th September, 2015. drawback on the latter. The Advance 9.8.4. Further, it may be stated that after finalization of Authorization notification 18/2015-Cus dated ATN/settled by C&AG, the same will be upload in the 01.04.2015 now allows domestic procurement portal of Monitoring Cell during the year on the direction without payment of duty, subject to some of Committee of Secretaries (CoS). safeguards. This means that exporter need not block their funds in duty payment that is to be 9.9. International Customs Division given back as duty drawback. 9.9.1. Agreement between the Government of the (I) A limit of 5% (instead of at least 5% cases) has Republic of India and the Government of the Democratic now been prescribed vide Instruction no. 605/ Socialist Republic of Sri Lanka on Co-operation and 71/2015-DBK dated 02.12.2015 for verification Mutual Assistance in Customs Matters was signed in of export obligation discharge certificates and Colombo on 13th March, 2015. After ratification by both time limit of 30 days provided for customs to sides, the Agreement came into effect on 25th December, cancel bond executed by exporters under 2015. The Agreement provides a framework for Advance Authorization scheme. This will reduce cooperation between the two Customs Administrations, 118Department of Revenue III including in information and intelligence exchange, this regard, the following measures were taken during investigative assistance and technical cooperation. the year 2015-16 (upto December, 2015):- 9.9.2. Protocol between the Federal Customs Service 9.10.2. Policy measures for strengthening enforcement (Russian Federation) and the Central Board of Excise capabilities: and Customs (Republic of India) on Cooperation in i. Prosecution and Arrest guidelines have been Exchange of Pre-arrival Information for Facilitation of issued. Trade and Customs Control on Goods and Vehicles moved between the Russian Federation and the Republic ii. Revised guidelines for reward to informers and of India was signed in New Delhi on 6th April, 2015. The departmental officers have been issued. Protocol provides for facilitation of clearance for cargo iii. The Anti-Smuggling Unit coordinated with other traded by identified entities, to be selected along mutually Ministries, National Security Council Secretariat accepted parameters. (NSCS), Central Economic Intelligence Bureau 9.9.3. Protocol between the Federal Customs Service (CEIB), Economic Intelligence Council (EIC), (Russian Federation) and the Central Board of Excise National Committee on Strengthening Maritime and Customs, Department of Revenue, Ministry of and Coastal Security (NCSMCS), etc. on issues Finance of the Republic of India on Cooperation in relating to economic, marine, coastal, and Combating Customs Violations in Air Traffic was signed national security. in New Delhi on 6th April, 2015. iv. Participated in the multilateral/international co- operation initiatives like the Protocol to eliminate 9.9.4. Pursuant to the expansion of the Duty Free Trade Illicit Trade in Tobacco products, Indo-US Home Preference Scheme, which extends unilateral preferential Land Security Dialogue, Asia-Pacific Trade tariff treatment to the Least Developed Countries, revised Based Money Laundering (TBML) and Trade- Rules of Origin were notified vide Notification No. 29/ Related Economic Risks Workshop, coordinated 2015-Customs (N.T.), dated 10th March, 2015. The training of Customs Officers in the Weapons of notification provides for greater clarity in the procedural Mass Destruction (WMD) Counter Proliferation aspects of certification and verification of origin. Programme held in USA, and also coordinated 9.9.5. Consequent to Hon’ble Prime Minister’s various joint operations under the aegis of announcement to make India into a hub for trading of Interpol, World Customs Organization and UNEP rough diamonds, a procedure for creation of a ‘Special targeting illicit trade activities in relation to piracy, Notified Zone’ at Bharat Diamond Bourse at Mumbai has counterfeit products/medicines, smuggling, been notified vide Circular no. 17/2015 – Customs dated environmental crime, cross border crime, etc. in 26th May 2015. The procedure envisages major diamond compliance with International Conventions. mining companies bringing in rough diamonds for display v. The Department has continuously renewed its and/or auctions to be conducted within the customs area efforts in pursuing the proposal for creation of and re-exporting the unsold consignments. seven new Customs Overseas Intelligence Network (COIN) posts at Beijing, Guangzhou, 9.9.6. To ensure clarity in the practice of assessment Dhaka, Colombo, Bangkok, Brasilia and Pretoria and valuation of second hand machinery, simplified with the Ministry of External Affairs. guidelines were issued vide Central Board of Excise and Customs Circular No. 25/2015 dated 15th October 2015. 9.10.3. Procurement of Anti-Smuggling Equipment 9.9.7. To reduce transaction costs of import and export 9.10.3.1. This wing addresses the logistical requirements and cut upon the dwell time, the Central Board of Excise of field formations pertaining to Anti-smuggling, and Customs commenced notifying the exchange rates Communications and Marine equipment. In this regard for Chinese Yuan (CNY) with effect from 8th January, 2016, the Directorate of Logistics caters to the needs of about thereby extending the number of currencies for which 66 operational Customs Stations along with our exchange rate is notified to twenty. international borders, 94 ports including 12 major Ports and 36 international Airports handling cargo and baggage 9.10. Anti-Smuggling Measures besides Foreign Post Offices and Land Customs Stations, ICDs etc. which too are vulnerable to smuggling. The 9.10.1. The Anti-Smuggling Unit assists the Central logistic support to prevent smuggling through air, land Board of Excise & Customs (CBEC) in formulation of the and sea is provided. The projects implemented or policy and provisions of logistics for effective underway are:- implementation of anti-smuggling measures through Directorate of Revenue Intelligence (DRI), Directorate of a) Mobile Gamma Ray Scanners - Three Mobiles Logistics (DOL) and other Customs field formations. In Gamma Ray Container Scanners were 119Annual Report 2015-2016 commissioned at Tuticorin Port and Chennai Port National Training Centre for Dogs (NTCD), a BSF in 2014 and at Kandla Port in March, 2015. facility, Tekanpur, Gwalior. b) Fixed X-Ray Scanners- Four fixed X-ray j) Marine Wing: The Department has procured 109 Container Scanners are under installation. Two boats of different categories in phases from 2009 Fixed scanners have been installed at Mumbai onwards. These boats have been deployed at and at Tuticorin during 2015. Work at Kandla and Jamnagar, Kandla, Ahmedabad, Mumbai, Pune, Chennai Ports is likely to be completed in May- Mangalore, Goa, Kochi, Trichy, Chennai, Vizag, June 2016. Bhubaneswar, Kolkata , Patna, Shillong and Vijayawada . c) Three Drive-through Container Scanners (Road) - Global tender was floated for purchase 9.11. Anti Evasion Activities of Drive-through Scanners for installation at JNPT, Cochin and Mundra in July 2015 and the 9.11.1. The Central Board of Excise & Customs under technical evaluation is underway. Department of Revenue, Ministry of Finance has presently two apex intelligence agencies, namely:- d) Two Drive-through Scanner (Rail): Rail Containers Scanner Project is envisaged at (i) Directorate General of Revenue Intelligence. Gateway Ports of Nhava Sheva and Mundra. (ii) Directorate General of Central Excise Intelligence. Technical specifications have been finalized. Site at Mundra Port has also been finalized. Location 9.11.2. With a view to deal with cases of violations of at JNPT is under discussion with Railways. Customs laws, having ramifications beyond the geographical jurisdiction of localized field formations and e) X-Ray Baggage Inspection Systems (XBIS): for collection, co-ordination and correlation of intelligence 159 XBIS including one system with Z- with respect to violation of these laws and also to furnish Backscatter Technology have been procured and specialized know-how, in 1953, a nucleus cell, christened installed at Airports, ICD, LCS and FPO functional ‘C.R.I.B.’ (Central Revenue Intelligence Bureau), under various field formations of Customs & charged with the responsibility of dealing with all matters Excise. Procurement of 76 additional XBIS has connected with anti-smuggling and anti-corruption in the been finalized during the year and approval of Customs and Central Excise organizations all over India competent authority to award the contract is was constituted. Thereafter, considering the magnitude awaited. of the smuggling and anti-evasion activities, the f) Videoscopes: A Videoscope enables the Directorate of Revenue Intelligence was thus constituted Customs officers to view inaccessible areas in on 4th December 1957, for dealing exclusively with the cargo containers, air cargo complexes, Inland work relating to the collection and study of information Container Depots etc. to detect attempt to on smuggling activities and the deployment of all anti- smuggle contraband. Procurement process of 90 smuggling resources at the all India level, videoscopes is currently underway. 9.11.3. In 1983, Directorate of Anti-evasion was carved g) Carat meter: This equipment is used while out of DRI as a specialized organization to plug and testing the purity of gold, silver and platinum etc. prevent revenue leakages pertaining to Central Excise Carat Meters have been procured and supplied duty. In 1988, expanded and upgraded to Directorate at the designated 12 Customs field formations General of Anti-evasion. In 2000, renamed as Directorate in December, 2015. General of Central Excise Intelligence. In 2004 mandate of DGCEI was expanded to look into the cases of evasion h) Disposal of Goods: During FY 2014-15 target of Service Tax as well. for disposal fixed was Rs.471.92 crore whereas achievements have been Rs.537.20 crore, i.e. 9.11.4. The mandate of these two Nodal Investigative 14% higher than the target. Actual sale proceeds Agencies is below:- have been Rs.509.19 crore, which is Rs.186.92 9.11.4.1. Directorate General of Revenue Intelligence crore more than that of preceding Financial Year. (DGRI) :- i) Canine Squad: 26 sniffer dogs have been (a) To study and disseminate intelligence about deployed at 9 airports namely, Mumbai (9 no.), smuggling; Delhi (3 no.), Amritsar (3 no.), Kochi (1 no.), Trichy (2 no.), Thiruvanthapuram (2 no.), (b) To identify the organized gangs of smugglers and Ahmedabad (1 no.), Pune (2 no.) and Kolkata areas vulnerable to smuggling, targeting of (03 no.) after their training along with the handlers intelligence against them and their from the respective Commissionerates at immobilization; 120Department of Revenue III (c) To maintain liaison with the intelligence and (b) To study the price structure, marking patterns and enforcement agencies in India and abroad for classification of commodities vulnerable to collection of intelligence and in-depth evasion of central excise duties; investigation of important cases having inter- (c) To coordinate action with other departments like Commissionerate and international ramification; Income Tax etc. in cases involving evasion of (d) To alert field formations for interception of central excise duties; suspects and contraband goods assessment of (d) To investigate cases of evasion of Central excise current and likely trends in smuggling; duties having inter-Commissionerate ramification; (e) To advise the Ministry in all matters pertaining to and anti-smuggling measures and in formulating or (e) To advise the Board and the Commissionerates amending laws, procedures and practices in on the modus operandi of evasion of central order to plug any loopholes; and, Excise duties and suggest appropriate remedial (f) To attend to such other matters as may be measures, procedures and practices in order to entrusted to the Directorate by the Ministry or plug any loopholes. the Board for action/ investigation. 9.11.5. In addition, all Field Formations in Customs, 9.11.4.2. Directorate General of Central Excise Central Excise and Service Tax have also been vested Intelligence (DGCEI) the powers to investigate economic offences within their jurisdiction. Commissioner. (a) To collect, collate and disseminate intelligence 9.11.6. Anti Evasion Performance of DGCEI upto relating to evasion of central excise duties; November, 2015 (` in crore) Detection Realization Central Excise Service tax Central Excise Service tax No. of Cases Amount No. of Cases Amount No. of Amount No. of Cases Amount Cases 219 1658.95 627 6862.85 152 200.07 428 524.80 9.12. Litigation Management by Single Member Benches of CESTAT has been enhanced from Rs. 10 lakhs to Rs. 50 lakh. 9.12.1. The Government has taken a number of measures to reduce litigation in taxes. v. Establishment of six Additional Benches of Important measures are as under:- CESTAT has been approved by the Government. i. Keeping in view of the spirit of National Litigation vi. Early hearing application in cases involving Policy, CBEC has issued instructions laying down substantial revenue is being filed for quicker disposal. threshold limit for filing Departmental Appeals as vii. Instructions are also issued from time to time to Rs. 25 lakh, Rs. 15 lakh and Rs. 10 lakh before sensitize the field formations for regularly Supreme Court, High Court and CESTAT monitoring litigation for safeguarding respectively. This is expected to reduce appeals Government’s interest and for taking steps to and help in de-clogging of indirect tax matters in improve indirect tax administration. courts and CESTAT. 9.12.2. Directorate of Legal Affairs is set up to function ii. The provisions of pre-deposit have been made as the co-ordinating agency: mandatory for filing of appeal before Commissioner (Appeals) and CESTAT. This (i) Between field formations and the Hon’ble would result into Appellate Authorities Supreme Court Registry through Central Agency concentrating their time on main Appeals instead Section (CAS) of Law Ministry. of disposal of Stay Applications. (ii) Between the Legal and Judicial Cell of the Board iii. Scope of the Settlement Commission and i.e. CBEC and Central Agency Section (CAS) of Authority for Advance Rulings has further Law Ministry. The directorate also co-ordinates expanded. between Govt. Advocates, Law Officers, Attorney General, Solicitor General, Additional Solicitor iv. Monetary limit of the cases heard and disposed Generals, Sr. Counsels and Counsels. 121Annual Report 2015-2016 9.12.3. To ensure proper representation of cases before the 9.12.6. Functional Owner (FO) of MIS database with bench by way of filing of counter affidavits / rejoinders, curing respect to litigation matters. Reports regarding present of defects, proper and timely briefing of counsels etc. status of pending cases at different fora are now uploaded directly by the Commissionerates, but the same is 9.12.4. Special Monitoring Cell (SMC) to keep track of regularly monitored by this directorate. the cases in the Hon’ble Supreme Court and keep the concerned field formations updated about daily proceedings 9.12.7. The information in respect of decisions of the in their cases. Officers regularly attend court proceedings various High Courts and Tribunal (CESTAT), which are and upload the outcomes on the CBEC website. received from field formations, are compiled and uploaded 9.12.5. In the current year i.e. 2015-16 the Hon’ble on the CBEC website for wider dissemination of the same. Supreme Court had set up Special Bench for Taxation 9.12.8. Pendency Statement of cases in different fora Matters from 09.03.2015.Till 30th November, 2015 total (upto December, 2015) number of cases heard and disposed of is above 1100. (Rs. In Lakhs) (Department Appeals) Sl. Forum Central Excise Service Tax Customs No. No. Amt. No. Amt. No. Amt. 1 Supreme Court 1158 386508.15 425 289823.6 364 119410.78 2 High Court 4364 853738.34 900 230650.97 1517 138531.01 3 CESTAT 10409 835189.35 5626 1312040.93 3819 241916.07 4 Commissioner (Appeal) 1948 46737.27 2621 40094.39 945 14810.62 (Party Appeals) 1 Supreme Court 573 214867.25 194 65401.56 293 144043.28 2 High Court 3606 711814.67 2090 586847.09 2508 348765.85 3 CESTAT 29655 5760972.1 18165 6471484.48 9827 1513617.62 4 Commissioner (Appeal) 11592 337247.64 15391 446257.92 8727 124128.93 9.12.9. Information about the performance/achievements in departmental SLPs is given below :- Information about the performance / achievements in Departmental SLPs SLP Number of proposals Number of Number of cases where High Court orders Period received SLP filed were accepted on a/c of merit/low amount 2009-10 387 331 56 2010-11 444 311 133 2011-12 374 187 187 2012-13 220 120 100 2013-14 324 237 87 2014-15 371 288 83 122Department of Revenue III 9.12.10. Engagement of Counsels : importers and exporters, Customs House Agents, manufacturers and service providers. In these initiatives, Legal Cell engages/appoints Senior Standing the department is guided by the following principles: Counsels and Junior Standing Counsels for conducting CBEC matters before various High Courts. A fresh panel  Citizen-centric delivery of services through for further engagement is under consideration. “single window” interface. Instructions have also been issued conveying the field  Providing services on an “anytime, anywhere” formations to avail services of the Central Government basis. Standing Counsels/Assistants Solicitor General of India appointed by Ministry of Law to defend CBEC cases.  Ushering in Transparency and Accountability. Department also appoints retired officers (IRS:C&CE) as Special Counsels to conduct CBEC cases before  Simplification of Procedures. CESTAT. Special Public Prosecutors are also appointed  Reduction in Transaction Costs. by department for handling criminal matters at various lower Courts. In exceptional cases Special Fee Counsels  Minimization of manual interface. are also appointed by CBEC with the concurrence of  Encouraging voluntary compliance. Ministry of Law.  Synergy between various Tax Systems. 9.13. Directorate General of Systems and Data Management 9.13.2. Efforts are being made to make an overview of the Department available over the internet and through 9.13.1. The e-governance projects already implemented various service centers. Integrated service delivery is and those under implementation by the CBEC are in line also being attempted by integrating processes, cutting with the proposed vision of the National e-Governance across diverse field formations under CBEC and also by plan. Most of the projects undertaken by CBEC have integrating with partner agencies such as Banks, Airlines, targeted the tax payers and other stake holders such as Custodians, CONCOR, etc. 9.13.3. Details of Completed Activities / Services Sl. Activity Brief Account No 1. Online registration of To enable the taxpayer to register online as Central Excise Assessee Central Excise Assessees On the website www.aces.gov.in [Currently available to users in 146 Commissionerates.] (119 Central Excise Commissionerate + 22 Service Tax Commissionerate + 5 LTU) 2. Online registration of To enable the taxpayer to register online as Service Tax Assessee Service Tax Assessees On the website www.aces.gov.in [Currently available to users in 146 Commissionerates. (119 Central Excise Commissionerate + 22 Service Tax Commissionerate + 5 LTU) 3. Online filing of Central Excise To enable the taxpayer to file online Claims, Intimations & Permissions Claims, Intimations & Permissions On the website www.aces.gov.in [Currently available to users in 146 Commissionerates ] (119 Central Excise Commissionerate + 22 Service Tax Commissionerate + 5 LTU) 4. Online filing of Central To enable the taxpayer to file their Central Excise Returns over the Internet. Excise Returns On the website www.aces.gov.in [Currently available to users in 146 Commissionerates.] (119 Central Excise Commissionerate + 22 Service Tax Commissionerate + 5 LTU) 5. Online filing of Service Tax Returns To enable the taxpayer to file their Service Tax Returns over the Internet. On the website www.aces.gov.in 123Annual Report 2015-2016 Sl. Activity Brief Account No [Currently available to users in 146 Commissionerates. (119 Central Excise Commissionerate + 22 Service Tax Commissionerate + 5 LTU) 6. e-payment of Central Excise Duty To enable the tax payer to make online e-payment by directing the user to the EASIEST website (https://cbec-easiest.gov.in/EST/InputPageForEPaymentServlet) or to the website of assessee's preferred bank. On the website www.aces.gov.in 7. Online registration with ACES To enable the tax payer to register online for transacting electronically with the Central Excise or Service Tax Department through ACES. [Currently available to users in 146 Commissionerates.] On the website www.aces.gov.in (119 Central Excise Commissionerate + 22 Service Tax Commissionerate + 5LTU) 8. Online registration of Non - To enable Non - Assessees such as Merchant exporters to register Assessee with ACES with ACES to transact with the Department On the website www.aces.gov.in [Currently available to users in 146 Commissionerates] (119 Central Excise Commissionerate + 22 Service Tax Commissionerate + 5LTU) 9. Online training on ACES To enable assessees, non-assessees& other users to be familiar with the ACES through online tutorials (Learning Management Software), User Manuals and FAQs. On the website www.aces.gov.in 10. Web-viewing and Web-tracking of To enable tax payer & users to view or to ascertain the status of their status of Central Excise / Central Excise / Service Tax documents filed through ACES Service Tax documents On the website www.aces.gov.in 11. Service Desk facility for ACES To provide the users the facility of Service Desk to solve their problems in using ACES by calling national toll free No.1800-425-4251 (on working days between 9 AM to 7 PM & 9.00 am to 2.30 pm on Saturdays) or by sending e-mails to aces.servicedesk@icegate.gov.in. [As on 01.12.2015, 11,56,215 issues have been received out of which 11,56,143 have been resolved and percentage of resolution is 99.99 %] 12. Electronic credit of Duty Drawback To enable the taxpayer to receive electronic credit of the amount due and Service Tax Refund directly into his account with any bank. This is enabled in the Indian Customs EDI System (ICES ). 13. Dissemination of information relating To enable the taxpayers to obtain up to date information relating to to the indirect taxes through web Customs, Central Excise & Service Tax laws, forms, etc through internet. On the websites www.cbec.gov.in, www.aces.gov.in and https:// www.icegate.gov.in 14. Online registration of Importers/ To enable the taxpayer to register online as Trading Partner for Exporters/ CHAs transacting electronically with the Customs is available on the website www.icegate.gov.in. The user has to be registered at ICEGATE in order to file BE, SB, IGM, CGM, EGM etc. Registration is free. 124Department of Revenue III Sl. Activity Brief Account No 15. Online filing of Customs documents The number of documents filed through Remote EDI System (RES) such as BE, SB, IGM, has been consistently rising. In the FY 2009-10 ICEGATE handled a EGM, CGM, SGM etc. total of 8.3 million documents. More than 9.15 Million documents have been filed during 2015-16 up to Dec. 2015 Presently, the most preferred format for filing at ICEGATE is proprietary flat file message formats however; option to use the other schemas such as XML & UN-EDIFACT message formats are also available to trade. In ICEGATE Upgrade project, schemas for XML & UN-EDIFACT message formats are being developed. Total 136 major customs locations are covered in Customs EDI System. In addition, the upgraded ICEGATE also allows filing, Amendments and Query Reply Messages Online through ICEGATE for ICES 1.5 locations and also gives the facility to take the printout of the 1st Copy of the Bill of Entry and the Challan for Duty payment at the Service Centre as well as at the user's preferred location such as house / office etc. 16. Electronic filing options There are three options for filing the documents 1. E-Mails (SMTP - Simple Mail Transfer Protocol) 2. Web Upload 3. FTP (File Transfer Protocol) 17. Online acknowledgement Acknowledgements of the documents filed through RES are electronically communicated to the users at their email addresses. 18. e-payment of Customs Duty ICEGATE enables the tax payer to make multiple payments at one go through the e-gateway. More than 99% customs duty paid through at 136 EDI locations comes through e-gateway. The amount of e-payment during January 2015 to November 2015 is Rs.1,96,122.00 Crores. 19. Electronic messages for Customs The prompt electronic messages to the bank containing the duty Duty payment in the bank. payment challan details as soon as the BE is assessed and due for duty payment enables prompt duty payment by the tax payers by visiting the bank and the reverse message of duty payment from the bank and its integration into messaging enables import goods' clearance without hassle and reduces transaction costs. 20. Web-tracking of status of Tax payers/ users can view their document status through Documents filed electronically www.icegate.gov.intracking system. Online tracking system includes:  BE status tracking  SB status tracking  Container based tracking  BL tracking  IGM/ SGM/ CGM tracking  EGM tracking  tracking of queries raised in BE  tracking of queries raised in SB  Challan tracking  IEC tracking  License status tracking etc.  CHA PAN based enquiry  DBK scroll tracking and  SB wise DBK enquiry 125Annual Report 2015-2016 Sl. Activity Brief Account No 21. Online Information sharing The Customs department shares following information with DGFT in and authentication with DGFTthe Ministry of Commerce through ICEGATE:  IEC (Importer Exporter Code) issued by DGFT  Shipping bill data for the issue of Licenses  Import Export Licenses issued by DGFT  Verification of licenses issued by DGFT with the relevant Customs Shipping Bills and its integration into the ICES 22. Online information sharing with Customs shares information with following Govt. Agencies online: other Govt. Agencies  RBI  DGFT  DGCI&S (Ministry of Commerce)  Pr. CCA  Ministry of Steel etc. 23. Customs Duty Calculator As a measure of facilitation, Customs Duty Calculator has been provided at the ICEGATE and CBEC website, which not only provides rate and calculation of different types of customs duty (chapter headings wise), but also gives details of Compulsory Compliance Requirement and relevant Notifications etc. 24. Automation of Manual Procedures a. New EDI sites- Reduction in Dwell time: During 2015, a total number of 16 Customs sites were brought under EDI which included 6 sites in online trade (Production) and 10 sites in testing (Pre-production) b. ICES-SEZ integration Pilot project for ICES-SEZ integration was launched in Jan 2015 in Chennai and has been extended to all sea ports and airports in April 2015. This will eliminate the need for paper based documents needed for transaction on movement of cargo between SEZs and Customs ports. c. CRCL Module Pilot project for ICES-CRCL message exchange initiated in Delhi in Jan 2015 and is being extended to all other sites. The module facilitates sending the samples for testing (the test memo) to a chosen CRCL lab on the ICES. CRCL lab will provide the results of testing on the EDI system. This test report will be automatically integrated with the Bill of Entry. Thereafter, customs can finalize the Bill of Entry. This eliminates the use of paper in test memo and the subsequent report from the lab. d. Single Window - Phase I As a trade facilitation measure, a pilot project has been launched in JNCH, NhavaSheva, ICD, TKD and ICD, PPG in April, 2015 wherein a provision in ICES has been made to obtain electronic No Objection Certificate from PQIS (Plant Quarantine Information System) and FSSAI (Food Safety and Standards Authority of India). e. EBRC (Electronic Bank Realization Certificate) It will eliminate the need to provide documentary proof of export realization to Customs, as details are received from RBI directly. 126Department of Revenue III Sl. Activity Brief Account No f. Collection of EDD through EDI In respect of cases referred for investigation by Special Valuation Branch (SVB), 1% EDD (Extra Duty Deposit) is required to be collected. However, there was no provision for collecting EDD through e-payment. Necessary modifications were made to collect this duty through e-payment which enabled increasing accountability while providing ease of payment to Importers. The new functionality for electronic payment of EDD i.e. Extra Duty Deposit by importers pending finalization of "Related party transaction" was enabled in ICES production during June, 2015. g. PCCCC (Precious Cargo Customs Clearance Centre) This ICES module was made operational in May 2015 at BDB, Mumbai which handles 90% of precious cargo trade in India. This enabled filing of approximately 500 to 700 electronic Shipping Bills per day to the tune of Rs. 150 Crores per day of precious cargo. h. MEIS Implementation Merchant Export Incentive Scheme (MEIS) has been implemented for online transmission of Shipping Bills to DGFT and online receipt of licences for their integration in ICES. This has resulted in secure and paperless licence implementation greatly facilitating the exporters. i. Drawback The revised All Industry Rates of duty drawback and other duty drawback related changes prescribed vide the CBEC circular No.29/2015 dated 16.11.2015 were updated in the ICES directories by constituting a team of dedicated officials. Enhanced public interface a. Contract to run Service Centers at EDI sites A contract to run service centers at various Customs EDI site was awarded to M/s Xeam Ventures Ltd on 15.09.2015. This is the first time that the whole process of tendering was done online in DG Systems through Government's Central Public Procurement Portal eprocure.gov.in b. Knowledge sharing Training sessions and Workshops are conducted with all stake holders, such as, Customs Department field Officers, Airline/ Shipping Line Operators, Customs House Agents, Custodians, Other Ministry/Department Officers etc., for imparting knowledge, improving awareness and providing training on effective use of the EDI system. Training workshops were periodically held at Mumbai, Chennai, Kandla to train officers and promote the use of new modules like SEZ online/ Air transshipment, etc. In continuation of the above process, a workshop for System Mangers christened as SMART (System Manager Awareness, Review and Training) was held on 18.12.2015 at Hyderabad. Enhanced monitoring mechanism a. Digital Signature and thereby reduced verification From April 2015, a facility has been created in ICES for the trade to file their Customs declarations with Digital Signature. The status of signing will be available for viewing by the departmental officers, thus reducing the need to provide documentary proof. 127Annual Report 2015-2016 Sl. Activity Brief Account No b. Seals and Signature module Seals and Signature module has been launched in 4 pilot sites, namely, IGI airport Delhi (INDEL4), Cochin Port (INCOK1), Chennai Sea Port (INMAA1) and Bangalore Air Cargo (INBLR4) in the month of Sep. 2015. This module enables online verification of country of origin certificates issued by various countries for import of goods into India. It will be an effective tool in fraud prevention. It is a green customs initiative also, as it eliminates the need for paper copies of the document to be sent to all field formations. 25. API (Application Program Interface) API (Application Program Interface) for the Customs EDI by way of for the ICES publication of:  Communication Guidelines With ICEGATE for ICES 1.0 and ICES 1.5  Code List / Directories such as port code, AD code, and currency code directories etc.  PAN Based CHA (Custom House Agents) Data 26. Registration for IPR (Intellectual The registration once done for an IPR at ICEGATE is valid for all the Property Rights) ICES sites. It is also free. 27. Online training on Sample formats of messages as per the requirement of trade and FAQs ICEGATE / Self help are also provided on the ICEGATE website www.icegate.gov.in 28. 24X7 helpdesk facility The ICEGATE also provides 24X7 helpdesk facility to the trade through dedicated toll free number. In the year 2011-12 the helpdesk received more than 137005 e-mails and 107324 calls. 285323 calls and 108681 mails have been received during the period January 2015 to November 2015. 29. EASIEST The Electronic Accounting System in Excise and Service Tax (EASIEST) project was launched in March 2007 with the objective of making available accurate tax payment data from banks for revenue and tax payer accounting. Under this system, data through all modes of payment including e-payment is captured by banks in the agreed format and uploaded in electronic form and made available to the Department. For improving data quality of Internet payments the EASIEST e- payment portal was developed. This is a web based feature which interfaces with the e-payment portals of the tax collecting banks. It is operational since November 2008. The various validations of the challans are done at this level before forwarding it to the bank's site for the financial transaction. As on date, 29 banks are authorized and have got linked with this portal. In respect of the current financial year 2015- 16 (upto 30th November, 2015), 57.54 lakh challans have been uploaded by the banks. In the current year, 100% of the revenue in Central Excise and Service tax was through e-payment (in terms of volume). Of course, few challans are paid through physical mode due to some exigencies accepted by the jurisdictional AC/DC. Outcomes of the project 1. With the implementation of EASIEST, it has become possible to ascertain the gross revenue collection figures for Central Excise 128Department of Revenue III Sl. Activity Brief Account No and Service Tax on a daily basis by CBEC. Web- based MIS have been developed to monitor the tax collection. 2. Further, as per RBI data feed, Report on Gross Revenue, Refunds and Net Revenue as per fund settlement by the agency banks is also provided to CBEC. 3. Capture of the unique Assessee Code in EASIEST data enables accounting of the tax paid by each taxpayer. 4. Automation in Central Excise and Service Tax (ACES) project has automated the workflow in the Central Excise and Service Tax Commissionerates. The data from EASIEST are used by the ACES application and it helps in system-based verification of tax payment. 5. As part of the EASIEST project, the taxpayer is able to verify the status of tax payment over internet. This not only increases transparency but also provides a sense of confidence in the taxpayers that the taxes paid are correctly credited. 9.13.4. Brief details of on-going Projects are as under: Sl. On- Going Projects Brief Account No. 1. Automation of Central Excise and ACES is a centrally-hosted, web-based and workflow-based software Service Tax (ACES) application to automate the entire business processes relating to Central Excise and Service Tax that includes online registration, online filing and processing of returns, claims, intimations and permissions, filing and processing of excise related export documents, dispute resolution, audit etc. ACES has been rolled out in all 104 Commissionerates on 23.12.2009. During 2014-15, consequent to Cadre re-organization and formation of additional Commissionerates, the extent of ACES has enhanced and now encompasses altogether 146 Commissionerates. e-filing of returns has been made mandatory for all Central Excise & Service Tax assessees w.e.f 01.10.2011 vide Notification No. 21& 22/2011-CX dtd. 14.09.11 and 43/2011-S.Tax dtd. 25.08.2011. Till 30.11.2015, 73,89,678 Central Excise Returns and 86,82,150 Service Tax Returns have been filed in ACES. Also 1,78,318 Registration applications in Central Excise & 17,36,037 Registration applications in Service Tax have been filed in ACES. Further, 2,72,264 claims of Refund and 4,63,886 Claims and Intimation applications have been filed in ACES In order to help the users, CBEC has set up a Service Desk with a National Toll-free No 1800 425 4251, which can be accessed by both the departmental officers and taxpayers between 9 AM to 7 PM on all working days. Besides, they can send e-mails (24X7) to aces.servicedesk@icegate.gov.in. All the calls / e-mails are logged by the Service Desk Agents, who are issued unique ticket numbers. If these Agents cannot resolve the issues at their end, they can escalate it to different teams namely the application team, Network team or the Hardware team for necessary action. CBEC teams closely monitor the progress of work in the Service Desk, analyse the issues and issue suitable instructions for early resolution. Close monitoring by the CBEC team has resulted in a very high degree of resolution. Till 01.12.2015, 129Annual Report 2015-2016 Sl. On- Going Projects Brief Account No. 11,56,215 issues were received in Service Desk, out of which 11,56,143 (99.99%) issues have been resolved. MOUs have been signed with Institute of Chartered Accountants (ICAI), Institute of Cost Accountants (ICAI) and Institute of Companies Secretaries (ICSI) to set up Certified Facilitation Centers across India. These CFCs assist those assessees who do not possess requisite expertise or infrastructure to transact their business in ACES. Currently, around 1599 such CFCs are operating in about 350 cities across India and the services are available on payment of prescribed services charges for various services such as digitisation of paper documents and on-line filing/ uploading of documents such as Application for Registration, Returns, Claims, Permissions and Intimations etc. in ACES. CBEC holds workshops and training programmes in different parts of the country by collaborating with different local Chambers of Commerce and Industry/Trade Associations and Institutes. Learning Management Software (LMS), a self-learning online tutorial has been hosted on the ACES website to teach users how to use ACES. User Manuals and FAQs have also been hosted on the ACES website. 2. Augmentation of Computer An All India Wide Area Network linking more than 37,000 Departmental infrastructure within the department users has been set up to link CBEC officers with the National Data Centre and Disaster Recovery Site. The Wide Area Network (WAN) has been implemented at 523 sites. The work at remaining 16 sites is in progress. Helpdesks have been provisioned to address user complaints on WAN and LAN issues. Alternate WAN Connectivity at 20 critical CBEC locations is being provisioned by M/s Tata Communications Ltd . This will ensure 100% availability of network at these locations. System Integration The project is implemented and is in maintenance phase. The infrastructure is being augmented for enhancing the quality of services being delivered to internal and external stakeholders - (departmental officers and taxpayers).  Three National Data Centres are in operation with system uptime of greater than 99%. There is centralised monitoring and security management on a 24*7*365 basis.  All centralised business software applications such as the Indian Customs EDI system (ICES), the Central Excise and Service Tax application (ACES), EDW, etc. are being hosted from these National Data Centres. The system supports about 37000 internal users and has about 30 registered external users (taxpayers).  Websites hosted - The corporate website (cbec.gov.in), e- commerce portal (icegate.gov.in) and the ACES website (aces.gov.in) are running from this central infrastructure and they had more than 245.8 crores hits in the current FY 2015-16 till 30.11. 2015.  A 24*7*365 SI helpdesk is in operation for Infrastructure and resolution of end user problems. A total of 41095 tickets were logged at the SI helpdesk in 2014-15 up to December 2014.  A Single Sign-on (SSO) application supporting more than 37000 registered users has also been implemented for providing policy 130Department of Revenue III Sl. On- Going Projects Brief Account No. based access for CBEC's officers to different applications.  Owned email domain - webmail.icegate.gov.in mail messaging solution has been implemented from the Data Centre to provide official mail accounts to over 20,000 internal users.  A Network & IT Operations Centre (NOC) has been set up for providing support to applications users and pro-active monitoring of the infrastructure.  CBEC's Disaster Recovery Simulation drill was successfully carried out on 11th and 12th July, 2015. The primary site at New Delhi was switched off and operations were restarted successfully from the disaster recovery site (located at Chennai) from 1000 hrs to 1900 hrs on 11th July, 2015. All the data of these transactions was successfully replicated back and operations were restored from the primary site at 1600 hrs on 12th July, 2015  During the drill, the DR site functioned as the primary site and all transactions by officers of identified sites were carried out as though on a normal day. A total of about 3100 Customs documents were filed, Customs duty amounting to Rs.77.72 crores was collected on 11.07.2015 and the ICEGATE website got 1.7 million hits. On the Central Excise and Service Tax side, a total of 105 Registrations and 1999 Returns were filed and the ACES website got about 2.3 million hits. A total of 66,983 emails (incoming and outgoing) were processed by the mail messaging system at DR 3. Local Area Network Local Area Network Connectivity has been provided to CBEC users in about 1177 buildings with requisite IT hardware such as Thin Clients, Network Printers, Print Servers, and Scanners etc. Using LAN, the Commissionerates, Customs Houses, Directorates, Divisions, ICDs, Land Customs Stations and the Central Excise/Service Tax Ranges are able to securely connect/access the central computing facility. 4. Data Warehouse (DW) CBEC's Enterprise DW called SmartView is a web-based analytical reporting solution that is specifically designed for fast querying and sophisticated analytical capabilities, using the latest Business Intelligence (BI) tools. It is the first of its kind in the field of taxation in India. It has the capability to extract the data from various online transactional systems such as ICES 1.5 (Customs), ACES (Central Excise & Service Tax Returns) and EASIEST (Central Excise & Service Tax Payments), at a regular pre-set frequency. CBEC's Data Warehouse is hosted on CBEC's centralized, consolidated IT infrastructure. It is expected to be a single repository for Indirect Tax data providing a holistic nation-wide view of the Customs, Central Excise and Service Tax data. This has enabled, for the first time, a 360 degree view of the taxpayer across Customs, Central Excise & Service Tax. SmartView has a user - friendly interface for accessing pre-defined reports and multi - dimensional analysis, along with an ad-hoc query facility. It also has data mining and text mining capabilities, which are being used to assist RMD in profiling entities involved in Import and Export. Around 75 Customs, Central Excise and Service Tax pre-defined reports have been developed so far in the Data Warehouse based on requirements taken from various field offices, Directorates, TRU, Board etc. There is no requirement for technical expertise to extract these reports or query the data from the DW portal and these reports are available to the user through CBECs applications' interface with a click 131Annual Report 2015-2016 Sl. On- Going Projects Brief Account No. of the mouse. The SmartView application has been rolled out for Departmental users and comprehensive end-use training has been imparted to a large number of officers. Additionally, the TAX 360 project has been implemented which enables Seamless Data Exchange between CBEC, CBDT and the Sales Tax Administration of the State of Maharashtra, and allows a 360 degree view of a taxpayer across Income Tax, Service Tax, Central Excise, Customs and State VAT. The pilot has now been extended to cover, besides Maharashtra, the VAT Administrations of Gujarat, Kerala, Tamil Nadu, Andhra Pradesh and West Bengal. 5. Electronic Data Interchange (EDI) The upgraded version of the Customs EDI System (ICES, version 1.5) has been implemented at 130 Customs locations. The number of documents filed in the period 01.01.2015 to 30.11.2015 is as follows: Bills of Entry : 3536289 Shipping Bills: 5357567 Import General Manifests: 122442 Export General Manifests: 841 6. Goods and Services GSTN & Upgrade of IT infrastructure for GST readiness: Tax Network (GSTN) The implementation of GST requires (i) integration of indirect tax IT systems at Centre and States to provide standard and uniform interface to the tax payers and (ii) a robust settlement mechanism amongst the States and the Centre particularly in the context of the inter-state trade of goods and services (IGST). This is possible only when there is a strong IT Infrastructure and Service backbone which enables capture, processing and exchange of information amongst the stakeholders (including tax payers, States and Central Government, Banks and RBI). (A) To give a concrete shape to these objectives, the Directorate General of Systems and Data Management has played the role of a Secretariat to the Empowered Group on IT Infrastructure for GST (EG) which included representatives from seven States. Based on EG recommendations and approval of Empowered Committee of State Finance Ministers, the Union Cabinet on April 12 2012, approved the setting up of Goods and Services Tax Network (GSTN SPV) as a non Government, not for profit, private limited Company. The GSTN was established in March 2013 and its Chairman appointed. CBEC Member (Computerization) is ex-officio Director in the GSTN Board of Directors. (B) DG (Systems) had coordinated a Pilot Project, through NSDL, covering Centre and States for GST implementation under the aegis of the EG. The following tasks were completed -  'As-Is' Study of IT infrastructure & Processes for Centre and all States / UTs  PAN analysis of existing Dealer data for all States / UTs and Centre  Development and Testing of the prototype modules for GST Registration, Return, Payments, payment reconciliation, credit verification and inter-state settlement. These modules were based on the interim business processes which were under discussion between Centre and States.  Based on the above prototype modules, workshops were conducted for officials and select dealers in some States as also for select Central Excise and Service Tax formations in Chennai and Bangalore 132Department of Revenue III Sl. On- Going Projects Brief Account No. With the set up of GSTN, the work of pilot project has been taken over by GSTN in June 2014. GSTN is working to create IT front end portal for GST. Further, the Directorate of Systems & Data Management has floated RFP to engage vendor for developing CBEC Indirect Tax applications (ACES and GST). 7 ICEGATE ICEGATE is a platform that connects all EDI stake holders with customs core application for remote EDI services, data sharing, validation and processing under customs IT business flow. It also connects other governments through SFTP for information sharing. ICEGATE provides e-filing services to the trade and cargo carriers and other clients of Customs Department. It creates Single Window environment and provide door step services. The domain of Single window system is getting expanded in terms of data exchange with from many other agencies like PQIS, FSSAI, Pr. CCA, RBI. The ICEGATE offers a host of services including electronic filing of documents through Remote EDI Services (RES) including Bills of Entry, Shipping Bills, IGM, EGM, CGM etc.; data transmission with various trade partners like Custodians, Airlines, Shipping Lines, Banks, Consol Agents etc. and other Govt. Agencies like DGFT, DOV, etc. Further, ICEGATE also provides real time documents tracking system, appraising query and reply support online, e-payment, export incentive disbursal to the exporters account, Service Tax refund on exported goods etc. ICEGATE provides multiple formats (flat file, xml etc.) and communication protocols (SFTP, Web-form, direct upload through e-mail etc.) for users. Besides, DTR data is also exchanged with other Regulatory and licensing Authorities like DGFT, RBI and DGCI&S, Ministry of Steel, Coffee Board etc. through ICEGATE. The National Import Database (NIDB) and Export Commodity Database (ECDB) for Directorate of Valuation are also being serviced through ICEGATE. All electronic documents/ messages handled by the ICEGATE are processed by the Customs' and by the Indian Customs EDI Systems (ICES). In addition, ICEGATE also provides many other services like online registration of IPR, online verification of DEPB/DES/EPCG licenses, online Import-Export Code (IEC) update, PAN based CHA data verification and Registration and links to the various other Agencies' servers for completing business process of Customs like various Banks, Custodians, DGFT etc. ICEGATE also provides 24X365 helpdesk /support Services to the trades and industries. It deals with all the grievances through toll free dedicated telephone lines as well as through e-mails. There has been a constant rise in the filing of customs documents through ICEGATE, since its introduction in 2004. ICEGATE has handled data exchange between Customs and Trade Partners with the help of 151 types of messages, and more than 99% of duty payment at 136 EDI locations through e-payment gateway. MEIS Message: The testing of MEIS message development was done on 31st August 2015. The MEIS moved into production on 9th Sept, 2015. 133Annual Report 2015-2016 9.13.4.1. The e-governance projects of CBEC have 9.14.4. Container Selection Module helped in making the process of assessment of goods CBEC has installed Container Scanners for transparent due to the following features:- scanning of Cargo containers at some of the major ports (a) Document status information through use of Tele- of the country including JNPT (NhavaSheva), Chennai enquiry system, Touch Screen Kiosks, SMS, Port, Tuticorin Port and Mumbai Port. To make an display of Document status on TV monitors and informed decision regarding which containers to scan, on local web sites leading to greater transparency the Risk Management Division introduced a Container in the monitoring of shipments by trade. Selection Module (CSM) in the RMS. The Container Selection Module processes the Import General Manifest (b) Transparency engendered through Document (IGM) data and associated risk parameters to come up Tracking, Status Query and Help Desks at with the list of containers to be scanned. ICEGATE. (c) Information dissemination through departmental 9.14.5. Arts For Enforcement Of Intellectual Property websites: www.cbec.gov.in, www.icegate.gov.in, Rights www.aces.gov.in . Besides the above mentioned three main 9.14. RISK MANAGEMENT SYSTEMS (RMS) modules, the Risk Management Division also manages a separate web based facility, Automated Recording and 9.14.1. The Central Board of Excise and Customs Targeting System (ARTS) module for enforcing (CBEC) has implemented a state-of-the-art Risk Intellectual Property Rights (IPR) of individual right Management System (RMS) for its Customs operations. holders at international borders. This facility allows a RMS is a risk based targeting system which flags high right holder to register and record its Intellectual Property risk consignments for verification of assessment and Right with Indian Customs. This 24X7 web based facility examination, whereas consignments posing little or no is accessible to all the right holders and designated risk are allowed clearance without intervention by customs officers at all the Indian Ports. It stores Customs. The Indian Customs' RMS has three main information about all the IPRs registered with Indian modules, viz Customs and provides real time access to Customs  RMS Imports Module officers about the same.  RMS Exports Module 9.14.6. Accredited Clients Programme (ACP)  Container Selection Module A major component of the Indian Customs' Risk Management System is the flagship facilitation 9.14.2. RMS Imports Module programme administered by CBEC, namely, the RMS in Imports was introduced vide CBEC Accredited Clients Programme (ACP). The RMS gives circular no. 43/2005- Cus. dated 24.11.2005 and has been preferential treatment to ACP status holders as they are operational since December, 2005. It has been granted accreditation on the basis of proven history of implemented in 107 Customs locations in the country so compliance and other qualifying parameters as detailed far. Bills of Entry filed by importers in the Indian Customs in CBEC circular No. 42/2005-Cus. dated 24.11.2005. EDI System (ICES) are processed for risk and a large ACP entities form a separate category to which assured number of consignments are allowed clearance without facilitation is being provided. Except for a nominal examination based on the importers' self assessment. percentage of consignments selected on random basis Other consignments are marked for verification of by the RMS, or cases where specific intelligence is assessment or examination or both depending on the available or where a specifically observed pattern of non- evaluation of risk by the Import module of RMS. From compliance is required to be addressed, the ACP status amongst consignments which are not interdicted by the holders are being allowed clearance on the basis of self- RMS, a specified percentage is selected for Post assessment i.e. as a matter of course, clearance is being Clearance Audit based on certain risk criteria. allowed on the basis of the importer's declarations, and 9.14.3. RMS Exports Module without examination of goods. The ACP scheme provides due recognition and the incentive of facilitation and facility RMS in Exports was introduced vide CBEC of direct delivery from port to importers who maintain high circular no. 23/2013- Cus. dated 24.06.2013 and has been levels of compliance. Total number of ACP status holders operational since July, 2013. It has been implemented in as on 18.12.2015 is 351. 117 Customs locations in the country till December, 2015. The Exports module has enabled expeditious clearance 9.14.7. Preferential treatment for AEO status holders of compliant export consignments because only risky RMS also gives preferential treatment to importers shipments are interdicted for verification of assessment registered as Authorized Economic Operators (AEO). and examination. 134Department of Revenue III 9.14.8. Compulsory Compliance Requirements Requirements. These are crucial and vital inputs for the (CCRs) officers increasing their capacity to deliver and efficiency. The Risk Management Division compiles and 9.14.11. Advance Passenger Information System frequently updates Compulsory Compliance (APIS) Requirements (CCRs). CCRs are a consolidated 9.14.11.1. The volume of passengers travelling on database of compliance requirements arising out of the international flights has been growing at a fast pace in Customs Act, 1962 and various other allied enactments recent times due to liberalization, globalization and administered by other government departments (OGDs) increase in international trade and tourism. The growth and implemented by Customs at borders. CCRs are in passenger traffic has hastened because of various printed on Bills of Entry and Shipping Bills for guidance facilities for the international travelers such as Visa on of trade and officers. CCRs have also been made Arrival, growth of Low Cost Carriers, modernization and available to public through the CBEC website. With the expansion of airports etc. At the same time, challenges help of this database, an importer can know the for the Border Control Agencies such as Customs and compliance requirements to be met under various Immigration have increased manifold due to threats posed enactments as applicable to the commodity to be by international terrorism, use of fake or forged travel imported/ exported. documents by criminals, increase in Serious Transnational Crimes including smuggling. India 9.14.9. Benefits of RMS To The Trade continues to remain a target for terrorist attacks and prone The Risk Management System has served as a to smuggling of commodities such as gold, fake Indian great measure of trade facilitation. As of now, more than currency notes, narcotic drugs & psychotropic substances 98% of India's international trade is processed under etc. RMS. The implementation of RMS has revolutionized the 9.14.11.2. To deal with these challenges, Indian Customs Customs import/ export clearance processes by limiting has developed the Advance Passenger Information Customs intervention only in cases of perceived risks System (APIS). This application helps in profiling of determined on the basis of objective risk evaluation international passengers so that the clearance of the criteria. By creating trust based environment, this bona-fide passengers can be facilitated and suspect measure has encouraged voluntary compliance and has persons can be identified for suitable action. The also brought about drastic reduction in the dwell time of application has been implemented at all major cargo and transaction costs for importers and exporters, international airports in the country and has proved to be and improved their global competitiveness. Further, the of immense help to the Customs Authorities in detecting compulsory compliance requirements have proved to be cases of smuggling. It has emerged as an important tool highly educative for the trade. Also, the non- to safeguard the economic frontiers of the country and to intrusiveinspection by way of container scanners has protect national security. obviated the need for higher degree of examination. 9.15. DIRECTORATE GENERAL OF 9.14.10. Benefits Of RMS to the Department And PERFORMANCE MANAGEMENT (DGPM) Officers 9.15.1. Introduction The implementation of RMS has enabled the Vide office Order No. 3/Ad.IV/2015 dated vide F. Department to optimize the scarce staff resources. The No. 11013/21/2015-Ad.IV dated 13th August 2015, the Customs field staff can now concentrate on verification Directorate General of Inspection (Customs & Central of assessment and examination of cargo which is Excise) was renamed as "Directorate General of determined to be risk rather than routine verification and Performance Management (Customs, Central Excise & examination of all inbound or outbound cargo. Thus, the Service Tax)". quality of verification and examination has significantly improved. Further, it is because of RMS that Indian 9.15.2. Performance Highlights and Achievement of Customs has been able to effectively cope with the DGPM exponential growth in the volume of cargo which has 9.15.2.1. Analysis of Part V of Monthly Performance come about in the past decades. The Department has Report (MPR) been able to balance the mandates of trade facilitation and effective enforcement through the RMS. The officers 9.15.2.1.1. As per the Board's instructions issued under in the field have also immensely benefited in the process F. No. 296/236/2014-CX.9 (Pt.II) dated 17.09.2015 and of examination and verification of assessment as in Member's DOF No. 296/236/2014-CX.9 dated 24.12.2014, respect of each consignment, the RMS sends the the Directorate General of Performance Management Appraising and Examination instructions to the assessing (DGPM) is the Functional Owner of the reports prescribed and examining officers besides Compulsory Compliance under Part V of the MIS Monthly Performance Report 135Annual Report 2015-2016 (MPR) of Customs, Central Excise & Service Tax. The inspection report is also sent to the zonal Chief monthly reports in Part V in the three streams of Central Commissioner. The field Commissionerate is required to Excise, Customs & Service Tax are downloaded from MIS send its compliance to ensure that the shortcomings are web-based utility, compiled and analyzed. removed in a time bound manner. 9.15.2.1.2. The Monthly Performance Report for Central 9.15.2.3.2. Board has revised the norms of frequency for Excise covers Key Areas viz. Adjudication, Call Book, inspection of field formation Central Excise, Customs and Provisional Assessments, Refund-Rebate & Bank Service Tax vide BMB No. 32/ 2010 dated 12.5.10. As Guarantee. Monthly Performance Report for Customs per the new norms, DGPM is to inspect the covers all the Key Areas in Customs viz. Adjudication, Commissionerate headquarter once in three years. Call Book, Provisional Assessments, Refund Bank Additional inspections would be based on careful profiling Guarantee, monitoring of Bonds, Drawback, Monitoring of the risk parameters. Each Commissionerate shall be of fulfillment of Export Obligation-EPCG & AA/DFIA. inspected each year by either DGPM or jurisdictional Chief Monthly Performance Report for Service Tax covers all Commissioners. For this DGPM shall form annual the Key Areas in Service Tax viz. Adjudication Cases, inspection plan allocating Commissionerates for Major Adjudication, Call Book, Provisional Assessments inspection to DGCCI or Chief Commissioner. Accordingly & Refunds. The reports are compiled on the basis of the an annual plan is prepared for the year. data of all the Zones and DG-CEI/DRI and every month 9.15.3. Central Excise & Service Tax a note containing our analysis and comments on the performance of various Zones on the above mentioned 9.15.3.1. As per approved annual action plan for the year Key Areas is sent to the Member (Central Excise)/ 2015-16, 50 Central Excise Commissionerates have been (Customs)/(Service Tax) & Commissioner (Coordination). scheduled for inspection by DGPM (H.Q and its Regional A copy is also marked to the Chairman. The analysis Units). The remaining 96 Central Excise formations have indicates top 5 Zones showing highest pendency in each been allocated to jurisdictional Chief Commissioners. of the Key Area. 9.15.3.2. At all India level there are 119 Central Excise 9.15.2.2. Monitoring of Key Areas of Performance and 22 Service Tax Commissionerates and 05 Large Tax Units which need to be inspected during the current To monitor the performance of the Zones in key financial year 2015-16. areas, DGPM has been writing Demi Official letters to each of the Zonal Chief Commissioners personally, 9.15.3.3. Chart Showing Numbers of Inspection allotted exhorting them to personally supervise the areas where and conducted: their Zones are lagging in performance viz:- Conducted Allotted 9.15.2.2.1. Central Excise Formation (Up to (2015-16) To highlight the pendencies in Adjudication, Call December 2015) Book and Refund-Rebates, demi official letters were CX written to all Zonal Chief Commissioners during the month CX HQ 08 5 of January, July, September & December 2015 NRU 07 4 9.15.2.2.2. Customs SRU 09 8 ERU 10 8 To highlight the pendencies in Adjudication, Call Book and Provisional Assessments, demi official letters CRU 06 5 were written to all Zonal Chief Commissioners during the WRU 10 9 month of July& September 2015. Jurisdictional 96 12* 9.15.2.2.3. Service Tax C.C Total 146 51 To highlight the pendencies in Adjudication, demi official letters were written to all Zonal Chief * 12 Central Excise & Service Tax Commissionerates Commissioners during the month of December 2015. have been inspected as per the information received from jurisdictional Chief Commissioners 9.15.2.3. Inspection of field formations 9.15.4. Customs Section: 9.15.2.3.1. The DGPM is tasked with inspection of field Commissionerate to ensure that the field offices are As per approved annual Customs action plan for working as per Board's policy guidelines. This is ensured the year 2015-16, 30 Customs Commissionerates have through a periodic review of Commissionerate records, been scheduled for inspection by Headquarters and its making an assessment of how the formation is performing Regional Units, The remaining 29 Customs formations and issuing inspection note highlighting the specific have been allocated to jurisdictional Chief Commissioners shortcomings with observed trends, if any. A copy of the for inspection. 136Department of Revenue III 9.15.4.1. Chart Showing Numbers of Inspection  Correspondences with diverse offices were allotted and conducted: made.  Periodic reports received from Commissionerates Conducted Allotted and Directorates were reviewed, consolidated Formation (Upto December and forwarded to Official Language section of (2015-16) 2015) Revenue Department. Customs  Quarterly Progress Report of DGPM was Customs, HQ 11 6 prepared and forwarded to Ministry. NRU 03 3  Orders & instructions received from Official ERU 04 4 Language section of Revenue Department were CRU 03 2 circulated amongst the field formations. SRU 04 3  Eight meetings of Hon'ble Parliamentary WRU 05 3 Committee on Official Language were Jurisdictional C.C 29 7* coordinated and attended. Full help was given in Total 30 21 preparation of questionnaire. * 7 Customs Commissionerates have been inspected 9.15.5.2. Implementation Plan for the year 2015-16 as per the information received from jurisdictional  Official language inspections of the offices under Chief Commissioners CBEC are proposed to be conducted as per the 9.15.5. Implementation of official language policy Annual Targets 2015-16 of Department of Official Language, Ministry of Home Affairs. As per the letter No. A-11019/34/2001-AdIV (Pt) dated 02.08.2005 issued Ad. IV Section, Department of  Participation in forthcoming meetings of Hon'ble Revenue, DGPM is required to function as the nodal Parliamentary Committee on Official Language. agency of Central Board of Excise and Customs for  Hindi workshops will be conducted. implementing various works relating to Hindi (Rajbhasha) in the field formations and to coordinate with Grih  Official Language Implementation Committee Mantralya (Rajbhasha vibhag). These directions have meetings will be organized as per the Annual been approved by the Chairman (CBEC). Targets of Department of Official Language. 9.15.5.1. In the year 2015-16 (From 01/04/2015 to 31/  Hindi week/Hindi fortnight will be organized. 12/2015) the following major work for promotion of the Official Language was undertaken:-  Periodical review of Quarterly progress report on Official Language received from Commissionerates  100 inspections of different field formations with and Directorates will be done. respect to implementation of Official Language policy during the year are proposed 14 inspection  Apart from these all types of works related to out of these have been conducted and remaining Nodal agency of CBEC for Official Language will 86 inspections have to be conducted. be performed.  Translation of Customs House Agent Model 9.15.6. Process and Sanction refund to Government paper/ Recruitment Rules of IRS in Hindi. of Bhutan  Translation of various materials in Hindi. Government of India has been annually paying refund of excise duties collected on goods exported from  Hindi week was celebrated and various India to Bhutan. On reference from MEA, exercise to work competitions were held. out approximate refund amount is undertaken by DGPM. The documents regarding claim of refund from Bhutan  Workshops on Unicode were conducted in are sent from MEA to the Board which in turn are sent to DGPM. DGPM.  Official Language Implementation Committee meetings were organized in DGPM. Year Amount of refund (Jan - Dec) (in Rs.)  Incentive scheme regarding Official Language was implemented. Amount claimed for the year 211,47,44,934  Ministry's requisition with regard to Official Amount Finalized 194,39,89,477 Language was fulfilled. 137Annual Report 2015-2016 9.15.7. Conduct of examination for issuance of 9.15.8.4. Summary of these 78 applications are as under: license to Customs Brokers (CB) 1. AEO Status Granted 31 9.15.7.1. Customs Brokers examination at all India level is being conducted by the DGPM in terms of Customs 2. AEO Applications which are Brokers Licensing Regulations, 2013 issued vide under process: notification no. 65/2013-Customs (N.T) dated 21.06.2013.  Applications where The examination consists of two parts, written Precertification audit is underway 04 examination & oral examination. The written examination is conducted on all India level. The successful candidates  Applications which are at are called for oral examination, being held at 5 zonal scrutiny stage/ incomplete and levels. The mark sheet is prepared at DGPM Hqrs. at complete application is awaited 08 Delhi compiling the marks of written and oral examination 3. Application withdrawn/ received. Thereafter, the same are sent to the returned/ rejected: 35 jurisdictional Commissionerates for declaration of result at their end. Total 78 9.15.7.2. In 2015, written examination under Customs 9.15.9. Mutual Recognition Arrangements/ Brokers Licensing Regulation, 2013 was conducted on Agreements (MRA) 28.01.2015 throughout India wherein 967 candidates  MRA between India and Korea has been signed appeared. The oral examination was conducted during in October, 2015 16th September to 1st October, 2015 wherein 573 candidates appeared. The mark sheets for the  Exercise for signing of MRA between Indian and examination were communicated to the concerned USA & India and Taiwan are under process. Custom Houses/Commissionerates accordingly.  China, Australia & Turkey have shown their 9.15.7.3. To conduct the CBLR examination for the year interest for signing MRA with India. 2016, an advertisement was published in different 9.15.10. Results of Framework Document (RFD) Newspapers at all India level in the month of May, 2015. formulation and monitoring The next written examination is scheduled for 28.01.2016. 9.15.10.1 DGPM is responsible for preparation of RFD 9.15.8. Implementation of Authorized Economic for CBEC annually and compiling the results under it. A Operator (AEO) programme in CBEC Results-Framework Document (RFD) is a document, 9.15.8.1. The Indian AEO programme has been launched each department in Government of India is required to by the CBEC with issue of the Circular No.37/2011, dated prepare, under the "Performance Monitoring and 23.08.2011and DGPM has been designated as the Nodal Evaluation System (PMES)" for Government Office for implementation of the AEO Programme. ADG Departments. (DGPM) HQ Delhi is the programme implementation 9.15.10.2 Through preparation of RFD and monitoring Manager. The full fledge AEO Programme was roll out the implementation of the same, DGPM assists the CBEC by CBEC vide Circular No. 28/2012, dated 16.11.2012. in performance monitoring and evaluation of the 9.15.8.2. In the pilot project of Indian AEO programme, department by giving an RFD score out of 100. CBEC 3 entities were certified with AEO certificate. After fully has scored 74.2, 54.8 and 39.1 in 2012-13, 2013-14 and fledged roll out of AEO programme, 28 entities have 2014-15 respectively. been certified with AEO Certificate with validity for 5 9.15.10.3 RFD for the year 2015-16 has been prepared years. by DGPM after conducting a detailed analysis of the 9.15.8.3. A total 78 applications have been received for results achieved under the RFD targets in the previous grant of AEO certificate from inception of the programme year and usefulness of RFD success indicators in the till 15.12.2015. 31 applicants have been awarded with current scenario. DGPM has also consulted various AEO certificate and 35 applications have been withdrawn/ directorates while preparing the RFD and has ensured returned/ rejected. Further, rest 12 applications are at alignment of the RFD with the Monthly Performance different stage of document verification/onsite validation Report (MPR) in order to avoid multiplicity of reports. It at AEO Centers at Regional Units as well as has been attempted to capture the overall performance Headquarters. of the CBEC by including objective and measurable 138Department of Revenue III parameters. The RFD for 2015-16 prepared by DGPM is and 'PM Kaushal Vikas Yojana' were appropriately used has been approved by CBEC. The same has been in consonance with the campaigns undertaken by the uploaded on the CBEC website and circulated to the field Department. formations for implementation. 9.16.2.3.1. In electronic media, 'CX-Hariharan' & 'ST- 9.16. Publicity Hariharan' 30-sec TVCs in Hindi on Central Excise & Service Taxtelecast on major channels with a scroller on 9.16.1. Introduction last date of payment of Central Excise & Service Tax The Directorate of Publicity and Public Relations (31.3.2015), during March; 'Independence Day', 20-sec (DPPR) is an attached office under the Central Board of TVC produced by Directorate, exhorting taxpayers to pay Excise & Customs. In terms of the Board's Order No. 02/ their service tax for nation's development, telecast on Ad.IV/2015 dated 27.8.2015, the Directorate has become major Hindi & English News Channels; 'Pay Your Service a part of recently created Directorate General of Taxpayer Tax' a new 40-sec TVC (in vernacular) placed for major Services (DGTS), however it continues to be a separate vernacular channels. 4 TVCs, all 30-Sec on Service Tax, budgetary authority till 31st March, 2016. The mandate 'Mary Kom-Pay your Service Tax', 'Sushil Kumar-Pay your of DGTS enclosed as Annexure I. The Directorate Service Tax '(Hindi), 'Akshay Kumar-Pay your taxes' General is entrusted with the task of coordinating taxpayer (Hindi) and 'Service tax - Turnover 10 lac' (Hindi & services and publicity & publication requirements of the Central Board of Excise & Customs. The Directorate has English), urging taxpayers to pay their service tax for its headquarters at New Delhi. nation's development were telecast in major Hindi, English & Vernacular news channels and DD National, 9.16.2. Performance and Achievements DD News & Lok Sabha TV during the third quarter of 9.16.2.1. The Directorate undertook massive multi-media 2015-16. campaigns in English, Hindi and major regional languages 9.16.2.3.2. Among external communication initiatives, 2 with objective of creating & enhancing awareness on Standees on the role of Indian Customs as Sentinels of important legal and procedural provisions & facilitative Nation's Economy and on non-Revenue functions of measures with the objective of taxpayers' education and Customs as Sentinel of Nation's Environment were to inculcate culture of voluntary compliance among produced and sent for display at Airports, Customs taxpayers. Matters relating to Service Tax received special focus. Houses and other places across the country. 9.16.2.2. Publicity campaign have highlighted the role of 9.16.3. CBEC Pavilion at IITF-2015 the Department as a facilitator and to foster an 9.16.3.1. The Directorate set up 'CBEC Pavilion' at IITF- atmosphere of mutual between the assessees and the 2015, New Delhi (14th-27th November, 2015). The department while underscoring the importance of Indirect Pavilion formed part of department's initiatives to bring taxes in national building. Essential procedural its objectives, policy & procedures and transparent & information especially simplified and transparent efficient functioning in the public domain with the aim to compliance measures with emphasis on 24x7 online filing promote culture of voluntary compliance among of returns and duty payment were communicated to the taxpayers. The Directorate adopted mixed media plan to taxpayers. Information on various matters on Customs, reach the wide and varied target groups i.e. print media Central Excise and Service Tax was displayed through (newspapers, magazines), electronic media (TV); panels, translates, blowups & digital screens displaying Outdoor/Misc. Media (Websites, Bus Shelters, Hoardings/ departmental films/audio-visuals. Helpdesks manned by Unipoles/ Bridge Panels, Kiosks, Street Furniture, Metro departmental officers were set up to address the queries Properties, Buses, 3600 LED Screens at Out-Of-Home of trade & public. Updated booklets on various topics were media at locations viz. Airline Coaches, Restaurants, made available for distribution to visitors. TVCs, some Hotels, Gyms, Clubs etc. on a pan-India basis, keeping featuring celebrities e.g. Mary Kom and Sushil Kumar, the needs of taxpayers in mind. Cinestar Akshay Kumar, Singer Hariharan and Maestro Amjad Ali Khan, were strategically used to motivate the 9.16.2.3. Some of the topics covered in the advertisements are: Ombudsman Scheme; Grievance visitors to comply with tax laws. Rounds of painting Redressal; Vigilance Awareness Week, 2015; warnings competitions for kids, quiz contests, magic shows & concerning illegally imported firecrackers; joint message interactive sessions were held through the fair period. from CBEC & IMA, represented by Padma Shri & Padma Attractive gifts embossed with departmental logo were Vibhusan Awardee Doctors, to encourage tax compliance given to winners & participants. The Pavilion drew huge etc. Flagship schemes of the Government like 'Beti response and was quite successful in promoting public Bachao, Beti Padhao', 'Swachh Bharat' 'Make in India' awareness about the role and working of the department. 139Annual Report 2015-2016 9.16.3.2. Projections for the period January, 2016 to 9.16.10.1. Taxpayer Information Publications March, 2016 Duty Drawback Schedule 2014-15; Guide for The Directorate will continue multi-media Travellers; Reward Scheme for Informers; Green campaigns on various legal and procedural matters and Customs; Advance Ruling Scheme; Convenience @ measures taken for improving ease of doing business ACES; ICEGATE; Appellate Procedures in Customs, relating to Indirect taxes, apart from campaigns to be Central Excise & Service Tax; Duty Drawback Schedule, undertaken under the directions of the Board/Ministry and 2015-16 in respect of important budgetary changes for taxpayer's information. Print advertisements are to be placed on the 9.16.10.2. Departmental Publications occasion of International Customs Day (26.1.2016) and Civil List, 2015; Minutes of the Conference of CCs Central Excise Day (24.2.2016); last date for deposit of & DGs on Customs Tariff and Allied Matters, October, Central Excise Duty and Service Tax and other topical 2014, Goa Minutes (CBEC); Departmental Wall Calendar, issues. New/updated editions of departmental 2015; Departmental Desktop Calendar, 2015-16; Indian publications/manuals etc. would be brought out. Customs Declaration Forms (ICDF); Sanctioned/Working 9.16.4. e-Helpline Strength & Vacancy Position in different cadres under CBEC (1.1.2015); ECS Law Reporter, Vol. 3, No. 4, 2014; The Directorate re-energized helplines at the ECS Law Reporter, Vol. 4, No. 1, 2015; Sampark, 2015; zonal levels with the objective of improving taxpayer Mini Sampark, 2015; Mini Sampark, 2015 Hindi, ICE services. Magazine, January & April, 2015; Central Excise & 9.16.5. Citizens' Charter Service Tax Audit Manual, 2015; Posters and banners on Vigilance Awareness Week, 2015; Brief of the CCs & In keeping with the statement in Citizens' Charter DGs Conference, August, 2015, New Delhi; Profiles of as well as Sevottam Scheme that revision should be Select Services; Customs Manual, 2015; Departmental carried out every two years, the process of revising the Calendar 2016, Sampark-2016. Citizens' Charter has been initiated through consultation with various stakeholders. 9.17. Grievance Redressal Mechanism 9.16.6. Taxpayer Service Centres Details of Grievance Redressal Mechanism and One of the mandates of DGTS has been to set CPGRAMS in CBEC are as follows: up Taxpayer Service Centres in all Commissionerates. 9.17.1. Regional Advisory Committee Meetings Vigorous follow-up has ensured setting up of Taxpayer (RAC) Services Centres in the Commissionerates of Customs, Central Excise & Service Tax. The assessees through their trade representatives can raise their submissions, involving policy issues in the 9.16.7. Public Grievance Officers Regional Advisory Committee Meetings which is headed Public Grievance Officers have been designated by the Chief Commissioner of the zone. This committee in all the Commissionerates across the country and the meets once in three months. The associations of the trade details have been made available on the CBEC website. and commerce are members in this committee. The Citizens' Charter provides for an appeal to the superior officer in the event of unsatisfactory response 9.17.2. Public Grievance Committee (PGC): A system from the Public Grievance Officer. Accordingly, contact of Public Grievance Committee (PGC) exists in the details of the superior officer have also been posted on Commissionerates. These committees generally meet the website for the benefit of taxpayers. once a month and take up specific issues pertaining to delays or other matters of general interest. These 9.16.8. Open House Seminars committees are chaired by the concerned Commissioners The Directorate coordinated the holding of Open and have representatives from various local trade House seminars jointly with trade & industry bodies across organizations as also representative of other government the country to discuss, inter alia, GST and Taxpayer departments. Services. These sessions were attended by the senior 9.17.3. Watch Dog Committee: In Customs formations, officers of the department. a Watchdog Committee has been constituted under the 9.18.9. Notifications: Latest Notifications are being made chairmanship of the Chief Commissioner of Customs, available on the website. which meets once in two months. Leading association of trade and industry and other agencies that interact with 9.16.10. Publications Customs are included in this Committee alongwith the The Directorate brought out following senior officers of Customs to ensure meaningful dialogue. publications at the behest of Central Board of Excise & This Committee takes note of various procedural delays Customs and other formations: or problems in general being faced in Customs clearance 140Department of Revenue III of export/import cargo or grant of various incentives. vi. Airport Authority of India (AAI). Feedback from trade and industry is used for necessary vii. PHD Chamber of Commerce & Industry review of procedures and taking measures to remove (PHDCCI). the difficulties of importers/exporters. viii. Container Corporation of India Ltd 9.17.4. Grievance redressal and facilitation measures for (CONCOR). passengers: ix. Indian Ports Association (IPA). At international airports, more than 90% of the passengers who have nothing to declare walk through x. Indian Bank Association (IBA). the Green Channel without interaction with Customs. Even otherwise, the Air Customs Officers have been xi. Brihanmumbai Customs House Agents sensitized to show due courtesy and exemplary conduct Associations (BCHAA). towards all passengers. However, in case any passenger xii. National Association of Container Freight still has a grievance there are a number of illuminated Stations (NACFS) boards installed by Customs in the arrival/departure halls and in the immigration area advising them to approach 9.17.6. CPGRAMS the PRO (Customs) for help. Senior officers of the rank of Assistant/Deputy Commissioners of Customs are also 9.17.6.1. Further, Department of Administrative Reforms available round the clock and can be directly approached and Public Grievances (DARPG) has introduced the by passengers for redressal of their grievances. Centralized Public Grievance Redress Mechanism (CPGRAMS) in all Ministries/ Departments/ Organizations 9.17.5. Functioning of Grievances Redressal of Government of India. The implementation of the Mechanism in Customs: CPGRAMS is one of the main components of SEVOTTAM - Service delivery Excellence System, others 9.17.6. Regular meetings of Public Grievances being Citizens Charter and Service Delivery Capability. Committee (PGC) are being conducted at Commissionerate level. Each Commissionerate has 9.17.6.2. CPGRAMS in the CBEC has been adopted on appointed a Public Grievance Officer (PGO) as Nodal 6th May, 2009 after careful review of existing grievance Officer for Grievance Redressal. redress mechanism. CPGRAMS allows in-built benefit of improving grievance redress whenever a new version a) Importers / exporters can get the solutions of their is released by DARPG. CPGRAMS has improved grievances by using CPGRAMS, an online utility, accessibility to the taxpayer. A taxpayer could redress where they can submit their complaint / grievance one's grievance concerning any of the field offices through which is monitored by Commissioner. a common online portal. Public Grievance Officers at the b) Permanent Trade Facilitation Committee field offices have also been appointed in each of the field (PTFCs) are to be held regularly with minimum Zones to look into the tax payer grievances. The CBEC of one meeting each per month on a pre-decided is now positioned with a sustainable platform to date in each commissionerate. continuously improve the taxpayer services. c) Customs Consultative Group (CCG) was 9.17.6.3. Grievances on the portal of CPGRAMS are constituted as a trade facilitation measure in received through President's Secretariat (PRSEC), Dec., 2009, with objectives to discuss the issues DARPG (Department of Administrative Reforms and related to policy as well as procedural aspects Public Grievances), DORVU (Department of Revenue) on the Customs side which hinder the import/ and directly from the complainant also. export operation of the Trade and Industry as 9.17.6.4. The Centralized Pension Grievance Redress General. Trade association of national levels who are members of this CCG are as follows; and Monitoring System (CPENGRAMS) disseminates information on pension and retirement related matters i. Federation of Indian Chambers of and provides online mechanism for pensioners' under Commerce and Industry (FCCI). the monitoring of Department of Pension and Pensioners' Welfare (DOPPW in short) since March, 2007. The ii. Federation of Indian Export Organization highlights of the CBEC grievance redressal are: (FIEO).  Online lodging of grievance on the Public iii. Confederation Indian Industry (CII). Grievance Portal (www.pgportal.gov.in). A link iv. Associated Chamber of Commerce and to this is given through CBEC website and CBEC Industry of India (ASSOCHAM). subordinate offices websites. v. Federation of Freight Forwarders'  Generation of unique registration number for Associations in India (FFFAI). each grievance for further reference. 141Annual Report 2015-2016  Acknowledgement by email, if e-mail is indicated. 9.18.3. The amount granted as ex-gratia financial assistance to the widows/dependents of the Departmental  Grievances received directly by the Nodal Officer officials (in case of death during anti-evasion/anti- at CBEC level. smuggling/anti-narcotics operations or death in harness) has been enhanced w.e.f 03.10.2012. During the  Any citizen can track the status of his lodged financial year 2015-16, an amount of Rs.1,15,50,000/- grievance was sanctioned in 63 cases as ex-gratia financial  Visibility on action taken including final reply by assistance to the wives/dependents of the employees who CBEC. died while in service. 9.17.6.5. Commissioner (Coordination), CBEC has been 9.18.4. In Cash Award scheme, the eligibility criterion for appointed as a nodal officer of CPGRAMS for public the girl child has been relaxed since the year 2007-08 grievance in CBEC. Joint Secretary (Admn.) was wherein they require marks 5% lower than boys for grant appointed as nodal officer of Centralized Pensioners of Cash Awards. The amount of Cash Award granted to Grievance Redress And Monitoring System girls is Rs.1,000/- more than the boys. During the financial (CPENGRAMS) which is an independent system of year 2015-16, out of total 504 Cash Awards granted, 281 CBEC. However, w.e.f. November, 2011, Commissioner, Cash Awards involving an amount of Rs. 16,86,000/- were (Coordination) is the nodal officer for CPENGRAMS also. granted to the girl children. 9.17.6.6. 73 subordinate offices at the level of Chief 9.18.5. Under the revised Scholarship Scheme, eligibility Commissioners /Director Generals/Joint Secretaries/ criterion has been relaxed since the year 2006-07 for the girl child in terms of the rank they obtain in the Entrance Commissioners in CBEC and Commissioner level officers Test/Examination. During the current financial year 2015- holding independent charges of Directorates under the 16, out of total of 642 Scholarships granted, 309 Public Grievance portal are working presently. scholarships involving an amount of Rs. 60,16,192/- were Subordinate offices have been allowed to create second granted to the girl children. level subordinate offices at the level of Commissioner for speedy disposal of grievances. 9.19. Activities undertaken for Disability Sector, SCs & STs and Other Weaker Section of 9.17.6.7. Redressal of Grievances during 2015 Society CBEC generally receives grievances on issues, 9.19.1. The policy of reservations for SCs/STs/OBCs and such as, delay in clearance of consignment, higher rate disabled persons in Government employment, in direct of duty calculation, non-availability of staff, behavior and recruitment and promotion, has been followed in letter attitude of staff, grievances related to promotion and and spirit. The matters concerning representation of SCs/ transfer and pension related problems. There is a specific STs/OBCs and Persons with Disabilities in CBEC are Cell in the Board for coordinating the redress and attended on priority and their grievances are redressed. monitoring of grievances received centrally. The Two statements showing representation of Scheduled grievance received online are being forwarded under the Caste, Scheduled Tribes and other Backward Castes and web based Centralized Public grievance redress and representation of the persons with disabilities, as on 1 Monitoring System (CPGRAMS), which are redressed January, 2015 in CBEC, are given in Annexure I & II. by the 73 subordinate offices at the level of Chief Commissioners of customs, Excise and service Tax, 9.19.2. Cash Award Scheme: the meritorious children Director Generals and policy and Administrative wings of of departmental officials are given Cash Awards on the Central Board of Excise & Customs. During the year basis of their performance in Board Examinations of class 2015, out of 8383 grievances, 7519 were redressed which 10th & 12th. Under that scheme, the eligibility criterion shows over 90% disposal. has been relaxed for SC/ST/OBC categories. The eligibility criterion has been relaxed by 10% for SC/ST 9.18. Gender Issues/ Empowerment of Women and category and 6% for OBC category. girl child 9.19.3. During the current financial year 2015-16, out of 9.18.1. A Committee has been constituted in each 504 total Cash Awards granted, 177 Cash Awards Commissionerate/ Directorate on the recommendations involving an amount of Rs. 9,72,000/- have been granted of Hon'ble Supreme Court and the National Commission to the children of Department officials belonging to SC/ for Women, to look after the complaints of women ST/OBC categories. employees regarding sexual harassment. 9.19.4. Scholarship Scheme: A scholarship scheme is 9.18.2. The Directorate General of Human Resource in operation in which scholarship to the children of officers/ Development has also taken specific initiatives for welfare staffs of the Department are granted for pursuing under of women. graduate professional courses. Under Scholarship 142Department of Revenue III Scheme, the eligibility criterion has been relaxed for the are also required to establish a documented procedure children of Departmental officers/staff belonging to SCs/ for complaints handling process. After detailed STs/OBCs categories, i.e they are eligible for grant of deliberations, CBEC has adopted the Centralized Public scholarship irrespective of ranks once they secure Grievance Redress and Monitoring (CPGRAM) Systems admission on the basis of common entrance test. in May, 2009. 9.19.5. Scholarships are also granted to the children of 9.20.4. Improvements in the delivery infrastructure to the Departmental officials where admissions have been meet promises made in Citizens' Charter has been secured by them on the basis of the percentage secured identified as sine qua non to sustain services. CBEC in the 12th exams. The eligibility criterion has been relaxed has decided to do it in phases. Accordingly in Phase-I, for the children belonging to the SC/ST/OBC categories, four formations i.e. Central Excise Commissionerate, wherein the SC/ST category candidates require 10% lower, Delhi-I, Customs Commissionerate (I&G), Delhi, Service and that of OBC category 6% lower, than the percentage Tax Commissionerate, Delhi & Directorate General of required for general category for grant of scholarships. Inspection as Apex Office, were identified by the Core Group/ Implementation Committee in its meeting held on 9.19.6. During the financial year 2015-16, out of total 642 16th June, 2009 as Pilot Commissionerates for scholarships granted, 256 scholarships involving an implementation of Sevottam. A Service Quality Manual amount of Rs. 52,08,290/- have been granted to the (SQM) was approved by CBEC for replicating capability children of Departmental officials belonging to SC/ST/ in all the field formations. After Internal assessment of OBC categories. service delivery with timenorms at all the Pilot 9.20. Sevottam Implementation in CBEC Commissionerate, the BIS has awarded the Pilot Commissionerates Sevottam Certificate License No. 9.20.1. As a part of the Central Government initiative to CRO/SQSC/L-8000035 as per IS 15700:2005 on 4th improve the quality of public services, the Central Board November, 2010. of Excise & Customs (CBEC) has been identified as one of the organizations with large citizens interface to 9.20.5. Present Status implement the quality management system for public At present 46 Commissionerates (including services. This is based on Indian standard IS DGICCE now DGPM) are Sevottam certified with 23 more 15700:2005, prepared by the Bureau of Indian Standards at BIS audit stage for Sevottam certification. (BIS), under the name "SEVOTTAM". 9.20.6. Next Steps 9.20.2. An 'Implementation Committee', was set up in August, 2007 by the Board (CBEC) with the Director 9.20.6.1. DGICCE (now DGPM) was monitoring the General of Inspection (DGI) as its Chairman, to carry out progress of Sevottam roll out in Commissionerates and the task of 'Sevottam' implementation. A consultant was taking up the issue with BIS for early audits and issuance also nominated for CBEC in this matter by the Department of certificates to Commissionerate(s), who had already of Administrative Reforms & Public Grievances (DARPG). applied to BIS. Vide Boards Order No. 02/Ad.IV/2015 dated 27.08.2015 the task of Sevottam has been 9.20.3. The Citizens' Charter, revised in terms of the assigned to Directorate General of Taxpayers Services requirements of IS 15700:2005 (Quality Management (DGTS), since then the work of Sevottam roll out is being Systems - Requirements for Service Quality by Public monitored by the DGTS. Service Organizations) was prepared by the Implementation Committee and issued on 1stDecember, 9.20.6.2. The overall position as on 31.12.2015 is as 2008 after approval of the Board. The service organizations under: Sl. Phase Allotted by No. of Committee Central Customs Service Certified Committee No. CBEC after cadre re- Excise Tax applied for BIS structuring certification 1. Phase-I 5 (DGICCE +4) 4 2 1 1 5 - 2. Phase-II 20 17 9 8 - 13 3 3. Phase-III 47 44 29 9 6 22 7 4. Phase-IV 63 59 47 12 - 5 5 5. Phase-V 79 77 32 30 15 1 8 Total 214 201 119 60 22 46 23 143Annual Report 2015-2016 10. Customs, Excise & Service Tax 10.1.4. The Tribunal is headed by the Hon’ble President. There are 16 posts of Members (Judicial) and 16 posts Appellate Tribunal (CESTAT) of Members (Technical). 10.1. Functions/ working of the Organization 10.2. Highlights of the performance and 10.1.1. The Customs, Excise & Service Tax Appellate achievements during the year. Tribunal (earlier Customs Excise & Gold (Control) 10.2.1. In spite of various constraints, including several Appellate Tribunal) was created to provide an vacancies, of Members & required staff, the disposal of independent forum to hear the appeals against orders the appeals has not been affected. A comparative and decisions passed by the Commissioners of Customs statement showing the institution and disposal of appeals & Excise under the Customs Act, 1962, Central Excise is given below: Act, 1944 and Gold (Control) Act, 1968. The Gold (Control) Act, 1968 has now been repealed. Presently Year Institutions Disposal Service Tax appeals have been included. The Tribunal is also having appellate jurisdiction in Anti dumping matters Appeals Stay Appeal Stay and the special bench headed by the President, CESTAT, hears the appeals against the orders passed by the From Jan. 2015 14653 871 13073 5650 designated authority in the Ministry of Commerce. The to Nov. 2015 Head Quarter as well as the Principal Bench of the Tribunal is situated at Delhi and other regional benches are situated at Mumbai, Kolkata, Chennai, Bangalore 10.2.2. Effective steps have been taken to dispose and Ahmedabad. In order to ensure the speedy disposal appeals wherein high stakes are involved, by setting up of appeals and for the benefit of the litigants and the of circuit benches at various centers thereby reducing Industry of various regions, the Ministry of Finance, vide the pendency of appeals. The additional benches of the Tribunal at Chandigarh, Allahabad and Hyderabad notification no. 7/2013 has notified the creation of have also become functional from October/ December additional six benches of Customs Excise & Service Tax 2015, onwards, thereby the disposal rate can be Appellate Tribunal at Chandigarh, Allahabad and increased and pendency of appeals will be reduced Hyderabad in addition to one each at Delhi Mumbai and considerably. Chennai. The additional benches at Allahabad, Chandigarh and Hyderabad have been set up and they 10.2.3. Regarding development of North Eastern Region, started functioning w.e.f. 01.10.2015, 01.12.2015 and since Tribunal is a higher judicial appellate body to hear 14.12.2015 respectively. the appeals in the matters of Customs, Excise, Service Tax and Anti-dumping and no bench of the Tribunal is 10.1.2. Each bench consists of a Judicial member and situated in the north-eastern regions, hence, on the point a Technical Member. To expedite the disposal of small the Tribunal has no information. cases with financial stake involving upto Rs. 50,00,000/ 10.2.4. Facilities as stipulated by the Government of India -[Rs. Fifty lacs], wherein no question of rate of duty or vide its Orders/circulars issued from time to time are being valuation issue is involved, a single member bench is extended to the disability sector & SCs/STs & other also constituted. The Tribunal is the appellate authority weaker sections of the society. hearing appeals arising against the order of the Commissioner of Customs, Excise, Service Tax and 10.2.5. As per the O.M. No.13018/4/2009-Estt. (L) dated Commissioner (Appeals) order. An appeal against the 08/07/2009 of DOPT, all facilities are being extended to Tribunal’s order lies before the Hon’ble Supreme Court female employees of this Tribunal. To redress the in respect of issues such as Classification, valuation grievances of women, a complaint committee under the etc. Chairmanship of Hon’ble Smt. Sulekha Beevi C.S., Member (J), CESTAT, has been constituted. 10.1.3. As a result of an amendment by the Finance Act, 10.2.6. The website of the Tribunal was launched in 1995 the distinction between the special benches and August 2003 and now the cause lists and orders of the other benches was done away with and now any bench Tribunal are being displayed on it. Important judgments of two or more members is competent to hear all the are being highlighted specially in separate ICON. Efforts matters which were earlier being heard at Delhi except are being made to streamline all the benches of the anti-dumping matters. 144Department of Revenue III Tribunal. As for developments which have taken place avoiding costly and time consuming litigation process in the current financial year are like timely updating of and to give an opportunity for tax payers who may have judgments and cause list and other information on day evaded payments of duty to come clean. Settlement to day basis. Apart from this, the reply to the RTI Commission is therefore set up as an independent body, applications is also being uploaded in the website. To manned by experienced tax officers of "integrity and put more information in the website, this Tribunal has outstanding ability", capable of inspiring confidence in undertaken the task in close coordination with NIC. the Trade and Industry and entrusted with the Some of the areas which are left for computerization in responsibility of defining and safeguarding "Revenue respect of this Tribunal will be sorted out in near future. Interest." In line with the DOPT O.M. No. 1/6/2011 dated 11.1.3. Settlement Commission has thus given an 15.4.2013, steps have been taken to upload the opportunity for providing a channel for expeditious information on the website of the Tribunal for the benefit settlement of tax disputes under the Customs & Central of the public. Excise laws in a spirit of conciliation, rather than 10.2.7. The Tribunal is trying to strictly adhere to the prolonging them through adversarial attitude. Any FRBM Act and rules and limit its expenditures to the assesses, importer or exporter desirous of settling a tax budget allocated for the Tribunal. However, due to dispute by the Settlement Commission has to invoke the escalation in prices of various items/ services and jurisdiction of the Settlement Commission voluntarily, sanction of additional benches, the Tribunal had some making full and true disclosure of the duty liability problem in restricting expenditures to the overall ceiling. accepted by him and in turn for the same, the Settlement However, sincere efforts are being put forward to control Commission is vested with the powers to grant him the budget for the coming year. immunity either fully or partially from penalty and fine under the provisions of the Central Excise Act, 1944 and 11. Customs, Central Excise & the Customs Act 1962 and immunity from prosecution Service Tax Settlement under the provisions of above Acts. Commission 11.1.4. By the Finance Act, 2007, drastic amendments 11.1. Function & Working of the Organization were made in the provisions relating to settlement 11.1.1. The Central Government have constituted the under the Central Excise Act, 1944 and the Customs Customs & Central Excise Settlement Commission under Act, 1962. This has considerably reduced the scope section 32 of the Central Excise Act, 1944 vide Notification of the cases in which the assesses, importers and No. 40/99-CX(NT) dated 09.06.99 and 41/99-CX(NT). exporters can seek the Settlement of the disputes. The Commission consists of a Principal Bench presided However, these amendments were reversed in the over by the Chairman at New Delhi and 3 Additional Budget, 2010, whereby the Settlement Commission Benches at Chennai, Mumbai and Kolkata presided over was once again allowed to settle cases involving by Vice Chairman with 2 Members in each Bench. The clandestine removable in Central Excise and in respect present sanctioned strength of the Commission is 118 of those cases of Customs where goods had not been Officers and staff-30 each for New Delhi, Mumbai and mentioned in bill of entry. Further, the disputes related Kolkata and 28 for Chennai. The Commission functions to Service Tax are also added to the jurisdiction of in the Department of Revenue as an Attached Office of Settlement Commission. This has resulted in increase the Ministry of Finance. in number of applications being filed in this Commission Seeking settlement. 11.1.2. The basic objective in setting up of the Settlement Commission is to expedite payments of 11.1.5. Highlights of the Performance and achievements Customs and Excise duties involved in disputes, by of the Commission during the Year is given below No. of No. of Duty Settled applications applications (Rs. in received from disposed crores) from April to Dec. from April to April to Dec. 2015 Dec. 2015 2015 888 966 539.29 145Annual Report 2015-2016 Year-Wise Performance/achievements of the Settlement Commission:- Year No. of Disposal Applications No. of No. of Duty settled Received Applications Application (Rs. in Rejected Settled Crores) 1999-2000 3 1 2000-01 327 28 146 21.28 2001-02 559 63 153 26.64 20002-03 656 105 365 187.51 2003-04 753 141 431 114.04 2004-05 1273 205 1143 181.25 2005-06 1587 283 1207 129.09 2006-07 1960 219 1434 239.02 2007-08 1596 369 2274 507.92 2008-09 857 124 569 125.43 2009-10 723 68 599 67.36 2010-11 885 103 770 114.33 2011-12 959 247 702 462.48 2012-13 1610 74 934 198.06 2013-14 1623 156 1680 482.99 2014-15 1525 353 1469 743.32 2015-16 (up to Dec, 15) 888 129 837 539.29 Total 17784 2668 14713 4140.01 12. Authority of Advance Rulings 12.2 Authority for Advance Rulings (Central Excise, Customs & Service Tax), is a high level quasi-judicial (Central Excise, Customs & body comprising of a retired judge of the Supreme Services Tax Court of India and two Members of Additional Secretary rank, who have wide experience in technical and legal 12.1 A scheme of Advance Rulings (Central Excise, matters. Customs & Service Tax) was incorporated in the Customs Act, 1962, the Central Excise Act, 1944 and in the Finance 12.3 Under the scheme of Advance Rulings the Act, 1994 by the Finance Acts of 1999 and 2003 to provide following categories of investors are eligible to apply for for issue of binding Rulings, in advance, on Customs, a ruling: Central Excise and Service Tax matters. The scheme is a. a non-resident investor setting up a joint venture intended to provide certainty to intending investors. in India in collaboration with a non-resident or a Statutory changes have been brought out to expand the resident; ambit of the Authority over a period of time. 146Department of Revenue III b. a resident setting up a joint venture in India in Excise, Customs and Service Tax) Procedure collaboration with a non- resident; Regulations, 2005 issued vide Notification No. 1/2005- AAR dated 07.01.2005 c. a wholly owned subsidiary Indian company of which the holding company is a foreign company; 12.5 Advance rulings can be sought in respect of the following questions/issues:- d. a joint venture in India, that is to say a contractual arrangement whereby two or more persons a. Classification of goods under the Customs Tariff undertake an economic activity which is subject Act, 1975, and Central Excise Tariff Act, 1985 to joint control and one or more of the participants and taxable services under Chapter V of the Finance Act, 1994; or partners or equity holders is non-resident having substantial interest in such arrangement. b. Principles of valuation under the Customs Act, 1962, and the Central Excise Act, 1944; e. A resident falling within any such class or category of persons as the Central Government c. Valuation of taxable services for charging service may by notification in the official gazette specify tax under the Finance Act, 1994; in this behalf. The Central Government has d. Applicability of notifications issued under the specified the following categories of persons as Customs Act, 1962, Customs Tariff Act, 1975, being eligible to seek advance rulings:- Central Excise Act, 1944 and Central Excise Tariff i. Any Public Sector Company; Act, 1985 having a bearing on the rate of duty and notifications issued under Chapter V of the ii. Residents proposing to import goods under Finance Act, 1994; the project import facility (heading 9801 of the Customs Tariff) for seeking rulings under e. Admissibility of input-tax credit under Central the Customs Act,1962; Excise Law; iii. Residents proposing to import goods from f. Admissibility of credit of Service Tax ; Singapore under the Comprehensive g. Determination of origin of goods in terms of the Economic Co-operation Agreement for rules notified under the Customs Tariff Act, 1975 seeking rulings on origin of goods under the and matter related thereto; Customs Act, 1962. h. Determination of liability to pay duties of excise iv. Resident Public Limited Company. on any goods under Central Excise Act, 1944; v. Resident Private Limited Company i. Determination of the liability to pay service tax on a taxable service under the provisions of vi. Resident Firm Chapter V of the Finance Act, 1994. 12.4 The Authority became functional in the financial 12.6 The process of obtaining an advance ruling is year 2002-03. The Customs (Advance Rulings) Rules, simple, inexpensive and transparent. A fee of Rs. 2500/- 2002 and Central Excise (Advance Rulings) Rules, 2002 has to be deposited through a Demand Draft with each were notified vide Notification Nos. 55/2002-Cus (N.T.) application. Obtaining a ruling is highly expeditious as and 28/2002-Central Excise (N.T.) both dated 23.08.2002. the Authority is statutorily required to deliver the same The Service Tax (Advance Rulings) Rules were notified within 90 days of receipt of an application. Rulings are vide Notification No. 17/2003-S.Tax (N.T.) dated pronounced after providing an opportunity of being heard 23.07.2003. The procedure to regulate the functioning by the Authority and in pursuance of other accepted of the Authority was laid down vide Authority for Advance judicial norms. Rulings (Procedural) Rules, 2003 issued vide Notification No. 1/2003-AAR dated 21.03.2003. Consequent upon 12.7 Advance Rulings pronounced by Authority are the expansion in the scope of advance rulings and the binding on the departmental officers engaged in experience gained, these Rules were streamlined and assessment of goods and services and on the applicant, superseded vide Authority for Advance Rulings (Central and hence rule out possibilities of disputes and litigation, 147Annual Report 2015-2016 subsequently. Advance Rulings are not appealable either For the period from 01.01.2015 to 31.12.2015, by the department or the applicant, under the Customs, 31 (Thirty one) applications seeking advance ruling were Central Excise and Service tax laws. An Advance received. Ruling remains valid unless there is a change in law or  The first application for seeking an advance the facts on the basis of which the ruling was pronounced. ruling was received on 20.11.2002. During the 12.8 Advance rulings would indicate, in advance, the period 20.11.2002 to 31.12.2015, 259 duty liability in respect of an 'activity', viz. 'import' or 'export' applications were received, out of which 2 under the Customs Act, 'production' or 'manufacture' of applications were withdrawn by the applicant goods under the Central Excise Act and 'taxable services' and 90 Orders and 115 Rulings (78 relating to under the Service Tax law, proposed to be undertaken Customs, 18 relating to Central Excise and 19 by an applicant. (Service Tax is administered by Central relating to Service Tax) were pronounced. From Excise officers). 1st January, 2015 to 31st December, 2015, following Rulings & Orders were issued under 12.9 Highlights of the performance and Section 28(I) of Customs Act, 1962, Section achievements during the year 23(D) of Central Excise Act, 1944 and section For the period 01.01.2015 to 31.12.2015 96 D(2) of the Finance Act, 1994: Customs Central Excise Service Tax Total Ruling 6 2 8 16 Order 9 3 11 23 12.10 Significant developments/Policy decision in clause (n) of sub-section (1) of the Section taken during the year 2 of the Limited Liability Partnership Act, 2008 (6 of 2009); or During the period, the ambit of the authority was widened and the following amendments were made as follows: (ii) Limited liability partnership which has no company as its partner; or As under Notification No. 11/2015-CE (NT) dated 01.03.2015, Advance Ruling is now available to (iii) The sole proprietorship; or Resident firms specified as a class of persons eligible (iv) One Person Company. for Advance Ruling. - In exercise of the powers conferred by sub-clause (iii) of clause I of Section (b) (i) "Sole proprietorship" means an individual 23A of the Central Excise Act, 1944 (1 of 1944), the who engages himself in an activity as Central Government hereby specifies "resident firm" defined in sub-clause (a) of Section 23A of as class of persons for the purposes of the said sub- the Central Excise Act, 1944. clause. Similarly, as under Notification No. 27/2015- Cus (NT) dated 1.3.15 clause I of Section 28E of (ii) "One person Company" means as defined the Customs Act, 1962 (52 of 1962). As under in clause (62) of Section 2 of the Companies Notification No. 9/2015-ST dated 1.3.15 clause (b) Act, 2013 (18 of 2013). of Section 96A of the Finance Act, 1994 (32 of 1994), (c) "Resident" shall have the meaning assigned to the Central Government hereby specifies "resident it in clause (42) of Section 2 of the Income-tax firm" as class of persons for the purposes of the Act, 1961 (43 of 1961) in so far as it applies to a said sub-clause. resident firm. Explanation - For the purposes of the above 12.11 All the Acts, Rules, Regulations, Procedures & notifications: guidelines are available on the website http://www. (a) "Firm" shall have the meaning assigned to it in cbec.gov.in/aar/aar.htm for guidance for the users. The Section 4 of the Indian Partnership Act, 1932 (9 copy of the rulings and Orders as Permitted by the Hon'ble of 1932), and includes - Chairman is also available on the Website. It is being (i) The limited liability partnership as defined regularly updated. 148G B Department of Revenue III 13.Central Board of Direct Taxes (Intelligence and Criminal Investigation) supervises the (CBDT) intelligence gathering and investigation in tax related crimes. CCIT (Exemptions) supervises the work of 13.1. Organization and Functions exemption and non-profit sector across the country and The Central Board of Direct Taxes (CBDT), created by Principal CCIT (International Taxation) supervises the the Central Boards of Revenue Act 1963, is the apex work in the field of International Tax and Transfer Pricing. body entrusted with the responsibility of administering Principal Chief Commissioners of Income Tax are direct tax laws in India. The CBDT consists of a Chairman assisted by Chief Commissioners, Principal and six Members, all of whom are ex-officio Special Commissioners and Commissioners of Income Tax and Secretaries to the Government of India, in the apex scale Principal Directors General/Directors General of Income of pay. It is the cadre controlling authority for the Income Tax are assisted by Principal Directors/ Directors of Tax Department. In its functioning, the CBDT is assisted Income Tax within their jurisdictions. Commissioners of by the following Directorates: Income Tax posted as CsIT (Appeals) perform appellate functions, adjudicating disputes between taxpayers and i). Principal Directorate General of Income Tax the department. The Income Tax department has its (Administration) presence in 530 cities and towns across India, having a taxpayer base of around 6.86 crore as on 1.4.2015. a. Directorate of Income Tax (PR, PP&OL) 13.1.2. The CBDT is implementing a comprehensive b. Directorate of Income Tax (Recovery) computerization programme in the Income Tax c. Directorate of Income Tax (Income Tax) Department which aims to establish a taxpayer friendly regime, increase the tax-base, improve supervision and d. Directorate of Income Tax (TDS) generate more revenue for the Government. The overall e. Directorate of Income Tax (Audit) endeavor is to promote voluntary compliance by taxpayers and create a non-intrusive and non-adversarial tax ii). Principal Directorate General of Income Tax administration. (Systems) 13.1.3. The National Academy of Direct Taxes (NADT) iii). Principal Directorate General of Income Tax at Nagpur along with Regional Training Institutes at (Logistics) different locations functions under overall supervision of a. Directorate of Income Tax (Expenditure a Principal Director General of Income Tax (Training) to Budget) cater to the training needs of officers and officials. b. Directorate of Income Tax (Infrastructure) 13.1.4. The Principal Chief Controller of Accounts, CBDT with the assistance of Zonal Accounts Officers is c. Directorate of Income Tax (O&MS) responsible for accounting for the revenue collections as iv). Principal Directorate General of Income Tax well as expenditure incurred by the Income Tax (Legal & Research) Department. v). Principal Directorate General of Income Tax 13.2. Direct Taxes Collections (Training) CBDT is engaged in overall administration and collection vi). Principal Directorate General of Income Tax of direct taxes. The performance of the Income Tax (HRD) Department as a whole in various key areas is as under: vii). Principal Directorate General of Income Tax (i) The collection of direct taxes has increased from (Vigilance) Rs. 4,46,935 crore in FY 2010-11 to Rs. 6,95,797 crore in FY 2014-15 at an average annual growth viii). Directorate General of Income Tax (Risk of 13.05%. The net direct taxes collection during Assessment) the current financial year i.e. 2015-16 (up to 31st January, 2016) is Rs. 5,21,853 crore. During the 13.1.1. Various Principal Chief Commissioners of FY 2014-15, the share of Direct Taxes to the total Income Tax stationed all over the country supervise Central Taxes Collection (excluding Taxes on collection of direct taxes and provide taxpayer services. Union territories) was 56.11%. Directors General of Income Tax (Investigation) supervise the investigation machinery, which is tasked to curb tax (ii) The Direct Tax-GDP ratio was 5.55% in FY 2014- evasion and unearth unaccounted money. DGIT 15. 149 G BG B Annual Report 2015-2016 (iii) The cost of collection measured in terms of total (v) The TDS administration has been showing administrative cost as a ratio of the revenue impressive performance over the past few years. generated has decreased marginally from 0.60% For FY 2014-15, total collection from TDS was to 0.59% in the period 2010-11 to 2014-15. Rs. 2,82,595 crore (Provisional) registering a growth of 7.83% over the previous year’s (iv) During the FY 2014-15, the department collected collections under the same head. TDS revenues Rs. 36,593 crore from arrear demand which is have now grown to be 35.35% of the gross total 9.69% higher than the collection of the previous FY. With respect to current demand, collection tax collections. In the current year (up to January, for FY 2014-15 was Rs. 44,857 (Provisional) 2016) TDS collections stood at Rs. 2,47,573 crore as against Rs. 41,218 crore in FY 2013- crore which is 11.30% higher than the collections 14. Up to Oct. 2015, the Department has in corresponding period of pervious year which collected Rs.18,361 crore (Arrear + Current). stood at Rs. 2,22,436 crore. Table: Budget Estimate and Actual Collection of Direct Taxes during the Financial Years 2012-2013, 2013-14 & 2014-15 (in Rs. Crore) Sl. No FY 2012-13 FY 2013-14 FY 2014-15 # Taxes Budget Actual Budget Actual Budget Actual Estimates Collections Estimates Collections Estimates Collections# 1 Corporate 4,19,520 356326 419520 394677 451005 428925 Tax 2 Personal 2,47,639 201487 247639 242859 284266 265787 Income Tax 3 Wealth Tax 950 845 950 1007 950 1085 Total 6,68,109 558658 668109 638543 736221 695797 Note: * Personal Income Tax collection includes collection under Security Transaction Tax, Fringe Benefit Tax and Banking Cash Transaction Tax, etc. # Figures for the F.Y. 2014-15 are provisional. Table: Arrear & Current Demand of Corporate Income Tax and Personal Income Tax for Financial Years 2013-2014 and 2014-2015 (in Rs. Crore) Head Financial Year Financial Year 2013-14 2014-15 A Total Outstanding Demand 674916 827680 B Reason wise Analysis 1 1. Amount Not Fallen Due 99,576 27532 2. Amount difficult to recover including, amounts stayed by I.T. Authorities, 552538 673032 Courts etc. C Net Collectible Demand (A-B) 22802 27116 150 G BG B Department of Revenue III Table: Actual Collection w.r.t BE & RE BUDGET ESTIMATES, REVISED ESTIMATES AND ACTUAL COLLECTIONS % age of Growth Rate of % age of Financial Budget Revised Actual Budget Actual Collns. Revised Year Estimates Estimates Collections Estimates over last year Achieved Achieved (in Rs. Crore) 2000-01 72105 74467 68305 17.85% 94.73% 91.73% 2001-02 85275 73972 69198 1.31% 81.15% 93.55% 2002-03 91585 82445 83088 20.07% 90.72% 100.78% 2003-04 95714 103400 105088 26.48% 109.79% 101.63% 2004-05 139510 134194 132771 26.34% 95.17% 98.94% 2005-06 177077 170077 165216 24.44% 93.30% 97.14% 2006-07 210684 229272 230181 39.32% 109.25% 100.40% 2007-08 267490 304760 312213 35.64% 116.72% 102.45% 2008-09 365000 345000 333818 6.92% 91.46% 96.76% 2009-10 370000 387008 378063 13.25% 102.18% 97.69% 2010-11 430000 446000 446935 18.22% 103.94% 100.21% 2011-12 532651 500651 493947 10.71% 92.73% 98.66% 2012-13 570257 565835 558658 13.10% 97.97% 98.73% 2013-14 668109 636318 638543 14.30% 95.58% 100.36% 2014-15* 736221 705628 695797 8.96% 94.50% 98.60% * The figure for the year 2014-15 is provisional. COST OF COLLECTION (in Rs. crore) Total Expenditure Financial Year Total Collections Exp as % of Collection (Revenue) 2000-01 68,305 929 1.36% 2001-02 69,198 933 1.35% 2002-03 83,088 984 1.18% 2003-04 105,088 1050 1.00% 2004-05 132,771 1138 0.86% 2005-06 165,216 1194 0.72% 2006-07 230,181 1349 0.59% 2007-08 314,330 1687 0.54% 2008-09 333,818 2248 0.67% 2009-10 378,063 2726 0.72% 2010-11 446,935 2698 0.60% 2011-12 493,947 2976 0.60% 2012-13 5,58,658 3283 0.59% 2013-14 6,38,591 3641 0.57% 2014-15* 695797 4101 0.59% * The figure for the year 2014-15 is provisional 151 G BG B Annual Report 2015-2016 DIRECT TAX GDP RATIO (Rs. in crore) Net Coll. of Financial GDP Current Direct Tax GDP Growth Tax Growth Buoyancy Direct Year Market Price GDP Ratio Rate% Rate Factor (%) Taxes 2000-01 68305 2102376 3.25% 7.70% 17.85% 2.32 2001-02 69198 2281058 3.03% 8.50% 1.31% 0.15 2002-03 83088 2458084 3.38% 7.76% 20.07% 2.59 2003-04 105088 2754621 3.81% 12.06% 26.48% 2.19 2004-05 132771 3242209 4.10% 17.70% 26.34% 1.49 2005-06 165216 3693369 4.47% 13.92% 24.44% 1.76 2006-07 230181 4294706 5.36% 16.28% 39.32% 2.42 2007-08 312213 4987090 6.26% 16.12% 35.64% 2.21 2008-09 333818 5630063 5.93% 12.89% 6.92% 0.54 2009-10 378063 6457352 5.85% 14.69% 13.25% 0.90 2010-11 446935 7674148 5.82% 18.84% 18.38% 0.97 2011-12 493,947 9009722 5.48% 15.58% 10.52% 0.69 2012-13 5,58,658 10113281 5.52% 12.25% 13.10% 1.07 2013-14 6,38,543 11355073 5.62% 12.28% 14.31% 1.17 2014-15* 6,95,797 12541208 5.55% 10.45% 8.97% 0.86 *The figure for the year 2014-15 is provisional 13.3. Results Framework Document (RFD) – unsustainable orders; effective strategies for achieving 2015 -16 budget target and arrear management; tackling the menace of black money and cross-border tax evasion, The Results Framework Document (RFD) for the Income etc. During the Conference, Hon’ble Finance Minister Shri Tax Department for the F.Y. 2015-16 carries measurable Arun Jaitley explained that the Government had enacted objectives designed to be achieved through a set of action the Black Money Act, 2015 to squeeze out the black points. Major objectives are better communication with money stashed away abroad. Elaborating on other Taxpayers, better management of Human Resources for measures taken by the Government to curb black money, enhancing Taxpayer services, strengthening Taxpayer he added that the Benami Transactions (Prohibition) Bill, services by enhancing Information Technology, efficiency 2015 to deal with unaccounted domestic wealth had also in Tax Administration and implementing recommendations been introduced. He also emphasized fair and non- of TARC. The performance of Department is to be adversarial tax administration and reiterated that the evaluated against these objectives assigned to different Government policy was crystal clear that though nobody Responsibility Centres of CBDT. should be harassed, tax evaders must not be spared. 13.4. Annual Conference He also exhorted the senior officers of the Income-tax Department to be prompt in redressing the grievances of The 31st Annual Conference of Principal Chief the taxpayers, expanding the tax-base in a non-intrusive Commissioners/Principal Directors General/Chief manner and achieving the revenue targets. Commissioners and Directors General of Income Tax was held on 25th and 26th May 2015. The main areas for 13.5. Direct Taxes Advisory Committees deliberations therein were non-adversarial and conducive With a view to encouraging mutual understanding tax environment, technology enabled e-governance, between taxpayers and Income tax officials and to advise simplification of procedures, overhauling the dispute the Government on measures for removing the difficulties resolution mechanisms, facilitating investment, of general nature pertaining to Direct Taxes, a Central accountability of assessing officers for factually and legally Direct taxes Advisory Committee (CDTAC) at Delhi and 152 G BG B Department of Revenue III 64 Regional Direct Taxes Advisory Committees (RDTAC) tax Department. The Income-tax Department is taking exist at important stations. Representatives of Trade and various steps to re-align the processes and systems for Professionals Associations are also nominated to these dealing with search & seizure cases/serious tax evasion Committees. The term of these Committees is two years cases with a view to create credible deterrence through from the date of their constitution. faster investigation leading to prosecution in appropriate cases. 13.6. INVESTIGATION DIVISION 13.6.2. Search & Seizure and Survey 13.6.1. Action against Black Money Search and seizure and survey are amongst the main Drive against black money is an on-going process. evidence collecting mechanisms that are used in cases Appropriate action under direct tax laws including levy of where credible information about tax evasion is in penalty and launching of prosecution in appropriate cases possession of the Income-tax Department. Relevant is taken whenever any instance of tax evasion is detected. statistics on search & seizure and surveys conducted in The Government has taken various measures under a the last three years and financial year 2015-16 (upto multi-pronged strategy to further strengthen and November 2015) are as under: streamline the enforcement mechanism of the Income- Search and Seizure [in Rs. crore] Number of groups Undisclosed income admitted Financial Year Total assets seized searched u/s. 132(4) of the IT Act, 1961 2012-13 422 575.08 10291.61 2013-14 569 807.84 10791.63 2014-15 545 761.70 10288.05 2015-16 (Upto November, 249 469.71 6167.12 2015*) * Figures are provisional. Surveys [in Rs. crore] Financial Year No. of surveys conducted Undisclosed income detected 2012-13 4630 19337.46 2013-14 5327 90390.71 2014-15 5035 12820.33 2015-16 1802 3577.12 (Upto November, 2015*) * Figures are provisional. 1961, particularly willful attempt to evade tax etc. attract criminal consequences in the form of prosecution so as 13.6.3. Prosecution to create credible deterrence. Relevant statistics for Apart from the civil consequences (levy of tax, interest prosecution for last 3 financial years and financial year and penalty), serious violations under the Income-tax Act, 2015-16 (upto September 2015) are as follows: No. of cases in which No. of persons Cases Financial Year prosecutions launched convicted compounded 2012-13 283 10 205 2013-14 641 41 561 2014-15 669 34 900 2015-16 (up to September, 105 16 345 2015*) 153 G BG B Annual Report 2015-2016 13.6.4. Investigation into undisclosed foreign assets Government’s response thereto are to be submitted to cases: the Standing Committee on Finance, under whose directions/ recommendations the study was Information regarding certain Indians holding bank commissioned. accounts in HSBC bank in Switzerland was obtained from the competent authority of a foreign jurisdiction under 13.6.7. Introduction of a new law – THE BLACK the Double Taxation Avoidance Convention. As a result MONEY (UNDISCLOSED FOREIGN INCOME and of painstaking investigations, despite several constraints ASSETS) and IMPOSITION of TAX ACT, 2015 – to including non-sharing of critical information by the Swiss combat the menace of black money stashed competent authority, undisclosed income of about abroad Rs.6479 crore has been brought to tax till 30th November, Hon’ble Finance Minister, in his budget speech, while 2015 on account of deposits made in unreported foreign acknowledging the limitations under the existing law, had bank accounts. Tax demand of about Rs.4562 crore has conveyed the considered decision of the Government to been raised in such cases which includes demand in enact a comprehensive new law on black money to protective assessments. Concealment penalty of about specifically deal with black money stashed away abroad. Rs.1146 crore has also been levied in 142 cases. So far In order to fulfill the commitment made the Parliament 137 prosecution complaints in criminal courts have been has enacted the stringent Black Money (Undisclosed filed in 48 cases relating to undisclosed foreign bank Foreign Income and Assets) and Imposition of Tax Act, accounts in HSBC. 2015 which is effective from 01.07.2015. A one-time compliance window under the aforesaid new law was 13.6.5. Monitoring by the SIT provided from 01.07.2015 to 30.09.2015 as an opportunity The Hon’ble Supreme Court in its Order dated 1st May to declarants to declare their undisclosed foreign assets subject to certain prescribed conditions, before they are 2014 read with the order dated 4th July, 2011 in Writ subjected to more stringent provisions of the new law. A Petition (Civil) No. 176 of 2009, directed constitution of a total of 644 declarations were made under the compliance Special Investigation Team (SIT). Following the directions window declaring undisclosed foreign assets worth Rs. of the Hon’ble Supreme Court, the SIT on black money 4164 crores. was constituted by the Government under the chairmanship of Justice Mr. M. B. Shah and vice 13.6.8. Amendment of Rules for mandatory quoting chairmanship of Justice Mr. Arijit Pasayat, retired Judges of PAN for specified transactions: of Hon’ble Supreme Court through Notification dated 29th With a view to collect information of certain types of May 2014. Cases involving substantial unaccounted transactions from third parties in a non-intrusive manner, income, more particularly those involving undisclosed it is mandatory under Rule 114B of the Income-tax Rules foreign assets (including bank accounts), are under to quote PAN where the transactions exceed a specified extensive monitoring of the SIT. Necessary action has limit. In case of transactions of sale or purchase of goods been taken on directions of the SIT and reports submitted and service PAN will be required to be quoted, irrespective from time to time. of the mode of payment if the transaction exceeds Rs. two lakhs. To bring a balance between burden of 13.6.6. Study on estimation of unaccounted income compliance on legitimate transactions and the need to and wealth inside and outside the country: capture information relating to transactions of higher A study on estimation of unaccounted income and wealth value, the Government has amended Rule 114B to inside and outside the country Black money was assigned enhance the monetary limits of certain transactions which to NIPFP, NCAER and NIFM in March 2011, to be require quoting of PAN. These changes are effective from conducted by these Institutes separately and 1stJanuary, 2016. independently. The reports are under examination of the 13.7. Widening of Tax Base, Assessment And Government. The Government’s response is under Refunds preparation, inter-alia, through inter-ministerial/ departmental consultation which is likely to be completed The position of Wealth Taxes and STT collected during within Financial Year 2015-16. The study reports and the the last 5 financial years is as under: 154 G BG B Department of Revenue III 2015-16 Financial Year 2011-12 2012-13 2013-14 2014-15 (up to January 2016) Wealth tax (0032) 786.67 844.12 1006.90 1085.50 877.8 Securities Transaction 5,780.4 5656.26 4997.86 5017.50 7398.15 Tax (0034) Source: O/o Pr. Chief Controller of Accounts, CBDT/ definition, the figures of tax base are given as under:- OLTAS (i) The Taxbase as on 01.04.2014 is 6,50,70,975. 13.7.1. Widening of Tax Base (ii) The Taxbase as on 01.04.2015 is 6,86,24,905. The definition of “Tax base” and “New Tax payer added (iii) New Taxpayer added during the year 2014-15 is during the year” has undergone change. Tax base as on 76,04,154. 1st April of the financial year is now taken as number of persons who have either filed Income Tax Returns (ITRs), 13.7.2. Disposal of Refund claims: or in whose case tax has reportedly been paid or After processing of returns, the number of refunds granted deducted, in any of the three consecutive financial years, is as follows: previous to the reference year. Based on the said (Rs. in Crore) Sl. Financial Year Number of refunds Amount of Refund paid No. (in lacs) (including interest) 1. 2011-12 105.45 14,734.53 2. 2012-13 82.15 12,619.72 3. 2013-14 103.60 18,759.31 4. 2014-15 135.78 26,663.39 5. 2015-16 161.08 26,938.96 (up to Dec,2015) Source: DGIT (Systems) Income tax Act, Chapter XIVA, Writ Petitions relating to IT matter, engagement of counsels etc. 13.8. Judicial Work 13.8.1. The statistics regarding the disposal of appeals The ITJ Division in CBDT deals with all issues having by the Commissioner of Income-tax (A) for FY 2015-16 bearing on subjects dealt with in Chapter XX of the is as follows: F.Y. F.Y. F.Y. 2015-16 2013-14 2014-15 (up to Oct. 2015) No. of appeals disposed of by CsIT(A) 87,770 73,736 35,187 High Demand appeals disposed of by CsIT(A) 27,277 24,517 9,407 Total number of appeals pending before CsIT(A) 2,15,174 2,32,126 2,81,467 at the end of F.Y. Number of High Demand appeals in total appeals pending before CsIT(A) at the end of 42,322 52,017 80,310 F.Y. Amount locked up in total appeals pending at the 2,87,444 3,83,797 5,67,082 end of year (Rs. in Crore) 155 G BG B Annual Report 2015-2016 13.8.2. The statistics regarding the engagement of counsels for FY 2015-16 is as follows: During the last 3 years, statistics related to engagement of F.Y. F.Y. F.Y. Category of counsels 2013-14 2014-15 2015-16* Standing Counsels 97 17 40 Prosecution Counsels 7 14 9 Special Counsels 73 36 10 *Up to December 2015 Department before Income Tax Appellate Tribunal and High Courts and SLP before 13.8.3. The highlights of the work done by the ITJ Supreme Court as a measure for reducing Division during the year are as follows: litigation. The limits on tax effects for filing of (i) Instructions were issued on 19.06.2015 to ensure appeals have been revised to Rs.10 lakhs for that appellate orders are issued within 15 days ITAT and Rs.20 lakhs for High Court. Notably, of last hearing. for the first time, the Circular was issued with retrospective effect for ITAT and High Court. (ii) Following Circulars on settled issues were issued: (iv) Annual targets were allocated to each Pr. CCIT Region in respect of disposal of appeals by the (a) Circular No.16/2015 – Non applicability of CsIT (A) and the same was monitored on a Rule 9A of the Income Tax Rules 1962 in regular basis. the case of Abandoned Feature Films. (v) Office Memorandum was issued on 10.12.2015 (b) Circular No.17/2015 - Measurement of the for forming Collegium for considering withdrawal distance for the purpose of section 2(4) (iii) of Appeals before High Courts exceeding the (b) of the Income Tax Act for the period prior monetary limit of Rs. 20 Lakhs. to Assessment year 2014-15. 13.9. TPL DIVISION (c) Circular No.18/2015 – Interest from Non- SLR Securities of Banks – reg. 13.9.1. Major Changes made by Finance Act, 2015 (d) Circular No.22/2015 – Allowability of A. Rates of taxation employer’s contribution to funds for the 1. In financial year 2015-16, basic exemption limit welfare of employees in terms of section 43B in the case of individual, HUF, association of persons, (6) of the Income tax Act. body of individuals and artificial juridical person has been (e) Circular No.23/2015 – TDS under section retained at Rs. 2,50,000/-. The exemption limit in case of 194A of the Act on interest on fixed deposits resident individuals above the age of sixty years but less made on directions of Courts – reg. than eighty years has also been retained at Rs. 3,00,000/ -. The rates of tax and other slabs of income for various (f) Circular No.24/2015 – Recording of categories remain the same as in financial year 2014- satisfaction note under section 158BD/153C 15. of the Act – reg. 2. The rates for deduction of income-tax at source (g) Circular No.25/2015 – Penalty u/s 271(1)(c) during the financial year 2015-16 from certain incomes wherein additions/disallowances made other than “salaries” have been specified in Part II of under normal provisions of the Income Tax the First Schedule to the Act. The rates for deduction of Act, 1961 but tax levied under MAT income-tax at source during the financial year 2015-16 provisions u/s 115JB/115JC, for cases prior will continue to be the same as those specified in Part II to A.Y. 2016-17 – reg. of the First Schedule to the Finance (No. 2) Act, 2014 except that in case of certain payments made to a non- (iii) Circular No.21/2015 was issued for Revision of resident (other than a company) or a foreign company, monetary limits for filing of appeals by the in the nature of income by way of royalty or fees for 156 G BG B Department of Revenue III technical services, the rate has been reduced to 10 the First Schedule to the Act. These rates are also percent of such income from 25 percent. Further, the applicable for charging income-tax during the financial newly inserted section 192A to the Income-tax Act, 1961 year 2015-16 on current incomes in cases where provides for withholding tax rate of 10 percent where accelerated assessments have to be made. The basic payment of accumulated balance under Employees’ exemption limit continues to remain at Rs. 2, 50,000. The Provident Fund Scheme, 1952 exceeding Rs. 30,000/- exemption limit in case of resident individuals above the due to an employee, which is includible in the total age of sixty years but less than eighty years also remains income; is made. Also, the newly inserted section at Rs. 3,00,000. The rates of tax and other slabs of income 194LBB to the Income-tax Act provides for withholding for various categories also remain the same as in financial tax rate of 10 percent where any income other than year 2014-15. business income, is distributed by an investment fund 4.1. In the case of every individual, Hindu undivided to its unit holders. family, association of persons, body of The tax deducted at source in the following cases shall individuals, artificial juridical person, co-operative be increased by a surcharge for purposes of the Union society, firm and local authority, the amount of indicated below: income-tax computed shall be increased by a surcharge at the rate of twelve percent of such (i) In case of every non-resident person not being a income-tax now instead of ten percent in case company, the rate of surcharge has been raised of a person having a total income exceeding one to twelve percent of tax from ten percent where crore rupees. However, the total amount payable the income or aggregate of such income paid or as income-tax and surcharge on total income likely to be paid and subject to the deduction exceeding one crore rupees shall not exceed the exceeds one crore rupees. total amount payable as income-tax on a total income of one crore rupees by more than the (ii) In case of payments made to foreign companies, amount of income that exceeds one crore the rate of surcharge is two per cent of such rupees. income tax where the income or the aggregate of such incomes paid or likely to be paid and 4.2. Education Cess on Income-tax and Secondary subject to the deduction exceeds one crore and Higher Education Cess on income-tax shall rupees but does not exceed ten crore rupees. In be levied at the rate of two per cent and one per case where such income or the aggregate of cent respectively of the amount of income tax such incomes paid or likely to be paid to a foreign and surcharge. No marginal relief shall be company and subject to the deduction exceeds available in respect of Education Cess and ten crore rupees, the rate of surcharge is five Secondary and Higher Education Cess. percent. 4.3. In case of a domestic company, the rate of 3. No surcharge on tax deducted at source shall income-tax is thirty per cent of the total income. The tax computed shall be enhanced by a be levied in the case of an individual, Hindu undivided surcharge of seven per cent where such family, association of persons, body of individuals, artificial domestic company has total income exceeding juridical person, co-operative society, and local authority, one crore rupees but not exceeding ten crore firm being a resident or a domestic company. rupees. The rate of levy of surcharge has been Education Cess on income-tax shall continue to raised to twelve percent in cases where the total be levied for the purposes of the Union at the income of the company exceeds ten crore rate of two per cent of income-tax and surcharge, rupees. In the case of a foreign company, the if any, in the cases of persons not resident in tax rate shall be forty per cent. The tax computed India including companies other than domestic shall be enhanced by a surcharge of two per cent company. In addition, the amount of tax deducted only where such company has total income and surcharge shall be further increased by an exceeding one crore rupees but not exceeding additional surcharge called Secondary and ten crore rupees. Surcharge at the rate of five Higher Education Cess on income-tax at the rate per cent shall be levied if the total income of the of one per cent in all such cases. company other than domestic company exceeds ten crore rupees. 4. The rates for deducting income-tax at source from Salaries and computing advance tax during the 4.4. However, marginal relief shall be allowed in the financial year 2015-16 have been specified in Part III of case of every company to ensure that 157 G BG B Annual Report 2015-2016 (i) the additional amount of income-tax payable, of the amount of income-tax computed including including surcharge, on the excess of income surcharge. No marginal relief shall be available in respect over one crore rupees is limited to the amount of Education Cess and Secondary and Higher Education by which the income is more than one crore Cess. rupees, 5. Where additional income-tax has to be paid (ii) the total amount payable as income-tax and under section 115-O or section 115-QA or sub-section surcharge on total income exceeding ten crore (2) of section 115R or section 115TA of the Income-tax rupees shall not exceed the total amount payable Act, that is to say, on distribution of dividend by domestic companies or distribution of income by a company on as income-tax and surcharge on a total income buy-back of shares from shareholders or on distribution of ten crore rupees, by more than the amount of of income by a mutual fund to its unit holders or on income that exceeds ten crore rupees. distribution of income by a securitization trust to its 4.5. Education Cess on income-tax and Secondary investors, the additional tax so payable shall be increased and Higher Education Cess on income-tax shall be levied by a surcharge of twelve percent of such tax instead of at the rate of two per cent and one per cent respectively ten percent for the previous year. B. Other major changes by the Finance Act, 2015 I. Measures to promote socio-economic growth Amendment Rationale for Amendment Amendment Rationale for Amendment Incentives for Manufacturing sector plays State of Telangana or the State the States of significant role in the economic of West Bengal; and Andhra Pradesh, growth of any region. In order to (b) the new assets are acquired Bihar, Telangana encourage the setting up of and installed for the purposes and West Bengal industrial undertakings in the of the said undertaking or backward areas of the State of enterprise during the period Andhra Pradesh or the State of beginning from the 1st April, Bihar or the State of Telangana or 2015 and ending on 31st the State of West Bengal, a new March, 2020. section 32AD has been inserted in the Income-tax Act and also the This deduction shall be available over provisions of section 32 of the and above the existing deduction Income-tax Act has been amended available under section 32AC of the to provide following incentives: Income-tax Act. Accordingly, if a company sets up an undertaking in the A. Additional Investment notified backward area in the State of Allowance Andhra Pradesh or in the State of Bihar Section 32AD has been inserted or in the State of Telangana or in the in the Income-tax Act to provide State of West Bengal, it shall be eligible for an additional investment to claim deduction under the existing allowance of an amount equal to provisions of section 32AC of the 15% of the cost of new asset Income-tax Act as well as under this acquired and installed by an newly inserted section 32AD of the assessee, if- Income-tax Act if it fulfils the conditions (such as investment above a specified (a) he sets up an undertaking threshold) provided in section 32AC as or enterprise for well as conditions specified in section manufacture or 32AD. production of any article or thing on or after 1st The phrase "new asset" has been April, 2015 in any notified defined as plant or machinery but does backward area in the not include- State of Andhra Pradesh i. any plant or machinery which or the State of Bihar or the before its installation by the 158 G BG B Department of Revenue III Amendment Rationale for Amendment Amendment Rationale for Amendment assessee was used B. Additional Depreciation at either within or outside the rate of 35% India by any other person; To incentivise investment in new ii. any plant or machinery plant or machinery, additional installed in any office depreciation of 20% is allowed premises or any under the existing provisions of r e s i d e n t i a l section 32(1) (iia) of the Income- accommodation, tax Act in respect of the cost of including accommodation plant or machinery acquired and in the nature of a guest installed by certain assessees. house; This depreciation allowance is allowed over and above the iii. any office appliances deduction allowed for general including computers or depreciation under section 32(1) computer software; (ii) of the Income-tax Act. iv. any vehicle; In order to incentivise acquisition v. any ship or aircraft; or and installation of plant and machinery for setting up of vi. any plant or machinery, manufacturing units in the notified the whole of the actual backward areas in the State of cost of which is allowed Andhra Pradesh or in the State as deduction (whether by of Bihar or in the State of way of depreciation or Telangana or in the State of West otherwise) in computing Bengal, a new proviso has been the income chargeable inserted in section 32(1)(iia) of the under the head "Profits Income-tax Act to provide for and gains of business or higher additional depreciation at profession" of any the rate of 35% (instead of 20%) previous year. in respect of the actual cost of new machinery or plant (other With a view to ensure that the than a ship and aircraft) acquired manufacturing units which are and installed by an assessee for set up by availing this incentive setting up of a manufacturing actually contribute to economic undertaking or enterprise in the growth of these backward areas notified backward area of the said by carrying out the activity of States on or after the 1st April, manufacturing for a reasonable 2015. period of time, suitable safeguards have been provided This higher additional for restricting the transfer of the depreciation shall be available in plant or machinery for a period respect of acquisition and of 5 years. However, this installation of any new machinery restriction shall not apply to the or plant for the purposes of the amalgamating or demerged said undertaking or enterprise company or the predecessor in during the period beginning on the a case of amalgamation or 1st day of April, 2015 and ending demerger or business before the 1st day of April, 2020. reorganisation but shall continue The eligible machinery or plant for to apply to the amalgamated this purpose shall not include the company or resulting company machinery or plant which are or successor, as the case may currently not eligible for additional be. depreciation as per the existing 159 G BG B Annual Report 2015-2016 Amendment Rationale for Amendment Amendment Rationale for Amendment proviso to section 32(1)(iia) of the approval of the Government shall Income-tax Act. be allowed as deduction for computing business income of These amendments takes effect the sugar co-operative factories. from 1st April, 2016 and will, Hence, for the purposes of accordingly, apply in relation to the computing business income of a assessment year 2016-17 and co-operative society engaged in subsequent assessment years. the business of manufacture of Deduction for Sugar factories operating in the sugar for assessment year 2016- payment made cooperative sectors in certain 17 and subsequent assessment for purchase of states of India pay to sugarcane years, the price paid for purchase sugar cane by growers a final amount, often of sugarcane which has been co-operative referred to as Final Cane Price fixed or approved by the sugar factories (FCP) which is over and above the Government shall be allowed as at a price fixed Statutory Minimum Price (SMP) deduction under section 36(1) by or fixed with fixed by the Central Government (xvii) of the Income-tax Act even the approval of under the Sugarcane Control if the same is in excess of the the Government. Order, 1996. FCP is decided on SMP. the basis of the particular factory's This amendment takes effect working results which take into from 1st April, 2016 and would account all the revenues and accordingly apply to assessment expenditure incurred by the year 2016-17 and subsequent factory. assessment years. The payment of FCP by the co- Tax neutrality on Securities and Exchange Board operative sugar factories over and merger of similar of India (SEBI) has been above the SMP for purchase of schemes of encouraging mutual funds to sugarcane resulted into tax Mutual Funds consolidate different schemes litigation. The co-operative sugar having similar features so as to factories were claiming this have simple and fewer numbers excess payment as business of schemes. However, such expenditure whereas the same mergers/consolidations are has been disallowed in the treated as transfer and capital assessment on the ground that gains are imposed on unit holders the excess price paid for purchase under the Income-tax Act. of sugar cane over and above SMP is in the nature of In order to facilitate consolidation appropriation/distribution of profit of such schemes of mutual funds and hence not allowable a in the interest of the investors, tax deduction. neutrality has been provided to unit holders upon consolidation or In order to provide certainty in this merger of mutual fund schemes matter and to encourage co- provided that the consolidation is operative movement in sugar of two or more schemes of an sector, a new clause (xvii) has equity oriented fund or two or been inserted in sub-section (1) more schemes of a fund other of section 36 of the Income-tax Act than an equity oriented fund by to provide that the amount paid for amending section 47 of the purchase of sugarcane by the co- Income-tax Act. Section 49 of the operative societies engaged in the Income-tax Act has also been manufacture of sugar at a price amended to provide that the cost which is equal to or less than the of acquisition of the units in a price fixed by or fixed with the consolidated scheme of a mutual 160 G BG B Department of Revenue III Amendment Rationale for Amendment Amendment Rationale for Amendment fund shall be the cost of units in gains shall be exempt the consolidating scheme and and the short term capital period of holding of the units of the gains shall be taxable at consolidated scheme shall include the rate of 15%. the period for which the units in ii. In case of capital gains consolidating schemes were held arising to the sponsor at by the assessee. the time of exchange of Consolidating scheme has been shares in Special defined as the scheme of a mutual Purpose Vehicle (SPV), fund which merges under the being the unlisted process of consolidation of the company through which schemes of mutual fund in income generating accordance with the Securities assets are held indirectly and Exchange Board of India by the business trusts, (Mutual Funds) Regulations, 1996 with units of the business and the consolidated scheme trust, the taxation of means the scheme with which the gains is deferred. consolidating scheme merges or which is formed as a result of such iii. The tax on such gains is merger. to be levied at the time of disposal of units by the These amendments will take sponsor. effect from 1st April, 2016 and will accordingly apply, in relation to the iv. However, the preferential assessment year 2016-17 and capital gains regime subsequent assessment years. (consequential to levy of STT) available to other Taxation Regime The Finance (No.2) Act, 2014 had unit holders of business for Real Estate amended the Income-tax Act to trust, is not available to Investment put in place a special taxation the sponsor in respect of Trusts (REIT) and regime in respect of business these units at the time of Infrastructure trusts. The business trust as their transfer. Investment defined in section 2(13A) of the Trusts (InviT) Income-tax Act before v. For the purpose of amendment by the Act, included computing capital gain, a Real Estate investment Trust the cost of these units is (REIT) and an Infrastructure considered as cost of the Investment Trust (InviT) which is shares to the sponsor. registered under regulations The holding period of framed by SEBI in this regard. shares is included in computing the holding The said tax regime for the period of such units business trust and their investors as contained in different sections vi. The pass through is of the Income-tax Act, inter alia, provided in respect of provided that:- income by way of interest received by the business i. The listed units of a trust from SPV i.e., there business trust, when is no taxation of such traded on a recognised interest income in the stock exchange, would hands of the trust and no be liable to securities withholding tax at the transaction tax (STT), level of SPV. and the long term capital 161 G BG B Annual Report 2015-2016 Amendment Rationale for Amendment Amendment Rationale for Amendment vii. However, withholding tax (i) the sponsor would get the at the rate of 5 percent in same tax treatment on case of payment of offloading of units under an interest component of Initial offer on listing of units as income distributed to non- it would have been available resident unit holders, and had he offloaded the at the rate of 10 per cent. underlying shareholding in respect of payment of through an IPO. interest component of (ii) Chapter VII of the Finance distributed income to a (No. 2) Act, 2004 has been resident unit holder is amended to provide that STT required to be effected by shall be levied on sale of such the trust. units of business trust which viii. The dividend received by are acquired in lieu of shares the trust is subject to of SPV, under an Initial offer dividend distribution tax at at the time of listing of units of the level of SPV and is business trust on similar lines exempt in the hands of as in the case of sale of the trust, and the dividend unlisted equity shares under component of the income an IPO. distributed by the trust to (iii) the benefit of concessional tax the unit holders is also regime of tax @15 % on STCG exempt. and exemption on LTCG under The deferral of capital gains section 10(38) of the Act shall provided to the sponsor of be available to the sponsor on business trust had placed such a sale of units received in lieu of sponsor at a disadvantageous tax shares of SPV subject to levy position vis-a vis direct listing of of STT. the shares of the SPV. In case the sponsor holding the shares of the (iv) MAT deferral at the time of SPV decides to exit through the exchange of shares of SPV Initial Public Offer (IPO) route, with units of business trust has then the benefit of concessional also been provided (refer para tax regime relating to capital gains 33.5). arising on transfer of shares Further, in case of a business trust subject to levy of STT is available being a REIT, the income is to him. The tax on short term predominantly in the nature of rental capital gains (STCG) in such income. This rental income arises from cases is levied @ 15% and the the assets held directly by REIT or held long term capital gain (LTCG) is by it through an SPV. While the rental exempt under section 10(38) of income received at the level of SPV the Act. However, the benefit of gets passed through by way of interest concessional regime was not or dividend to the REIT, the rental available to the sponsor at the income directly received by the REIT time it offloads units of business was being taxed at REIT level and did trust acquired in exchange of its not get pass through benefit. shareholding in the SPV through Initial offer at the time of listing of In order to provide pass through to the business trust on stock exchange. rental income arising to REIT from real estate property directly held by it, it has In order to provide parity, it has been provided that:- been provided that,- 162 G BG B Department of Revenue III Amendment Rationale for Amendment Amendment Rationale for Amendment i. any income of a business Pass through The provisions of section trust, being a real estate status to 10(23FB) of the Income-tax Act investment trust, by way Category–I and provide that any income of a of renting or leasing or Category–II Venture Capital Company (VCC) letting out any real estate Alternative or a Venture Capital Fund (VCF) asset owned directly by Investment from investment in a Venture such business trust shall Funds Capital Undertaking (VCU) shall be exempt; not form part of its total income. Section 115U of the Income-tax ii. the distributed income or Act provides that income accruing any part thereof, received or arising or received by a person by a unit holder from the out of investment made in a VCC REIT, which is in the or VCF shall be taxable in the nature of income byway same manner, on current year of renting or leasing or basis, as if the person had made letting out any real estate direct investment in the VCU. asset owned directly by such REIT, shall be These sections provide a tax pass deemed to be income of through (i.e. income is taxable in such unit holder and shall the hands of investors instead of be charged to tax. VCF/VCC) only to the funds, being set up as a company or a iii. the REIT shall effect TDS trust, which are registered (i) on rental income allowed before 21.05.2012 as a VCF to be passed through. In under SEBI (VCF) Regulations, case of resident unit 1996, or (ii) as venture capital holder, tax shall be fund being one of the sub- deducted @ 10%, and in categories under category-I case of distribution to Alternative investment fund (AIF) non-resident unit holder, regulated by SEBI (AIF) the tax shall be deducted Regulations, 2012 w.e.f. at rate in force as 21.05.2012. This pass through is applicable for deduction available only in respect of of tax on payment to the income which arises to the fund non-resident of any sum from investment in VCU (Venture chargeable to tax. Capital Undertaking), being a iv. no deduction shall be company which satisfies the made under section 194- conditions provided in SEBI I of the Income-tax Act (VCF) Regulations, 1996 or SEBI where the income by way (AIF) Regulations, 2012 (AIF of rent is credited or paid regulations) . to a business trust, being Under the AIF regulations, a real estate investment various types of AIFs have been trust, in respect of any classified under three separate real estate asset held categories as Category I, II and directly by such REIT. III AIFs. Category I includes AIFs These amendments take effect which invest in start-up or early from 1st April, 2016 and will, stage ventures or social ventures accordingly, apply in relation to or SMEs or infrastructure or other the assessment year 2016-17 sectors or areas which the and subsequent assessment Government or regulators years. consider as socially or 163 G BG B Annual Report 2015-2016 Amendment Rationale for Amendment Amendment Rationale for Amendment economically desirable. Category fund, been made directly by II AIFs are funds including private him. equity funds or debt funds which (ii) income in the hands of do not fall in Category I and III and investment fund, other than which do not undertake leverage income from profits and gains or borrowing other than to meet of business, shall be exempt day-to-day operational requirements. Category III AIFs from tax. The income in the are funds which employ diverse or nature of profits and gains of complex trading strategies and business or profession shall may employ leverage including be taxable in the case of through investment in listed or investment fund. unlisted derivatives. The funds (iii) income in the hands of can be set up as a trust, company, investor which is of the same limited liability partnership and any nature as income by way of other body corporate. Similarly, profits and gains of business investment by AIFs can be in or profession at investment entities which can be a company, firm etc. fund level, shall be exempt. Pooled investment vehicles (other (iv) where any income, other than than hedge funds) engaged in income which is taxable at making passive investments have investment fund level, is been accorded pass through in payable to a unit holder by an certain tax jurisdictions. In order investment fund, the fund shall to rationalize the taxation of deduct income-tax at the rate Category-I and Category-II AIFs of ten per cent. (hereafter referred to as (v) the income paid or credited by investment fund), a special tax regime has been provided. The the investment fund shall be taxation of income of such deemed to be of the same investment fund and their nature and in the same investors shall be in accordance proportion in the hands of the with the new regime which is unit holder as if it had been applicable to such funds received by, or had accrued irrespective of whether they are or arisen to, the investment set up as a trust, company, or fund. limited liability firm etc. The salient (vi) if in any year there is a loss at features of the special regime are as under:- the fund level either current loss or the loss which had (i) income of a person, being remained to be set off, the loss a unit holder of an shall not be allowed to be investment fund, out of passed through to the investments made in the investors but would be carried investment fund shall be over at fund level to be set off chargeable to income-tax against income of the next in the same manner as if year in accordance with the it were the income provisions of Chapter VI of the accruing or arising to, or Income-tax Act. received by, such person had the investments, (vii) the provisions of Chapter XII- made by the investment D (Dividend Distribution Tax) 164 G BG B Department of Revenue III Amendment Rationale for Amendment Amendment Rationale for Amendment or Chapter XII-E (Tax on II. Relief and welfare measures distributed income) shall Fund Managers The provisions of section 9 of the not apply to the income in India not to Income-tax Act deal with incomes paid by an investment c o n s t i t u t e which are deemed to accrue or fund to its unit holders. b u s i n e s s arise in India. Section 9(1)(i) connection of provides a set of circumstances (viii) the income received by offshore funds in which income is deemed to the investment fund accrue or arise in India, and is would be exempt from taxable in India. One of the TDS requirement vide conditions for the income of a Notification S.O. 1703 non-resident to be deemed to (E)dated 25th accrue or arise in India is the June,2015. existence of a business connection in India. Once such a (ix) shall be mandatory for business connection is the investment fund to established, income attributable file its return of income. to the activities which constitute business connection becomes The investment fund taxable in India. Similarly, under shall also provide to the Double Taxation Avoidance prescribed income-tax Agreements (DTAAs), the source authority and the country assumes taxation rights investors, the details of on certain incomes if the non- various components of resident has a Permanent income, etc. for the Establishment (PE) in that purposes of the country. scheme. Further, section 6 of the Income- tax Act provides conditions under Further, the existing pass through which a person is said to be regime shall continue to apply to resident in India. In the case of a VCF/VCC which had been person other than an individual, registered under SEBI (VCF) the test is dependent upon the Regulations, 1996. Remaining location of its “control and VCFs, being part of Category-I management”. AIFs, shall be subject to the new In the case of off-shore funds, pass through regime. under the above provisions, the presence of a fund manager in The application of the provisions India could create sufficient nexus of the new regime has been of the off-shore fund with India explained in the Memorandum and could constitute a business explaining the provisions in the connection in India even though Finance Bill, 2015 by way of the fund manager may be an independent person. Similarly, if illustrations. the fund manager located in India These amendments take effect undertakes fund management from 1st April, 2016 and will, activity in respect of investments accordingly, apply in relation to outside India for an off-shore fund, the profits made by the fund the assessment year 2016-17 from such investments could and subsequent assessment have been liable to tax in India years. due to the location of fund 165 G BG B Annual Report 2015-2016 Amendment Rationale for Amendment Amendment Rationale for Amendment manager in India and attribution (ii) that income of the fund from the of such profits to the activity of the investments outside India would fund manager undertaken on not be taxable in India solely on behalf of the off-shore fund. the basis that the Fund Therefore, apart from taxation of management activity in respect income received by the fund of such investments have been manager as fees for fund undertaken through a fund management activity, income of manager located in India. off-shore fund from investments The regime provides that in the case made in countries outside India of an eligible investment fund, the fund may have also got taxed in India management activity carried out due to such fund management through an eligible fund manager activity undertaken in, and from, acting on behalf of such fund shall not India constituting a business constitute business connection in India connection. Further, presence of the fund manager under certain of the said fund. circumstances may have led to the Further, it has been provided that an off shore fund being held to be eligible investment fund shall not be resident in India on the basis of said to be resident in India merely its control and management being because the eligible fund manager in India. undertaking fund management There are a large number of fund activities on its behalf is located in managers who are of Indian India. This specific exception from the origin and are managing the general rules for determination of investment of offshore funds in business connection and ‘resident various countries. These persons status’ of off-shore funds and fund were being discouraged from management activity undertaken on its locating in India due to the above behalf is subject to the following:- tax consequence in respect of (1) The offshore fund shall be required income from the investments of to fulfil the following conditions during offshore funds made in other the relevant year for being an eligible jurisdictions. investment fund: In order to facilitate location of (i) the fund is not a person fund managers of off-shore funds resident in India; in India a specific regime has been provided in the Income-tax Act in (ii) the fund is a resident of a line with international best country or a specified territory practices with the objective that, with which an agreement subject to fulfilment of certain referred to in sub-section (1) conditions by the fund and the of section 90 or sub-section (1) fund manager,- of section 90A the Income-tax Act has been entered into; (i) the tax liability in respect of income arising to the (iii) the aggregate participation or Fund from investment in investment in the fund, directly India would be neutral to or indirectly, by persons being the fact as to whether the resident in India does not investment is made exceed five percent. of the directly by the fund or corpus of the fund; through engagement of Fund manager located in (iv) the fund and its activities are India; and subject to applicable investor 166 G BG B Department of Revenue III Amendment Rationale for Amendment Amendment Rationale for Amendment protection regulations in the (xii) the fund is neither country or specified territory engaged in any activity where it is established or which constitutes a incorporated or is a resident ; business connection in India nor has any person (v) the fund has a minimum of acting on its behalf whose twenty five members who activities constitute a are, directly or indirectly, business connection in not connected persons; India other than the activities undertaken by (vi) any member of the fund the eligible fund manager along with connected on its behalf. persons shall not have any participation interest, (xiii) the remuneration paid by directly or indirectly, in the the fund to an eligible fund exceeding ten fund manager in respect percent; of fund management activity undertaken on its (vii) the aggregate behalf is not less than the participation interest, arm’s length price of directly or indirectly, of such activity. ten or less members (2) The following conditions shall along with their be required to be satisfied by the connected persons in the person being the fund manager fund, shall be less than for being an eligible fund fifty percent.; manager: (viii) the investment by the i. the person is not an fund in an entity shall not employee of the eligible exceed twenty percent of investment fund or a the corpus of the fund; connected person of the fund; (ix) no investment shall be made by the fund in its ii. the person is registered associate entity; as a fund manager or investment advisor in (x) monthly average of the accordance with the corpus of the fund shall specified regulations; not be less than one hundred crore rupees iii. the person is acting in the and if the fund has been ordinary course of his established or business as a fund incorporated in the manager; previous year, the corpus iv. the person along with his of fund shall not be less connected persons shall than one hundred crore not be entitled, directly or rupees at the end of such indirectly, to more than previous year; twenty percent of the profits accruing or arising (xi) the fund shall not carry on to the eligible investment or control and manage, fund from the directly or indirectly, any transactions carried out business in India or from by the fund through such India; fund manager. 167 G BG B Annual Report 2015-2016 Amendment Rationale for Amendment Amendment Rationale for Amendment It has been provided that assessment year 2016-17 and conditions mentioned in items subsequent assessment years. (v),(vi)& (vii) of paragraph (1) shall Pursuant to the Budget not apply in cases of an Tax benefits announcement in July 2014, a investment fund set up by the under section special small savings instrument Government or the Central Bank 80C for the girl for the welfare of the girl child has of a foreign State or a sovereign child under the been introduced under the fund or such other fund as the S u k a n y a Sukanya Samriddhi Account Central Government may notify. S a m r i d d h i Rules, 2014. The following tax It has been further provided that A c c o u n t benefits have been envisaged in every eligible investment fund Scheme the Sukanya Samriddhi Account shall, in respect of its activities in scheme:- a financial year, furnish within (i) The investments made in ninety days from the end of the the Scheme will be financial year, a statement in the eligible for deduction prescribed form to the prescribed under section 80C of the income-tax authority containing Income-tax Act. information relating to the fulfilment of the above conditions (ii) The interest accruing on or any information or document deposits in such account which may be prescribed. In case will be exempt from of non-furnishing of the prescribed income tax. information or document or (iii) The withdrawal from the statement, a penalty of Rs. 5 lakh said scheme in shall be leviable on the fund accordance with the rules (section 271FAB of the Income- of the said scheme will be tax Act). The provisions of the new exempt from tax. section 9A the Income-tax Act shall be applied in accordance Accordingly, a new clause (11A) with such guidelines and in such has been inserted in section 10 of manner as the Central Board of the Income-tax Act to provide that Direct Taxes (CBDT) may any payment from an account prescribe in this behalf. opened in accordance with the Sukanya Samriddhi Account It has also been clarified that this Rules, 2014 made under the regime shall not have any impact Government Savings Bank Act, on taxability of any income of the 1873, shall not be included in the eligible investment fund which total income of the assessee. As would have been chargeable to a result, the interest accruing on tax irrespective of whether the deposits in the aforesaid account, activity of the eligible fund and withdrawals from any such manager constituted the business account under the scheme would connection in India of such fund be exempt. or not. Further, the new regime shall not have any effect on the The Scheme has been notified scope of total income or under clause (viii) of sub-section determination of total income in (2) of section 80C of the Income- the case of the eligible fund tax Act vide Notification number manager. 9/2015 S.O.210 (E), F. No. 178/ 3/2015-ITA-I dated 21.01.2015. These amendments take effect To provide that the deduction from 1st April, 2016 and will, under section 80C may be accordingly, apply in relation to the 168 G BG B Department of Revenue III Amendment Rationale for Amendment Amendment Rationale for Amendment availed by the parent or legal A d d i t i o n a l Under the provisions contained in guardian of the girl child, deducation sub-section (1) of section 80CCD amendment of section 80C of under 80CCD of the Income-tax Act, before its the Income-tax Act has been amendment by the Act, if an made to provide that a sum paid individual, employed by the or deposited during the year in Central Government on or after the Scheme in the name of any 1st January, 2004, or an individual girl child of the individual or in employed by any other employer, the name of any girl child for or any other assessee being an whom such individual is the legal individual has paid or deposited guardian, would be eligible for any amount in a previous year in deduction under section 80C of his account under a notified the Income-tax Act. pension scheme, a deduction of such amount not exceeding ten These amendments take effect percent of his salary in the case retrospectively from 1st April, of an employee and ten percent 2015 and will, accordingly, apply of the gross total income in case in relation to assessment year of any other individual is allowed. 2015-16 and subsequent Similarly, the contribution made assessment years. by the Central Government or any Raising the limit Under the provisions of sub- other employer to the said of deduction section (1) of the section 80CCC account of the individual under under 80CCC of the Income-tax Act, before its the pension scheme is also amendment by the Act, an allowed as deduction under sub- assessee, being an individual was section (2) of section 80CCD, to allowed a deduction upto one lakh the extent it does not exceed ten rupees in the computation of his per cent of the salary of the total income, of an amount paid individual in the previous year. or deposited by him to effect or Sub-section (1A) of section keep in force a contract for any 80CCD provides that the amount annuity plan of Life Insurance of deduction under sub-section Corporation of India or any other (1) shall not exceed one hundred insurer for receiving pension from thousand rupees. Till date, under a fund set up under a pension section 80CCD, only the National scheme. Pension System (NPS) has been notified by the Ministry of Finance. In order to promote social security, sub-section (1) of With a view to encourage people section 80CCC has been to contribute towards NPS, sub- amended to raise the limit of section (1A) of section 80CCD deduction under section has been omitted. The overall 80CCC from one lakh rupees limit of one hundred and fifty to one hundred and fifty thousand rupees under section thousand rupees, within the 80CCE shall apply in respect of overall limit provided in section the contribution made in 80CCE. accordance with sub-section (1) of section 80CCD. In addition to This amendment will take effect the enhancement of the limit from 1st April, 2016 and will, under section 80CCD(1), a new accordingly, apply in relation to sub-section (1B) has been the assessment year 2016-17 inserted in section 80CCD so as and subsequent assessment to provide for an additional years. deduction in respect of any 169 G BG B Annual Report 2015-2016 Amendment Rationale for Amendment Amendment Rationale for Amendment amount paid, upto fifty thousand A similar deduction is also rupees for contributions made by available to a Hindu Undivided any individual assessee under the Family (HUF) in respect of health NPS. The additional deduction of insurance premia, paid by any Rs.50,000/- will be available mode, other than cash, to effect whether or not any claim under or to keep in force insurance on sub-section (1) of section 80CCD the health of any member of the has been made. HUF. The section also provided for a deduction of twenty Consequential amendments have thousand rupees in both the also been made in sub-section (3) cases if the individual insured is and sub-section (4) of section a senior citizen of sixty years of 80CCD. age or above. These amendments take effect The quantum of deduction from 1st April, 2016 and will, allowed under Section 80D to accordingly, apply in relation to individuals and HUF in respect of the assessment year 2016-17 premium paid for health and subsequent assessment insurance had been fixed vide years. Finance Act, 2008 at Rs.15000/- Amendment in The provisions contained in and Rs.20,000/- for senior section 80D section 80D of the Income-tax Act, citizens. In view of continuous rise relating to before its amendment by the Act, in the cost of medical deducation in inter alia, provided for - expenditure, section 80D has respect of health been amended to raise the limit (a). deduction up to fifteen i n s u r a n c e of deduction from fifteen thousand rupees to an premis thousand rupees to twenty five assessee, being an thousand rupees. The limit of individual in respect of deduction for senior citizens has health insurance premia, been raised from twenty paid by any mode, other thousand rupees to thirty than cash, to effect or to thousand rupees. keep in force an insurance on the health of Further, very senior citizens are the assessee or his family often unable to get health or any contribution made insurance coverage and are to the Central therefore unable to take tax Government Health benefit under section 80D. Scheme or any other Accordingly, as a welfare notified scheme or any measure towards very senior payment made on citizens, section 80D has further account of preventive been amended to provide that health checkup of the any payment upto Rs.30,000/- assessee or his family; made on account of medical and expenditure shall be allowed as a deduction under section 80D, (b). an additional deduction in respect of a very senior citizen, of fifteen thousand if no payment has been made to rupees to an individual keep in force an insurance on the assessee to effect or to health of such person. The keep in force insurance aggregate deduction available to on the health of the any individual who is a very senior parent or parents of the citizen in respect of health assessee. 170 G BG B Department of Revenue III Amendment Rationale for Amendment Amendment Rationale for Amendment insurance premia and the medical if the dependent is suffering from expenditure incurred for his family disability and one lakh rupees if would, however, be limited to thirty the dependent is suffering from thousand rupees. severe disability (as defined under the said section). Example: The provisions of section 80U of (i) For Individual and the Income-tax Act, before its his family amendment by the Act, inter alia, Health insurance provided for a deduction to an premia 21,000 individual, being a resident, who, (ii) For parents at any time during the previous Health insurance year, was certified by the medical of Mother: 18,000 authority to be a person with Medical expenditure disability (as defined under the on father (very said section). senior citizen) 25,000 Deduction eligible u/s 80D Rs. The said section provided for a 21000 + Rs. 30000 = Rs. 51,000 deduction of fifty thousand rupees if the person is suffering from A 'very senior citizen' has been disability and one lakh rupees if defined to mean an individual the person is suffering from resident in India who is of the age severe disability (as defined of eighty years or more at any time under the said section). during the relevant previous year. The limits under section 80DD These amendments take effect and section 80U in respect of a from the 1st April, 2016 and will, person with disability were fixed accordingly, apply in relation to the at fifty thousand rupees by assessment year 2016-17 and Finance Act, 2003. Further, the subsequent assessment years. limit under section 80DD and Raising the limit The provisions of section 80DD of section 80U in respect of a person of deducation the Income-tax Act, before its with severe disability was last under section amendment by the Act, inter alia, enhanced from seventy five 80DD and 80U provided for a deduction to an thousand rupees to one lakh for persons with individual or HUF, who is a resident rupees by Finance (No.2) Act, disablity and in India, and has incurred- 2009. service disability (a) Expenditure for the In view of the rising cost of medical treatment medical care and special needs (including nursing), of a disabled person, section training and rehabilitation 80DD and section 80U have been of a dependent, being a amended to raise the limit of person with disability as deduction in respect of a person defined under the said with disability from fifty thousand section; or rupees to seventy five thousand rupees. (b) Paid any amount to LIC or any other insurer in Section 80DD and section 80U respect of a scheme for have further been amended to the maintenance of a raise the limit of deduction in disabled dependent. respect of a person with severe disability from one lakh rupees to The section provided for a one hundred and twenty five deduction of fifty thousand rupees thousand rupees. 171 G BG B Annual Report 2015-2016 Amendment Rationale for Amendment Amendment Rationale for Amendment These amendments take effect intending to claim the aforesaid from 1st April, 2016 and will, deduction. Government hospitals accordingly, apply in relation to the at many places do not have assessment year 2016-17 and doctors specializing in the above subsequent assessment years. branches of medicine. Therefore, it may be difficult for the taxpayer Raising the limit Under the provisions contained in to obtain a certificate from a of deduction section 80DDB of the Income-tax Government hospital. under section Act, before its amendment by the 80DDB Act, an assessee, resident in India In view of the above, section is allowed a deduction of a sum 80DDB has been amended to not exceeding forty thousand provide that the assessee will be rupees, being the amount actually required to obtain a prescription paid, for the medical treatment of from a specialist doctor for the certain chronic and protracted purpose of availing this diseases such as Cancer, full deduction. blown AIDS, Thalassaemia, Section 80DDB has been Haemophilia etc. This deduction amended further to provide for a is allowed up to sixty thousand higher limit of deduction of upto rupees where the expenditure is eighty thousand rupees, for the in respect of a senior citizen i.e. a expenditure incurred in respect of person who is of the age of sixty the medical treatment of a "very years or more at any time during senior citizen". A "very senior the relevant previous year. citizen" has been defined as an The above deduction is available individual resident in India who is to an individual for medical of the age of eighty years or more expenditure incurred on himself or at any time during the relevant a dependent. It is also available previous year. to an HUF for such expenditure These amendments take effect incurred on its members. from 1st April, 2016 and will, Dependent in case of an individual accordingly, apply in relation to means the spouse, children, the assessment year 2016-17 parents, brother or sister of an and subsequent assessment individual and in case of an HUF years. means a member of the HUF, wholly or mainly dependent on One hundred per Under the provisions of section such individual or HUF for his cent deduction 80G of the Income-tax Act, before support and maintenance. for National Fund its amendment by the Act, an for Control of assessee was allowed a Under the provisions of section Drug Abuse deduction from his total income 80DDB before its amendment by in respect of donations made by the Act, a certificate in the him to certain funds and prescribed form, from a charitable institutions. The neurologist, an oncologist, an deduction is allowed at the rate urologist, a haematologist, an of hundred percent of the amount immunologist or such other of donations made to certain specialist working in a funds and institutions formed for Government hospital was a social purpose of national required. It had been represented importance, like the Prime that the requirement of a Ministers' National Relief Fund, certificate from a doctor working National Foundation for in a Government hospital causes Communal Harmony etc. undue hardship to the persons 172 G BG B Department of Revenue III Amendment Rationale for Amendment Amendment Rationale for Amendment The National Fund for Control of Bharat Abhiyan. Similarly, Clean Drug Abuse is a fund created by Ganga Fund has been the Government of India in the established by the Central year 1989, under the Narcotic Government to attract voluntary Drugs and Psychotropic contributions to rejuvenate river Substances Act, 1985. Since Ganga. National Fund for Control of Drug With a view to encourage and Abuse is also a Fund of national enhance people's participation in importance, section 80G has the national effort to improve been amended to provide sanitation facilities and hundred per cent deduction in rejuvenation of river Ganga, respect of donations made to the section 80G of the Income-tax Act said National Fund for Control of has been amended to incentivise Drug Abuse. donations to the two funds. It has This amendment take effect from been provided that donations 1st April, 2016 and will, made by any donor to the Swachh accordingly, apply in relation to the Bharat Kosh and donations made assessment year 2016-17 and by resident donors to Clean subsequent assessment years. Ganga Fund will be eligible for a deduction of hundred per cent in Tax benefits for Under the provisions of section computing the total income. Swachh Bharat 80G of the Income-tax Act, before However, any sum spent on this Kosh and Clean its amendment by the Act, a account in pursuance of Ganga Fund deduction was allowed in Corporate Social Responsibility computing the total income of a under sub-section (5) of section person in respect of donations 135 of the Companies Act, 2013, made to certain funds and will not be eligible for deduction charitable institutions. The from the total income of the donor. deduction is allowed at the rate of fifty percent of the amount of The provisions of section 10(23C) donations made except in the of the Income-tax Act provide for case of donations made to certain exemption from tax in respect of funds and institutions formed for the income of certain charitable a social purpose of national funds or institutions like the Prime importance, where it is allowed at Minister's National Relief Fund; the rate of one hundred percent, the Prime Minister's Fund such as the National Defence (Promotion of Folk Art); the Prime Fund set up by the Central Minister's Aid to Students Fund; Government, the Prime Minister's the National Foundation for National Relief Fund, the Prime Communal Harmony. Minister's Armenia Earthquake Considering the importance of Relief Fund, the Africa (Public Swachh Bharat Kosh and Clean Contributions-India) Fund, the Ganga Fund, section 10(23C) of National Children's Fund, the the Income-tax Act has also been National Foundation for amended to exempt the income Communal Harmony etc. of Swachh Bharat Kosh and Clean Ganga Fund, set up by the "Swachh Bharat Kosh" has been Central Government, from set up by the Central Government income-tax. to mobilize resources for improving sanitation facilities in These amendments take effect rural and urban areas and school retrospectively from 1st April, premises through the Swachh 2015 and will, accordingly, apply 173 G BG B Annual Report 2015-2016 Amendment Rationale for Amendment Amendment Rationale for Amendment in relation to assessment year 80JJAA has been amended to 2015-16 and subsequent provide "additional wages" to mean assessment years. the wages paid to the new regular workmen in excess of fifty workmen Deduction for The provisions of section 80JJAA employed during the previous year. employment of of the Income-tax Act, before its new workmen amendment by the Act, inter alia, These amendments take effect from provided for deduction to an Indian 1st April, 2016 and will, accordingly, company, deriving profits from apply in relation to the assessment manufacture of goods in a factory. year 2016-17 and subsequent The quantum of deduction allowed assessment years. is equal to thirty per cent of Raising the The provisions of section 92BA of additional wages paid to the new threshold for the Income-tax Act define "specified regular workmen employed by the s pe ci f ie d domestic transaction" in case of an assessee in such factory, in the d o m e s t i c assessee to mean any of the previous year, for three transaction specified transactions, not being an assessment years including the international transaction, where the assessment year relevant to the aggregate of such transactions previous year in which such entered into by the assessee in the employment is provided. previous year exceeds a sum as Clause (a) of sub-section (2), inter provided in the said section. Before alia, provides that no deduction amendment by the Act, this under sub-section (1) shall be threshold was rupees five crore. available if the factory is hived off In order to address the issue of or transferred from another compliance cost in case of small existing entity or acquired by the businesses on account of low assessee company as a result of threshold of five crore rupees, the amalgamation with another said section 92BA has been company. Explanation to the amended to provide that the section defines "Additional wages" aggregate of specified transactions to mean the wages paid to the new entered into by the assessee in the regular workmen in excess of previous year should exceed a sum hundred workmen employed of twenty crore rupees for such during the previous year. transaction to be treated as With a view to encourage 'specified domestic transaction'. generation of employment, This amendment takes effect from section 80JJAA has been 1st April, 2016 and will, accordingly, amended to extend the benefit to apply in relation to the assessment all assessees having year 2016-17 and subsequent manufacturing units rather than assessment years. restricting it to corporate assessees only. Further, in order Reduction in The provisions of section 115A of the to enable the smaller units to claim rate of tax on Income-tax Act provide that in case this incentive, the benefit under Income by of a non-resident taxpayer, where section 80JJAA has been way of Royalty the total income includes any extended to units employing 50 and Fees for income by way of Royalty and Fees (instead of 100) regular workmen. t ec hn i ca l for technical services (FTS) received services in by such non-resident from Accordingly, sub-sections (1) and case of non- Government or an Indian concern (2) of the section 80JJAA have residents after 31.03.1976, and which is not been amended. Further, clause (i) effectively connected with of the Explanation to section permanent establishment, if any, of 174 G BG B Department of Revenue III Amendment Rationale for Amendment Amendment Rationale for Amendment the non-resident in India, tax shall payable upto 30th June, 2017. be levied on the gross amount of This amendment takes effect such income at the rate provided from 1st June, 2015. therein. The Finance Act, 2013 had provided the rate to be 25%. Relaxing the Under the provisions of section requirement of 203A of the Income-tax Act, every In order to reduce the hardship obtaining TAN person deducting tax (deductor) faced by small entities due to high for certain or collecting tax (collector) is rate of tax of 25%, the Income- deductors required to obtain Tax Deduction tax Act has been amended to and Collection Account Number reduce the rate of tax provided (TAN) and quote the same for under section 115A on royalty and reporting of tax deduction/ FTS payments made to non- collection to the Income-tax residents to 10%. Department. However, currently, This amendment takes effect from for reporting of tax deducted from 1st April, 2016 and will, payment over a specified accordingly, apply in relation to the threshold made for acquisition of assessment year 2016-17 and immovable property (other than subsequent assessment years. rural agricultural land) from a resident transferor under section Extension of The provisions of section 194LD 194-IA of the Income-tax Act, the eligible period of of the Income-tax Act provide for deductor is not required to obtain concessional tax lower withholding tax at the rate and quote TAN and is allowed to rate under of 5 per cent in case of interest report the tax deducted by quoting section 194LD of payable to Foreign Institutional his Permanent Account Number the Income tax Investor (FII) and a Qualified (PAN). Act Foreign Investor (QFI) on their investments in Government The obtaining of TAN creates a securities and rupee denominated compliance burden for those corporate bonds provided that the individuals or Hindu Undivided rate of interest does not exceed Family (HUF) who are not liable the rate notified by the Central for audit under section 44AB of Government in this regard. Before the Income-tax Act. The quoting amendment by the Act, this benefit of TAN for reporting of TDS is a was available on interest payable procedural matter and the same at any time on or after the 1st day result can also be achieved in of June, 2013 but before the 1st certain cases by quoting of PAN day of June, 2015 especially for the transactions which are likely to be one time The limitation date of the eligibility transaction such as single period for benefit of reduced rate transaction of acquisition of of tax available under section immovable property from a non- 194LC in respect of external resident transferor by an commercial borrowings (ECB) individual or HUF on which tax is had been extended from 30th deductible under section 195 of June, 2015 to 30th June, 2017 by the Income-tax Act. For reducing Finance (No.2) Act, 2014. the compliance burden for these Accordingly, section 194LD has types of deductors, the provisions been amended to provide that the of section 203A of the Income-tax concessional rate of 5% Act have been amended so as to withholding tax on interest provide that the requirement of payment under section 194LD will obtaining and quoting of TAN now be available on interest under section 203A of the 175 G BG B Annual Report 2015-2016 Amendment Rationale for Amendment Amendment Rationale for Amendment Income-tax Act shall not apply to section 295 of the Income-tax Act the notified deductors or has been amended to enable collectors. CBDT to prescribe the procedure for granting relief or deduction, as This amendment takes effect from the case may be, of any income- 1st June, 2015. tax paid in any country or Eligibility for The provision of section 245-O of specified territory outside India, appointment as the Income-tax Act, before its under section 90, or under section Law member in amendment by the Act, provided 90A, or under section 91, against the Authority for that a person from Indian legal the income-tax payable under the A d v a n c e Service shall be qualified for Income-tax Act. Rulings (AAR) appointment as law member who These amendments have taken is an Additional Secretary to the effect from 1st day of June, 2015. Government of India. Abolition of levy Wealth-tax Act, 1957 (the WT In order to widen the scope for of wealth-tax Act) was introduced w.e.f. eligibility, section 245-O has been under Wealth-tax 01.04.1957 on the amended to provide that a person Act, 1957 recommendation of Prof. from Indian legal Service who is, Nicholas Kaldor for achieving twin or is qualified to be, an Additional major objectives of reducing Secretary to the Government of inequalities and helping the India shall be qualified for enforcement of Income-tax Act appointment as a law Member. through cross checks. This amendment has taken effect Accordingly, all the assets of the from 1st April, 2015. assessees were taken into account for computation of net- Enabling the Sub-section (1) of section 91 of wealth. The levy of wealth-tax Board to notify the Income-tax Act provides relief was thoroughly revised on the rules for giving to Indian residents in respect of recommendation of Tax Reform foreign tax credit income-tax on the income which Committee headed by Raja J. is taxed in India as well as in the Chelliah vide Finance Act, 1992 country with which there is no with effect from 01.04.1993. The DTAA by providing a deduction Chelliah Committee had from the Indian income-tax of a recommended abolition of sum calculated on such doubly wealth-tax in respect of all items taxed income, at the Indian rate of wealth other than those which of tax or the rate of tax of said can be regarded as unproductive country, whichever is lower. In forms of wealth or other items cases of countries with which India whose possession could has entered into an agreement for legitimately be discouraged in the the purposes of avoidance of social interest. double taxation under section 90 or section 90A, a relief in respect As per the WT Act, prior to its of income-tax on doubly taxed amendment by the Act, wealth- income is available as per the tax was levied on an individual or respective DTAAs. HUF or company, if the net wealth of such person exceeded Rs. 30 Income-tax Act, before lakh on the valuation date, i.e. last amendment made by the Finance date of the previous year. For the Act, 2015, did not provide the purpose of computation of manner for granting credit of taxes taxable net wealth, only few paid in any country outside India. specified assets are taken into Therefore, sub-section (2) of account. 176 G BG B Department of Revenue III Amendment Rationale for Amendment Amendment Rationale for Amendment The actual collection from the levy burden on the department. The of wealth-tax during the financial details regarding levy of year 2011-12 was Rs.788.67 crore enhanced surcharge on this and during the financial year 2012- account are given under the 13 was Rs.844.12 crore only. The heading "Rates of Income-tax". number of wealth-tax assessee Further the information relating to was around 1.15 lakh in 2011-12. assets which is currently required Although only a nominal amount to be furnished in the wealth-tax of revenue is collected from the return shall be captured by levy of wealth-tax, this levy suitably modifying income-tax created a significant amount of return for assessment year 2016- compliance burden on the 17 and subsequent assessment assessees as well as years. administrative burden on the This amendment takes effect department. This is because the from 1st April, 2016 and will, assessees are required to value accordingly, apply in relation to the assets as per the provisions the assessment year 2016-17 of Wealth-tax Rules for and subsequent assessment computation of net wealth and for years. certain assets like jewellery, they are required to obtain valuation III. Measures for Widening of Tax Base and Anti- report from the registered valuer. Tax avoidance measures Further, the assets which were Return of Income Sub-section (1) of section 139 specified for levy of wealth-tax, is to be filed by of the Income-tax Act specifies being unproductive, such as ‘b enef ici al the category of tax payers who jewellery, luxury cars, etc. are owner’ or are required to furnish their difficult to be tracked and this ‘beneficiary’ of a return of income. Fourth gives an opportunity to the foreign asset proviso to sub-section (1) of assessees to under report/under section 139 provides that a value the assets which are liable resident who is not required to for wealth-tax. Due to this, the collection of wealth-tax over the furnish a return of income but years has not shown any who during the previous year significant growth and has only has any asset (including any resulted into disproportionate financial interest in any entity) compliance burden on the located outside India or signing assessees and administrative authority in any account located burden on the department. outside India shall furnish, on Therefore, the levy of wealth tax or before the due date, his under the WT Act has been return of income. abolished with effect from the 1st In the budget announcement of April, 2016. It has also been 2015, it was stated that the provided that the objective of requirement of furnishing of taxing high net worth persons return of income will be shall be achieved by levying a surcharge on tax payer earning extended to beneficial owner of higher income as levy of assets. Before the amendment surcharge is easy to collect & made by the Act, there was no monitor and also does not result requirement of furnishing the into any compliance burden on the return if the asset was held by assessee and administrative a person as a beneficial owner 177 G BG B Annual Report 2015-2016 Amendment Rationale for Amendment Amendment Rationale for Amendment or he is a beneficiary of the IV. Rationalisation measures foreign asset. It has been found Rationalisation Section 11 of the Income-tax Act that in a large number of cases of definition of deals with exemption to charitable foreign assets are held in the c h a r i t a b l e trusts and institutions. The name of trusts/entities where purpose in the primary condition for grant of Income-tax Act exemption to a trust or institution the assessee is a beneficial under the said section is that the owner or is a beneficiary. As a income derived from property result, he escapes the held under trust should be applied requirement of furnishing the for charitable purposes in India. return of income and disclosing ‘Charitable purpose’ is defined in the foreign asset. section 2(15) of the Act. The first proviso to clause (15) of section Accordingly, section 139 has been 2, inter alia, provides that amended to provide for furnishing advancement of any other object of return of income by the of general public utility shall not beneficial owner or beneficiary of be a charitable purpose, if it a foreign asset. The amendment involves the carrying on of any also defines the term ‘beneficial activity in the nature of trade, owner’ to mean an individual who commerce or business, or any has provided, directly or indirectly, activity of rendering any service consideration for the asset for the in relation to any trade, commerce immediate or future benefit, direct or business, for a cess or fee or or indirect, of himself or any other any other consideration, person. The term ‘beneficiary’ has irrespective of the nature of use or application, or retention, of the been defined to mean an income from such activity. individual who derives benefit from However, as per the second the asset during the previous year proviso, this restriction shall not and the consideration for such apply if the aggregate value of the asset has been provided by any receipts from the activities person other than such referred above is twenty five lakh beneficiary. rupees or less in the previous year. It has also been provided that a beneficiary of any asset (including The institutions which, as part of any financial interest in any entity) genuine charitable activities, located outside India is not undertake activities like required to furnish a return of publishing books or holding income where, income, if any, program on yoga or other programs as part of actual arising from such asset is carrying out of the objects which includible in the income of the are of charitable nature were beneficial owner in accordance being put to hardship due to first with the provisions of the Income- and second proviso to section tax Act. 2(15). This amendment will take effect The activity of Yoga has been one from 1st April, 2016 and will of the focus areas in the present accordingly apply, in relation to times and international recognition the assessment year 2016-17 has also been granted to it by the and subsequent assessment United Nations. Therefore, the years. provisions of the Income-tax Act 178 G BG B Department of Revenue III Amendment Rationale for Amendment Amendment Rationale for Amendment have been amended to include Alignment of Sub-section (2) of section 145 of ‘yoga’ as a specific category in the p r o v i s i o n s the Income-tax Act provides that definition of charitable purpose on relating to the Central Government may the lines of education. taxation of notify Income Computation and Government Disclosure Standards (ICDS) for In order to ensure appropriate Grants with the any class of assessees or for any balance between the object of provisions of class of income. The CBDT preventing business activity in the I n c o m e notified ICDS-I to ICDS-X vide garb of charity and at the same Computation Notification No. S.O. 892(E) time protecting the activities and Disclosure dated 31st March, 2015 after wide undertaken by the genuine Standards (ICDS) public consultations. The ICDS- organization as part of actual VII relating to Government grants carrying out of the primary provides that all Government purpose of the trust or institution, grants except relating to the definition of ‘charitable depreciable asset shall be purpose’ in the Income-tax Act has recognised as income in been amended to provide that the accordance with the provisions of advancement of any other object the said ICDS. The existing of general public utility shall not provisions of Explanation 10 to be a charitable purpose, if it clause (1) of section 43 of the involves the carrying on of any Income-tax Act already contained activity in the nature of trade, the guidance for treatment of commerce or business, or any Government grants relating to activity of rendering any service in acquisition of an asset. However, relation to any trade, commerce there was no specific guidance or business, for a cess or fee or available under the provisions of any other consideration, the Income-tax Act for treatment irrespective of the nature of use of other Government grants. or application, or retention, of the During the public consultations for income from such activity, unless,- ICDS, the stakeholders i. such activity is suggested that in order to avoid undertaken in the course any future controversy in this of actual carrying out of matter, there should be specific such advancement of any provision in the Income-tax Act for other object of general treating these Government grants public utility; and as income. The Accounting Standard Committee, which ii. the aggregate receipts drafted the ICDS, has also from such activity or examined the suggestions/ activities, during the comments received during public previous year, do not consultations and suggested that exceed twenty percent. of the issue of legislative the total receipts, of the amendment for bringing certainty trust or institution in this matter may be examined. undertaking such activity In order to avoid any future or activities, of that litigation and controversy in this previous year. matter, the definition of income These amendments take effect under clause (24) of section 2 of from 1st April, 2016 and will, the Income-tax Act has been accordingly, apply in relation to the amended so as to provide that the assessment year 2016-17 and income shall include assistance subsequent assessment years. in the form of a subsidy or grant 179 G BG B Annual Report 2015-2016 Amendment Rationale for Amendment Amendment Rationale for Amendment or cash incentive or duty drawback In the case of foreign bound ships or waiver or concession or where the destination of the reimbursement (by whatever voyage is outside India, there was name called) by the Central uncertainty with regard to the Government or a State manner and basis of Government or any authority or determination of the period of stay body or agency in cash or kind to in India for crew members of such the assessee other than the ships who are Indian citizens. subsidy or grant or reimbursement In view of the above, the Income- which is taken into account for tax Act has been amended to determination of the actual cost of provide that in the case of an the asset in accordance with the individual, being a citizen of India provisions of Explanation 10 to and a member of the crew of a clause (1) of section 43 of the foreign bound ship leaving India, Income-tax Act. the period or periods of stay in India As mentioned in Press Release shall, in respect of such voyage, be dated 5th May, 2015, the amended determined in the manner and definition of income shall not subject to such conditions as may apply to the LPG subsidy or any be prescribed in the Income-tax other welfare subsidy received by Rules, 1962. Rule 126 of Income- an individual in his personal tax Rules, 1962 notified vide S.O. capacity and not in connection No. 2240(E) dated 17th August, with the business or profession 2015 prescribes the manner for carried on by him.”. determination of the period of stay in India. This amendment takes effect from 1st April, 2016 and would This amendment takes effect accordingly apply to assessment retrospectively from 1st April, year 2016-17 and subsequent 2015 and will, accordingly, apply assessment years. in relation to the assessment year 2015-16 and subsequent Power of the Clause (1) of section 6 of the assessment years. Central Board of Income-tax Act provides the Direct Taxes to conditions under which an Amendment to The provisions of section 6 of the prescribe the individual is held to be resident in the conditions Income-tax Act provide for the manner and India. The said clause, inter alia, for determining conditions under which a person procedure for provides that an individual is said residency status can be said to be resident in India computing the to be resident in India in any in respect of for a previous year. In respect of period of stay in previous year if he, having within Companies a person being a company the India. the four years preceding that year conditions are contained in been in India for a period or periods clause (3) of section 6 of the said amounting in all to three hundred Act. Under the said clause, and sixty five days or more, is in before its amendment by the Act, India for a period or periods a company was said to be amounting in all to sixty days or resident in India in any previous more in that year. However, in the year, if- case of an individual, being a i. it is an Indian company; citizen of India, who leaves India or in any previous year as a member of the crew of an Indian ship, the ii. during that year, the above mentioned condition of sixty control and management days is extended to one hundred of its affairs is situated and eighty-two days. wholly in India. 180 G BG B Department of Revenue III Amendment Rationale for Amendment Amendment Rationale for Amendment Due to the requirement that whole companies outside India but of control and management being controlled and managed should be situated in India and from India. that too for whole of the year, the In view of the above, section 6 of condition had been rendered the Income-tax Act has been practically inapplicable. A amended to provide that a person company could easily avoid being a company shall be said to becoming a resident by simply be resident in India in any holding a board meeting outside previous year, if- India. This could facilitate creation of shell companies which are i. it is an Indian company; incorporated outside but or controlled from India. ii. its place of effective ‘Place of effective management’ management, in that (POEM) is an internationally year, is in India . recognized concept for Further, the “place of effective determination of residence of a management” has been defined company incorporated in a foreign to mean a place where key jurisdiction. Most of the tax management and commercial treaties entered into by India decisions that are necessary for recognise the concept of POEM the conduct of the business of an for determination of residence of entity as a whole are, in a company as a tie-breaker rule substance, made. for avoidance of double taxation. Many countries prefer the POEM These amendments take effect test to be appropriate test for from 1st April, 2016 and will, determination of residence of a accordingly, apply in relation to company. The principle of POEM the assessment year 2016-17 is recognized and accepted by and subsequent assessment Organisation of Economic years. Cooperation and Development (OECD) also. The OECD Clarity relating to The provisions of section 9 of the commentary on model convention Indirect transfer Income-tax Act deal with cases of provides definition of place of provisions income which are deemed to effective management to mean accrue or arise in India. Sub- the place where key management section (1) of the said section and commercial decisions that are creates a legal fiction that certain necessary for the conduct of the incomes shall be deemed to entity’s business as a whole, are, accrue or arise in India. Clause in substance, made. (i) of said sub-section (1) provides a set of circumstances in which The modification in the condition income accruing or arising, of residence in respect of directly or indirectly, is taxable in company by including the concept India. The said clause provides of effective management would that all income accruing or align the provisions of the Income- arising, whether directly or tax Act with the DTAAs entered indirectly, through or from any into by India with other countries business connection in India, or and would also be in line with through or from any property in international standards. It would India, or through or from any also be a measure to deal with asset or source of income in cases of creation of shell India, or through the transfer of a 181 G BG B Annual Report 2015-2016 Amendment Rationale for Amendment Amendment Rationale for Amendment capital asset situate in India shall located in India, if on the be deemed to accrue or arise in specified date, the value India. of Indian assets,- The Finance Act, 2012 had (a). exceeds the amount inserted certain clarificatory of ten crore rupees ; amendments in the provisions of and section 9. The amendments, inter (b). represents at least alia, included insertion of fifty per cent. of the Explanation 5 in section 9(1) (i) value of all the w.e.f. 01.04.1962 . The assets owned by the Explanation 5 clarified that an company or entity. asset or capital asset, being any share or interest in a company or (ii) value of an asset shall entity registered or incorporated mean the fair market outside India shall be deemed to value of such asset be situated in India if the share or without reduction of interest derives, directly or liabilities, if any, in indirectly, its value substantially respect of the asset. from the assets located in India. (iii) the specified date of Considering the concerns raised valuation shall be the by various stakeholders regarding date on which the the scope and impact of these accounting period of the amendments, an Expert company or entity, as the Committee under the case may be, ends Chairmanship of Dr. Parthasarathi preceding the date of Shome was constituted by the transfer. Government to go into the various (iv) however, if the book aspects relating to the value of the assets of the amendments. company on the date of The recommendations of the transfer exceeds by at Expert Committee were least 15% of the book considered and a number of value of the assets as on recommendations (either in full or the last balance sheet with partial modifications) were date preceding the date accepted for implementation of transfer, then instead either by way of an amendment of the date mentioned in of the Act or by way of issuance (iii) above, the date of of a clarificatory circular in due transfer shall be the course. In order to give effect to specified date of the recommendations, the valuation. provisions of section 9 relating to (v) the manner of indirect transfer have been determination of fair amended by the Act to provide market value of the that:- Indian assets vis-a vis (i) the share or interest of a global assets of the foreign company or entity foreign company shall be shall be deemed to derive prescribed in the rules. its value substantially (vi) the taxation of gains from the assets (whether arising on transfer of a tangible or intangible) share or interest deriving, 182 G BG B Department of Revenue III Amendment Rationale for Amendment Amendment Rationale for Amendment directly or indirectly, its (b) nor holds any right value substantially from in, or in relation to, assets located in India will such company or be on proportional basis. entity which would The method for entitle him to the determination of right of control or proportionality shall be management of the prescribed in the rules. direct holding company or entity, (vii) the exemption shall be nor holds such available to a non- percentage of voting resident from transfer, power, or share outside India, of a share capital or interest in of, or interest in, a foreign such company or company or entity if such entity which entitles foreign company or entity him to the voting directly owns the assets power, or share situated in India and the capital or interest transferor along with its exceeding five associated enterprises, at percent in the direct any time in twelve months holding company or preceding the date of entity. transfer,(a) neither holds the right of control or (ix) exemption shall be management in relation available in respect of to such company or any transfer, subject to entity,(b) nor holds voting certain conditions ,in a power or share capital or scheme of interest exceeding five amalgamation, of a per cent. of the total capital asset, being a voting power or total share of a foreign share capital or total company which derives, interest, in the foreign directly or indirectly, its company or entity . value substantially from (viii) in case the transfer is of the share or shares of an shares or interest in a Indian company, held by foreign company or entity the amalgamating which holds the Indian foreign company to the assets indirectly, then the amalgamated foreign exemption shall be company. available to the transferor (x) exemption shall be if he along with its available in respect of associated enterprises, at any transfer, subject to any time in 12 months certain conditions, in a preceding the date of demerger, of a capital transfer,- asset, being a share of a (a) neither holds the foreign company which right of management derives, directly or or control in relation indirectly, its value to such company or substantially from the the entity, 183 G BG B Annual Report 2015-2016 Amendment Rationale for Amendment Amendment Rationale for Amendment share or shares of an Clarity regarding The provisions of section 5 of the Indian company, held by source rule in Income-tax Act provide for scope the demerged foreign respect of of total income for the purposes company to the resulting interest received of its chargeability to tax. In case foreign company. by the non- of a non-resident person, the resident in chargeability of income in India is (xi) there shall be a reporting certain cases on the basis of source rule under obligation on Indian which certain categories of concern through or in income are deemed to accrue or which the Indian assets arise in India. The provisions of are held by the foreign section 9 provide for the company or the entity. circumstances under which The Indian entity shall be income is deemed to accrue or obligated to furnish arise in India. Section 9(1) (v) information relating to relates specifically to the interest the off-shore transaction income. The said clause provides having the effect of that the income by way of interest directly or indirectly is deemed to accrue or arise in modifying the ownership India if it is payable by- structure or control of (a) the Government ; or the Indian company or entity. In case of any (b) a person who is a failure on the part of resident, except where Indian concern in this the interest is payable in regard a penalty shall be respect of any debt leviable under section incurred, or moneys 271GA. The penalty borrowed and used, for shall be- the purposes of a business or profession (a) a sum equal to two carried on by such percent of the value person outside India or of the transaction in for the purposes of respect of which making or earning any such failure has income from any source taken place if such outside India ; or transaction had the (c) a person who is a non- effect of directly or resident, where the indirectly transferring interest is payable in the right of respect of any debt management or incurred, or moneys control in relation to borrowed and used, for the Indian concern; the purposes of a and business or profession (b) a sum of five lakh carried on by such rupees in any other person in India. case. Section 90 of the said Act These amendments take effect provides that Central from 1st April, 2016 and will, Government may enter into an accordingly, apply in relation to the agreement with the Government assessment year 2016-17 and of any country or specified subsequent assessment years. territory outside India among 184 G BG B Department of Revenue III Amendment Rationale for Amendment Amendment Rationale for Amendment other things for providing relief The CBDT, in its Circular No. 740 from double taxation. India has dated 17/4/1996 had clarified that entered into Double Taxation branch of a foreign company in Avoidance Agreements (DTAAs) India is a separate entity for the with more than 90 countries. purpose of taxation under the Further sub-section (2) of the Income-tax Act and, accordingly, section provides that in respect of TDS provisions would apply along an assessee to whom such DTAA with separate taxation of interest applies, the provisions of the Act paid to head office or other shall apply to the extent they are branches of the non-resident, more beneficial to him. Therefore, which would be chargeable to tax the taxpayer is entitled to relief in India. from the provisions of the Income- Some of the judicial rulings in this tax Act if such relief is available context have held that although under the DTAA and to that extent under the provisions of the the provisions of the Income-tax Income-tax Act the payment of Act are not applicable. interest by the branch to head Further, income of a non-resident office is non-deductible under from business activity is taxable in domestic law, being payment to India if it has a business connection the self, however, such interest is in India in accordance with the deductible due to computation provisions contained in section mechanism provided under the 9(1)(i) of the Income-tax Act, and DTAA but it is not taxable in the only such income is taxable as is hands of the Bank, being income attributable to the business generated from self. The view connection. Similarly, under the expressed in the CBDT circular DTAA, income from business has not found favour in these activity in the case of a non- judicial decisions. If the legal resident shall be taxable only if fiction created under the treaty such non-resident has a PE in were treated to be of limited India and only such income is effect, it would have led to base taxable which is attributable to the erosion. The interest paid by the PE. The concept of PE is almost permanent establishment to the on similar lines as business head office or other branch etc. connection with variations as per is an interest payment sourced in different DTAAs. The DTAA further India and is liable to be taxed provides the manner of under the source rule in India. This position is also recognised computation of income attributable in some of our DTAAs, in to the PE. It is provided that for the particular Article 14 (3) the Indo- purpose of computation of income, USA DTAA which reads as the PE shall be deemed to be an under:- independent enterprise with certain restrictions regarding allowability of "In the case of a banking expense paid to head office by the company which is resident of the PE. Under DTAAs, in case of a United States, the interest paid by banking company, the interest paid the permanent establishment of by a PE to its head office and other such a company in India to the branches is allowed as deduction head office may be subject in by treating such a permanent India to tax in addition to the tax establishment as an independent imposable under the other enterprise. provisions of this Convention at 185 G BG B Annual Report 2015-2016 Amendment Rationale for Amendment Amendment Rationale for Amendment a rate which shall not exceed the either the head office or any other rate specified in paragraph 2(a) of branch or PE, etc. of the non- Article 11 (Interest)" resident outside India. Further, non-deduction would result in The Special Bench of the Income- disallowance of interest claimed tax Appellate Tribunal (ITAT) in the as expenditure by the PE and case of Sumitomo Mitsui Banking may also attract levy of interest Corporation [136 ITD- 66 TBOM] and penalty in accordance with had mentioned that there are relevant provisions of the Income- instances of other countries tax Act. providing for specific provisions in their domestic law which allows for These amendments take effect the taxability of interest paid by a from 1st April, 2016 and will, permanent establishment to its accordingly, apply to the head office and other branches assessment year 2016-17 and subsequent assessment years. and had pointed out absence of such a specific provision in the Alignment of The Income Computation and Income-tax Act. Considering that p r o v i s i o n s Disclosure Standards (ICDS)-IX there were several disputes on the relating to relating to borrowing costs issue which were pending and capitalisation of provides for capitalisation of likely to arise in future, it was interest and borrowing costs incurred for essential that necessary clarity claim of acquisition of assets up to the and certainty is provided for in the deduction of bad date the asset is put to use. The Income-tax Act. debts with the proviso to clause (iii) of sub- provisions of the section (1) of section 36 of the Accordingly, the Income-tax Act I n c o m e Income-tax Act provided for has been amended to provide that Computation and capitalisation of borrowing costs in the case of a non-resident, D i s c l o s u r e incurred for acquisition of assets being a person engaged in the Standards (ICDS) for extension of existing business business of banking, any interest up to the date the asset is put to payable by the permanent use. However, the provisions of establishment in India of such ICDS-IX do not make any non-resident to the head office or distinction between the asset any permanent establishment or acquired for extension of any other part of such non- business or otherwise. resident outside India shall be deemed to accrue or arise in India Therefore, there was an and shall be chargeable to tax in inconsistency between the addition to any income attributable provisions of proviso to clause (iii) to the permanent establishment in of sub-section (1) of section 36 India. The permanent of the Income-tax Act and the establishment in India shall be provisions of ICDS-IX. The deemed to be a person separate general principles for and independent of the non- capitalisation of borrowing cost resident person of which it is a requires capitalisation of permanent establishment and the borrowing cost incurred for provisions of the Income-tax Act acquisition of an asset up to the relating to computation of total date the asset is put to use income, determination of tax and without making any distinction collection and recovery would whether the asset is acquired for apply. Accordingly, the PE in India extension of existing business or shall be obligated to deduct tax at not. The Accounting Standard source on any interest payable to Committee, which drafted the 186 G BG B Department of Revenue III Amendment Rationale for Amendment Amendment Rationale for Amendment ICDS, also recommended that been recognised as per the there is a need to carry out provisions of ICDS without suitable amendments to recording in the accounts and is provisions of the proviso to clause required to be written off as (iii) of sub-section (1) of section irrecoverable as per the 36 of the Income-tax Act for provisions of ICDS, it shall be aligning the same with the general deemed to be written off as capitalisation principles. irrecoverable in the accounts. In view of the above, the These amendments take effect provisions of proviso to clause (iii) from 1st April, 2016 and would of sub-section (1) of section 36 of accordingly apply to assessment the Income-tax Act have been year 2016-17 and subsequent amended so as to provide that the assessment years. borrowing cost incurred for Cost of Under clause (vi b) of section 47 acquisition of an asset shall be acquisition of a of the Income-tax Act any capital capitalised up to the date the asset capital asset in asset transferred by the is put to use without making any the hands of demerged company to the distinction as to whether an asset r e s u l t i n g resulting company in the scheme is acquired for extension of company to be of demerger is not regarded as existing business or not. the cost for transfer if the resulting company The provisions of the ICDS are which the is an Indian company. In such applicable for computation of d e m e r g e d cases the cost of such asset in income and not for the purposes c o m p a n y the hands of resulting company of maintenance of books of acquired the should be the cost of such asset account. There may be cases capital assets in the hands of demerged where the income is recognised company as increased by the cost for computation of taxable income of improvement, if any, incurred in accordance with the provisions by the demerged company or the of ICDS without recording the resulting company as the case same in the books of account and may be. Further, the period of such income may be required to holding of such asset in the hands be reversed in accordance with of resulting company should the provisions of the ICDS. For include the period for which the claiming bad debt, the provisions asset was held by the demerged of section 36(1)(vii) of the Income- company. tax Act, inter alia, require that the However, under the provisions of amount should be written off in the the Income-tax Act, before accounts of the assessee. amendment made by the Finance Therefore, the reversal of income Act, 2015, there was no express in accordance with the provisions provision to this effect. of the ICDS may not be allowable Accordingly, sub-clause (e) of on the ground that same has not clause (iii) of sub-section (1) of been written off in the accounts as section 49 of the Income-tax Act per the provisions of section has been amended so as to 36(1)(vii) of the Income-tax Act. In provide that the cost of acquisition view of this, a proviso has been of an asset acquired by resulting inserted in section 36(1)(vii) of the company shall be the cost for Income-tax Act so as to provide which the demerged company that for claiming deduction under acquired the capital asset as section 36(1)(vii) of the Income- increased by the cost of tax Act, the income which have improvement incurred by the 187 G BG B Annual Report 2015-2016 Amendment Rationale for Amendment Amendment Rationale for Amendment demerged company or the are implemented as part of a resulting company ,as the case comprehensive regime to deal may be, and the period of holding with BEPS and aggressive tax of a capital asset in the hands of avoidance. the resulting company shall Accordingly, the Income-tax Act include the period for which the has been amended to defer the asset was held by the demerged implementation of GAAR by two company. years and GAAR provisions have This amendment will take effect been made applicable to the from 1st April, 2016 and will income of the financial year 2017- accordingly apply, in relation to the 18 (Assessment Year 2018-19) assessment year 2016-17 and and subsequent years. Further, subsequent assessment years. investments made up to 31.03.2017 will be protected from Deferment of The provisions of the General Anti the applicability of GAAR by p ro vi si on s Avoidance Rule (GAAR) undertaking amendment in the relating to introduced by the Finance Act, relevant rules in this regard. General Anti 2013 are contained in Chapter X- Avoidance Rule A (consisting of section 95 to 102) This amendment takes effect (GAAR) and section 144BA of the Income- from 1st April, 2015. tax Act. Chapter X-A provides the Amendments The Depository Receipts substantive provision of GAAR relating to Global Scheme, 2014 was notified by the whereas section 144BA provides D ep o si t or y Department of Economic affairs the procedure to be undertaken for receipts (GDRS) (DEA) vide Notification F.No.9/1/ invoking GAAR and passing of the 2013-ECB dated 21st October, assessment order in 2014. This scheme replaces consequence of GAAR provisions "Issue of Foreign Currency being invoked. Convertible Bonds and Ordinary As provided in the Income-tax Act Shares (through depository before its amendment, GAAR receipt mechanism) Scheme, provisions were to come into effect 1993". from 1.04.2016. These provisions, The taxation scheme of income therefore, would have been arising in respect of depository applicable to the income of the receipts under section 115AC of financial year 2015-16 the Income-tax Act, before (Assessment Year 2016-17) and amendment by the Act, was subsequent years. aligned with the earlier scheme The implementation of GAAR which was limited to issue of provisions was reviewed. Global Depository Receipts Concerns had been expressed (GDRs) based on the underlying regarding certain aspects of shares of the company issued for GAAR. Further, it was noted that this purpose (i.e. sponsored the Base Erosion and Profit GDR) or FCCB of the issuing Shifting (BEPS) project under company and where the company OECD is continuing and India is was either a listed company or an active participant in the project. was to list simultaneously. The report on various aspects of Besides, the holder of such BEPS and recommendations GDRs was a non-resident only. regarding the measures to counter Further, section 47(viia) provided it are awaited. It would, therefore, exemption from capital gains be proper that GAAR provisions arising from transfer of GDRs by 188 G BG B Department of Revenue III Amendment Rationale for Amendment Amendment Rationale for Amendment one non-resident to another non- said Act has been amended to resident made outside India. mean only those instruments i.e. depository receipts as are issued As per the new depository to non-resident investors against, scheme, Depository Receipts (DRs) can be issued against the (i) ordinary shares of securities of listed, unlisted or issuing company, being a private or public companies company listed on a against underlying securities recognised stock which can be debt instruments, exchange in India; or shares or units etc; Further, both (ii) foreign currency the sponsored issues and convertible bonds of unsponsored deposits and issuing company. acquisitions are permitted. DRs can be freely held and transferred Clause (42A) of section 2 of the by both residents and non- Income-tax Act has been residents. amended to provide that in the case of a capital asset, being Further, the process of conversion share or shares of a company, of DRs into the underlying shares which is acquired by the non- involves the non-resident holding resident assessee on redemption the DRs in the overseas market of Global Depository Receipts giving instruction to its foreign held by such assessee, the period broker regarding cancellation of of holding shall be reckoned from DRs and release of underlying the date on which request of such shares. The foreign broker then redemption was made. delivers the DRs to the foreign depository for cancellation and Section 49 (2ABB) has been instructs it to deliver the underlying inserted in the Income-tax Act to shares into a demat account held provide that where the capital by the foreign investor in India. asset being share of a company The foreign depository thereafter is acquired by the non-resident cancels the DRs and issues an assessee on redemption of GDRs instruction to its local custodian in held by him, then the cost on India to release and deliver the acquisition of the share shall be underlying shares into the special the price of such share prevailing demat account in India. The local on any recognized stock custodian in India delivers the exchange in India on the date on shares to the specified 'DR type' which a request for redemption demat account and informs the was made. foreign depository of the In view of the process of completion of the process. The conversion of GDR into foreign investor may choose to underlying shares referred to hold the underlying shares or sell above, the "date on which a them in India (either on exchange request for redemption was through a SEBI registered broker made" for purposes of Section or through private arrangement). 49(2ABB), shall be the date on Since the tax benefits under the which the instruction from foreign Income-tax Act were intended to depositary is received by the local be provided in respect of custodian in India requesting the sponsored GDRs and listed release of underlying shares in companies only, the definition of favour of the non-residence GDR in section 115ACA of the assessee. 189 G BG B Annual Report 2015-2016 Amendment Rationale for Amendment Amendment Rationale for Amendment The GDRs which qualify for section 148 of the Income-tax Act. special treatment under the Under certain specified Income-tax Act constitute a subset circumstances, the Assessing of Depository receipts which can Officer (AO) is required to obtain be issued under the Depository sanction before issue of notice Scheme, 2014. Therefore, the under section 148. Section 151, benefit under section 115-AC, before amendment made by the section 47 and section 49 (2ABB) Finance Act, 2015, specified of the Income-tax Act are available different sanctioning authorities only if the GDR has been issued based on- (i) whether scrutiny against the ordinary shares of the under sub-section (3) of section issuing company, being a 143 or section 147 has been company listed on a recognized made earlier or not, (ii) whether stock exchange in India notice is proposed to be issued ('sponsored' issue). The benefit within or after four years from the of these sections would not be end of relevant assessment year, available in respect of depositary and (iii) the rank of the Assessing receipts issued other than under Officer proposing to issue notice. sponsored issuance of a listed In order to provide simplicity, company. Accordingly:- section 151 has been amended (i) The gains arising on so as to provide that no notice transfer of such under section 148 shall be issued depository receipt (i.e. by an assessing officer upto four other than sponsored years from the end of relevant issue) between non- assessment year without the resident investors, approval of Joint Commissioner outside India, would not and beyond four years from the be exempt from Capital end of relevant assessment year gains; without the approval of the Principal Chief Commissioner or (ii) On conversion of these Chief Commissioner or Principal DRs into the underlying Commissioner or Commissioner. shares, the provision of Section 49 (2ABB) shall This amendment has taken effect not apply and the cost of from 1st day of June, 2015. acquisition of such Procedure for Section 158A of the Income-tax underlying shares on appeal by Act provides that during conversion of DR shall be revenue when an pendency of proceedings in his the cost at which DR had i d e n t i c a l case for an assessment year an been acquired by the question of law assessee can submit a claim investor. is pending before before AO or any appellate These amendments take effect Supreme Court authority that a question of law from the 1st day of April, 2016 and arising in the instant case is will, accordingly, apply to the identical with the question of law assessment year 2016-17 and already pending in his own case subsequent assessment years. before the High Court or Supreme Court for another assessment Simplification of Section 151 of the Income-tax Act year and if the AO or any approval regime provides for sanction from certain appellate authority agrees to for issue of authorities before issue of notice, apply the final decision on the notice for re- for reassessment of income question of law in that earlier year assessment escaping assessment, under to the present year, he will not 190 G BG B Department of Revenue III Amendment Rationale for Amendment Amendment Rationale for Amendment agitate the same question of law direction only if an acceptance is once again for the present year received from the assessee to the before higher appellate effect that the question of law in authorities. the other case is identical to that arising in the relevant case. There were no parallel provisions However, in case no such in the Income-tax Act, before acceptance is received, the amendments made by the Commissioner or Principal Finance Act, 2015, enabling Commissioner may, if he objects revenue not to file appeal for to the order passed by the subsequent years where the Commissioner (Appeals), direct Department is in appeal on the the AO to appeal to the Appellate same question of law for an earlier Tribunal as per the normal year. As a result, appeals had provisions of appeal to Appellate been filed by the revenue year Tribunal. after year on the same question of law until it is finally decided by It has also been provided that the Supreme Court thus, where the order of the multiplying litigation. Commissioner (Appeals) is not in conformity with the final decision Accordingly, a new section 158AA on the question of law in the other has been inserted to provide that case (if the Supreme Court where any question of law arising decides the earlier case in favour in the case of an assessee for any of the Department), the assessment year(relevant case) is Commissioner or Principal identical with a question of law Commissioner may direct the AO arising in his case for another to appeal to the Appellate Tribunal assessment year which is pending against such order within sixty before the Supreme Court, in an days from the date on which the appeal or in a special leave petition order of the Supreme Court in the under Article 136 of the other case is communicated to Constitution filed by the revenue, the Commissioner or Principal against the order of the High Court, Commissioner and save as the Commissioner or Principal otherwise provided in the said Commissioner may, instead of section 158AA, all other directing the AO to appeal to the provisions of Part B of Chapter Appellate Tribunal under sub- XX shall apply accordingly. section (2) or sub-section (2A) of section 253 (normal provisions of This amendment has taken effect appeal by revenue to Appellate from the 1st day of June, 2015. Tribunal), direct the AO to make an application to the Appellate Simplification of Under the Employees Provident Tribunal in the prescribed form Tax Deduction at Fund and Miscellaneous within sixty days from the date of Source (TDS) Provisions Act, 1952 (EPF & MP receipt of order of the mechanism for Act, 1952), certain specified Commissioner (Appeals) stating E m p l o y e e s employers are required to comply that an appeal on the question of Provident Fund with the Employees Provident law arising in the relevant case Scheme (EPFS) Fund Scheme, 1952 (EPFS). However, these employers are may be filed when the decision on also permitted to establish and the question of law becomes final manage their own private in the earlier case. provident fund scheme (PPFS) The Commissioner or Principal subject to fulfilment of certain Commissioner shall give such conditions. The provident funds 191 G BG B Annual Report 2015-2016 Amendment Rationale for Amendment Amendment Rationale for Amendment established under a scheme part of the employer group, have framed under EPF & MP Act, 1952 access to or can easily obtain the or PPFS exempted under section information regarding taxability of 17 of the said Act and recognised the employee making pre-mature under the Income-tax Act are withdrawal for the purposes of termed as Recognised Provident computation of the amount of tax fund (RPF) under the Income-tax liability under rule 9 of the Act. The provisions relating to Schedule-IV-A of the Act. RPF are contained in Part A of the However, at times, it is not Fourth Schedule (Schedule IV-A) possible for the trustees of EPFS to the Income-tax Act. to get the information regarding taxability of the employee such as Under the existing provisions of year-wise amount of taxable rule 8 of Schedule IV-A of the income and tax payable for the Income-tax Act, the withdrawal of purposes of computation of the accumulated balance by an amount of tax liability under rule employee from the RPF is exempt 9 of the Schedule-IV-A of the from taxation. However, in order Income-tax Act. to discourage pre-mature withdrawal and to promote long In view of the above, a new term savings, it has been provided section 192A has been inserted that such withdrawal shall be in Income-tax Act for deduction taxable if the employee makes of tax at the rate of 10% on pre- withdrawal before continuous mature taxable withdrawal from service of five years (other than EPFS. However, deduction of tax the cases of termination due to ill on pre-mature withdrawal from health, closure of business, etc.) the PPFS i.e. private provident and does not opt for transfer of fund exempted under section 17 of the EPF & MP Act,1952 and accumulated balance to any recognised under the Income-tax recognised provident fund Act shall continue to be made in maintained by the new employer. accordance with the rule 10 of the Rule 9 of the said Schedule further schedule IV-A read with sub- provides computation mechanism section (4) of section 192 of the for determining tax liability of the Income-tax Act. employee in respect of such pre- mature withdrawal. For ensuring Further, to reduce the compliance collection of tax in respect of these burden of the employees having withdrawals, rule 10 of Schedule income below the taxable limit, a IV-A provides that the trustees of threshold of payment of the RPF, at the time of payment, Rs.30,000/- for applicability of this shall deduct tax as computed in newly inserted section has been rule 9 of Schedule IV-A. provided. In spite of providing this threshold for applicability of Rule 9 of Schedule IV-A to the deduction of tax, there may be Income-tax Act provides that the cases where the tax payable on tax on withdrawn amount is the total income of the employees required to be calculated by re- may be nil even after including the computing the tax liability of the amount of pre-mature withdrawal. years for which the contribution to RPF has been made by treating For reducing the compliance the same as contribution to burden of these categories of unrecognized provident fund. The employees, it is further provided trustees of PPFS, being generally that the facility of filing self- 192 G BG B Department of Revenue III Amendment Rationale for Amendment Amendment Rationale for Amendment declaration for non-deduction of marginal rate. tax under section 197A of the These amendments take effect Income-tax Act shall be available from 1st June, 2015. to the employees receiving pre- mature withdrawal i.e. an Rationalisation Section 194A(1) read with section employee can give a declaration of provisions 194A(3)(i) of the Income-tax Act in Form No. 15G to the effect that relating to provides for deduction of tax on his total income including taxable deducation of tax interest (other than interest on pre-mature withdrawal from EPFS on interest (other securities) over a specified does not exceed the maximum than interest on threshold, i.e. Rs.10,000 for amount not chargeable to tax and securities) interest payment by banks, co- on furnishing of such declaration, operative society engaged in no tax will be deducted by the banking business (co-operative trustee of EPFS while making the bank) and post office and payment to such employee. Rs.5,000 for payment of interest Similar facility of filing self- by other persons. Further, sub- declaration in Form No. 15H for section (3) of section 194A inter non-deduction of tax under alia also provides for exemption section 197A of the Income-tax from deduction of tax in respect Act has been extended to the of following interest payments by senior citizen employees receiving co-operative society: pre-mature withdrawal. (i) interest payment by a co- Some employees making pre- operative society to a mature withdrawal may be paying member thereof or any tax at higher slab rates (20% or other co-operative society. 30%). Therefore, the shortfall in [Section 194A(3)(v)of the the actual tax liability vis-à-vis TDS Income-tax Act] is required to be paid by these employees either by requesting (ii) Interest payments on their new employer to deduct deposits by a primary balance tax or through payment agricultural credit society of advance tax/ self-assessment or primary credit society tax. For ensuring the payment of or co-operative land balance tax by these employees, mortgage bank or co- furnishing of valid PAN by them operative land to the EPFS is a prerequisite. The development bank. existing provisions of section [Section 194A(3)(viia)(a) 206AA of the Income-tax Act of the Income-tax Act] provide for deduction of tax @ (iii) Interest payment on 20% in case of non-furnishing of deposits other than time PAN where the rate of deduction deposit by a co-operative of tax at source is specified. As society engaged in the mentioned earlier, there may be business of banking employees who may be liable to other than those pay tax at the highest slab rate. In mentioned in section order to ensure the collection of 194A(3)(viia)(a) of the balance tax from these Act. [Section employees, it has also been 194A(3)(viia)(b) of the provided that non-furnishing of Income-tax Act] PAN to the EPFS for receiving these payments shall attract Therefore, as per the provisions deduction of tax at the maximum of section 194A(1) read with 193 G BG B Annual Report 2015-2016 Amendment Rationale for Amendment Amendment Rationale for Amendment provisions of sections societies for non-deduction of tax 194A(3)(i)(b) and 194A(3)(viia)(b), from interest payment to co-operative bank is required to members under section deduct tax from interest payment 194A(3)(v) of the Income-tax Act. on time deposits if the amount of As there is no difference in the such payment exceeds specified functioning of the co-operative threshold of Rs.10,000/-. banks and other commercial However, as the provisions of banks, the Finance Act, 2006 and section 194A(3)(v) of the Income- Finance Act, 2007 amended the tax Act provide a general provisions of the Income-tax Act exemption from making tax to provide for co-operative banks deduction from payment of a taxation regime which is similar interest by all co-operative to that for the other commercial societies to its members, the co- banks. Therefore, there is no operative banks tried to avail this rationale for treating the co- exemption by making their operative banks differently from depositors as members of other commercial banks in the different categories. matter of deduction of tax and This has led to dispute as to allowing them to avail the whether the co-operative banks, exemption meant for smaller for which the specific provisions credit co-operative societies of tax deduction exist in the form formed for the benefit of small of section 194A (1), section number of members. However, 194A(3)(i)(b) and section as mentioned earlier, a doubt has 194A(3)(viia)(b) of the Income-tax been created regarding the Act, can take the benefit of general applicability of the specific exemption provided to all co- provisions mandating deduction operative societies from deduction of tax from the payment of interest of tax on payment of interest to on time deposits by the co- members. The matter has been operative banks to its members carried to judicial forums and in by claiming that general some cases a view has been exemption is also applicable for taken that the provisions of section payment of interest to member 194A(3)(viia)(b) of the Income-tax depositors. Act makes no distinction between members and non-members of In view of this, the provisions of co-operative banks for the the section 194A(3)(v) of the purposes of deduction of tax, Income-tax Act have been hence, the co-operative banks are amended so as to expressly required to deduct tax on payment provide that the exemption of interest on time deposit and provided from deduction of tax cannot avoid the same by taking from payment of interest to the plea of the general exemption members by a co-operative provided under section 194A(3)(v) society under section 194A(3)(v) of the Income-tax Act. This is of the Income-tax Act shall not because the specific provision of apply to the payment of interest tax deduction provided under on time deposits by the co- section 194A(3)(i)(b) and operative banks to its members. 194A(3)(viia)(b) of the Income-tax As this amendment is effective Act for co-operative banks from the prospective date of 1st override the general exemption June, 2015, the co-operative provided to all co-operative bank shall be required to deduct 194 G BG B Department of Revenue III Amendment Rationale for Amendment Amendment Rationale for Amendment tax from the payment of interest banking company or co-operative on time deposits of its members, bank was not subject to TDS. The on or after the 1st June, 2015. recurring deposit is also made for Hence, a cooperative bank was a fixed tenure and, therefore, is not required to deduct tax from the akin to time deposit. In view of payment of interest on time this, the definition of 'time deposits of its members paid or deposits' as provided in credited before 1st June, 2015. Explanation 1 below clause (xi) of sub-section (3) of section 194A of However, the existing exemption the Income-tax Act has been provided under section amended so as to include 194A(3)(viia)(a) of the Income-tax recurring deposits within its scope Act to primary agricultural credit for the purposes of deduction of society or a primary credit society tax under section 194A of the or a co-operative land mortgage Income-tax Act. However, the bank or a co-operative land existing threshold limit of Rs development bank from deduction 10,000 for non-deduction of tax of tax in respect of interest paid shall also be applicable in case on deposit shall continue to apply. of interest payment on recurring Therefore, these co-operative deposits to safeguard interests of credit societies/banks referred to small depositors. in said clause (viia)(a) of section 194A(3) of the Income-tax Act The proviso to clause (i) of sub- shall not be required to deduct tax section (3) of section 194A of the on interest payment to depositors Income-tax Act provides that the even after the said amendment. interest income for the purpose of deduction of tax by the banking Further, the existing exemption company or the co-operative provided under section 194A(3)(v) society engaged in carrying on of the Income-tax Act from the business of banking or the deduction of tax from interest paid public company shall be by a co-operative society to computed with reference to a another co-operative society shall branch of these entities. As continue to apply to the co- currently, most of these entities operative bank and, therefore, a are computerised and follow core co-operative bank shall not be banking solutions for crediting required to deduct tax from the interest, there is no rationale for payment of interest on time continuing branch wise deposit to a depositor, being a co- calculation of interest by the operative society. entities which have adopted core The existing provision of tax banking solutions. Therefore, a deduction at source (TDS) on new proviso has been inserted to payment of interest by banking section 194A(3)(i) of the Income- company or co-operative bank tax Act so as to provide that in applies only to the interest case of a banking company or co- payment on time deposits made operative society or the public on or after the 1st day of July, company which has adopted core 1995. The definition of "time banking solution, the computation deposits" provided in the section of interest income for the 194A of the Income-tax Act purposes of deduction of tax excludes recurring deposit from its under section 194A of the scope. Therefore, payment of Income-tax Act shall be made interest on recurring deposits by with reference to the income 195 G BG B Annual Report 2015-2016 Amendment Rationale for Amendment Amendment Rationale for Amendment credited or paid by the banking These amendments take effect company or the co-operative from 1st June, 2015. society or the public company. Clarification Under the provisions of section Under section 194A(3)(ix) of the r e g a r d i n g 194C of the Income-tax Act Income-tax Act, tax is not required deduction of tax payment to contractors is subject to be deducted from the interest from payments to TDS at the rate of 1% in case credited or paid on the made to the payee is an individual or Hindu compensation amount awarded transporters undivided family and at the rate by the Motor Accident Claim of 2% in case of other payees if Tribunal if the amount of such such payment exceeds Rs. interest credited or paid during a 30,000/- or aggregate of such financial year does not exceed payment in a financial year Rs.50,000/-. Finance (No.2) Act, exceeds Rs. 75,000/-. Prior to 2009 amended the provisions of 01.10.2009, section 194C of the section 56 of the Income-tax Act Income-tax Act provided for and substituted section 145A of exemption from TDS to an the income-tax Act to, inter alia, individual transporter who did not provide that interest income own more than two goods received on compensation or carriage at any time during the enhanced compensation shall be previous year. deemed to be the income of the The Finance (No.2) Act, 2009 year in which the same has been substituted section 194C of the received. However, the provisions Income-tax Act with effect from of section 194A(3)(ix) of the 01.10.2009, which inter alia Income-tax Act provided for provided for non- deduction of tax deduction of tax from interest paid from payments made to the or credited on compensation, contractor during the course of whichever is earlier. Section 145A plying, hiring and leasing goods (b) of the Income-tax Act provides carriage if the contractor furnishes an exception to method of his Permanent Account Number accounting contained in section (PAN) to the payer. The 145 of the Income-tax Act and memorandum explaining the provides for taxation of interest on provisions of Finance (No.2) Bill, compensation on receipt basis only. Therefore, deduction of tax 2009 indicates that the intention on such interest on mercantile/ was to exempt only small transport accrual basis results into undue operators (as defined in section hardship and mismatch. Hence, 44AE of the Income-tax Act) from the provisions of section 194A(3) the purview of TDS on furnishing of the Income-tax Act has been of PAN. Thus, the intention was to amended so as to provide that reduce the compliance burden on deduction of tax under section the small transporters. However, 194A of the Income-tax Act from the language of sub-section (6) of interest payment on the section 194C of the Income-tax compensation amount awarded Act did not convey the desired by the Motor Accident Claim intention and as a result all Tribunal compensation shall be transporters, irrespective of their made only at the time of payment, size, were claiming exemption if the amount of such payment or from TDS under the existing aggregate amount of such provisions of sub-section (6) of payments during a financial year section 194C of the Income-tax exceeds Rs.50,000/-. Act by furnishing their PAN. 196 G BG B Department of Revenue III Amendment Rationale for Amendment Amendment Rationale for Amendment As there is no rationale for in the previous year, the payer exempting payment to all shall not be required to deduct tax transporters, irrespective of their from the payment made to the size, from the purview of TDS, the transporter during the period of the provisions of section 194C(6) of previous year when he was not the Income-tax Act have been owning more than ten goods amended so as to expressly carriages. However, the tax shall provide that the relaxation under be required to be deducted from sub-section (6) of section 194C of the payment made during that part the Income-tax Act for non- of the previous year during which deduction of tax shall only be the transporter owned more than applicable to the payment in the ten goods carriages. nature of transport charges Further, for determining the (whether paid by a person aggregate amounts of sum engaged in the business of credited or paid for the purposes transport or otherwise) made to a of proviso to sub-section (5) of contractor who is engaged in the section 194C all the payment made business of transport i.e. plying, during the financial year shall be hiring or leasing goods carriage taken into account including the and who is eligible to compute amount credited or paid during the period of the financial year during income as per the provisions of which the transporter was not section 44AE of the Income-tax owning more than ten goods Act (i.e. a person who is not carriages. However, as the owning more than 10 goods provisions of section 194C(6) were carriages at any time during the amended with effect from 1st June, previous year) and who has also 2015, for determining the furnished a declaration to this aggregate payments for the effect along with his PAN, to the financial year 2015-16, the person paying such sum. payments made on or after 1st June, 2015 shall only be taken into Further, this exemption from TDS account. This is explained by way is applicable only in respect of of following illustration:- transport charges received for 'T', an individual owns five goods plying, hiring or leasing of goods carriages from 1st April, 2015 to carriage (s) owned by the 31st October, 2015. On 1st transporter. Therefore, if a person November, 2015, he purchased 6 receives payment in respect of more goods carriages. On 1st plying, hiring or leasing of goods January, 2016, he sold 8 goods carriage (s) which are not owned carriages. 'P' makes following by him, he shall not be entitled to payment of transport charges to 'T' claim exemption from TDS in during the financial year 2015-16: respect of these payments. 15th April, 2015- Rs. 35,000 The condition of not owning more 15th July, 2015 - Rs. 40,000 than ten goods carriages by the 15th November transporter is required to be fulfilled 2015 - Rs. 20,000 on the date on which the amount 15th December, is credited or paid, whichever is 2015 - Rs. 20,000 earlier. In case a transporter does 15th February, not own ten goods carriages on the 2016 - Rs. 50,000 date on which the amount is No tax is deductible on payment credited or paid but becomes made on 15th April, 2015 if 'T' owner of ten goods carriages later furnishes his PAN as per the pre- 197 G BG B Annual Report 2015-2016 Amendment Rationale for Amendment Amendment Rationale for Amendment amended provisions of section Further, for the purposes of 194C (6) of the Income-tax Act. ensuring uniformity in the format No tax is deductible from payment of declaration to be furnished by made on 15th July, 2015 if 'T' the payee under section 194C(6) furnishes a declaration that he of the Income-tax Act for does not own more than 10 goods receiving the payment without carriages during the relevant deduction of tax, the following financial year along with his PAN format for furnishing of as per the requirement of the declaration is specified: amended provision of section 194C(6) of the Income-tax Act. "DECLARATION UNDER SECTION 194C(6) OF THE The tax is also not deductible from INCOME-TAX ACT, 1961 payment made on 15th No………(To be provided by payee) November, 2015 as the payment Date…………….. does not exceed Rs.30,000 and the aggregate of payments during From : (Name & address of the payee) the period from 1st June, 2015 [i.e. To : (Name & address of the payer) the date from which the amended provision of section 194C(6) is effective] to15th November, 2015 The freight/transport charges amounting to does not exceed Rs.75,000 as specified in proviso to section Rs…………for transportation of goods by goods carriages 194C(5) of the Income-tax Act. having Registration Number …………may be paid or Tax at the rate of 1% i.e. Rs.200/- credited to my account without deduction of tax under is deductible from payment made section 194C of the Income-tax Act, 1961. I/We, on 15th December, 2015 as 'T' ……………….. in the capacity of ……………hereby owns more than 10 goods declare that I/We do not own more than ten goods carriages on that date and the carriage and also did not own more than ten goods aggregate of the payments made carriage at any time during the period from 1st April …….. during the period from 1st June, to ……………..My Permanent Account Number (PAN) is 2015 to 15th December, 2015 ……….I hereby enclose a self-attested photocopy of my exceeded the threshold of Rs.75,000. Tax is also deductible PAN Card. from the payment made on 15th Place: February, 2016 even though 'T' did Signature of the person making declaration" not own more than 10 goods carriages on 15th February, 2016. This is because 'T' owned more It may be mentioned here that the than10 goods carriages during the person responsible for paying to financial year 2015-16 and the transporter is required to report the payment exceeded both the particulars of payment made to specified threshold for individual transporters without deduction of and aggregate payments. In view tax in compliance to the provision of this, 'T' is not eligible to claim of section 194C(6) of the Income- the exemption under section tax Act in the statement of 194C(6) of the Income-tax Act by deduction of tax (Form 26Q) as furnishing declaration along with per the provision of rule 31A(4)(vi) the PAN in accordance with the of the Income-tax Rules, 1962. provisions of section 194C(6) in Non-furnishing or incomplete respect of payments made on furnishing of this information shall 15th December,2015 and 15the make the deductor liable for February,2016. penalty as per the provision of 198 G BG B Department of Revenue III Amendment Rationale for Amendment Amendment Rationale for Amendment section 271H of the Income-tax Orders passed Sub-clause (vi) of clause (23C) of Act. This amendment takes effect by the section 10 of the Income-tax from 1st June, 2015. p r e s c r i b e d provides that any income authority under received by a person on behalf Enabling of filing The Finance (No.2) Act, 2014, section sub- of any university or other of Form 15G/15H inserted section 194DA in the clauses (vi) and educational institution existing for payment Income-tax Act with effect from (via) of clause solely for educational purposes made under life 1.10.2014 to provide for deduction (23C) of section and not for purpose of profit and insurance of tax at source at the rate of 2% 10 made which may be approved by the from payments made under life a p pe a l ab l e prescribed authority is not liable insurance policy, which are before Income- to tax. Similarly, sub-clause (via) chargeable to tax. It has been further tax Appellate of clause (23C) of section 10 of provided that no deduction shall be Tribunal the said Act provides that any made if the aggregate amount of income received by a person on payment during a financial year is behalf of any hospital or other less than Rs. 1,00,000. institution for treatment of persons suffering from illness or In spite of providing high threshold mental defectiveness or for deduction of tax under this treatment of persons during section, there may be cases where convalescence or persons the tax payable on recipient's total requiring medical attention, income, including the payment existing solely for philanthropic made under life insurance, will be purposes and not for the purpose nil. The existing provisions of of profit is not liable to tax if such section 197A of the Income-tax Act hospital or institution is approved by the prescribed authority. inter alia provide that tax shall not be deducted, if the recipient of the The provisions contained in sub- certain payment on which tax is section (1) of section 253 of the deductible furnishes to the payer Income-tax specify orders that a self-declaration in prescribed are appealable before ITAT. Order Form No.15G/15H declaring that passed by the prescribed the tax on his estimated total authority under sub-clauses (vi) income of the relevant previous and (via) of clause (23C) of year would be nil. section 10 was not included in this sub-section. The decision of the In order to reduce the compliance prescribed authority to refuse to burden for those recipients whose grant approval can have tax liability on estimated total significant implications for the income is nil, the provisions of educational or medical institution section 197A of the Income-tax Act under the Income-tax Act. has been amended so as to provide that the recipients of payments Further, under a comparable referred to in section 194DA of the provision an order for refusal to Income-tax Act shall also be eligible register a charitable trust under section 12AA of the Income-tax for filing self-declaration in Form Act is appealable before the No.15G/15H for non-deduction of Appellate Tribunal. Accordingly, tax at source in accordance with the sub-section (1) of section 253 of provisions of section 197A of the the Income-tax Act has been Income-tax Act. amended to provide that an This amendment takes effect from assessee aggrieved by the order 1st June, 2015. passed by the prescribed 199 G BG B Annual Report 2015-2016 Amendment Rationale for Amendment Amendment Rationale for Amendment authority under sub-clause (vi) or to the interests of the revenue" has (via) of section 10(23C) of the been a contentious one. In order to Income-tax Act may appeal to the provide clarity on the issue, section Appellate Tribunal. 263 of the Income-tax Act has been amended to provide that an order This amendment has taken effect passed by the AO shall be deemed from 1st day of June, 2015. to be erroneous in so far as it is Raising the The provision contained in sub- prejudicial to the interests of the income-limit of section (3) of section 255 of the revenue, if, in the opinion of the the cases that Income-tax Act, before amendment Principal Commissioner or may be decided by the Act, provided for disposal of Commissioner,- by single appeals by single member bench (a) the order is passed member bench of Tribunal in cases where total without making inquiries of ITAT income of assessee as computed or verification which, by the Assessing Officer did not should have been made; exceed five lakh rupees. This limit of total income of five lakh rupees (b) the order is passed for a single member bench was last allowing any relief without revised in 1998. inquiring into the claim; Considering the rise in number of (c) the order has not been cases before ITAT where total made in accordance with income of assessee exceeded any order, direction or five lakh rupees, sub-section (3) instruction issued by the of section 255 of the Income-tax Board under section 119; or Act has been amended to provide (d) the order has not been that a single member bench may passed in accordance dispose of a case where the total with any decision, income of assessee as computed prejudicial to the by the Assessing Officer does not assessee, rendered by exceed fifteen lakh rupees. the jurisdictional High This amendment has taken effect Court or Supreme Court in from 1st day of June, 2015. the case of the assessee or any other person. Revision of The provisions contained in sub- order that is section (1) of section 263 of the This amendment has taken effect erroneous in so Income-tax Act, before from 1st day of June, 2015. far as it is amendment by the Act, provided Provisions contained in section prejudicial to the Mode of taking or that if the Principal Commissioner 269SS of the Income-tax Act, interests of accepting certain or Commissioner considers that before amendment by the Act, revenue any order passed by the AO is loans, deposits provided that no person shall take and specified erroneous in so far as it is from any person any loan or sums and mode prejudicial to the interests of the deposit otherwise than by an of repayment of Revenue, he may, after giving the account payee cheque or account loans or deposits assessee an opportunity of being payee bank draft or online transfer and specified heard and after making an enquiry through a bank account, if the advances pass an order modifying the amount of such loan or deposit is assessment made by the AO or twenty thousand rupees or more. cancelling the assessment and However, certain exceptions were directing fresh assessment. provided in the section. The interpretation of expression Similarly, the provisions contained "erroneous in so far as it is prejudicial in section 269T of the Income-tax 200 G BG B Department of Revenue III Amendment Rationale for Amendment Act, before amendment by the 13.9.2. Besides, the changes as above made through Act, provided that any loan or the Finance Act, 2015, a new Act, namely, Black Money deposit shall not be repaid, (Undisclosed Foreign Income and Assets) and Imposition otherwise than by an account of Tax Act, 2015 has also been enacted to provide for payee cheque or account payee specific and stringent regime for taxation of undisclosed bank draft or online transfer foreign income and assets. Salient features of the Black through a bank account, by the Money Act are as under: persons specified in the section if the amount of loan or deposit is (i) Scope: The Act applies to all persons resident twenty thousand rupees or more. in India. Provisions of the Act apply to both In order to curb generation of black undisclosed foreign income and assets (including money by way of dealings in cash financial interest in any entity). in immovable property transactions, (ii) Rate of Tax: Undisclosed foreign income or section 269SS of the Income-tax Act has been amended to provide assets shall be taxed at the flat rate of 30 percent. that no person shall accept from any No exemption or deduction or set off of any person any loan or deposit or any carried forward losses which may be admissible sum of money, whether as advance under the existing Income-tax Act, 1961, shall or otherwise, in relation to transfer be allowed. of an immovable property(specified sum) otherwise than by an account (iii) Penalties: Violation of the provisions of the payee cheque or account payee proposed new legislation will entail stringent bank draft or by electronic clearing penalties. system through a bank account, if The penalty for non-disclosure of income or an the amount of such loan or deposit or such specified sum is twenty asset located outside India will be equal to three thousand rupees or more. times the amount of tax payable thereon, i.e., 90 percent of the undisclosed income or the value Section 269T of the Income-tax of the undisclosed asset. Act has also been amended to provide that no person shall repay Failure to furnish return in respect of foreign any loan or deposit made with it income and assets shall attract a penalty of Rs.10 or any specified advance received lakh. The same amount of penalty is prescribed by it, otherwise than by an account for cases where although the assessee has filed payee cheque or account payee a return of income, he has not disclosed the bank draft or by electronic clearing foreign income/ asset or has furnished inaccurate system through a bank account, particulars of the same. if the amount or aggregate amount of loans or deposits or Penalties have also been provided for failure to specified advances is twenty answer questions, failure to sign any statement thousand rupees or more. The made by the person in the course of the specified advance shall mean any proceedings, failure to attend or to give evidence sum of money in the nature of an advance, by whatever name or to produce books or documents etc., as called, in relation to transfer of an required by the tax authorities. The penalty for immovable property whether or each such failure shall be Rs. 50,000/- to Rs. not the transfer takes place. 2,00,000/- Consequential amendments in (iv) Prosecutions: The Act provides enhanced section 271D and section 271E, to punishment for various types of violations. provide penalty for failure to comply with the amended provisions of The punishment for willful attempt to evade tax section 269SS and 269T, in relation to a foreign income or an asset located respectively, have also been made. outside India will be rigorous imprisonment from three years to ten years. In addition, it will also These amendments have taken entail a fine. effect from 1st day of June, 2015. 201 G BG B Annual Report 2015-2016 Failure to furnish a return in respect of foreign (vii) Amendment of PMLA: Prevention of Money assets and bank accounts or income will be Laundering Act (PMLA), 2002 has also been punishable with rigorous imprisonment for a term amended to include offence of tax evasion under of six months to seven years. The same term of the new Act as a scheduled offence under PMLA. punishment is prescribed for cases where 13.9.3. The Black Money (Undisclosed Foreign although the assessee has filed a return of income, Income and Assets) and Imposition of Tax Rules, 2015 but has not disclosed the foreign asset or has which inter alia prescribe the method of valuation of furnished inaccurate particulars of the same. undisclosed foreign income and assets and various The above provisions will also apply to beneficial Forms have been notified vide Notification No. 58/2015, owners or beneficiaries of such illegal foreign assets. dated 2nd July 2015 . Abetment or inducement of another person to 13.9.4. Explanatory Circular (Circular No. 12 of 2015, make a false return or a false account or dated 2nd July 2015) on provisions relating to tax statement or declaration under the Act will be compliance for undisclosed foreign income and assets punishable with rigorous imprisonment from six as provided in chapter VI of the Black Money (Undisclosed months to seven years. This provision will also Foreign Income and Assets) and Imposition of Tax Act, apply to banks and financial institutions aiding in 2015 was issued on 2nd July, 2015. concealment of foreign income or assets of resident Indians or falsification of documents. 13.9.5. Circular No. 13 of 2015 dated 6th July 2015 and Circular No. 15 of 2015 dated 3rd September 2015 (v) Safeguards: The principles of natural justice and incorporating Frequently Asked Questions in respect of due process have been embedded in the Act by the one-time compliance window were also issued to laying down the requirement of mandatory issue clarify the issues raised by various stakeholders. of notices to the person against whom proceedings are being initiated, grant of opportunity of being heard, necessity of taking the evidence produced 13.10. FT&TR DIVISION by him into account, recording of reasons, passing 13.10.1. Negotiation of Tax Treaties of orders in writing, limitation of time for various actions of the tax authority, etc. Further, the right of The Foreign Tax and Tax Research (FT&TR) Division appeal has been protected by providing for appeals negotiates and finalizes the Double Taxation Avoidance to the Income-tax Appellate Tribunal, and to the Agreements (DTAAs) which are entered into for twin jurisdictional High Court and the Supreme Court purpose of (a) allocation of taxation rights between the on substantial questions of law. Contracting States with a view to avoid double taxation and (b) prevention of fiscal evasion through exchange of To protect persons holding foreign accounts with information, assistance in collection of taxes etc. As on minor balances which may not have been reported 31.12.2015, 95 DTAAs are in force. out of oversight or ignorance, it has been provided that failure to report bank accounts with a maximum The revised DTAAs with Korea and Thailand were signed balance of upto Rs.5 lakh at any time during the on 18.05.2015 and 29.06.2015 respectively. The revised year will not entail penalty or prosecution. DTAA with Thailand came into force on 13.10.2015. New Double Taxation Avoidance Agreement (DTAA) with (vi) Compliance opportunity: Considering the Macedonia has entered into effect from 1st April, 2015. stringent provisions of the new Act, a one-time The Protocol amending the DTAC with Israel was signed compliance window was provided to persons on 14.10.2015. An amending protocol to the India-Japan having undisclosed foreign assets to disclose the DTAC was signed on 11.12.2015. The Protocol amending same by filing a declaration before competent the Double Taxation Avoidance Agreement between India authority between 1st July, 2015 to 30th and South Africa entered into force and was notified in September, 2015 and pay tax at the rate of 30% the Gazette of India on 02.02.2015. Amending protocol of the value of declared assets and an equal to DTAAs with Turkmenistan, Vietnam, Kazakhstan and amount of penalty by 31st December, 2015. Such Kuwait have been finalised and ready for signature. In persons will not be prosecuted under the addition, negotiations for DTAAs with Azerbaijan, Bulgaria, stringent provisions of the new Act. Chile, China, Cyprus, Egypt, Germany, Hong Kong, Iran, Undisclosed foreign assets worth Rs 4164 crore Jordan, Nigeria, Oman, Qatar, Senegal, Tajikistan and has been declared under the compliance window. Venezuela) are going on. 202 G BG B Department of Revenue III With countries/jurisdictions with which it is felt that there is In the modified/renegotiated DTAAs as also in the new no need for allocation of taxation rights for avoidance of DTAAs/TIEAs entered after 2009 and also under the double taxation, such as offshore jurisdictions, the FT&TR Multilateral Convention and SAARC Multilateral Division negotiates and enters into Tax Information Agreement, the banking information and information for Exchange Agreements (TIEAs) containing provisions for domestic tax purposes can also be exchanged. Further, exchange of information. As on 31.12.2015, 16 TIEAs are generally the information received may be used for non- in force. Two more, i.e., with Saint Kitts & Nevis and tax purposes if such use is permitted under the laws of Seychelles have been signed but are yet to come into force. both the supplying and receiving State and with the TIEA negotiations with Maldives have been concluded and consent of the supplying State. steps are being taken for completion of internal procedures 13.10.2. Role of Tax Treaties in Prevention of Fiscal in both countries for signing of the Agreement. With twenty- Evasion and Tackling of the Menace of Black seven (27) countries/jurisdictions, i.e., Costa Rica, Money Democratic Republic of Congo, Marshall Islands, Panama, Andorra, Anguilla, Antigua and Barbuda, Aruba, Barbados, Effective investigation of tax evasion and Brunei Darussalam, Cook Islands, Curacao, Dominica, avoidance, including unearthing of unaccounted money Dominican Republic, Faroe Islands, Greenland, Grenada, stashed abroad, is possible only if there is access to Honduras, Jamaica, Montserrat, Peru, Saint Lucia, Saint information from foreign countries. However, foreign Vincent and the Grenadines, Samoa, Saint Maarten, Turks governments, particularly tax havens, are most unlikely and Caicos and Vanuatu, new TIEAs are being negotiated. to provide information on the basis of just letters or on a plea regarding their moral obligations to prevent tax India has also joined the Multilateral Convention on Mutual evasion. Among other factors, parting with information Administrative Assistance in Tax Matters (Multilateral without a legal basis may be challenged in their own Convention) which came into force for India on Courts and may be against their own public policy or public 01.06.2012 and which provides a wide range of opinion of their citizens. Such information about money administrative assistance in tax matters, including and assets hidden abroad and about undisclosed exchange of information, assistance in collection of taxes, transactions entered into overseas, can be obtained only tax examination abroad, joint audit etc. India has been through “legal instruments” or treaties entered between actively pursuing with other countries to join this India and those countries. Convention. As on 17.12.2015, 92 countries/jurisdictions have signed the Multilateral Convention and it has come The “legal instruments” through which information can be into force for 73 countries/jurisdictions as on 17.12.2015. efficiently obtained for the purposes of investigation under Indian tax laws are the DTAAs, TIEAs, Multilateral Convention The SAARC Countries have signed Mutual Administrative and SAARC Multilateral Agreement, which create a legal Assistance in tax matters on 13.11.2005 which came into obligation on a bilateral basis to provide information. These effect for India from 01.04.2011. It provides wide range agreements have, over the years, taken the shape of of administrative assistance. An amending protocol to instruments of co-operation between the countries party to bring the Exchange of Information Article to international the agreements, for sharing of tax revenues and elimination standards has been agreed upon and steps are being of double taxation; for the prevention of fiscal evasion, tax taken by SAARC countries for signature. avoidance and fraud, primarily through exchange of India has also entered into Limited Agreement for information in relation to the taxpayers concerned; and for avoidance of double taxation income of enterprises assistance in collection of taxes. operating aircraft, with Afghanistan, Iran, Lebanon, The Government of India can obtain information which is Pakistan, Saudi Arabia, UAE and Yemen Arab Republic. “foreseeably relevant” for administration and enforcement Similar agreement with Maldives has been finalised during of domestic laws concerning taxes from more than 137 the year and steps are being taken to sign the same. countries/jurisdiction under DTAAs/TIEAs/Multilateral In old DTAAs (before 2009), there were generally no Convention / SAARC Multilateral Agreement. With some provisions for exchange of banking information. Further, countries/jurisdictions, there can be more than one the information could be exchanged only if it was relevant agreement e.g. DTAA as well as Multilateral Convention, for application of DTAA and not for enforcement of under which information can be received. Table at domestic laws. In addition, under the old DTAAs, the Annexure - 1 lists the countries / jurisdictions and the information received could generally not be used for non- current status of tax treaty with that country/ jurisdiction. tax purposes even after the consent of the supplying Information received under the tax treaties shall be State. Accordingly, from 2009 onwards, a number of tax disclosed only to persons or authorities concerned with treaties were modified through amending Protocols. 203 G BG B Annual Report 2015-2016 tax purposes and they may use the information only for (e) The Central Action Plan issued by the CBDT in such purposes. They may, however, disclose the May, 2015, read with Manual on Exchange of information in public court proceedings or in judicial Information, explains the process and decisions, which may for instance be in the form of filing emphasizes the need to make exchange of a complaint or prosecution in a competent court. The information references seeking information under information so disclosed becomes public and may be the tax treaties. The Central Action Plan 2015 used by other law enforcement agencies dealing with also mandates that every CIT charge will corruption, money laundering, terrorist financing etc. organize training and sensitization programme for making proper references under tax treaties. The following additional steps have been taken by the Government in recent past for effectively utilizing the (f) A comprehensive training on Exchange of above mechanism of Exchange of Information: Information was organized in collaboration with the Global Forum/OECD at National Academy (a) During the financial year 2015, one more Income of Direct Taxes, in May 2015, for officers Tax Overseas Unit (ITOU) became nominated from all over the country. Further, operationalised in Germany in addition to the regular trainings have also been held at places seven ITOUs already established previously in like Lucknow, Chennai, Hyderabad, Kolkata to Mauritius, Singapore, France, Japan, equip the officers with requisite knowledge and Netherlands, UK and USA. IRS officers were skills to make appropriate requests/enquiries posted as First Secretary (Economic), in these under the prevailing tax-treaties of India, to Income Tax Overseas Units (ITOUs). address the issue of offshore-based tax evasion (b) Steps are being taken to proactively engage with and Black Money stashed abroad. foreign governments to receive information about (g) Steps are also being taken to ensure that the tax evasion and avoidance under the provisions of information received from our treaty partners are tax treaties. Bilateral discussions, including through effectively utilized to combat tax evasion and Conference calls and face-to-face meetings, with avoidance. the competent authorities of our treaty partners, which now include well known offshore financial (h) Efforts are also being made to complete centers, such as British Virgin Islands, Jersey, UAE investigations quickly and file complaints/ and Singapore are being planned, and the prosecutions in appropriate cases expeditiously. cooperation in this regard will be deepened in future. Under tax treaties, the Contracting States may also These bilateral meetings will help us in making provide information to their treaty partners with a view to targeted and specific requests for information and prevent fiscal evasion even if no specific reference is to understand the problems, if any, which prevent received in this regard under “spontaneous exchange of them in providing the information, and how the information”. As of now, number of information received same can be addressed. under this route is not many and efforts are being made (c) A significant step taken under this strategy was at bilateral level to improve cooperation in this regard. the visit of Switzerland Delegation on 07th Under most of the DTAAs and Multilateral Convention, December, 2015 to resolve exchange of Automatic Exchange of Information (AEOI), which is information issues. Meeting were also held with systematic and periodic transmission of “bulk” taxpayer the Competent Authorities of British Virgin Island, information by the source country to the residence country, Luxembourg, United Kingdom, UAE and is also possible. India is receiving information from some Singapore which have resulted into improvement countries under AEOI. However, the information received in the quality of responses leading to positive and significant outcomes. under the AEOI at present mostly relates to interest, dividend, salary, pension etc. and further are not in a (d) A revised version of Manual on Exchange of standard format and thus are not very effective in Information has been released in May 2015 that prevention of offshore tax evasion. As discussed later, provides detailed guidelines for framing requests global standard on AEOI is being developed under for information under the provisions of tax guidance and leadership of G20 countries which will make treaties. Other forms of administrative assistance a sea change in our ability to address offshore tax evasion. possible under the tax treaties, as well as assistance that can be sought under other legal In 48 out of 94 Indian DTAAs, there is provision for instruments have also been described in detail. assistance in collection of taxes under which the 204 G BG B Department of Revenue III Contracting States are obliged to collect tax dues from efforts for strengthening developing economies’ assets located in their country. The provision for engagement in the international tax agenda.” assistance in collection of taxes is also present in 3 out 13.10.4. India’s stand in G20 on Automatic Exchange of 16 TIEAs. Assistance in collection of taxes is also of Information (AEOI) possible under the Multilateral Convention if the signatory country has not given a reservation and also under the (a) There is a need to ensure that the Common SAARC Multilateral Agreement. Reporting Standards (CRS) on AEOI should be The other forms of administrative assistance possible implemented on a fully reciprocal basis on a under tax treaties are tax examination abroad, global basis and those countries which have not simultaneous examination, joint audit, service of notices, yet committed to the timeline of 2017 or 2018 etc. which are presently not being used much. should do it without any further delay. The problem of black money and illicit flow to offshore 13.10.3. Tax Issues in G20 jurisdictions and tax havens can be addressed The Hon’ble Prime Minister played an active role during only when CRS based on AEOI is implemented the G20 Leaders’ Summit in Antalya, Turkey on 16th at a global level November, 2015, and highlighted the need for policy (b) The Global Forum should monitor the coordination amongst leading economies of the world to implementation of CRS on AEOI and ensure that address the challenges of black money and its adverse every country/jurisdiction is effectively impact on security issues. The Communique issued at implementing and have necessary legal and the Summit contained the following text with regard to regulatory framework and are also exchanging ‘International Tax’ issues: information in practice. “To reach a globally fair and modern international tax 13.10.5. G20 / OECD Project on Base Erosion and system, we endorse the package of measures Project Shifting (BEPS) developed under the ambitious G20/OECD Base Erosion and Profit Shifting (BEPS) project. Widespread Base Erosion and Profit Shifting (BEPS) refers to and consistent implementation will be critical in the strategies adopted by taxpayers having cross-border effectiveness of the project, in particular as regards the operations to exploit gaps and mismatches in tax rules exchange of information on cross-border tax rulings. of different jurisdictions which enable them to shift profits We, therefore, strongly urge the timely implementation outside the jurisdiction where the economic activities of the project and encourage all countries and giving rise to profits are performed and where value is jurisdictions, including developing ones, to participate. created. BEPS has been a cause of concern for To monitor the implementation of the BEPS project developing and emerging economies for long as it erodes globally, we call on the OECD to develop an inclusive their tax base depriving them of much needed resources framework by early 2016 with the involvement of for developmental activities. It is also unfair to general interested non-G20 countries and jurisdictions which taxpaying public and further provides an unfair competitive commit to implement the BEPS project, including advantage to Multinational Enterprises (MNEs) vis-à-vis developing economies, on an equal footing. We domestic companies having no opportunities for the welcome the efforts by the IMF, OECD, UN and WBG BEPS strategies. to provide appropriate technical assistance to interested At the request of G20 Finance Ministers, in July 2013 developing economies in tackling the domestic resource the OECD, working with G20 countries, launched an mobilization challenges they face, including from BEPS. We acknowledge that interested non-G20 developing Action Plan on BEPS, identifying 15 specific actions countries’ timing of implementation may differ from other needed in order to equip governments with the domestic countries and expect the OECD and other international and international instruments to address this challenge. organizations to ensure that their circumstances are The Action Plan provides for 15 actions to be undertaken appropriately addressed in the framework. We are to put an end to double non-taxation and ensure that progressing towards enhancing the transparency of our profits are taxed where the economic activities that tax systems and we reaffirm our previous commitments generate them are carried out and where value is to information exchange on-request as well as to created. The actions outlined in the plan, expected automatic exchange of information by 2017 or end-2018. outcome, and the responsible body are summarized We invite other jurisdictions to join us. We support the below: 205 G BG B Annual Report 2015-2016 Action Expected Output Responsible body 1- Address the Tax Challenges Report identifying key issues raised by the Task Force on the of the Digital Economy digital economy and possible actions to Digital Economy address them 2- Neutralise the effects of Changes to the Model Tax Convention Working Party 1 hybrid mismatch Recommendations regarding the design of Working Party 11 arrangements domestic rules 3- Strengthen CFC rules Recommendations regarding the design of Working Party 11 domestic rules 4- Limit Base Erosion via Recommendations regarding the design of Working Party 11 Interest Deductions and other domestic rules financial payments Changes to the Transfer Pricing Guidelines Working Party 6 5 - Counter harmful tax Finalise review of member country regimes Forum on Harmful Tax practices more effectively, Strategy to expand participation to non-OECD Practices taking into account members transparency and substance Revision of existing criteria 6- Prevent Treaty Abuse Changes to the Model Tax Convention Working Party 1 Recommendations regarding the design of domestic rules 7- Prevent the artificial Changes to the Model Tax Convention Working Party 1, in avoidance of PE status consultation with Working Party 6 8- Assure that Transfer Pricing Changes to the Transfer Pricing Guidelines Working Party 6 Outcomes are in Line With and possibly to the Model Tax Convention Value Creation / Intangibles Changes to the Transfer Pricing Guidelines and possibly to the Model Tax Convention 9- Assure that Transfer Pricing Changes to the Transfer Pricing Guidelines Working Party 6 Outcomes are in Line With and possibly to the Model Tax Convention Value Creation / Risks and Capital 10- Assure that Transfer Changes to the Transfer Pricing Guidelines Working Party 6 Pricing Outcomes are in Line and possibly to the Model Tax Convention With Value Creation / Other High-risk transactions 11-Establish methodologies to Recommendations regarding data to be Working Party 2 collect and analyse data on collected and methodologies to analyse them BEPS 12- Require taxpayers to Recommendations regarding the design of Working Party 11 disclose their aggressive tax domestic rules planning arrangements 13- Re-examine Transfer Changes to Transfer Pricing Guidelines and Working Party 6 Pricing Documentation Recommendations regarding the design of domestic rules 14- Make dispute resolution Changes to the Model Tax Convention Working Parties 1 and 6 mechanisms more effective 15- Develop a Multilateral Report identifying relevant public international Informal Group of Instrument law issues Experts Develop a multilateral instrument Interested Parties 206 G BG B Department of Revenue III The G20 countries have entrusted the work of footing in finalizing these deliverables with the twin development of recommendations on these 15 point purpose of (a) collaborating with other countries in Action Plan to the OECD. During the G20 meeting, India development of recommendations to prevent base and some other non-OECD G20 countries raised an issue erosion and profit shifting and (b) safeguarding the that the base erosion and profit shifting is a global concern interests of India and other developing countries in and accordingly the recommendations should be development of new standards. developed through global consensus and not by the Developing countries and other non-OECD/non-G20 OECD countries only. After detailed negotiations in G20, economies have been extensively consulted through it was agreed that all the eight non-OECD G20 countries numerous regional and global fora meetings and their (Argentina, Brazil, China, Indonesia, Russia, Saudi Arabia input has been fed into the work. Business and South Africa) would participate in the “Project on representatives, trade unions, civil society organizations BEPS” on an equal footing. The OECD agreed to modify and academics have also been very involved in the its rules for associating non-OECD G20 countries on an process through opportunities to comment on discussion equal footing and a formal letter requesting the non-OECD drafts and their comments were discussed through G20 countries to become an Associate was made. It was consultation meetings and webcasts. also decided that the other developing and low income countries will also be associated with the work on BEPS The first set of seven deliverables described in the Action and their inputs will be taken while developing the Plan was presented to G20 Finance Ministers in recommendations. September 2014 and to Leaders in November, 2014. These include recommendations for realigning taxation India accepted the offer to become an “Associate” in the and relevant substance to restore the intended benefits BEPS Project through our acceptance letter dated 31st July, of international standards both in the area of bilateral tax 2013. The other seven non-OECD G20 countries also treaties by preventing treaty abuse and in the area of accepted the offer. In accordance with the OECD Council’s transfer pricing to assure that transfer pricing outcomes resolution, the eight “Associates” are participating on an are in line with value creation in the area of intangibles equal footing with OECD countries, including participation and ensuring better transparency for tax administrations in its bureau in the Committee overseeing the project in and better consistency of requirements for taxpayers the discussions and in the decision-making process. As through improved transfer pricing documentation and a per this resolution, the Associates “would be expected to template for country-by-country reporting. associate themselves in the outcome of the project or of the discussions unless they state otherwise”. 13.10.6. Current Status of BEPS Project and Role of India The CFA has a Bureau consisting of 12 members. The Bureau oversees the progress of the Project and After an elaborate exercise and discussions in Focus participate in the decision making process. Since in the Groups, Working Parties and the Committee of Fiscal BEPS Project, 8 non-OECD G20 countries are Affairs, a holistic package of measures have been agreed participating on an equal footing, it was decided to expand upon, and have been made public on 5th October, 2015, the Bureau to “Bureau Plus” for BEPS Project and it was and the same has been presented to G20 Finance also decided to include 3 out of 8 non-OECD G20 Ministers during their dinner meeting in Lima, Peru on 8th countries in the Bureau Plus through a process of October, 2015 and were endorsed by the G20 Leaders elections by these 8 countries. In the first round of at Antalya, Turkey in November, 2015. elections in which 7 countries voted (by that time It may be noted that India participated in the BEPS Project Indonesia has not formally accepted the offer to be an on an equal footing engaging constructively and Associate), China, Brazil and South Africa were elected extensively through different mechanisms including direct on behalf of 8 non-OECD G20 countries. India, however, participation in Working Parties and Focus Groups set with active lobbying by MEA, ensured Indonesia supports up under the Committee on Fiscal Affairs (CFA) of OECD us resulting in a tie. The OECD was thereafter persuaded, in finalizing the deliverables with the twin purpose of (a) again after active support by MEA, to include 4 non-OECD collaborating with other countries in development of G20 countries in the Bureau Plus on account of their large recommendations to prevent base erosion and profit economies. Accordingly, India, Brazil, China and South shifting and (b) safeguarding the interests of India and Africa now represent the eight non-OECD G20 countries other developing countries in development of new in the Bureau Plus. standards. The recommendations made under the BEPS The Indian delegates participated in the meetings of the Project have been made on the basis of consensus Focus Group, Working Parties and CFA on an equal arrived at by the OECD (34 in number) and non-OECD 207 G BG B Annual Report 2015-2016 G20 countries (8 in number) and thus India is an equal the other measures. G20 and OECD countries will participant in making such recommendations. A summary continue to work on equal footing to complete the areas of the recommendations in the final reports, with regard which require further work in 2016 and 2017 such as to the 15 Action Points, is placed at Annexure - 2. finalizing transfer pricing guidance on the application of transactional profit split methods and on financial The recommendations made under the BEPS Project will transactions, discussing the rules for the attribution of be implemented through domestic legislations and treaty profits to permanent establishments in light of the changes provisions in a coordinated manner, and will be supported to the permanent establishment definition, a continued by targeted monitoring and strengthened transparency. examination of the issues relating to the broader question These measures include the following: of treaty entitlement of investment funds (other than (a) Adoption of minimum standards to tackle issues collective investment funds i.e. non-CIV funds). in cases where no action by some countries G20 and OECD countries will keep working on an equal would have created negative spill over (inclusive footing to monitor the implementation of the BEPS adverse competitiveness impacts) on other measures. The monitoring will consist of an assessment countries such as consistent implementation in of compliance with the minimum standards in the form of the areas of treaty shopping, country by country a periodic and public report on what countries have done reporting, fighting harmful tax practices and to implement the BEPS recommendations. It will involve improving dispute resolution. some form of peer review which will have to be defined (b) Agreement on common approaches for changing and adapted to the different Actions, with a view to domestic legislation relating to neutralizing hybrid establishing a level playing field by ensuring all countries mismatches and limiting interest deductibility. implement their commitments so that no country would gain unfair competitive advantage. (c) Providing guidance based on best practices for countries which seek to strengthen their domestic Drawing on the successful experience of the Global legislation relating to mandatory disclosure by Forum on Transparency and Exchange of Information taxpayers of aggressive or abusive transactions, for Tax Purposes, in the course of 2016OECD and arrangements, or structures, and the building G20 countries will work together to design and propose blocks of effective Controlled Foreign Company a more inclusive framework to support and monitor the (CFC) rules. implementation of the BEPS package, with all interested and committed countries participating on an equal (d) Development and analysis of options to tackle footing. Such work will include consideration of the the problems posed by digital economy including manner in which non-OECD countries will consider digital presence test, introduction of a withholding themselves committed to the agreed rules and their tax and equalization levy in addition to implementation. identification of implementation mechanism to facilitate VAT collection in the country where the India would continue to contribute to the most important consumer is located which is particularly relevant phase of the BEPS Project, which is its implementation. for online ordering and delivery of goods and India strongly supports the approach for inclusive services. framework to monitor and review the success of implementation of the BEPS recommendations, and (e) Launch of an innovative mechanism to update would collaborate with all the G-20, developing countries the global network of more than 3 500 bilateral and international organizations to ensure that there is a tax treaties. 90 countries have joined an ad hoc level playing field amongst various economies. group to negotiate a multilateral instrument by end of 2016 to implement the treaty-related BEPS 13.10.7. Automatic Exchange of Information (AEOI) measures which will facilitate the modification of bilateral tax treaties in a synchronized and Automatic Exchange of Information (AEOI) is systematic efficient manner, without the need to invest and periodic transmission of “bulk” taxpayer information resources to bilaterally renegotiate each treaty. by the source country to the residence country, which is possible under most of the DTAAs and Multilateral Countries are sovereign and it is therefore up to them to Convention on Mutual Administrative Assistance in Tax implement these changes but it is expected that they will Matters. implement their commitments in the case of the standards, and that they will seek consistency and Although exchange on “request basis” has resulted in convergence when deciding upon the implementation of improving transparency, its scope is limited since the 208 G BG B Department of Revenue III offshore financial centers and tax havens are obliged to for the creation of new Terms of Reference and a new provide information only when the requesting State has Methodology, which will allow for Global Forum member some information already in its possession and and relevant non-member jurisdictions to be evaluated investigation in the particular case has already for the effectiveness of the implementation, including the commenced. The information on “request” thus may have meeting of confidentiality and data safeguard limited effect in identifying the financial assets hidden in requirements. These reviews will ensure a globally offshore jurisdictions and tax havens through a complex consistent implementation of the CRS. web of entities. The 6th Meeting of AEOI Group was held in New Delhi on Accordingly, the Government of India took a leading role in 03-04 December 2015. In the meeting, Confidentiality and international fora, including at G20 and Working Party 10 of Data Safeguard Assessment Reports of more than 30 the OECD, towards building an international consensus countries were discussed and approved including India’s amongst major economies of the world that the problem of Confidentiality and Data Safeguard Assessment Report. offshore tax evasion and flow of illicit money can be addressed only by the free flow of financial account information, 13.10.9. Inter-Governmental Agreement (IGA) with exchanged amongst countries on an automatic basis. USA for purposes of FATCA On the request of the G20, the OECD, working with all India entered into Inter-Governmental Agreement (IGA) the non-OECD G20 countries including India, developed with the USA under the Foreign Account Tax Compliance a single uniform standard for automatic exchange of Act (FATCA) on 9th July 2015. This will obligate the Indian information, the Common Reporting Standards (CRS) on financial institutions to provide financial information to AEOI. This new global standard was endorsed by the Indian tax authorities, which will then be transmitted to G20 Finance Ministers in their meeting in Cairns on USA automatically. Similarly, under the IGA the USA 21.09.2014, and by the G20 Leaders in their summit at financial institutions will also be providing information to Brisbane on 16th November, 2014. As stated earlier, the USA tax authorities, which will be transmitted to India Hon’ble Prime Minister in his intervention at the G20 automatically. The USA had enacted the FATCA in 2010 Leaders’ Summit on 16.11.2014 in Brisbane strongly with the objective of tackling tax evasion by obtaining supported the new global standard on automatic information in respect of offshore financial accounts exchange of information and stated that this would be maintained by USA residents and citizens. The provisions instrumental in getting information about unaccounted money hoarded abroad and enable its eventual of FATCA essentially provide for 30% withholding tax on repatriation. US source payments made to Foreign Financial Institutions (FFIs) unless they enter into an agreement In keeping with its leadership role in this area, India has with the Internal Revenue Service (IRS) to provide also joined a group of 48 countries as “early adopters” of information about accounts held with them by USA the new standards and has committed to exchange persons or entities (firms/companies/trusts) controlled by information automatically by 2017. Some jurisdictions have USA persons. joined later and the number of jurisdictions committed to first exchanges by 2017 has now increased to 56. Under IGA, India will receive information about Indian tax residents who have opened bank accounts in USA Government of India is emphasizing at various which will include international fora, including in G20, the need to ensure that every financial centre commits to the new reporting • The name, address and Indian TIN of any standards and further, that their implementation at global person that is resident of India and is an level is monitored by the Global Forum. account holder of the account; 13.10.8. AEOI Group • Account number; In order to carry out the review of the implementation of • Gross amount of interest, US source AEOI based on CRS, the Global Forum has set up an dividends or other income paid or credited, AEOI Group to develop the methodology and terms of depending on the nature of the financial reference for monitoring the implementation of the CRS. account. At present, 68 countries/jurisdictions are part of AEOI Group. India is one of Vice-chair of the AEOI Group. To The first exchange under IGA has already taken place monitor implementation of CRS, the AEOI Group is on 30th September 2015. Information received from USA creating a peer review process. Work has commenced is currently being analyzed for further action. 209 G BG B Annual Report 2015-2016 13.10.10. Implementation of AEOI and FATCA Economic Co-operation and Development. Tax issues have always been an important part of OECD’s overall For implementation of FATCA and CRS, necessary activities and are undertaken by the Committee on Fiscal legislative changes were made through Finance (No. 2) Affairs (CFA) and its subsidiary bodies. These subsidiary Act, 2014, by amending section 285BA of the Income- bodies carry out the work on a number of different topics, tax Act, 1961. Income-tax Rules, 1962 were amended including development of the model tax convention vide Notification No. 62 of 2015 dated 7th August, 2015 (Working Party 1), tax policy and statistics (Working Party by inserting Rules 114F to 114H and Form 61B to provide 2), transfer pricing (Working Party 6), consumption taxes a legal basis for the Reporting Financial Institutions (RFIs) (Working Party 9), exchange of information (Working Party for maintaining and reporting information about the 10), and aggressive tax planning (Working Party 11). Reportable Accounts. In addition the CFA has established a number of other A Guidance Note was released on 31st August 2015 to subsidiary bodies such as the Forum on Tax provide guidance to the Financial Institutions, Regulators Administration, the Forum on Harmful tax Practices, the and officers of the Income Tax Department for ensuring Task Forces on Tax Crime and Other Crimes, the Task compliance with the reporting requirements provided in Rules 114F to 114H and Form 61B of the Income-tax Force on the Digital Economy and the Task Force on Tax Rules, 1962. The Guidance Note is intended to explain and Development. The Centre for Tax Policy and the complex reporting requirements and provide further Administration (CTPA) acts as the Secretariat to the CFA guidance wherever required. This Guidance Note was and its subsidiary bodies and provides technical expertise further updated on 31st December 2015 to address the and support to the CFA. evolving issues in the implementation. India’s engagement with OECD in the field of Direct Taxes 13.10.11. Country-by-Country (CbC) Reporting began in the 1990s in the form of delivery of technical development programme at the National Academy of Direct Action 13 of the BEPS Action Plan required the Taxes at Nagpur. Since then, India has been associated development of rules regarding transfer pricing with the taxation work of OECD and since 2006 have been documentation that would enhance transparency in accorded the status of “Participant” (earlier known as business models employed globally by Multi National “Observer”) to the work of CFA and in this capacity was Enterprises (the “MNEs”), for the benefit of tax participating in the meetings of CFA and its subsidiary administrations, taking into consideration the compliance bodies, although as “participant”, India do not take part in costs for business. The rules to be developed were to the decision-making process and is not bound by the CFA’s include a requirement that the MNEs provide all relevant conclusions, proposals or decisions. governments with needed information on their global allocation of the income, economic activity and taxes paid The Indian delegates have been participating in the meetings among countries according to a common template. of Working Parties and Task Force in view of the prominent role of OECD in development of international standards in The final report on Action 13 recommends a three-tiered the areas of international taxation, transfer pricing and standardized approach, which requires the MNEs to exchange of information. The policy adopted by India was provide (i) information of their global business operations that of continuous engagement and participation, and and transfer pricing policies in a “Master File”, (ii) detailed influencing the development of international standards to transfer pricing documentation specific to each country protect our revenue interests while ensuring at the same in a “Local File” and (iii) a Country-by-Country Report (the “CbC Report”). time that in areas where the stand and position taken by India is not in conformity with the stand taken by the OECD, To facilitate the implementation of the exchange of CbC the reservations and positions of India are taken into account Reports among tax administrations on the basis of the during the updating of various standards and guidelines Multilateral Convention, the BEPS report on Action 13 being developed by the OECD. specifies a Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports (the For the last two years, the work of OECD is primarily “CbC MCAA”), which will be signed by the Competent concentrated on BEPS and AEOI discussed above. Some Authorities of agreeing countries. India proposes to sign of the other areas of OECD’s work related to taxation in this agreement shortly. which India is associated are summarized below: 13.10.12. India’s Association with OECD (a). OECD Global Relations Training Programme The OECD is an organization of 34 member countries who Each year, under Global Relations Programme (GRP), are signatories to the Convention on the Organization for OECD holds around 75 training events on a variety of 210 G BG B Department of Revenue III international tax policy and administration topics bringing As part of its endeavor to promote global tax transparency, together some 2000 serving tax officials from over 100 India has joined the Joint International Tax Shelter countries in more than 20 venues globally. India’s Information and Collaboration (JITSIC) network, which engagement with OECD’s GRP includes participation of is a global effort at coordinating tax administrations tax officers in training events abroad both in the capacity against tax avoidance, and base erosion and profit of participants as well as experts. During 2015, 34 Indian shifting. officers participated in 17 events abroad. Further, training (d). Forum on Harmful Tax Practices (FHTP) events are hosted in NADT, Nagpur and OECD experts are invited to lead these events. During the year 2015, Forum on Harmful Tax Practices (FHTP) was established following two events were held at NADT: following the publication of OECD’s 1998 report on “Harmful Tax Competition: An Emerging Global Issue” to i. BEPS: Tax Treaties, Treaty Abuse and PE from identify those preferential tax regimes that have harmful 10th-14th August, 2015 effects. Main work of FHTP is to review preferential tax ii. BEPS: Transfer Pricing Intangibles and Business regimes of member countries and to make Restructurings from 23rd - 27th November, recommendations to remove features that create harmful 2015. effect or to abolish the regime. During the year, review of Indian regimes was completed by FHTP and regimes (b). Tax Inspectors Without Borders (TIWB) review reviewed were not considered to be harmful. India is also participating in Tax Inspectors Without 13.10.13. Global Forum on Transparency and Borders (TIWB), which is a joint initiative of the OECD and Exchange of Information for Tax Purposes the United Nations Development Programme (UNDP), designed to support developing countries to build tax audit The Global Forum on Transparency and Exchange of capacity. The objective of the programme is to enable Information for Tax Purposes (Global Forum) carries out transfer of tax audit knowledge and skills to tax in-depth monitoring and peer review of the standards of administrations in developing countries through a real time transparency and exchange of information (EOI) for tax “learning by doing” approach. It aims at facilitating the sharing purposes. The peer review is done over two phases: of expertise by deployment of tax auditors on demand basis Phase 1 dealing with the legal and regulatory framework to support developing countries build tax audit capacity. of the assessed jurisdiction and Phase 2 relating to actual implementation of the standards in practice. India is a (c). Forum on Tax Administration (FTA) Vice Chair of the Peer Review Group of the Global Forum India is a member of the Forum on Tax Administration and has actively participated in all Global Forum meetings (FTA), which is a forum for co-operation between revenue and discussions on the peer review reports. The Steering bodies with participation from 45 countries, which aims Group of the Global Forum steers and guides the work to improve taxpayer services and tax compliance by of the Global Forum and provides policy direction to the helping revenue bodies increase the efficiency, various activities carried on by it. India has also been an effectiveness and fairness of tax administration and active participant in the deliberations and decisions of reduce the costs of compliance. The work programme of the Steering Group of the Global Forum. The 8th Plenary the Forum is overseen by the FTA Bureau. India has been meeting of the Global Forum took place at in Bridgetown, a member of the general body of the FTA as well as a Barbados from 29-30 October 2015 with participation of member of its Bureau, where it is represented by the 88 jurisdictions, including India, and 11 international Revenue Secretary. During the year, India participated in organisations and regional groups. various ongoing activities and projects of FTA. Inputs were 13.10.14. United Nations Committee of Experts or sent for Administration 2015(TA 2015) which is a report International Cooperation in Tax Matters published by FTA, presenting an updated review of the structure, management and performance of tax During April, 2015 meeting of United Nations Tax administrations in 56 countries. Committee’s Sub-Committee on Transfer Pricing and special meeting of ECOSOC on International Tax India, along with 22 other countries, has participated in a Cooperation was held in New York, USA. The Sub- feasibility study to develop a Common Transmission Committee discussed the drafts on Chapters on Intra System(CTS) for Automatic exchange of Group Services (IGS), Business Restructuring and Information(AEOI) for Tax Purposes. India has expressed Intangibles. its willingness to join the CTS, which will be a secure, effective and harmonized system for automatic The UN Committee of Experts on International Co- information exchange amongst countries. operation on Tax Matters met during 19th to 23rd 211 G BG B Annual Report 2015-2016 December, 2015 at Geneva to focus on the decisions to (iii) Prevention of cross-border tax evasion through update the United Nations Model Tax Convention and implementation of Common Reporting Standards the United Nations Practical Manual on Transfer Pricing for Automatic Exchange of Information; for developing countries. The meeting was attended by (iv) Engagement of developing countries in BEPS experts from India. project and increasing tax administrations’ Another meeting of UN Tax Committee’s Sub-committee capacities in implementation of Automatic on Transfer Pricing was held at Santiago, Chile during Exchange of Information. 16-18 November, 2015. Drafts of Chapters on IGS, During this meeting, the Heads of Revenue of BRICS Documentation and Intangibles were discussed. countries committed to work closely with each other 13.10.15. Cooperation with BRICS Countries on Tax and with developing countries to facilitate and deepen Matters collective involvement in implementation of BEPS measures and cooperate on issues of common During the BRICS Finance Ministers and Central Bank interest. Governors meeting held in Washington DC on 19th April, 2012, it was agreed to develop a cooperative approach 13.10.16. India-Brazil-South Africa (IBSA) Revenue on issues relating to international taxation, transfer pricing, Administration Working Group Meeting exchange of information and tax evasion & avoidance. IBSA (India-Brazil-South Africa) Dialogue Forum is a Accordingly, the tax administrations of BRICS countries trilateral developmental initiative between India, Brazil and have been cooperating in the areas of taxation. South Africa to promote South-South Co-operation and Importance of cooperation on tax matters amongst BRICS brings together three democracies. The Heads of countries has also been recognised by BRICS leaders Revenue Administrations Working Group is one of the and accordingly following was included in the declaration, several sectoral working groups of the IBSA Dialogue issued after BRICS Summit held in Ufa, Russia in the Forum formed in 2006. It is to promote closer cooperation month of July, 2015: in both tax and customs matters and contribute to the IBSA Dialogue Forum. Areas of international taxation and “26. The BRICS countries reaffirm their commitment to transfer pricing, exchange of information, cooperation in participate in the development of international standards multilateral fora, digital economy, aggressive tax planning of international taxation and cooperation for countering and capacity building have been identified for closer co- the erosion of tax base and profit shifting, as well as to operation among IBSA countries. Sub-groups have been strengthen mechanisms for ensuring tax transparency constituted to work in these areas for enhanced and to exchange information for taxation purposes. cooperation. We remain deeply concerned about the negative 13.10.17. Meeting of Competent Authorities under the impact of tax evasion, harmful practices, and aggressive SAARC Agreement tax planning which cause erosion of tax base. Profits should be taxed where the economic activities driving The Fourth Meeting of SAARC Competent Authorities the profits are performed and value is created. We reaffirm on Avoidance of Double Taxation and Mutual our commitment to continue to cooperate in relevant Administrative Assistance in Tax Matters was held in New international fora on issues related to the G20/OECD Delhi on 23-24 April 2015. The main outcome of the BEPS Action Plan and AEOI. We are engaged in assisting meeting was finalization and drafting of the Protocol developing countries to strengthen their tax administration Amending the SAARC Agreement on Avoidance of capacity, and to promote a deeper engagement of Double Taxation and Mutual Administrative Assistance developing countries in the BEPS project and the in Tax Matters, through which Article 5 (Exchange of exchange of tax information. The BRICS countries will Information) of the Agreement is brought at par with share knowledge and best practices in taxation.” current international standards. The Heads of Revenue of BRICS countries met in 13.10.18. Capacity building under SAARC Agreement Moscow during the month of November, 2015 and discussed the following issues: The SAARC Member States signed a Limited Multilateral Agreement on Avoidance of Double Taxation and Mutual (i) Approaches and steps of implementation of Administrative Assistance in Tax Matters in 2005. Article BEPS Action Plan, taxing profits at the place of 10 of the Agreement provides that Member States shall economic activity; endeavor to hold and organize Seminars/Training Programmes. In the last five years, 7 seminars/training (ii) Challenges of Digital Economy; 212 G BG B Department of Revenue III programmes were conducted. This year, programme on During the financial year 2015, one more Income Tax “Taxation issues in Digital Economy” was conducted in Overseas Unit (ITOU) became operationalised in India at NADT, Nagpur, during 17-20 March, 2015. Germany in addition to the seven ITOUs already established previously in Mauritius, Singapore, France, 13.10.19. Coordination with other Multilateral Japan, Netherlands, UK and USA. IRS officers were Agencies posted as First Secretary (Economic), in these Income India is an Associate member of Center for Inter American Tax Overseas Units (ITOUs). Tax Administration (CIAT), a multilateral organization. The 13.10.22. Mutual Agreement Procedure efforts of CIAT are focused on cooperation between the tax administrations of different jurisdictions with a view As in all spheres of commercial activities, disputes do to work jointly against international tax evasion. To fulfil arise in the application and interpretation of tax treaties. this objective, CIAT organizes different activities, studies, All tax treaties, therefore, contain an article providing for workshops, seminars etc. wherein tax administrations can a mechanism to resolve such disputes known as “Mutual share their suggestions, practices, experiences, etc. Agreement Procedure (MAP)”. This is a treaty mechanism During 2015, Indian delegates participated in General and can be taken for recourse to, irrespective of the Assembly and Technical Conference of CIAT. Indian remedies provided by the domestic law of the Contracting delegations made presentations during these events on States and under which the Competent Authorities may topics allocated to India. reach an understanding to avoid double taxation. The purpose is to ensure that the tax disputes involving cross Commonwealth Association of Tax Administrators (CATA) border transactions are settled in an amicable manner to was established as a result of decision taken at the the satisfaction of all parties. meeting of the Commonwealth Finance Ministers in Barbados in 1977. India has been an important member During the Year 2015, Meetings for resolving under MAP of Commonwealth Association of Tax Administrators cases were held with USA, UK, Canada, Japan, China (CATA) since 1979. CATA’s activities include organizing etc. annual technical workshops, high quality training In January 2015, a MAP meeting with US Authorities was programmes for tax officials, in country training held in New Delhi in which an agreement on a framework programmes tailored to meet specific needs of members, was reached that would help in resolving MAP cases publication of a quarterly newsletter, provision of pertaining to the SWD &ITeS Sectors. Subsequently, in consultancy services and research facilities for members September 2015, another meeting was held in upon request, supply of information to members, etc. India Washington DC in which the framework was further participated in major events organized by CATA during revised. Till December 2015, under the framework, 100 the year. A paper was also presented by India in Technical MAP (TP) cases have been resolved. Apart from this, 36 Conference of CATA held in Malaysia. MAP (non-TP) cases involving non transfer pricing issues 13.10.20. Examination of FIPB proposals in FT&TR have been resolved with USA. Division In July 2015, a MAP meeting was held with UK Authorities FT&TR Division of CBDT is required to examine all FDI at London and the pending cases were discussed. 10 applications filed under ‘Government Approval route’ from MAP (TP) cases were resolved during that meeting. revenue angle and forward its inputs to the FIPB Unit of Department of Economic Affairs. During calendar year In September 2015, a MAP meeting was held with 2015, a total of 449 proposals were processed in the Canadian Authorities at Ottawa and the pending cases FT&TR division and inputs on these proposals were sent were discussed. 5 MAP (TP) cases were resolved during to Foreign Investment Promotion Board. that meeting. 13.10.21. Income Tax Overseas Units Meeting for resolving cases under MAP was held with China during July, 2015. One MAP case has been The Income Tax Overseas Unit (ITOU) posts were resolved in addition to one already resolved last year. created to assist Indian Competent Authority on matters Positions on other MAP cases have also been relating to exchange of information under DTAAs, other exchanged. matters concerning Double Taxation Avoidance Agreements (DTAAs), facilitate Mutual Agreement Three MAP/APA meetings (in March, 2015, June, 2015, Procedure (MAP) cases under DTAAs, facilitate Advance October, 2015) were held with the Japanese Competent Pricing Agreements (APA) and to liaison with various Authority during the year. Some of the pending cases Departments, liaison with investors, etc. could be resolved during these meetings in an amicable 213 G BG B Annual Report 2015-2016 manner to the satisfaction of both countries as well as introducing Sections 92CC and 92CD. The APA scheme taxpayer. Significant progress was made in other pending was notified in the Income-tax Rules, 1962 on 30th August MAP case. 2012, inserting Rule 10F to 10T and 44GA. In May 2013, a taxpayer series on “Guidance on APA Scheme and Bilateral MAP negotiations between India and Australia FAQs” was released. are going on in four cases. The Advance Pricing Agreement (APA) mechanism was 13.10.23. Advance Pricing Agreement introduced in order to reduce litigation that arises in Advance Pricing Agreement provisions were introduced transfer pricing matters. A large number of applications vide Finance Act 2012, amending the Income Act 1961, have been filed, a majority of which are unilateral applications. Till date, the year-wise breakup is as follows: Details of applications for unilateral and bilateral APAs received are as under: Number of Number of Number of Number of Applications for Applications Applications FY Applications filed which agreement is signed withdrawn Pending 2012-13 146 4 22# 120 2013-14 232 4 10 219 2014-15 205 - - 204 2015-16* 7 - - 7 Total 590 8 32 550 * Till 31st December, 2015 # Out of 5 APAs signed in FY 2013-14, one APA has been revised and signed ini FY 2015-16 Details of APAs signed are as under: FY Unilateral APA Bilateral APA Total 2013-14 5# - 5 2014-15 3 1 4 2015-16* 23 - 23 Total 31 1 32 * Till 31st December, 2015 # Out of 5 APAs signed in FY 2013-14, one APA has been revised and signed ini FY 2015-16 214 G BG B Department of Revenue III Rollback of APAs was announced by the Hon’ble Finance 13.11. International Taxation Minister in his Budget Speech on 1oth July, 2014. The Principal Chief Commissioner of Income Tax Provisions for Rollback Mechanism was brought into the (International Taxation) deals with international taxation Act vide Finance Act 2014. The Roll back scheme was issues pertaining to entities having cross border notified in the Income-tax Rules, 1962 on 14th March 2015, transactions. System of taxation of income varies widely inserting Rule 10 MA and 10 RA. On 1st April 2015, some from country to country and there are no broad general amendments to the Rules were notified. In June 2015, a rules. These variations create the potential for double circular was issued clarifying the Rollback Provisions in taxation (where the same income is taxed by different the form of FAQs. countries) as well as no taxation in some cases (where income is not taxed by any country). Generally, where During the year, meetings between India and Japan took worldwide income is taxed, reduction or credit is provided place to discuss bilateral APA cases involving Rollback. for foreign taxes paid in other jurisdictions. Under any Bilateral APA negotiations are also underway in three system of taxation, it is possible to shift profit to another cases with Australia. tax jurisdiction or re-characterize income in a manner 13.10.24. Dispute Resolution Panels (DRPs) that reduces taxation. Tax jurisdictions, therefore, often impose rules relating to shifting of income among Dispute Resolution Panel (DRP) as a new dispute commonly controlled parties, often referred to as Transfer resolution mechanism, in the Income Tax Department, Pricing Rules. In India, various Commissionerates was put in place from 1st April, 2009. Each DRP is a functioning under the Principal CCIT (Intl. Taxn.) are collegium comprising of three Commissioners of Income- continuously engaged in the work of scrutinizing the tax constituted by the Board for this purpose. Prior to 1st cases of transfer pricing and cross border mergers/ January, 2015, the Commissioners of Income Tax (CsIT) acquisition of companies, as and when such transactions were functioning as members of DRPs in addition to their take place, to bring to tax capital gains arising on transfer regular duties. of shares/ assets consequent to merger and acquisition A new scheme for the DRPs has come into force with of companies. effect from 1st January, 2015 whereby 5 permanent DRP The region of Pr. Chief Commissioner of Income Tax benches have been created at 3 cities i.e.2 at Delhi, 2 at (International Taxation), New Delhi was reorganized w.e.f. Mumbai and 1 at Bengaluru with deployment of 15 CsIT 15.11.2014 after restructuring of the Income Tax for this purpose. It may be mentioned that this new Department and two new posts of Chief Commissioner scheme establishes permanent DRPs (CIT level officers of Income Tax (Intl. Taxn.), West Zone, Mumbai and Chief functioning exclusively as Members of DRPs) as against Commissioner of Income Tax (Intl. Taxn.), South Zone, the earlier scheme of non-permanent DRPs manned by Bengaluru were created. Additional posts of CsIT performing functions of members of DRP in addition Commissioners have also been created at Delhi and to their regular duties. Mumbai in the International Taxation as well as Transfer Pricing charges. 13.10.25. Policy Issues on International Taxation 13.12. Pr. DGIT (Administration) A Committee was constituted in 2014 by the Central Board of Direct Taxes under Section 119 of the Income-tax Act, There are five (5) directorates under the charge of Pr. DGIT 1961 for dealing with references made by assessing (Admn.) which is an attached office of the CBDT. Each officers on the application of amendments introduced with Directorate is headed by an Addl. Director General of retrospective effect on income arising from indirect Income-tax, an officer of the rank of Commissioner of transfer of assets, consisting of Joint Secretary (FT&TR- Income-tax. Details of the said Directorates are as under: I), Joint Secretary (TPL-I) and Commissioner of Income 13.12.1. Directorate Of Income Tax (PR,PP&OL) Tax (ITA-I), with Director (FT&TR-I) as its Secretary. The committee examined two references that were made to The Directorate of Income-tax (Public Relation, Printing it during the year, and gave its recommendation in one Publications and Official Language) is responsible for the such case. Publicity and Public Relations, Printing and Publications and Implementation of Official Language Policy in the A notification was published on 23rd March, 2015, Income-tax Department all over India. clarifying that DTAA between India and erstwhile Czechoslovakia continues to be applicable to the Some of the important steps/ initiatives/decisions taken residents of Slovakia. during the period of report are detailed below: 215 G BG B Annual Report 2015-2016 A. Publicity Campaigns: Several publicity campaigns were carried out by the Directorate of Income Tax (PR,PP&OL) such as: Name of Campaign Medium Duration TDS Awareness Campaign for Govt. & Non-Govt. deductors-January Print 4 Insertions Awareness in respect of Non-filers Print 2 Insertions Payment of Advance Tax Due Date 15th March Print 5 Insertions Advance Tax – Filing of Income Tax Return Print 4 Insertions Due Date 31st March Publication of Names of Chronic Defaulters Print 2 Insertions Filing of TDS statement Due Date 15th May Print 2 Insertions Issuance of TDS certificate Due Dates 30th& 31st May Print 2 Insertions Payment of Advance Tax (1st installment for Corporate) Due Date 15th June Print 2 Insertions Filing of TDS statement/Issue of TDS certificate Print 2 Insertions Due Date 15th July Print 5 Insertions TV 12 days Radio 12 days Filing of Income Tax Return Last Date 31st August Web 12 days SMS 6 days Cinema 10 days Outdoor 30 days Public Awareness in respect of services of TRPs Print 1 Insertions Filing of Annual Information Return Print 1 Insertions Due Date 31st August Print 5 Insertions TV 12 days Radio 12 days Payment of Advance Tax (second instalment) Web 10 days Due Date 15th September SMS 3 days Cinema 10 days Outdoor 15 days Print 2 Insertions TV 12 days Radio 12 days Filing of Income Tax Return Web 8 days Due Date 30th September SMS 3 days Cinema 10 days Outdoor 15 days Black Money Act Print 8 TV 15 days Radio 15 days Awareness in AIR Filers Print 1 Insertions Filing of TDS return Due Date 15th October Print 2 Insertions Web 10 days Income Tax Ombudsman Print 1 Insertions Vigilance Awareness Week 27th October to Print 1 Insertions 1st November Payment of Advance Tax (third installment) Print 6 Insertions Due Date 15th December TV 12 days Radio 12 days Web 15 days SMS 3 days Cinema 10 days Outdoor 15 days 216 G BG B Department of Revenue III B Trade Fairs: such as Nukkad Natak, Drawing Competition and Quiz Contest to engage with school children and youth, who 1.1 Gujarat: Vibrant Gujarat Global Trade Show, are potential taxpayers of the future, were organised in 2015 was organized at Gandhinagar, Gujarat jointly by the Lounge to generate interest and awareness about Industrial Extension Bureau (A Govt. of Gujarat taxation. Organization) and K&D Communication Ltd from 7th to 13th January 2015. The Directorate set up a Taxpayers’ 1.6 An initiative during IITF, 2015 was the focus of Lounge at this trade show on the theme of “How Taxes the Department on outdoor branding at the fair venue in Enable Skill Development”. For the exhibition, the publicity the form of wall branding, banners on electric poles and videos were displayed at the Lounge. The Taxpayers’ publicity through LED walls set up by ITPO at various Lounge was visited by several dignitaries and taxpayers. prominent locations within the Pragati Maidan. In sync Hon’ble Finance Minister, Shri Arun Jaitley visited the with the theme of IITF, 2015, a short Audio-Visual film lounge on 11.01.2015. He saw the various taxpayer “Chodo Kal Ki Batein” on Make in India & Taxation was services being offered to the taxpayers at the lounge and also prepared and run during the trade fair. During the also witnessed the drawing competitions being organized entire period of the trade fair approximately 1.5 lakh at the lounge as a part of public engagement and persons visited the Pavilion. Visitors books kept for obtaining feedback from the public recorded more than education of the future taxpayers. The Lounge was also 6530 comments (approx). During the 14 day period about visited by the Minister of State (Finance), Shri Jayant 2100 certificates were given to children and more than Sinha. He appreciated the initiative taken by the approx3000 prizes were given to children as well as Department. general public for participating/winning the competitions 1.2 Mumbai: The Department participated in Times organized at the Taxpayers’ Lounge. Utsav, Mumbai from 16thto 25th October, 2015 at 1.7 The Taxpayers’ Lounge was awarded ‘Silver’ Bandra Kurla Complex, Mumbai by setting up a medal for excellence in display in the category of Taxpayers Lounge at the said event. The Taxpayers’ Ministries and Departments in the 35th India International Lounge was inaugurated by Principal Chief Trade Fair, 2015 in the award ceremony held on 27th Commissioner of Income Tax, Mumbai on 16th November 2015. The award was presented by Shri Arun October, 2015. There were four different counters for Jaitley, Minister of Finance, Corporate Affairs and TRPS, 26AS, ASK and PAN for taxpayer services and Information & Broadcasting, Government of India and were manned by TRPs and supervised by officers Smt. Nirmala Sitharaman, Minister of State deputed by Mumbai office. Approximately, 2500 visitors (Independent Charge) for Commerce and Industry at an had made entry in the visitor’s book. Activities like quiz impressive ceremony in the presence of representatives competition, nukkadnatak and drawing competitions of various foreign participants, States, PSUs, Ministries were organized. & Business organizations. 1.3 Delhi: The Department has been participating 2. Social Media in the India International Trade Fair at Pragati Maidan, In sync with the thrust of the Government, the Department New Delhi for the past few years by setting up a Taxpayers has forayed into Social Media by commencing the social Lounge. media activities of the Department with a Twitter account. 1.4 The Taxpayers’ Lounge set up by the Income Tax The Twitter account @IncometaxIndia has been started Department at “35th India International Trade Fair (IITF), and integrated with the official website. Regular tweets are 2015” at Pragati Maidan, New Delhi is a major step by being pasted on various Press releases latest Circulars & the Department to generate awareness in the public about Notification & other initiatives of the Department. the various taxpayer-friendly initiatives taken by the 3. Public Relations Department. Through the Taxpayers’ Lounge, various taxpayer services like e-filing of returns, viewing of tax Booklets and brochures under the ‘Tax Payers Information credit through 26AS, applications for PAN, ASK counter Series’ are continuously updated to increase the and services of Tax Return Preparers were showcased awareness of the taxpayers about the provisions of tax to the public. laws and the steps taken by the government to reduce the complexities of tax laws and improve Tax Payer service. 1.5 This year’s Lounge was designed keeping in mind the theme of IITF 2015 i.e. ‘Make in India’. The A. The following Booklets and Brochures (English Lounge highlighted the contribution of taxes and the and Hindi) were updated & printed during the period Income Tax Department to nation building and activities 01.01.2015 to 31.12.2015. 217 G BG B Annual Report 2015-2016 TPI (Tax Payer Information) Booklets 15. Date With Direct Taxes for 2016 (English) 1. How to Compute your Capital Gains 16. Date With Direct Taxes for 2016 (Hindi) 2. Taxation of Salaried Employees, Pensioners and 17. E-filing (English) Senior Citizens 18. Do’s for Tax Payers (English) 3. Manual on Exchange of Information(Hindi) 19. Do’s for Tax Payers (Hindi) 4. Assessment of Income from House Property 20. TDS- Tax Deductee’s Guide (English) 5. Assessment of Charitable Trusts & Institutions 21. TDS- Tax Deductee’s Guide(Hindi) Brochures 22. TDS -Tax Deductors / collector’s Guide (English) 1. Form 26AS (English) 23. National portal of Income Tax (English) 2. Form 26AS (Hindi) 24. National portal of Income Tax (Hindi) 3. Aayakar Sewa Kendra (English) 25. Penalties & Prosecutions under the Income Tax 4. Aayakar Sewa Kendra (Hindi) Act (English) 5. Citizen’s Charter (English) 26. Penalties & Prosecutions under the Income Tax Act (Hindi) 6. Citizen’s Charter (Hindi) 27. Know Your TDS for F.Y. 2015-16(English) 7. Ombudsman (English) 28. Know Your TDS for F.Y. 2015-16 (Hindi) 8. Ombudsman (Hindi) 29. PAN (English) 9. TRPS (English) B. The following Booklets are under process & are 10. TRPS (Hindi) likely to be printed during the period 01.01.2016 to 11. Know Your Income Tax Rate For A.Y. 2016- 31.03.2016. 17(company, Co-operatives Societies and Local 1. Hand Book on Advance Rulings. Authorities) (English) 2. TDS on Salaries, 12. Know Your Income Tax Rates For A.Y.2016- 17(company, Co-operatives Societies and Local 3. TDS other than Salaries, Authorities ) (Hindi) 4. Income Tax Guide for Residents & Indian 13. Know Your Income Tax Rate For A.Y. 2016-17 Nationals Abroad, (Individual/HUF/AOP/BOI/Artificial juridical & 5. Transfer Pricing Concept & the Law in India, Firms) English 6. Appeal Manual for CIT (A), 14. Know Your Income Tax Rate For A.Y.2016-17 (Individual/HUF/AOP/BOI/Artificial juridical & Tax Return Preparer Scheme Firms) (Hindi) During the period January’ 2015 to December’ 2015 data regarding returns filed by TRPs is given below: SI. No. Description Count 1 Total number of returns filed by the Tax Return Preparers 81,060 2 Income Declared 4266.03Crore 3 Amount of Tax Paid (in INR 421.19 Crore 218 G BG B Department of Revenue III 4.1 Online Tax Help – During the period January Publications under Print are as under: 2015 to December 2015, there were1392 requests for 1. Let Us Share, Vol. VIII assistance received where 1162 were contactable and processed and the rest of the requests could not be 2. TROs Manual. validated as they were not contactable (No Answer, Not 3. Office procedure Manual for departmental Reachable, Wrong No. etc.) representative in ITAT 4.2 Register for Home Visit – During the period 4. Accounts at a Glance. January 2015 to December 2015, there were 957 requests for home visit by TRP received where 812 were 5. CBDT Accounts Manual. contactable and processed as the rest of the requests could not be validated as they were not contactable (No 6. Quarterly Tax Bulletin 103,104,105,106,107 & Answer, Not Reachable, Wrong No. etc.). 108. 4.3 Deployment of Tax Return Preparers in Mega 7. Compendium of CBDT’s Administrative Orders, Events organized by the Income Tax Department – 2015. During the period January 2015 to December 2015, 13.12.2. Directorate of Income Tax (TDS) Department participated in three mega events namely Vibrant Gujarat Trade Show-2015, Gandhi Nagar 13.12.2.1. Initiatives of the Directorate of TDS (Gujarat), Times Utsav -2015, Mumbai (Maharashtra), Directorate of TDS follows a system of monthly MIS IITF-2015, New Delhi (Delhi). Tax Return Preparers were reports. These reports are standardized and are deputed to handle queries of taxpayers relating to return monitored on regular basis for the purpose of analyzing filing, PAN applications, refund status as well as assisted performance of TDS charges. Apart from this, progress the taxpayers in preparing their returns of income apart is also reviewed from time to time, on specific areas of from being utilised in various ASK centres& Return filing work, viz. contact programs, surveys/verifications, camps. prosecution, compounding etc. 5. Printing & Publications 13.12.2.2. TDS Conferences The Directorate printed and distributed several Directorate of TDS convenes annual Conference of CsIT publications for the use of the officers of the department. (TDS). Last Conference of CsIT (TDS) was held on 18th Details of the important publication during F.Y. 2015-16 November, 2015 at CPC-TDS. Various aspects of TDS up to 22.12.2015 are as under: Administration were taken up during the Conference. 1. Let Us Share Vol. VII Issues pertaining to CPC-TDS were especially emphasized. Imparting of training to the personnel dealing 2. Manual on Exchange of Information with the TDS was stressed upon. Accordingly, training 3. Tax Recovery Manual sessions are being conducted by the CPC-TDS regularly. Under “Corporate Connect” programme, CPC-TDS has 4. Digest of Tribunal Decisions - Vol. II directly contacted big deductors to resolve issues pertaining to TDS statements. 5. Central Action Plan, 2015-16 Directorate of TDS also convenes annual meeting of 6. Digital Evidence Investigation Manual Standing Committee of stakeholders. Last meeting of 7. Income-Tax Act, 2015 Standing Committee was convened on 29th October, 2015. Standing Committee includes representatives of 8. Income-Tax Rules, 2015 Trade/Professional bodies. During these conferences and 9. Compendium of CBDT’s Administrative orders meetings, various issues of TDS Administration were 2013 discussed and a roadmap for their resolution was drawn. 10. APAR Forms-2014-15 Group ‘A’ ‘B’ Officers & 13.12.2.3. Tax deductors’ education programme Non-Gazetted staffs TDS Charges carry out contact programmes for various 11. Direct Tax Bulletin, Vol. 51 tax deductors. Upto 31.10.2015, 231 such contact programmes have been conducted in which more than 12. Explanatory notes to the budget Provision & 8800 persons participated. Deductors were sensitized of Budget 2015 their obligations and their doubts were addressed. This 219 G BG B Annual Report 2015-2016 enables the Department to be in touch with deductors I. Recovery of arrear and current demands and also to monitor compliance by them. Commissioners a) The target of cash collection for arrear demand of Income Tax (TDS) and the offices under them also act during the year 2015-16 has been fixed at Rs. as focal points for the purpose of Grievances Redressal, 51359 Crores. Till November 2015, cash collection on regular basis. out of arrear demand is Rs. 18846 Crores. 13.12.2.4. Surveys / Spot Verification: b) Review meetings were undertaken for discussing strategies for maximizing recovery Surveys are another tool ensuring effective compliance of of outstanding demand with the field officers, the TDS provisions. TDS charges carry out surveys and with specific emphasis on monitoring dossiers spot verifications from time to time. Such surveys not only of high demand cases. detect the defaults but this action also works as a pre- c) Special reviews of arrears relating to scam emptive correction, resulting in better compliance of TDS. cases were conducted. A total of 565 surveys / verifications have been conducted upto 31.10.2015 by CsIT (TDS) across the country. II. Special Cell 13.12.2.5. Prosecution & Compounding Cases: a) Demand not under Dispute: - Statistical data with the department shows that substantial During the Financial Year 2015-16, upto 31.10.2015, a arrear demand is reflected as ‘demand not under total of 29 prosecutions for TDS violations have been dispute’. The Special Cell constituted in the launched and 311 cases of TDS defaulters have been Directorate of Recovery collects information compounded. regarding such cases to identify the reasons for non recovery and segregates demand which is 13.12.2.6. BIS Certification of operational ASK recoverable by resorting to actions under the Centres control of tax authorities. Collection of arrear demand is diligently monitored by the cell. The work of administration and control of the Aayakar Seva Kendras (ASKs) is vested in the office of Pr. DGIT b) Assessee not Traceable and Assessee having No/Inadequate Assets for recovery: - In order (Admn.), New Delhi who has further assigned the task to to address the issue of mounting tax arrears, a the ADG(TDS), CBDT. At present there are 250 Committee was constituted to focus on these operational ASK Centres in the country. After an ASK categories of demands. The Committee achieves excellence in service delivery as per norms examined options for a cost effective and flexible under the Sevottam Scheme, a certification under IS mechanism to manage recovery of these dues 15700:2005 is to be obtained from the Bureau of Indian and conducted a pilot study with dossier cases Standards (BIS). Out of the 250 ASKs, 56 have been of demand of Rs.10 crore and above and certified certified and during the FY 2015-16, 52 more Centres cases of demand above Rs.1crore which were have been proposed to be certified. made available to the Directorate of Recovery. Pr. DGIT (Systems) and FIU-IND were also 13.12.3. Directorate of Income Tax (Recovery):- requested to provide any information available regarding these cases from the data available Work assigned to this Directorate can be broadly with them. Pursuant to the recommendations of classified under 3 heads: the Committee, accepted by CBDT, a time bound methodology for dealing with these cases has i. Monitoring of collection/reduction of arrear been instituted through the Special Cell in the demand and compiling and collating data relating Directorate of Recovery. FIU-IND is periodically to recovery of tax arrears arising from current approached for getting information from their and arrear demand primarily with reference to database. Till date 241 cases have been dossiers cases of arrears of Rs. 25 Crores and uploaded on the website of FIU-IND. Out of these, above. information in 18 cases involving 254 bank accounts has been received and the same has ii. Processing of write off, partial write off and scaling been forwarded to the concerned Pr. CCsIT for down of arrear demand proposals received from further action. CCIT charges. c) Publication of the Names of Chronic iii. Processing of BIFR/AAIFR cases in terms of Defaulters in Public Domain:- Names of granting relief/ concessions under the Income chronic defaulters are placed in the public Tax Act. domain to name and shame them and seek 220 G BG B Department of Revenue III information from general public about their of the Pr. DGIT (Admn.) as the nodal agency and whereabouts. Till date 67 names have been CBDT. published in the National Newspapers/Local 13.12.4. Directorate of Income-Tax (Income-Tax): News Papers and Website of the Department. This Directorate comprises of two wings viz. Inspection d) Reward Guidelines for Informants: - and Examination. Instruction No.7/2015 has been issued by the CBDT on 26.08.2015 (available on the national (a) Inspection Wing website of the department) incorporating The instrument of inspection is an effective tool to enhance, guidelines for grant of reward to informants upgrade and sustain a high quality of work standard in leading to recovery of irrecoverable taxes. assessment/administrative functions, record keeping III. BIFR matters systems and dealing with the public grievances. It is also an important tool for providing guidance to the officials in a) The Board for Industrial and Financial their work. During these Inspections, the work done in the Reconstruction (BIFR) is a machinery created preceding financial year is examined by the Inspecting under The Sick Industrial Companies (Special Officer in a comprehensive manner, highlighting the Provisions) Act, 1985 (in short SICA) for the achievements and shortcomings of the concerned officers purpose of detection of sick industrial companies in the key areas of their work, with a view to bring out the and to frame schemes for revival of such sick strengths and weaknesses of the work practices and companies. thereby strengthen the administrative machinery. b) The Pr. DGIT (Admn.) is the nodal agency in all A new system of Inspection came into operation vide BIFR cases between CBDT and BIFR. The work Instruction No. 16/2008 dated 4th November, 2008 which on behalf of Pr. DGIT (Admn.) is done by the provided for an annual comprehensive inspection of the BIFR unit in the Directorate of Recovery, which CIT (Appeals), Range Offices and Assessing Officers for is a coordinating agency between the BIFR and the CBDT. BIFR approves a Sanctioned Scheme which the reports were to be made in accordance with the for rehabilitation of a Sick Industrial Company, prescribed proforma in each class of inspection. Under envisaging certain reliefs from CBDT. The case the new system of Inspection, the following Inspections is processed by this Directorate with the approval are to be carried out by the Inspecting Officers:- Sl. Reviewing Inspected Office Inspecting Officer No. of Inspections to be done No. Officer 1. CIT (Appeals) Concerned CCIT - All CIT (Appeals) working in CCIT charge 2. Addl./ JCIT Concerned Concerned One Range per CIT charge administrative CIT CCIT 3. DCIT/ACIT Concerned Concerned Two DCsIT/ACsIT per CIT charge administrative CIT CCIT 4. ITO Concerned Range Head Concerned CIT Two ITOs per Range charge A comparative analysis of inspections done since F.Y. 2010-11 onwards, till 29.12.2015 is as under: Inspection Carried out for No. of Reports No. of Reports Financial Year the F. Y. Received Reviewed 2010-11 2008-09 1803 926 2011-12 2009-10 1554 951 2012-13 2010-11 1667 1660 2013-14 2011-12 1435 1427 2014-15 2012-13 1023 1023 2015-16 2013-14 561* 395 (as on date) * Reports received as on date in accordance with the inspection reports due in this Directorate vide Instruction No. 16/2008 dated 4.11.2008. 221 G BG B Annual Report 2015-2016 (b) Examination Wing:- 3. For speedy evaluation of the subjective answer sheets in respect of ITO exam, the centralized The Examination Wing is entrusted with conducting evaluation camp for two week was held in the Departmental Examinations for Assistant Commissioner Directorate in mid September. of Income Tax (Probationers) and other Gazetted and Non-Gazetted cadres of Income Tax Department. The 4. The centre wise attendance sheets were also Directorate plays an important role in ensuring the uploaded on the net and the web-link, user and conduct of Departmental Examinations in an efficient, password were provided to all the Pr. CCIT/CIT time-bound, fair & impartial manner. The Directorate has (Exams) for downloading the attendance sheets also been constantly reviewing the Examination rules and for their respective Centers. policy/syllabus taking into accounts the new developments in the field of Income Tax and E- 5. The number of candidates for each subject per Governance so that capable and efficient Staff/Officer centre for ITO/ITI Exams was worked out from are made available to the Income Tax Department all the finalized application data. On the basis of over India. these details, the question papers were packed for each centre and sub-centre. A. Highlights of the performance/achievements during the year : 13.12.5. Directorate of Income Tax (Audit) 1. In April, 2015 the results of the 1st Departmental 13.12.5.1. Internal Audit (1st Supplementary) Examination as well as of Internal audit was introduced in the Dept. with the the 2nd Departmental Examination of the 67th objective of providing a second check over the accuracy Batch of IRS Probationers were compiled and in computation of income and determination of tax. On declared. the recommendations of a committee setup under the 2. Examination data status – PQ Betterment, Chairmanship of the then DGIT (Admn.), as approved by Normal was scrutinized and wherever required, the CBDT, a new internal audit system was introduced matched with previous year’s records. Wherever with effect from 1st June, 2007. The new system provides needed, process for correction of this data was for a separate specialized Internal Audit Wing in the initiated. Department to perform the audit work, with no overlapping between assessment and audit functions. Its objectives 3. Departmental Examination for ITOs/ITIs 2015 are:- was conducted in the month of July, 2015 in the objective type pattern. The total no. of candidates a) To play a corrective role of pointing out mistakes who appeared in these exams is around 8000. committed during assessments and taking remedial action; 4. Result of the Departmental Examination for ITOs and ITIs were declared in the month of October b) To exercise vigilance for prevention of mistakes 2015. having both deterrent as well as reformative effect; B. Involvements of technology for curtailing the c) To improve the quality of assessment, to reduce time taken in conducting the exams, and errors and omissions which are subsequently declaration of results detected by Revenue Audit. 1. A new initiative taken this year was introduction (i) In the audit structure, at present, there are 22 of the online receipt of application forms of the Commissioners of Income Tax who, along with their candidate. Facility of registering online complaint teams look into the audit work. There are 2 CsIT (Audit) and raising online disputes are also provided to each in the 4 metro cities and there is one CIT (Audit) the candidates. This has reduced the no of phone with each Pr. CCIT in all the other charges. The CIT (Audit) calls received in this office regarding problem is the overall in charge of the audit wing and functions faced by candidates while filling online under the administrative control &supervision of the Pr. application. It has also facilitated online CCIT. The audit work is carried out by special audit parties generation of Roll Nos. and issue of admit cards. (SAP), headed by DCIT and internal audit parties (IAP) 2. The answer keys of the objective-type question headed by ITOs. Performance targets for these audit papers for Departmental Examination for ITOs/ parties are assigned by the Board. The norms of auditable ITIs 2015 were put on the website to ensure cases, for internal audit, have been prescribed by the transparency. Board (Instruction no. 3 of 2007). 222 G BG B Department of Revenue III (ii) During the F.Y. 2015-16, upto quarter ending on 30.09.2015*, details of work done by the different authorities are given below:- Cases Audited by the authorities Addl. CIT SAP IAP Total 645 2266 57742 60653 * Although actual figures upto December, 2015 were called for, figures are available upto September, 2015, as this reporting is done quarterly. (iii) A statement of Internal Audit Objection Pending, Raised & Settled with revenue effect is given below:- Objection Raised/Settled & Balance for the period 01.04.2015 to 30.09.2015* (F.Y. 2015-16) No. of Objections No. Amt. (Rs. In lakh) Opening balance as on 15273 682828.94 01.04.2015 Raised 4850 507247.02 Total 20123 1190075.96 Settled 2720 69909.96 Outstanding 17403 1120166.00 as on 30.09.2015* *Although actual figures upto December, 2015 were called for, figures are available upto September, 2015, as this reporting is done quarterly. (iv) Reports: • Annual Report on Internal Audit functions: The Annual Report on Internal Audit functions is • Monthly Report: The compilation of figures of prepared for internal circulation to all CsIT (Audit) audit objections, raised and settled during the detailing and highlighting therein the quality work month along with the revenue impact, is and the performance of internal audit set-up of submitted by the 22 CsIT (Audit) charges. The the country. monthly report enables the supervisory authority to know the latest position of settlement and • Statement XVI: Statistical Data for inclusion in pendency of audit objections of each charge. the Report of C&AG (Statement XVI) is sent annually. • Quarterly Progress Report: The Quarterly Progress Report gives a comprehensive picture (v) Inspection of work of Audit Parties: The Audit of the work done by the different echelons of the Manual mandates Inspection of work done by Audit audit wing. It exhibits the comparative analysis Parties in different charges. During the F.Y. 2015-16, the of work of CsIT (Audit) throughout the country Inspection of work of Audit Parties has been carried out for a particular quarter and it helps in monitoring. at 2 stations Bhubaneshwar and Ahmedabad. In the last A copy of this Report is sent to Member (A & J) quarter of January-March, 2016, it is proposed that and each Pr. CCIT for effective supervision. Inspection of work would be conducted in charges at • Review of Settlement of Objections: A total of Kochi, Mumbai and Pune. 134 such Review Meetings have been held upto (vi) Workshops on Internal Audit: The workshops/ November, 2015 (in F.Y. 2015-16) against 117 seminar are periodically held by the Pr. CCsIT to sensitize upto January, 2015 (in F.Y. 2014-15) resulting in the assessing officers on the common/repeated mistakes total settlement of 3,964 Internal Audit Objections pointed out by audit. upto October, 2015. 223 G BG B Annual Report 2015-2016 (vii) Initiative for improvement in the functioning position of settlement and pendency of audit of Audit Wing: - With a view to make an updated Audit objections of each charge. Manual, the CBDT has constituted a Review Committee • Quarterly Progress Report: It exhibits the to submit revised draft instruction incorporating charges comparative analysis of work carried out made subsequent to introduction of Audit Manual in 2011, throughout the country for a particular quarter ITBA (Income Tax Bus Applications) functionality for Audit, and helps in proper monitoring of the work. effect of cadre- restructuring and prescribe and prescribe Standard Office Procedure for dealing with Audit 13.13. Directorate of Organization and Management Objections. The Committee is likely to submit proposal Services (O&MS) for draft instructions in January, 2016. (A) Highlights of the performance and 13.12.5.2. Revenue Audit Work achievements under key programmes being implemented by DIT (O&MS) during the year. During the Financial Year 2015-16, upto November, 2015, 437 Action Taken Notes were sent to the Audit and PAC 1. Aayakar Sewa Kendra : Division of CBDT. These are then forwarded to the Aayakar Sewa Kendra (ASK) is the single window system Monitoring Cell in the Ministry of Finance for settlement for implementation of Citizen’s Charter of the Income Tax of objections with C&AG. Department and a mechanism for achieving excellence Reports: in public service delivery. Details of setting up are as under: • Monthly Report: The monthly report enables the supervisory authority to know the latest From 01.04.2014 to Projection/Estimate from 01.04.2015 to 31.03.2016 31.03.2015 61 ASKs 58 more ASKs are have been set up to be setup by 31-03-2016 In All 250 Aayakar Sewa Kendras have been set up across all buildings of the Income Tax Department upto 31-03-2015 (B) Significant initiatives taken during the year (C) Mechanism put in place to measure for development of public service delivery development outcomes of majors schemes/ and for ensuring “inclusive growth”. programmes. 1. Review of Strategic Plan 2011-15 In order to equip the department with a tool to measure the progress regarding various development schemes, The Vision 2020 document envisages a review of the the Results Framework Document (RFD) is drafted every Strategic Plan 2011-15 in order to create a roadmap for year. The RFD is an agreement between Chairman, the next 5 years and course correction if any. A draft CBDT and the Responsibility Centres vide which a set of Strategic Plan 2016-20 has been prepared by DOMS and targets are resolved to be achieved within a matrix of is under consideration of the CBDT. measurable success indicators. The RFD for the year 2015-16 was submitted in March, 2015. The annual 2. Review of RFD review of RFD for F.Y. 2014-15 was completed in May, DIT (O&MS) is the coordinator for preparing Results 2015. Framework Document (RFD) every year and half yearly (D) Initiatives taken with reference to and yearly review of RFD. The RFD for the year 2015-16 Development of North Eastern Region and was prepared and submitted to CBDT on 04-02-2015. Sikkim including projects/schemes in This year annual review of RFD for F.Y. 2014-15 was operation and actual expenditure thereon. completed in the month of May, 2015. The first ASK at Tripura was setup in Agartala in 2014- 3. Process & Management Studies 15.5 more AayakarSewaKendras are being setup in Studies on streamlining MIS reports and efficiency of Morigaon, Nalbari, Golaghat, Dharmanagar and ASKs is disposal of rectification appreciations and Duliajanupto 31.03.2016. A budget of Rs. 51.24 lacs has underway. been sanctioned for setting up these 5 ASKs. 224 G BG B Department of Revenue III (E) E-Governance Activities. 15th Main Road, Anna Nagar West, Chennai through CPWD. The 12 report of 2nd Administrative Reforms Commission (ARC) aimed at Citizen Centric Governance. The advent ii. Hiring of AIR India Building at Mumbai of modern technology has brought in the concept of E- @Rs.107,47,64,436/- p.a. was approved and Governance. The setting up of ASKs is a step towards sanction. this direction. Besides providing a Citizen Centric iii. Sanction of Rs.49,21,58,483/- for Extension of Governance, all communications, as well as returns existing contract of M/s BVG India Ltd. for received in ASK, mandate timely disposal which can be providing Facility Management Services (FMS) monitored and reviewed at the highest level. at Civic Centre, New Delhi. Online compilation and collation of various statistics of iv. Sanction of Rs.44,81,46,528/- for payment of the income Tax Department in the form of CAP-I and BSNL & MTNL on account of telecom services CAP-II is being done, thereby reducing delay and ensuring availed by the IT Deptt. under the project tarang accuracy of data. for the period from 01.10.2013 to 31.03.2014 and (F) Implementation of the Right to Information outstanding payment for 01.01.2011 to Act 2005 and the matters incidental thereto. 30.09.2013. The scope of services provided in ASKs was v. Rs.33,65,00,000/- for sanction for hiring of contemplated to be expanded by enabling the Sevottam additional operation vehicles for new Assessment Software to receive RTI applications during the month of Ranges and additional offices created under June, 2013. The facility to receive RTI applications and various Directorate in the I.T Deptt. consequent appeals through Sevottam Software has been made to Cadre Restructuring. available from 01-05-2014. vi. Construction of 58 Staff quarters, (Type-III- 38 13.14. Directorate of Income Tax (infrastructure) Nos., Type-IV -20 Nos,) alongwith community hall for I.T. Deptt., at Majura Gate, Surat through The Directorate was notified vide Ministry of Finance order NBCC Ltd was accorded for an amount of dated 21st November, 2005. The Directorate of Income Rs.29,36,82,047/-. Tax (Infrastructure) is presently headed by three Addl. Director General. The functions of the Directorate include vii. Construction of office and residential building at drawing up of construction programme, examination of MouzaNarsingGarh, Govt. Silk Weaving Factory, individual proposals including drawing up a schedule of Rajbagh, Srinagar was accorded for revised accommodation, scrutiny of plans and estimates, estimate of Rs.25,47,17,000/-. securing approval of expenditure Finance Committee viii. Sanction amount of Rs.23,28,74,005/- for where necessary. The Directorate also deals with the construction of 48 residential quarters and scrutiny of proposals regarding acquisition of land for community hall/guest house at Hadapsar, Pune construction of building, finalization of budget proposals was revalidated. in respect of construction, acquisition of land and purchase of buildings. Examination of proposals ix. Sanction of Rs.22,18,73,181/- was made for regarding repairs of departmental building and minor construction of office building and 18 staff works, hiring of office/office-cum-residential quarters (Type-IV -3 Nos& Type-III -15 Nos) accommodation, purchase of vehicles for the alongwith community hall for I.T. Deptt., at Department, including replacement and hiring of vehicles Navsari, Surat. are also being dealt by the Directorate. x. Rs.20,00,00,000/- was sanction for payment to 13.14.1. Highlights of the performance and BSNL & MTNL on account of telecom services achievements during 01.01.2015 to availed by the Deptt. under project tarang for the 31.12.2015: period from 01.10.2014 to 31.03.2015. Projects exceeding Rs.10 Crores which were accorded xi. Purchase of Plot No.223 of TPS-2 for administrative approval and financial sanction are as under: construction of office building & staff quarters at Surat Station was accorded for Rs.18,01,47,500- i. Sanction of Rs. 208,95,95,000/- crore for construction of 152 Nos. of Type-II, 304 Nos. of xii. Purchase of land for construction of office Type-III & 76 Nos. of Type-IV residential quarters building at Pathankot was accorded for for IT Deptt., Chennai at Central Revenue Colony, Rs.10,43,65,946/-. 225 G BG B Annual Report 2015-2016 13.15. Pr. DGIT (SYSTEMS) E- Governance Activities centrally in the department’s database through robust software at National Computer Centre (NCC) of the 13.15.1. Project Name: PAN Income Tax Department and thereafter printed and (a) Permanent Account Number (PAN) dispatched through service providers. PAN (Permanent Account Number) is a 10 digit alpha- (e) PAN Verification Facility numeric number allotted by the Income Tax Department PAN verification facility is provided through CBDT’s e- to taxpayers and to the persons who apply for it under filing server to Government departments through the the Income Tax Act, 1961. Permanent Account Number Internet. One by one PAN verification or Bulk verification (PAN) enables the department to link all transactions of of 50,000 PANs in one go can be done by the users. PAN the “person” with the department. The transactions linked can also be verified through “Know Your PAN” facility on through PAN include tax payments, TDS/TCS credits, Income-tax official web site www.incometaxindia.gov.in returns of income/wealth, specified transactions, where Name, Father’s Name and Date of Birth (DOB) / correspondence, and so on. PAN, thus, acts as an Date of Incorporation (DOI) are known. identifier for the “person” with the Income tax department. Service for PAN verification is also provided by income (b) Common Business Identification Number (CBIN tax PAN Service Providers (UTITSL and NSDLeGov) to or BIN) agencies such as (i) Financial Institutions (RBI/Banks), PAN has now taken on the role of “identifier” beyond the (ii) Government Agencies, (iii) Persons/Entities required Income tax department as it is now required for various to file Annual Information Returns, (iv) Credit Card activities like opening of bank account, opening of demat Companies/Institutions (v) Companies and Government accounts, obtaining registration for Service Tax, Sales Deductors of TDS for the purpose of verifying PAN of Tax / VAT, Excise registration etc. PAN is leveraged to TDS/TCS deductees (vi) Department of Commercial become Common Business Identification Number (CBIN) Taxes of various States (vii) Insurance Companies (viii) or simply Business Identification Number (BIN) for Educational Institutions established by Regulatory Bodies providing registration to a number of government (ix) KYC Registration Agency (KRA) (x) Depositories and departments and services. Depository Participants (xi) Mutual Funds (xii) Stock Exchanges/Commodity Exchanges/Clearing (c) One Person One PAN Corporations (xiii) Credit Information Companies The Income Tax Act permits one person to have only approved by RBI (xiv) Non-Banking Financial Companies one PAN. To avoid issuance of duplicate PAN, the data is approved by RBI (xv) Insurance Repositories (xvi) DSC checked for duplicity by using the software having Providers and (xvii) GSTN Network. The PAN verification phonetic matching algorithm. In order to leverage the facility provided by PAN service Providers is on biometric data collected through Aadhaar enrolment it was chargeable basis. decided to include Aadhaar Card as a valid Proof of Identity (POI), Proof of Date of Birth (PDOB) and Proof (f) Grievances Redressal Machinery of Address (POA) document for allotment of PAN under Grievance Redressal Machinery related to PAN is well Income Tax Rules, 1962. In order to further strengthen defined. Whenever a grievance is received related to the de-duplication process the PAN database is being PAN, appropriate action is taken including forwarding the seeded with Aadhaar number for Individuals and grievance to field formations with guidance and existing Company Identification Number (CIN) for Corporate instructions. Grievances are also received through Entities. Centralised Public Grievance Redressal and Monitoring System (CPGRAMS). All grievance related to PAN are (d) PAN Service Providers downloaded from the website of CPGRAMS and after The services related to PAN such as receiving PAN examination, appropriate action is taken by the application forms, verification of the documents Directorate and information about redressal action taken submitted, digitizing the PAN application form, uploading in such cases, is uploaded on the website. the data on the NCC (National Computer Centre), printing PAN cards and dispatching of PAN cards have been Grievances are also received by PAN Service Providers i.e. UTIITSL and NSDLeGov. After examination of the outsourced to two PAN Service Providers, grievances by the Service Providers, action is taken by M/s UTIITSL and M/s NSDLeGov. The Service Providers through their network of more than 14000 front offices PAN Service Providers. If required, approval of the Directorate is obtained in specified cases and PAN (PAN centres), receive and process the PAN application applicants are informed accordingly. submitted by applicants. However, the PAN is generated 226 G BG B Department of Revenue III (g) Migration of MMS and Global modules from ITD conference. More PAN camps will be held during the to ITBA-HRMS financial year to increase the coverage. Migration of Software Application and Database was PAN database has shown steady growth in tune with carried out replacing MMS and Global modules of ITD economic progress. The progressive number of PANs with HRMS module of ITBA. The sign off was made for allotted upto 31st December, 2015(cumulative) is Drop 1 (Phase 1) of implementation of ITBA-HRMS 24,04,18,473. During the current year (up to module. 31stDecember, 2015) 1,71,70,778PANs have been allotted. (h) Migration of AIS module from ITD to ITBA-PAN 13.15.3 Project Name: E-filing of Income Tax Returns Migration of Software Application and Database was carried out replacing AIS module of ITD with PAN module Project Description of ITBA. The sign off was made for Drop 1 (Phase 1) of The e-filing project is an eminent e-governance and e- implementation of ITBA-PAN module. delivery measure taken by the Income Tax Department 13.15.2. New Initiatives for providing web- enabled services to the taxpayers. The project aims at enabling e-filing of Income tax returns, a). Integration with e-Biz portal of DIPP audit reports and other Forms prescribed under the E-Biz programme is a mission mode project of Income Tax over Internet directly by taxpayers and Department of Industrial Policy and Promotion (DIPP), through e-return intermediaries (ERIs).The project also Ministry of Commerce and Industry to facilitate the provides other web- enabled services to facilitate public investors by providing SINGLE WINDOW clearance like private participation in the filing of returns. licensing, environment & land clearances, approvals from The e-filing portal https://incometaxindiaefiling.gov.in various ministries and departments for start-up provides following personalized services to the taxpayer: businesses. L1 and L3 integration of PAN and TAN services with e-Biz portal of DIPP has been completed. • Status of returns – Processing/Demand/Refund In L1 integration the applications for PAN and TAN are • Rectification uploads and status after processing received through e-Biz portal and forwarded to PAN Service Providers. In L3 integration five services of CIN, • Refund Re-issue Request PAN, TAN, EPFO and ESIC have been combined through common application form INC-29 for corporate entities. • Request for Intimation u/s 143(1) and 154 The applications received through L3 integration will be • Outstanding Tax Demand serviced in T+1 day by the Income Tax Department i.e. PAN and TAN will be allotted within 24 hours. • Tax Credit Mismatch Summary b). Paperless Application using DSC • View Form 26AS An online paperless procedure for application of PAN • ITR-V Receipt Status using Digital Signature Certificate has been launched at websites of both service providers M/s NSDL and M/s • Register as Legal Heir UTIITSL. In this procedure a person having Digital • Add / Disengage CA and ERI Signature Certificate can apply for PAN through online form 49A and upload digitally signed application with • Profile Settings -Change Password, Update scanned copies of Proof of Identity, Proof of Date of Contact details etc Birth, Proof of Address, Photograph and Signature • Reset Password additional options without any need for sending physical documents by post. • Using PINS (OTP to mobile number and e-mail id) c). PAN Camps PAN camps were held on 27.10.2015 by M/s NSDL and • Login through Net Banking M/s UTIITSL at 43 remote and rural sites across the • Verification and Validation of Contact details of country for providing ease of access for obtaining PAN Taxpayers in view of mandate for quoting of PAN for financial transactions. Seven of these camps were inaugurated • Compliance Module updated with NMS-3 (FY by the Hon’ble Finance Minister through a video 2012) data 227 G BG B Annual Report 2015-2016 • Filing of Form 6 (Disclosure of Foreign Income and Chartered Accountant (CA).Select information is also & Assets) available through mobile interface. • Submitting Response to Outstanding Tax Electronic filing of I-T returns over the internet picked Demand up from AY 2006-07 and the number of returns filed electronically has risen from around 4 Lakh in Financial • Submitting CPC Grievance through e-Filing Year, 2006-07 to 341.73 Lakh in Financial Year 2014- Portal 15. In Financial Year, 2015-16, nearly 309.53 Lakh • Schematron Implementation – ITR Validation returns were received up to 31st December, 2015 as Rule engine compared to 243.31 Lakh returns for same period in Financial Year 2014-15, representing a growth of around • Electronic Verification Code for filing of 27.22%. The progressive achievement of e-filing ITRs(EVC) scheme is as under: • Aadhaar and PAN linking There has been significant growth in the new PANs getting The dedicated call centre and help desk deals with query registered on the e-filing site, showing increased use of or grievance related to e-Filing. The portal also provides the e-filing and other facilities through the e-filing website. help and static content “in Hindi” for users. A video link to The number of registered users of the e filing portal as view the e-Filing procedure is also available for tax payer on 31st Dec 2015 is 4.95 Crore. Financial Year Number of e-returns Growth (in lacs) In % 2006-07 4 2007-08 22 450% 2008-09 48.5 120% 2009-10 52.5 8% 2010-11 91.56 74% 2011-12 164.12 79% 2012-13 214.87 31% 2013-14 296.81 38.67% 2014-15 341.73 15.13% 2015-16 309.53 27.22% Online filing of audit reports has been made mandatory e-filled returns, that CPC was to process in 5 years. since F.Y. 2013-14 for which functionality has been • Electronic Verification Code (EVC) process provided. The tax professionals, on being authorized by the tax payers, can upload tax audit reports using digital implemented in April 2015 is successful and more signature. During FY 2015-16, 58.12 Lakh audit forms than 50 lakh taxpayers have adopted this Green were e-Filed (up to 31st Dec 2015). Initiative. CPC has already processed 44 lakhs 13.15.4. Project Name: CPC, Bengaluru Central returns validated through EVC. Processing Center for Income Tax Returns • Average processing time is reduced to 61 days, CPC has achieved following milestones: which is less than the period specified in citizen’s • CPC has processed 3.07 crore returns of income charter (6 months) and much less than during Financial Year 2014-15 with a year on year performance in manual processing (approx. 14 growth rate of 26%, (2.44 crores processed months). Prior to CPC, average processing during Financial Year 2013-14). Further, till 31st capacity of the department was approx. 2.5 crore December 2015, CPC has processed 3.27 crore return per annum against receipt of more than 3 returns in Financial Year 2015-16. crore returns each year. • CPC has achieved a peak processing capacity of 5.48 lakh returns per day. • Projected/Estimated Volumes for the period December 2015 - March 2016 and Actual as on • CPC has processed 12,56,95,021 E-Returns till 31st Dec., 2015, as against the target of 2.7 crore 31st December 2015 are as under: 228 G BG B Department of Revenue III Projections for Jan -Mar Achievements during 10-04-2015 Activity 2016 to 31-12-2015 Processing of Returns 50 327 Rectifications 1 5.06 Calls handling 1 6.68 E-mail Communications 159 879 SMS Communications 153 868 • Till date, CPC has sent around 33.31 Crore Crore intimations sent by Speed Post all over digitally signed PDF based intimations by email, the country. Savings due to e-delivery as around 26.69 Crore SMS alerts and around 2.58 compared to postage is Rs.499.75 crore. Description FY FY FY FY FY FY % age Total 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Growth Savings (Upto 31st over last in 6 FYs Dec 2015 year Communication 5,927,080 36,769,270 65,630,267 93,941,486 87,962,765 22% via email sent 42,943,613 to taxpayers Postage cost 8.89 55.15 64.42 98.45 140.91 131.94 499.75 saved (Rs. Crores) # # Average cost of speed-post/ordinary post taken as Rs. 15/- • To enable handling of large volume and processed 5.06 lakh rectification requests out of managing size of the e-mails and improving 5.20 lakh rectification requests received. aesthetics of intimations, email through HTML • Due to the higher accuracy level of processing template has been enabled and used. at CPC, there has been a sharp drop in overall • 90 call center agents attend to over 5,000 calls rectification requests. daily in 3 languages. Around 45.08 lakh calls • Refund reissue requests due to refund failures, attended till 31st December 2015. incorrect bank account number involving amount • CPC, call center made 72,954 outbound calls for of Rs. 42.51 cr. for A.Y. 2015-16 were processed. All such requests are processed within 7 days of Demand Management to Assessing Officers. request accepted by CPC. • CPC has enabled Web based Taxpayer • Over 2,500 business rules in software for tax Grievance Mechanism in the last Financial year. processing of IT Returns designed and Under this system, the taxpayers can login to the implemented. e-filing web portal of the department and submit their grievances online. The resolution of the • In addition to processing of Income Tax returns, grievances and other assistance is provided CPC has processed 38,139 Wealth Tax Returns through registered e-mails of the taxpayers. Form BB filed electronically. Status of redressal of the grievance is also • Launch of digitization friendly Forms with features updated on the e-filing web portal. Up to 31st such as anchor points, Colour drop out, bar codes December 2015, 3.29 lakh grievances have been on each page etc.-ITR 1- SAHAJ and ITR 4S- received out of which 3.21 (97%) grievance have SUGAM for AY2011-12 designed by officers at been addressed. CPC for CBDT based on learning from digitization • Rectification requests received from taxpayers of paper returns of AY2008-09. 1.77 lakhs ITR1 are processed within the statutory limits. For SAHAJ returns have been digitized and financial year 2015-16 (till 31.12.2015) CPC has processed at CPC till date. 229 G BG B Annual Report 2015-2016 • Demand Management: To deal with the issue • This Project enabled Centralized Processing of of cleaning and updating of arrear demands, the all paper returns also of Karnataka and Goa at Bengaluru. outstanding demand position in CPC FAS (Financial Accounting System) was made • CPC and e-filing are Eco friendly Projects available to field AO’s through the AO Portal and  CPC and e-filing is leading the Income Tax to taxpayers through ‘My Account’ on e-filing Department to website. As on 31st December 2015, AO has acted on 3,96,049 entries involving arrear  Paper-less office, demand of Rs.42,482.13 Crore. CPC has also  Paper-less delivery by phasing out paper facilitated Tax payers to revert on the demand based notices, intimations, letters and position by agreeing/disagreeing to the demand replacing them by emails, SMS and website through E filing website. Responses received in driven delivery to taxpayers. 14,20,730 entries totaling to Rs.67,167.04 Crore  Marks an effort made by department to have been received from Taxpayers through e- reduce carbon imprint and “GO GREEN”. filing website. 13.15.5. Project Name: e- Sahyog • CPC has stored over 12.50 Crore ITR V physical documents through a Record Management The “e-Sahyog” project launched in Oct’2015 on a pilot basis, is aimed at reducing compliance cost, especially for small Service and has been awarded ISO 15489 taxpayers. The objective of “e-Sahyog” is to provide an online certification, the first entity in Asia to achieve this. mechanism to resolve any mismatch or discrepancy in • CPC has been awarded ISO27001 Certification information as per Income-tax return of the taxpayer vis-à- for the rigorous implementation of Information vis third party information collected by the Department. Security Management Systems. Under this initiative the Department will provide an end to end e-service using SMS, e-mails to inform the taxpayers • CPC has been awarded ISO9001 Certification of the mismatch. The taxpayer has to login to the e-filling for the implementation of Quality Management portal to view mismatch related information and submit Systems. online response on the issue. Based on the responses by the taxpayers, the issue may be closed or processed for • The Union Cabinet has accorded approval for further action. The taxpayer can also check the updated extension of the project for next 2 years till status. The tax payers would also be informed of closure of September 2017. cases through SMS & e-mail. Statistics on e-sahyog as on 02.12.2015 1) Number of taxpayers selected under e-sahyog 91,113 2) Number of taxpayers who have submitted their response on e-filing portal 13,374 under e-sahyog 3) Number of taxpayers who filed Revised Return of Income after launch of e- 1,010 sahyog 13.15.6. Project Name: Refund Banker the State Bank of India (SBI), which has been designated as the Refund Banker agent of the Department. The The Refund Banker project has enabled system driven Refund Banker sends ECS or Direct Credits to the bank process for determination, generation, issue, dispatch and accounts, where the refunds have been processed for credit of refunds. This project has made the process of electronic payment. In case of paper refunds, Refund delivery of refund completely automated, speedy and Banker prints and dispatches the refund cheques transparent. (payable at par through Core Banking all over India) by Under the Refund Banker Scheme, paper and electronic speed post to the tax-payers. The electronic method of refunds determined by the Income Tax Assessing Officers payment has reduced the delivery time to 1-2 days as are sent in electronic files by Income Tax Department to against paper refund which takes 4-8 days. The Assessing 230 G BG B Department of Revenue III Officer’s role in issuing refunds is limited to processing unpaid or returned refunds, to enable the assessing the return of income on computer. officers to re-send the refund for payment after removing the deficiency. Audit trail and MIS on unpaid/unpicked A web based status tracking facility in collaboration with refunds (with ageing) are available on system for India Post and National Securities Depository Ltd. (NSDL) monitoring status of issue of refunds. is available under the Scheme. Call centre facility with toll free number 1800-42-59-760 is also available for There has been a steady increase in number and percentage tracking status of refunds issued through the scheme. of refunds issued through the scheme. During current Financial Year, 2015- 16 (up to December, 2015), the The status of refunds is updated on the departmental percentage of refunds issued through the scheme is 99.93% application with reasons for non- payment in case of of the total number of refunds issued all over India as under: No. of Other No. of Refunds (Paid) Percentage of Refunds Refunds Total F. Y. through Refund Paid through (Paid) Banker Refunds Banker 2012-2013 81,48,839 66,733 82,15,572 99.19% 2013-2014 1,03,18,595 41,501 1,03,60,096 99.60% 2014-2015 13556088 22517 13578605 99.84% 2015-16 1,60,98,393 10,081 1,61,08,474 99.93% (up to 29 Dec) 13.15.7. Project Name: E-Payment i. Promote voluntary compliance and deter noncompliance The E-Payment project has enabled online payment of all direct taxes using net banking facility. The scheme ii. Impart confidence that all eligible persons pay provides for ease of payment anytime, anywhere. With appropriate tax effect from 1 April, 2008, e-payment of direct taxes was iii. Promote fair and judicious tax administration made mandatory for all Companies and mandatory audit cases. The objectives of the Project are: E-payment facility has been now extended to 30 agency i. Widening of tax base banks collecting direct taxes. SBI has started the e- ii. Deepening of tax base payment facility online through its debit cards as well. Facility of payment of direct taxes has been launched iii. Improve compliance with tax laws through ATMs of Corporation Bank, Bank of Maharashtra, Axis Bank, Central Bank, Bank of India, iv. Detect fraud and leakage of revenue HDFC Bank, Canara Bank, Union Bank of India, Punjab v. Support Investigation & Sind Bank, Punjab National Bank, Indian Bank, UCO Bank, Andhra Bank, Bank of Baroda and Oriental Bank vi. Increase effectiveness of tax collection of Commerce. vii. Enhance cooperation with exchange partners In Financial Year 2013-14 the percentage of count and viii. Generate enterprise wide reports amount of e-tax payments was 64.41 % and 86.48% respectively. In Financial Year 2014-15 the percentage ix. Monitor high risk scenarios of such count and amount went up to 69.20 % and 87.10% x. Provide inputs for policy making respectively. In F Y 2015-16 (upto 29 Dec), the percentage of count and amount of such payment has gone upto The Project will integrate enterprise data warehouse, data 75% and 89% respectively. mining, web mining, predictive modelling, data exchange, master data management, centralised processing, 13.15.8. Project Name: Project Insight compliance risk management and case analysis capabilities. The Income Tax Department has initiated ‘Project A Compliance Management Centralised Processing Centre Insight’ on Data Warehouse and Business Intelligence (CMCPC) will also be set up under the Project to handle (DW&BI) platform to strengthen the non-intrusive resource intensive repetitive tasks and ensure optimum information driven approach for improving compliance resource mobilisationwithin ITD for high skill work. The and effective utilization of information in all areas of tax Project is also envisaged to meet the requirements relating administration. The Project goals are: to Foreign Account Tax Compliance Act (FATCA), Common 231 G BG B Annual Report 2015-2016 Reporting Standard (CRS) and Automatic Exchange of A ‘Compliance Module’ has been created on the e-filing Information. The project is expected to be rolled out in 2016- portal to address various compliance related issues. The 17 and would be operational by 2017-18. compliance module shows the underlying reasons for non- compliance to the taxpayer and enables online capture of 13.15.9. Project Name: Non-filers Monitoring System response from the taxpayer for further processing. (NMS) Pilot Project NMS Cycle 4 has identified 58.95 lakh potential non- The Non-filers Monitoring System (NMS) was filers for AY 2014-15. These cases have been pushed conceptualised as a pilot project under the Data to the compliance module. Warehouse and Business Intelligence (DW&BI) Project 13.15.10. Project Name: E-TDS to prioritise action on potential non-filers. Data analysis was carried out to identify potential non-filers about Project Features whom specific information was available in AIR, CIB data The Centralised Processing Cell for Tax Deduction at and TDS/TCS Returns. The number of non-filers with source (CPC-TDS) is a technology driven initiative of potential tax liabilities identified in various NMS cycles the Income Tax Department to put in place Non-Intrusive, is as under: Non-Adversarial administration in the country. The robust • NMS cycle 1 (2013): 12.19 lakh technology platform has been leveraged to provide value added services to more than 15 lakh deductors, 4 crores • NMS Cycle 2 (2014): 22.09 lakh taxpayers from all over India and abroad and more than • NMS Cycle 3 (2015): 44.07 lakh 500 officers of the Income Tax Department who are administering the TDS across India. A Compliance Management Cell was set up under the Directorate of Systems to capture the response and take Centralized Processing Cell – TDS (CPC-TDS) follow-up action. A comprehensive online monitoring system undertakes end to end processing of TDS statements was implemented in June, 2013 to ensure that information through a Rule Based Technology enabled system related to non-filers is effectively used by the field Assessing and offers’ e-enabled services that are accessible on Officers. The information in respect of the target segment any-time, any-where basis with no cost to the taxpayers was made available to the jurisdictional assessing officers / deductors.. The rule based automated processing of for continuous monitoring and relevant follow up action. ‘Statements’ facilitates uniform interpretation of laws, faster turnaround time besides ensuring seamless flow CBDT issued SOP to ensure that the field formations of data for tax credits. CPC-TDS introduces follow a standard procedure in NMS cases to maintain transparency in the processes through online display of consistency in their approach. The results of the pilot information and provides an integrated platform for tax project are very encouraging and many taxpayers have deductors, taxpayers and the officers of Income tax paid self-assessment tax and filed returns after initiation department. Thus, it forms the backbone of overall of the pilot project. TDS administration in the Income Tax Department. India is one of the very few countries to put in place an initiative of this scale for reconciliation of Tax Deducted at Source. 232 G BG B Department of Revenue III Concept of CPC-TDS Attributes of the CPC-TDS • Centralized Processing Cell (TDS) provides a i. Database size – 700 crores transactional data comprehensive solution to deductors through ii. State of the art Data Centres at NOIDA and Pune ‘Tax Deduction, Reconciliation, Analysis and Correction Enabling System (TRACES)’ - its iii. Processing Capacity core engine on the CPC-TDS website  Processing capacity of more than 1 crore www.tdscpc.gov.in. TDS Assessing Officers deductee records in 24 hours. (AOs) of the Income tax Department have been provided Intranet Portal that offers wide variety  Average processing time < 5 days from the of functionalities to the AOs. date of receipt of statements at CPC-TDS • CPC-TDS reconciles and co-relates information  Processing capacity of nearly 2000 inbound from various sources including banks (tax letters in a day payment), deductors (reporting tax deduction), Assessing Officers (mapping no tax / low tax  Processing capacity of nearly 30000 deductions) and tax professionals (reporting outbound intimations in a day international transactions). iv. Intimation of defaults is also sent to the registered • CPC-TDS undertakes bulk processing of TDS email IDs of the deductors. statements to generate ‘Annual Tax Credit’ CPC-TDS - Game Changer statements for each taxpayer in Form 26AS, TDS certificates in Form 16 / 16A & identifies TDS The core engine of the CPC-TDS viz called TRACES defaults of short payment, short deduction, (Tax Deduction Reconciliation, Analysis & Correction interest, etc. Enabling System) is a web-based application that provides an interface to all stakeholders associated with The users/ stakeholders interact with the CPC-TDS TDS administration. The application has three important system and with each other through multiple channels of attributes:- communication including Call Centre, e-mail, website, etc.  Reconciliation –On TRACES, Input (OLTAS Approach and Strategy – USAGE Challan and Original/Correction Statement as The Strategy is to encourage & prompt the stakeholders received from Tax Information Network) and towards ‘USAGE’ of the facilities. More ‘USAGE’ output (Form 16/16A and Form 26AS as inherently creates more awareness, transparency & produced by TRACES) are duly reconciled. compliance. Therefore, TRACES ensures that two sets of records are in agreement. • Uniformity – Uniform interpretation of laws & procedures through conversion of laws into set  Analysis - TRACES facilitates compilation of of mathematical formulae. reports that are provided to the Officers in the Income Tax Department for policy making. The • Simplification – Simplification and reports are also available to the Commissioners standardization of backend & front end of Income Tax/Range Officers & TDS Assessing processes. Officers for enforcement of TDS provisions at • Accessibility – Services at the doorstep of the regional levels. taxpayer –any time/ anywhere & realising  Correction Enabling System – TRACES jurisdiction free tax administration for bulk enables correction systems to the deductors for processes. correcting the challans, statements, etc. This • Good Tax Governance – Each rupee that is facilitates resolution / closure of defaults. – GEAPHICAL AND DEMGRAPHIC collected is accounted for. Robust reconciliation of tax collected vis-à-vis credit claimed. Coverage - Geographical and Demographic • Empowerment - Empowering the tax payer with The CPC-TDS services have stakeholders who are information, knowledge of laws & procedures and spread across the country. It works on the “HUB- status of the proceedings through multiple SPOKE” model, with CPC-TDS being the hub for e- communication channels. delivery of services. The TDS offices located all over India 233 G BG B Annual Report 2015-2016 act as an extended delivery centers through the e-office period of last two years. Verifiable single version of truth, model. through reengineering, also eliminates any possibility of fraudulent claim of TDS based on bogus TDS certificates. Demographic spread Online Correction of TDS statements CPC-TDS brings value to various institutions, organizations (both within and outside government). It The CPC-TDS provides facility for online correction touches ALL government establishments, banks, financial of TDS statements. Thus the deductors can now correct institutions, corporates on one hand and on the other, PANs and other attributes of the transactions by promptly provides services to ALL the taxpayers, whether filing tax filing a correction any time anywhere. At the same time, returns or otherwise. The users of the facilities at CPC- with this facility, any correction, for resolution of defaults TDS include – can also be carried out at deductor’s convenience. More than 6 lakh corrections were received and resolved by • More than 4 crores Taxpayers including the CPC-TDS till date. corporates, individuals, business entities and others. 35 banks are linked to the CPC-TDS E - OFFICE System for online access to Tax Credit Statement The CPC-TDS provides an integrated technology driven (26AS).Around 3 Crore registered users of e- platform for enabling e-office in the Income Tax filing website of the Income tax Department have Department. Over 500 Officers of the Income Tax online access to Tax Credit Statement (26AS). Department, administering TDS provisions across India, • More than 15 Lakh Deductors including more connect with CPC-TDS system through its Intranet than 1,75,000 offices of the Central & State services. In addition, a dedicated Helpdesk for assistance Governments to these officers has been enabled. • More than 5000 Government (Central & state) The CPC-TDS has re-engineered following processes in treasuries, sub-treasuries in each district and the offices of the TDS Field Officers: other Principal Accounts officers • The CPC-TDS provides visibility to the Field • More than 500 Field Officers of the Income Officers as regards grievances of the deductors/ Tax Department, spread across the country, who taxpayers related to their jurisdiction. This has are responsible for TDS administration helped in bringing down physical visits to the ITD office. Re-engineered process through CPC-TDS • The CPC-TDS provides a facility for Online With the inception of CPC-TDS, following processes have Generation of Notices and Orders, required for been reengineered:- the enforcement of TDS provisions. This has Issue of Digital TDS Certificate helped in minimizing manual activities for Field Officers and allowing them to focus on The traditional practice of manual TDS certificates was supervision and control. a major cause of TDS mismatch in the processing of Income Tax Returns. • Online repository of the notices and orders through CPC-TDS facilitates adherence to The CPC-TDS now generates TDS certificates from the statutory timelines. The tax demand, raised as data reported by the deductors and after matching tax consequence of these actions, is also captured payments (reported through banks or other competent in the system. entities). These certificates, having a reference number, are verifiable online and unique for a • The CPC-TDS facilitates consolidation of deductor-deductee combination. In this way, the ‘manual demands’ and ‘System generated amount depicted in the TDS certificate matches with the demands’ on one platform. amount reflected in the Annual Tax Credit Statement. This • The CPC-TDS provides platform for sharing of rules out possibility of a mismatch while processing of knowledge and best practices among the officers Income Tax Returns. More than 52.34 Crore digital TDS of the Income Tax Department through the facility certificates have been downloaded by deductors from of ‘Quality Cases’ (QC) and ‘Awareness Program’ TRACES website till date. (AP) material upload on the TRACES website. The matching of TDS credits, while processing of Income Centralized Issue & Dispatch of Intimations - Automated Tax Returns, has improved from 89% to 96% over a Document Management System (DMS) 234 G BG B Department of Revenue III The intimations are being dispatched from a centralized The CPC-TDS has put in place a Call Centre for real automated system, through emails, SMS, postal mail and time support to all the stakeholders. Further, the are also being shown on the dashboard of the deductors. stakeholders can also reach CPC-TDS through e-mail, With these services in place, the manpower in the Grievance Portal on the website and by writing a letter. department has been relieved of the task of manually The grievances are being handled in a centralized manner sending out intimations. They can now focus on quality and all the stakeholders are given visibility regarding tasks. grievance by virtue of an integrated system. More than 10 lakhs grievances have been responded by CPC-TDS The deductors also benefit as defaults are intimated to since inception. them within seven days of filing of the TDS statement, leading to better compliance. There are better chances Data for Policy Formulation and Social Policy of service of intimations, etc because address of Planning communication is same as that stated in the TDS Using data mining and analytics tools, CPC-TDS provides statement. More than 1.96 Crores intimations have been an updated Management Information System (MIS) issued since inception of CPC-TDS. and Business Intelligence (BI) reports to the field Proactive dissemination of Information - authorities. This helps them to focus on the potential PROMOTING voluntary compliance cases involving high-risk. Field authorities stand empowered and equipped to take up the enforcement The inception of CPC-TDS marks a paradigm shift in the work in effective and efficient manner. TDS administration towards achieving a Non-Adversarial, Non-Intrusive Tax administration. Around 4.02 Crore The output of analytical tools also acts as an input for educational e-mails on various issues have already been effective policy formulation. sent by CPC-TDS to the deductors. Timely processing Citizen Centricity of TDS statements coupled with multifold communication channels (Portal, emails and call centre) has facilitated The operationalisation of CPC-TDS has benefitted compliance-driven ecosystem for the deductors. CPC- multiple stakeholders involved in TDS administration by TDS has leveraged these channels to send specific way of an integrated interactive platform for Service emails to the target audience (e.g. non-filers, late filers, Delivery. This has made a tremendous impact on effort, tax defaulters etc.) with an aim to create ‘TDS default time and cost. free’ environment and to promote voluntary compliance. Taxpayers Three-pronged approach has been adopted to address 1. With CPC-TDS generating TDS certificates the closure of the defaults: centrally, the initiative has eliminated mismatch • Timely intimation to the deductors –giving sense of tax credits at the time of claiming credit of “someone watching” - Persuades them for for TDS in the Income Tax Return. voluntary compliance. 2. The taxpayers do not have to maintain record of • E-mail & Call Centre campaign - Persuades the manual paper TDS certificates. All information deductors to close the defaults. related to TDS credits, is available online in the form of Annual Tax Credit statement (Form • ‘Any time Any where’ facility for online correction 26AS). The taxpayer has to only verify it from - Facilitates resolution of defaults. time to time. The impact is clearly visible in the following areas of TDS 3. With the elimination of manual issuance of TDS administration: certificate by the deductor, verification by the • Improvement in filers of TDS Statements within Income Tax Department is not required. This has due date. cut down unnecessary delays in the granting of tax credits. • Improvement in deposit of tax within due date. 4. The availability of Form 26AS online has • Reduction in TDS default cases. facilitated accurate & complete reporting of • Reduction in quoting of invalid PANs. Income. As a consequence, compliance cost for the taxpayer has come down. Institutionalized mechanisms for Grievance redressal & Communications 5. The e-filing website of the Income tax department pre-populates Tax Credit data in the Income Tax Return 235 G BG B Annual Report 2015-2016 based on information sent by CPC-TDS. This has made has sent over 8 lakh Intermediate the process of filing Income Tax Return easy. Communications so far. 6. The Annual Tax Credit Statement is updated (ii) Good Governance Programme: CPC (TDS) on a near real time basis. Hence discrepancies in the connects with the Deductors as part of its “Good TDS reported by the deductor, can be reported by Governance” Programme to continuously test taxpayer to deductor, while the transaction is very satisfaction levels for various services offered by recent. CPC (TDS). CPC(TDS) connected with over 20,000 end-users as part of this exercise to take 7. Malpractices in the issuance of refunds, etc their feedbacks. have been minimized. Following satisfaction results have been achieved with Deductors the Good Governance Programme of CPC (TDS): 1. Single Window Delivery: A comprehensive web (iii) Call Back facility provisioned by CPC(TDS): based service delivery platform takes care of all Being sensitive to end-users’ requirements, the the compliance needs of deductors and is a Inbound Helpdesk IVR facility at CPC (TDS) has source of constant feedback. provisioned for a call back facility on “Node 8” 2. Online and Offline Correction facility is on the toll free number 1800 103 0344. available on anytime anywhere basis. This is CPC(TDS) connected with over 28,000 users one of the major components of the integrated who used the above facility on IVR. The above interactive platform of CPC-TDS. facility has been applauded by the deductors, which is extremely convenient and saves their 3. The CPC-TDS has promoted voluntary time and effort. compliance by the deductors. Through proactive dissemination of Information, CPC- (iv) Deductor Awareness Programme: CPC (TDS), TDS has been able to help the deductors in in order to drive Proactive dissemination of avoiding defaults and consequent costs by Information and promote voluntary compliance, providing valuable updates through reaches out to the Deductors through email educational emails and other sources. campaigns on a regular basis. 13.15.11. Feedback and Grievance Redressal: The Income Tax Department has earlier been relying on traditional methods of advertisements, postal letters The centralized tracking of grievance ensures that the and seminars to disseminate information. The time taken for redressal is minimized. communications sent out by the department were generic and did not deliver focused message to specific 13.15.12. Recent Quality Services provided by CPC audience. (TDS): The inception of CPC-TDS marks a paradigm shift in TDS (i) Intermediate Communication in the course of administration towards achieving a Non-Adversarial, Non- processing of TDS Statements: CPC (TDS) Intrusive Tax administration. More than 4.02 Crore has implemented the functionality to identify PAN educational e-mails on relevant contemporaneous issues and Challan related errors in the Original TDS have been sent by CPC-TDS to the deductors: Statement filed by the deductors during preliminary scanning and to communicate the 13.15.13. The performance of CPC(TDS) since the same to the respective deductors through SMS beginning of its operations is presented text and email registered at TRACES. The below: deductor is given an opportunity to rectify mistake pointed out by the System in 7 days. CPC(TDS) a. Overall performance: From 1st April to Description 23rd Dec. 2015 TDS statements processed for 26AS / TDS 66.84 Lakh certificates TDS statements processed for defaults 21.6 Lakh No. of intimations issued Via Email –30 Lakh Via Print – 19.3 Lakh 236 G BG B Department of Revenue III b. Download statistics From 1st April to Download Type 23rd Dec. 2015 Form 16A 15.84 Crores Form 16 3.58 Crores Form 16B 2.38 Lakhs c. 26AS views: The salient features of the OLTAS Project are as under: No of Taxpayer viewing 26AS : More than 63 lacs • The collecting and nodal branches of banks can verify the status of the tax payment data (From 1st April, 2015 to 23rd Dec, 2015) transmitted by them to TIN through TIN website tin-nsdl.com. 13.15.14. Project Name: OLTAS (Online Tax Accounting System) • The taxpayers can verify their tax payments through Challan Status Enquiry at the TIN OLTAS project integrates online tax payments made by website, on the basis of TAN/CIN (Challan tax payers with the running ledger accounts of tax payers Identification Number). Challan Identification maintained by the income tax department for tax credit. Number under OLTAS is a unique combination OLTAS functions in close coordination with RBI, Agency of BSR Code of the bank/branch, Date of deposit Banks and TIN (presently being managed by NSDL). and Challan serial number. The objective of OLTAS project was to do away with the • Reports on top advance tax payers and TDS paper trail for tax credit and paper validation system. payers with quarter-wise comparative analysis OLTAS project has been one of the landmark e- with preceding financial year are also available to the Commissioners of Income Tax and governance initiatives undertaken by the department. Commissioners of Income Tax (TDS) for Under the project, all payments made in bank are monitoring of collections. uploaded on T+3 basis. Cash payment can be mapped with the bank and the assessee with PAN/TAN • Monthly MIS reports are generated by TIN for irrespective of the place of payment. A country wide Income Tax Department as well as for Pr. CCA, network of30 agency banks and their 13,000 branches CBDT and RBI, for monitoring and follow-up. including 3 private sector banks are authorized by the • TIN provides an OLTAS dashboard facility to the RBI for collecting direct tax payments under OLTAS. collecting bank branches, their nodal branches as well as their link cells for monitoring upload of Under this Project, the banks enter data of tax payment tax payment data and for its reconciliation with challans in their computer system and transmit the challan funds remitted by them to RBI. information online to the server of the Tax Information Network (TIN) of the Income-tax Department, maintained • A separate OLTAS dashboard facility is also by NSDL. Modified File validation instructions have been available through TIN website for the Finance installed in the software of all collecting banks and at TIN Minister, senior functionaries of CBDT, Chief Commissioners/Director Generals of Income to ensure better data quality. In over 99% of total cases, Tax, Commissioners of Income Tax (TDS) and correct PAN and TAN is being quoted in the challans, Commissioners of Income Tax (Computer which shows definite improvement in quality of tax Operations) for monitoring direct tax collections payment as well as payment data linked by the agency on a daily basis. banks. During Financial Year, 2015-16 (till Dec 29 2015) NSDL extracts the data, prepares OLTAS files and the count and amount of tax payment challans handled transmits the same to the OLTAS server maintained at through OLTAS was 3.32 crore and Rs 5,83,059.16 crore NCC, New Delhi. From there, the data is populated into respectively. the ITD OLTAS database, enabling the Assessing 13.15.15. Project Name: National Website of th Officers to give due credit to the taxpayers for the tax Income Tax Department payments made by them, and generation of collection http://incometaxindia.gov.in reports for AO/ Range Head/CIT/CCIT based on PAN/ TAN jurisdiction, irrespective of the place or mode of A major initiative to enhance taxpayer services was payment. launched by the Income Tax Department on 22.09.2014 237 G BG B Annual Report 2015-2016 with the unveiling of the new National Website Notifications which are cross-referenced & (www.incometaxindia.gov.in). The same has been hyperlinked for users’ convenience. revamped in 2015 and services incorporated keeping in During last quarter of 2014 (October to December) total mind feedback received from various users, trade number of visitor hits on website were 20,28,48,435 and associations and other stakeholders. The website with 54,15,630 visitors accessed this site whereas in the New Layout was made available for the users and tax calendar year 2015 the numbers of visitors hits were payers on 27-11-2015. Several new functionalities, 1,26,81,13,355 crore and no. of visitors were 4,07,06,550 features and services that have been incorporated to which shows usefulness and popularity of new layout of make it more user friendly, informative and useful, are- the National website. The new layout of the website has  Tax Payer Services: - It contain list of all the e- been widely appreciated by a large number of Tax Payers. services provided by Income-Tax Department 13.15.16. Project Name : AST along with a lot of new features. Now, Tax Payer can use all the contents of the web site on a single AST refers to the existing core module of the Income page itself. All the services and contents will be Tax Department and takes care of Assessment related available on maximum two-three clicks. functions wherefore it interacts with all the modules including AIS (PAN), TDS (Tax Deduction At Source),  Optimization and Enhancement of Search OLTAS (Online Tax Accounting System), E-filing, CPC- Engine: - Contents are searchable as per choice ITR Bengaluru, CIB (including AIR) etc for obtaining vital & requirement of user such as section wise information for the functioning of all the modules. This search, text search, chapter wise, phrase wise includes the Global Module (User Authentication) which search, and DTAA Treaty comparison utility. is required for all Departmental users to access different modules. All returns that are processed or taken up for  Services centric information Page for various rectification or scrutiny assessment in either AST or CPC services such as PAN/TAN, Return Filing, Tax ITR are finally captured in AST and all the results of these Payment, and more have been provided. proceedings posted in the IRLA (Individual Running Ledger Account) of an Assessee (taxpayer). The System  Cross linking: - Cross linking across all the takes care that processing in different systems are sections of Income-Tax Act 1961, has been coordinated and discrepancies, if any, resolved. The AST provided. Further, all related Income-Tax Rules has to develop applications for processing returns under 1962, FAQs, Tax Services, Income-Tax forms are different forms and fine tune the IRLA to capture all available on that page itself. amendments to the Income Tax Act.  Providing information to the Tax Payer in the Digitization of paper returns and maintenance of online form of FAQs/Tutorials. registers is done in AST as well as processing and post processing activities such as scrutiny, appeal effects,  A > Z Index page: - A new of alphabetical index rectification and penalty proceedings. The functionalities has been provided. Users will be able to navigate have been fine tuned to take care of orders u/s 119 and all the pages alphabetically. various other difficulties faced by tax payers.  Website is disabled friendly, The website is 13.15.17. New Application for Business Process Of disabled friendly and is for blind users, users with Income Tax Department partial or poor sight including color blind users and deaf users Income Tax Business Application (ITBA) is the flagship project of the Department for automating all the processes  Website is bilingual and Raj Bhasha of the Department in the foreseeable future. The project compliant. involves re-writing of the existing application, adding yet untouched processes and automating the Human  Separate corner for Senior Citizen Resource related aspects of the Department. The project  Interestingly web site is having information and is distinct in so far as a single Vendor is responsible for Videos for Kids Hardware application as well as its performance and the performance is calibrated against strict Service Level  Website is now one of the most educative sites, Agreements. built on state of the art technology, having a rich repository of more than 100 Tax and allied Laws, The new application is being designed especially keeping Rules, approximately 10,000 circulars and the end user experience and the efficiency of tax 238 G BG B Department of Revenue III administration in mind. It will be a paradigm shift in the • Physical infrastructure for Technology Training way technology enables ease and efficiency of tax Centre completed administration. Some of the features of the new application • Data Centre Services has been migrated from illustrating this shift are workflow based management IBM to TCS system, alert and notification services, consolidated view of tax payers, capability to generate a large • E-mailing solution, helpdesk has been rolled out. number of standard and customized reports for all • New RSA tokens and antivirus installation has (authorized users), a uniform mailing solution to all , been initiated in September 2014 a full scale HRMS etc. The very landing page (portal after log-in) will make all statistics (customizable by • Design and testing of the application is in the user)relevant to him/her for the day visible to a progress. user (AO, Range head, CIT, CCIT), enabling him not only to keep updated about statistical details of his • Digitization of service books in progress. charge but also to take better on the spot decisions. • Portal, PAN, TAN, Hindi Quarterly Report and CIT Dashboard feature of the application is another Appeal Modules have already been rolled out in powerful tool in the hands of the users to keep them 2015. in better control of their work. With better hardware infrastructure and better software tools, users will have a 13.16. Directorate of Legal & Research faster access to various functionalities. To ensure that the The Directorate of Income-tax (L&R) has been services to users do not get interrupted, the service provider notified as attached office of the CBDT mainly to render performance will be monitored through a separate EMS technical assistance to the CBDT for examining proposals (Enterprise Management Solution) tool. for filing Special Leave Petitions in the Supreme Court Project Timelines: against the adverse judgments of High Courts not acceptable to the Revenue, co-ordination between field The new application is scheduled to be rolled out by Mid offices and MOL/Central Agency Section and to carry out 2016 and has been currently envisaged to be run for 5 research on specific issues referred by the CBDT. years with the same technology. Number of SLP Proposals received/processed and cases Present Status of Project out of such proposals where SLPs were not filed, for the years 2011,2012,2013,2014 & 2015 is as under: Year Number of SLP Proposals Cases out of such proposals received/processed where SLPs were not filed 2011 2288 852 2012 1576 496 2013 1875 704 2014 1519 748 2015 1726 668 (up to15/12/2015) Some recent initiatives of the Directorate are as 1st September,2015 About 7500 officers of the Department follows: are already registered for use of NJRS. (a) National Judicial Reference System Over 1,25,000 Direct Tax Appeals have been scanned under NJRS till date. More than 1,50,000 judgments and This project, titled the “National Judicial Reference data of close of 5,00,000 appeals have also been made System “ (NJRS), has been taken up with the objective available in NJRS. This will go a long way in assisting the of improving litigation management in the Department officers in taking a consistent view in tax matters and in with the help of technology. The Computerized database avoiding litigation on already settled issues. The project of appeals and judgments will help in identifying issues that have attained finality avoiding litigation on settled also involves scanning of appeal documents. This will issues; bunching of similar cases, prioritization of help in ready retrieval of appeal records over the lifecycle important cases; capacity building and in tax policy of the appeal and will also save storage space required analysis. for multiple copies of appeals. During the current year, the software has been completely NJRS Project is one of the first e-Governance Projects developed and the project achieved a “Go-Live” state on to use data created by other IT systems. It utilizes appeal 239 G BG B Annual Report 2015-2016 data taken from the IT systems of the courts. The data of thereof, resulting in reduction in litigation. Also, a Supreme Court of India, the 27 ITAT s and 3 High Courts committee was constituted under Pr. DGIT (L&R) to (viz. Delhi, Mumbai and Gujarat) has already been examine the issue regarding reduction of litigation and a successfully integrated in NJRS. Permissions have been comprehensive report has been prepared and submitted obtained from several other High Courts for taking data to the CBDT. from their computer systems and efforts are on to 13.17. DIT (Expenditure Budget) integrate such data in NJRS. The Directorate of Income Tax (Expenditure Budget) was (b) Measures initiated to reduce litigation before created vide Gazette Notification No. 15/2011/F.No.402/ the appellate forums 88/13/2011-Comm. (Coord.) dated 18th March, 2011. It The Department has initiated several measures for acts as a Nodal Authority in respect of all Expenditure reducing litigation. For this objective, a separate Bench Budget matters for the Grant No. 44- Direct Taxes and has been created in the Hon’ble Supreme Court. The performs all work related to the management of Department has taken steps for bunching of cases on Expenditure Budget under this Grant. The Directorate also identical issue pending before the Supreme Court. The prepares the statement of Budget Estimates for inclusion Department has also created a platform in the form of in the relevant Budget Documents and monitors the Central Technical Committee to formulate Departmental progress in expenditure vis-à-vis sanctioned grant. All view on contentious issues. The CTC is examining other matter related to expenditure budget such as R.E., several contentious issues and also reduce litigation. F.R., Audit Matters, Allocation of advance to Govt. Further, the Department is taking steps to identify issues servants etc. are taken up by it from time to time. which has been accepted by the Department and to give wide publicity of these issue so that the officers of The details of Expenditure for the financial year are Department as well as the assessee would be aware tabulated as under: REVENUE SEGMENT (Rs. in thousands) BE RE Actual Expenditure OBJECT DESCRIPTION 2015-16 2015-16 (till 31st Jan, 2016) 1 Salaries 27974600 26600000 24445763 2 Wages 300000 249000 199743 3 OTA 6000 6000 2534 6 Medical 340000 245000 190636 11 D.T.E. 700000 477000 375474 12 Foreign travel 12000 10500 4701 13 O.E. (voted) 8677000 8353500 5829259 14 Rent, rates & taxes 2100000 2400000 1745561 16 Publications 30000 27000 18538 20 Other admn expn 742500 696500 599472 26 Advt & publicity 1150000 1120000 637855 27 Minor works 280000 280000 70194 28 Professional srv 580000 409000 279520 32 Contributions 7500 7500 3611 41 Sect srv exp 140000 140000 91284 50 Other charges 34000 29000 14274 99 Information tech. 5250000 5050000 4322632 TOTAL ‘A’ 48323600 46100000 38831051 240 G BG B Department of Revenue III CAPITAL SEGMENT BE RE Actual Expenditure Minor Head Description 2015-16 2015-16 (till 31st Jan, 2016) Acquisition of Office 4059.00.204 3237200 840000 147903 Accommodation Acquisition of Property 4075.00.204 20000 20000 10883 XX-C Acquisition of Rental 4216.01.111 2504800 560000 24915 Accommodation TOTAL CAPITAL ‘B’ 5762000 1420000 183701 GRAND TOTAL ‘A+B’ 54085600 47520000 39014752 During the current Financial Year 2015-16, the actual submission of quarterly reports to the CVC, DOP&T etc.. expenditure under the Revenue Segment, up to 31st Jan’ All the complaints against Group-A officers are, therefore, 2016 is at Rs. 3883.11 crores which is 80.36% of BE of Rs required to be forwarded to him for registration in the CVO’s 4832.36 crores and 84.23% of RE of Rs. 4610.00 crores. register as well as for further necessary action. In Capital Segment, the actual expenditure upto 31st Jan’ As CVO, he is required to examine and comment on all 2016 is at Rs.18.37 crores which is 3.19% of BE of Rs 576.20 proposals where a reference to the CVC is required to be crores and 12.93% of RE of Rs. 142.00 crores. made. Apart from the officers posted in his headquarters, Overall, the total expenditure up to 31st Jan’ 2016 is Rs. who assist him in initial processing of complaints and post 3901.48 crores is 72.13% of BE of Rs 5408.56 crores disciplinary proceeding cases of Group-A officers, four and 82.10% of RE of Rs. 4752.00 crores. regional Directorates of Income Tax (Vigilance) assist him in conduct of preliminary verifications or investigations. He The Directorate also regularly monitors the audit objections makes all vigilance related references to CBDT, CVC, related to expenditure budget as per is mandate. DOPT, UPSC etc.. All such references are sent to him 13.18. Principal DGIT (Vigilance) through the concerned Zonal ADG(Vig.). The Vigilance set-up of the Income Tax Department is Four Zonal Directorates of Income Tax (Vigilance) assist headed by the Principal Director General of Income Tax him in the handling of vigilance matters pertaining to their (Vigilance). He is also the Chief Vigilance Officer of the respective regional jurisdictions. Organization. He is responsible for taking the initial decision These Directorates process complaints against Group on complaints against Group-A officers. He is also required ‘B’ officers and also conduct preliminary verifications and to maintain up to date records of such complaints and their investigations in respect of both Group - A and Group - B latest status, through the prescribed registers, for officers. Performance and Achievements during Current Year (from January to December, 2015) Sl. ITEMS OF WORK (DISPOSAL) Achievements No. CORE AREAS OF ACTION 1 Penalties Imposed 20 2 Out of above J.S. and above Rank 02 3 Charge-sheets given 09 4 Sanction for prosecution approved/granted 05 5 Vigilance clearance issued 6945 241 G BG B Annual Report 2015-2016 13.18.1Significant Developments The Academy imparts training in core competency areas, disseminates information about the best of academics The process of Vigilance Clearance (VC) has been and practices, provides an international perspective, high modified and made faster and less cumbersome. The quality professional capabilities and cultural sensitivities VCs earlier were granted in a period varying from 10/15 to officers. It has the core job of conducting 16 months days to even two/three months. Now with the revised Induction Training for the directly recruited officers of the procedure it has been reduced to 1 day in the cases of IRS selected through the UPSC Civil services individual officers and not more than 7 days in the cases Examination. The Induction training also includes of panel of officers. Parliamentary Attachment, On-the-Job Training, industrial 13.18.2Preventive Vigilance attachment, international attachment, Bharat Darshan, Military attachment. Besides, NADT also imparts 15 week Income Tax Department has celebrated and observed Foundation Course to officers of various civil services. Vigilance Awareness Week from 26.10.2015 to 31.10.2015 throughout the country in the respective Besides training, high quality career planning, profiling Income Tax offices situated at different stations. The and progression and continued development of the Direct officers/officials of Income Tax Department along with Taxes Administration personnel are also a part of the their family members participated in the programs/ NADT’s responsibility. Thus, NADT also conducts In- competitions, especially conducted during the week. Service programmes for serving officials from the rank During the Vigilance Awareness Week banners were of Asstt. Commissioners of Income Tax to Pr. Chief displayed at prime locations in all the office buildings. Commissioners of Income Tax. The training programmes Essay competitions were also organized. The programs are designed based on the training needs analysis of the at the respective Income Tax Offices concluded with prize field formations. distribution functions. NADT also conducts Organized Courses with 13.18.356(j) COMMITTEE Organization for Economic Co-operation & Development(OECD) headquarters in Paris, France on The DoPT has issued an O.M. No. 25013/01/2013- Advanced tax Treaties, International Tax Avoidance etc. Esstt.A-IV dated 11.09.2015 concerning status of the Besides it conducts outreach programmes for the officers outcome of the exercise of identifying officers/ officials fit of other organizations like officers from Customs and for retirement on grounds of integrity under Rule 56(j) of Central Excise, Indian Audit and Accounts Service (IAAS), Fundamental Rules (FR) and other Rules of respective Indian Railway Accounts Service probationers (IRAS), Lok grades. Order for Constitution of the Review Committees Sabha &Rajya Sabha Secretariat, etc. and Internal Committees for carrying out the Review in respect of Group ‘A’ Officers of the Income tax Under International Courses, NADT imparted training for Department has been issued by the CBDT. officers of National Board of Revenue Bangladesh during the F.Y. 2014-15. It also conducted SAARC seminar on Pr. CCsIT have formed similar Committees in respect of international Taxation and Transfer Pricing during other Officers and Officials. 2014-15. 13.19. Pr. DGIT (NADT) Besides the NADT, there are 10 DTRTIs functioning under Pr. Director General (Training) heads the directorate of DG (Training), who impart training to group “A” “B” & “C” training for the officers and staff of the Income tax officers/officials. There are also 30 Ministerial Staff Department. The National Academy of Direct Taxes Training Units. (NADT) is the apex training institution of the Group “A” 13.20. Chief Commissioner of Income of Tax officers of the Indian Revenue Service (IRS) Officers. (Exemption) The NADT is headed by the Pr. Director General (Training). He is assisted by two Additional Directors The office of Chief Commissioner of Income of Tax General and a team of other officers. (Exemption) (CCIT(E))is headed by Chief Commissioner 242 G BG B Department of Revenue III of Income of Tax (Exemption) with Headquarters at New 13.21.2Recruitment of Group ‘C’: Delhi. There are fourteen Commissioners of Income Tax located at Ahmedabad, Bangalore, Bhopal, Chandigarh, The Income Tax Department has initiated the process of Chennai, Delhi, Hyderabad, Jaipur, Kolkata, Kochi, recruitment of officials in Group ‘C’ cadre at the level of Lucknow, Mumbai, Patna, Pune. The CCIT(E) is Tax Assistants and Income Tax Inspectors. In the year prescribed authority for approvals under sections 2015-16 selection of 1901 candidates in ITI cadre has 10(23C), 17(2)(ii)(b), 80G(2)(iii)(f), 11(1)(c) etc. and been made which included 524 OBC, 271 SC and 119 condonation of delay under sections 119(2)(b) for ST candidates. Similarly in the TA cadre 3901 candidates approval by the CBDT. The data base of charitable were selected which included 1179 OBC, 676 SC & 293 organizations is being uploaded on the department ST candidates. website which is handled by Pr. DGIT(Systems). 13.22. Grievance Redressal Machinery: 13.21. Principal DGIT (HRD) Presently, in the Income-tax Department a Some of the main activities/initiatives of the Directorate comprehensive and multilayered Grievance Redressal of Income Tax(HRD) during the year 2015-16 are as Machinery is functioning as hereunder: follows: 13.21.1 Annual Performance Appraisal Report (i) A Central Grievance Cell under the Chairman, (APAR): Central Board of Direct Taxes at New Delhi which is looked after by an officer of the rank of a The Income Tax Department has brought about changes Director to the Government of India. in the Performance Appraisal System i.e. Annual Performance Appraisal Report (APAR) for the Assessing (ii) Regional Grievance Cells under each Chief Officers (Income Tax Officers as well as Assistant Commissioner/ Director General of Income-tax. Commissioners/Deputy Commissioners of Income Tax) In places like Delhi, Kolkata, Mumbai and to bring accountability and transparency as well as Chennai where there is more than one Chief fairness in the decision making process in the Income Commissioner, the Regional Grievance Cell Tax Department. These changes shall be applicable for functions under the Cadre Controlling Principal the reporting year 2015-16 i.e. with effect from Chief Commissioner. A Commissioner of 01.04.2016. Income Tax (Helpline) is also functional in these four metropolitan cities for settlement of The changes have been done to assess the performance grievances. of the Assessing Officers on the followings criteria: (iii) Out station Grievance Cells which function under a. Quality of Assessment, Commissioners/Directors of Income Tax in all other places, where there is no Chief b. Uniform pace of disposal of assessments, Commissioner or Director General of Income Tax. c. Widening of tax net. (iv) Income-tax Ombudsmen are functioning in 12 These changes will ensure accountability of Assessing cities for speedy and independent resolution of Officers in assessment work, both for demand creation public grievances against the Income Tax and the quality of assessment orders. Due weightage Department. The 12 cities where Income tax will be given to legality, fairness and reasonableness of the orders in writing the APARs of these officers. Changes Ombudsman have been posted are Mumbai, have also been made in the APAR forms to correctly Delhi, Bangalore, Lucknow, Chennai, Pune, assess the efforts make by the Assessing Officers Kolkata, Ahmedabad, Hyderabad , Chandigarh , towards widening of tax base. Bhopal and Kochi. 243 G BG B Annual Report 2015-2016 (v) Under the Sevottam Scheme which is aimed address the grievance to the Regional Grievance Cell at promoting ’Excellence in Service Delivery’, functioning under the concerned Principal CCIT or the department has set up Chief Commissioner of Income Tax. Nodal Officers AaykarSewaKendras (ASKs) in various have been placed in charge of these Cells. Besides, buildings of the department in identified there are facilitation Counters to receive grievance stations all over India. The ASKs serve as petitions and to assist the public. If the grievance is single window facility to help tax payers in not redressed by the Regional Grievance Cell within 2 filing applications for services and redressal months, an application may be sent to the Central of grievances including filing of paper Grievance Cell functioning under the Chairman, Central returns. Board of Direct Taxes. Presently, Director (Hqrs.),CBDT who is the designated nodal officer for vi) Besides, CBDT has adopted the web based grievances in CBDT is responsible for the activities of Centralised Public Grievance Redress and the Central Grievance Cell, CBDT. Monitoring System (CPGRAMS) introduced by 13.23. Media Centre the Department of Administrative Reforms & Public Grievances for redressal and effective The Media Centre, set up in the CBDT in August 2006, monitoring of grievances lodged online, by the disseminates information of public value relating to Direct citizens on various issues, related to the Income Taxes through the Print and Electronic Media. During the Tax Department. 54 subordinate offices at the year, various press releases were issued to bring different level of the Chief Commissioner & Director important decisions and tax issues to the public notice General of Income Tax have been created by and to highlight different achievements of the Income Tax giving them user ID and Password to monitor Department. Several press briefings of senior and redress grievances received online through functionaries were organized. this system. Even grievances received through Dak are being scanned and forwarded online 13.24. Directorate General of Income Tax (Risk to concerned offices for necessary action and Assessment) report. The Directorate General of Income Tax (Risk Grievance application can be made on a plain paper Assessment) is an attached office of CBDT responsible to the Grievance Cell functioning under the concerned for identifying taxpayers and financial transactions which Commissioner or by directly approaching the pose high revenue risk of non compliance or tax evasion concerned officer who needs to redress the grievances, and to give inputs for data driven policy decisions. This with a copy to the Grievance Cell. The applicant should give his name, address and PAN so that the Grievance Risk identification is done without interacting with the Cell can make further communication with him, if assesses; by data analysis of large volume data (big data) required. If the grievance is not redressed even after a collected by the department, either internally or through month of making the application, the applicant may external sources. 244 G BG B Department of Revenue III Annexure - 1 India’s DTAA/ TIEA/ Multilateral Agreement as on 31st December, 2015 Sl. Jurisdiction Type of EOI agreement Date signed Date from Revision of No. which in force DTAA 1. Afghanistan SAARC Multilateral Agreement 13.11.2005 19.5.2010 2. Albania Double Taxation Avoidance 08.07.2013 4.12.2013 Agreement (“DTAA”) Multilateral Convention on Mutual 1.3.2013 1.12.2013 Administrative Assistance in Tax Matters (“Multilateral Convention”) 3. Andorra Multilateral Convention 05.11.2013 Not yet in force in Andorra 4. Anguilla Multilateral Convention Extension by the 01.03.2014 United Kingdom 5. Argentina Taxation Information Exchange 21.11.2011 28.01.2013 Agreement (“TIEA”) Multilateral Convention 03.11.2011 01.01.2013 6. Armenia DTAA 31.10.2003 09.09.2004 DTAA including EOI provisions under revision 7. Aruba Multilateral Convention Extension by the 01.09.2013 Netherlands 8. Australia DTAA 25.07.1991 30.12.1991 Protocol 16.12.2011 02.04.2013 Multilateral Convention 03.11.2011 01.12.2012 9. Austria DTAA 08.11.1999 05.09.2001 DTAA including EOI provisions Multilateral Convention 29.5.2013 01.12.2014 under revision 10. Azerbaijan Multilateral Convention 23.5.2014 01.09.2015 11. Bahamas TIEA 11.02.2011 01.03.2011 12. Bahrain TIEA 31.05.2012 11.04.2013 13. Bangladesh DTAA 27.08.1991 27.05.1992 Protocol 16.02.2013 13.06.2013 SAARC Multilateral Agreement 13.11.2005 19.05.2010 14. Barbados Multilateral Convention 28.10.2015 Not yet in force in Barbados 15. Belarus DTAA 27.09.1997 17.07.1998 DTAA including EOI provisions under revision Amending Protocol 03.06.2015 19.11.2015 16. Belgium DTAA 26.04.1993 01.10.1997 DTAA including Multilateral Convention 04.04.2011 01.04.2015 EOI provisions under revision 17. Belize TIEA 18.09.2013 25.11.2013 Multilateral Convention 29.05.2013 01.09.2013 18. Bermuda TIEA 07.10.2010 03.11.2010 Multilateral Convention Extension by 01.03.2014 United Kingdom 245 G BG B Annual Report 2015-2016 SAARC Multilateral 13.11.2005 19.05.2010 19. Agreement Bhutan DTAA 04.03.2013 17.07.2014 DTAA including 20. Botswana DTAA 08.12.2006 30.01.2008 EOI provisions under revision DTAA 26.04.1988 11.03.1992 Not yet in Protocol 15.10.2013 21. force Brazil Not yet in Multilateral Convention 03.11.2011 force in Brazil TIEA 09.02.2011 22.08.2011 22. British Virgin Extension by Islands Multilateral Convention 01.03.2014 United Kingdom DTAA including DTAA 26.05.1994 23.06.1995 EOI provisions 23. under revision Bulgaria Not yet in Multilateral Convention 26.10.2015 force in Bulgaria DTAA 11.01.1996 06.05.1997 DTAA including 24. Canada EOI provisions Multilateral Convention 03.11.2011 01.03.2014 under revision 25. Cameroon Multilateral Convention 25.06.2014 01.10.2015 TIEA 21.03.2011 08.11.2011 26. Cayman Extension by Islands Multilateral Convention 01.01.2014 United Kingdom DTAA 18.07.1994 21.11.1994 DTAA including 27. China EOI provisions Multilateral Convention 27.08.2013 01.02.2016 under revision Chinese 28. Taipei DTAA 12.07.2011 12.08.2011 (Taiwan) 29. Not yet in Chile Multilateral Convention 24.10.2013 force in Chile 30. DTAA 13.05.2011 07.07.2014 Colombia Multilateral Convention 23.05.2012 01.07.2014 31. Costa Rica Multilateral Convention 01.03.2012 01.08.2013 32. DTAA 12.02.2014 06.02.2015 Croatia Multilateral Convention 11.10.2013 01.06.2014 33. Extension by Curacao Multilateral Convention 01.09.2013 the Netherlands DTAA including 34. DTAA 13.06.1994 21.12.1994 EOI provisions Cyprus under revision Multilateral Convention 10.07.2014 05.09.2014 DTAA 01.10.1998 27.09.1999 DTAA including 35. Czech EOI provisions Republic Multilateral Convention 26.10.2012 01.02.2014 under revision 36. Denmark1 DTAA 08.03.1989 13.06.1989 246 G BG B Department of Revenue III 37. Egypt (United DTAA 20.02.1969 30.09.1969 DTAA including EOI Arab Republic) provisions under revision 38. El Salvador Multilateral Convention 01.06.2015 Not yet into force in El Salvador 39. Estonia DTAA 19.09.2011 20.06.2012 Multilateral Convention 29.05.2013 01.11.2014 40. Ethiopia DTAA 25.05.2011 15.10.2012 41. Faroe Islands Multilateral Convention Extension by 01.06.2011 Denmark 42. Fiji DTAA 30.01.2014 15.05.2014 43. Finland DTAA 15.01.2010 19.04.2010 Multilateral Convention 27.05.2010 01.06.2011 44. France DTAA 29.09.1992 01.08.1994 DTAA including EOI Multilateral Convention 27.05.2010 01.04.2012 provisions under revision 45. Gabon Multilateral Convention 03.07.2014 Not yet in force in Gabon 46. Georgia DTAA 24.08.2011 08.12.2011 Multilateral Convention 03.11.2010 01.06.2011 47. Germany DTAA 19.06.1995 26.10.1996 DTAA including EOI Multilateral Convention 03.11.2011 01.12.2015 provisions under revision 48. Ghana Multilateral Convention 10.07.2012 01.09.2013 49. Gibraltar TIEA 01.02.2013 11.03.2013 Multilateral Convention Extension by 01.03.2014 the United Kingdom 50. Green Land Multilateral Convention Extension by 01.06.2011 the Denmark 51. Greece DTAA 11.02.1965 17.03.1967 DTAA including EOI Multilateral Convention 21.02.2012 01.09.2013 provisions under revision 52. Guatemala Multilateral Convention 05.12.2012 Not yet in force in Guatemala 53. Guernsey TIEA 20.12.2011 11.06.2012 Multilateral Convention Extension by 01.08.2014 the United Kingdom 54. Hungary DTAA 03.11.2003 04.03.2005 DTAA including EOI Multilateral Convention 12.11.2013 01.11.2014 provisions under revision 55. Iceland DTAA 23.11.2007 21.12.2007 DTAA including EOI Multilateral Convention 27.05.2010 01.02.2012 provisions under revision 56. Indonesia DTAA 07.08.1987 19.12.1987 Revised DTAA 27.07.2012 Not yet in force Multilateral Convention 03.11.2011 01.05.2015 57. Ireland DTAA 06.11.2000 26.12.2001 DTAA including EOI provisions under revision 247 G BG B Annual Report 2015-2016 TIEA 04.02.2011 17.03.2011 58. Isle of Man Extension by the Multilateral Convention 01.03.2014 United Kingdom DTAA including DTAA 29.01.1996 15.05.1996 EOI provisions under revision 59. Israel Yet to enter Protocol 14.10.2015 into force Not yet in Multilateral Convention 24.11.2015 force in Israel DTAA 19.02.1993 23.11.1995 DTAA including 60. Italy EOI provisions Multilateral Convention 27.05.2010 01.05.2012 under revision DTAA 07.03.1989 29.12.1989 DTAA including 61. Japan EOI provisions Multilateral Convention 03.11.2011 01.10.2013 under revision TIEA 03.11.2011 08.05.2012 62. Jersey Extension by the Multilateral Convention 01.06.2014 United Kingdom DTAA including 63. Jordan DTAA 20.04.1999 16.10.1999 EOI provisions under revision DTAA 09.12.1996 02.10.1997 DTAA including 64. Kazakhstan EOI provisions Multilateral Convention 23.12.2013 01.08.2015 under revision DTAA including 65. Kenya DTAA 12.04.1985 20.08.1985 EOI provisions under revision DTAA 19.07.1985 01.08.1986 DTAA including 66. Korea EOI provisions (Republic of) Multilateral Convention 27.05.2010 01.07.2012 under revision DTAA including 67. Kuwait DTAA 15.06.2006 17.10.2007 EOI provisions under revision DTAA including 68. Kyrgyz DTAA 13.04.1999 10.01.2001 EOI provisions Republic under revision 69. DTAA 18.09.2013 28.12.2013 Latvia Multilateral Convention 29.05.2013 01.11.2014 TIEA 28.03.2013 20.01.2014 70. Not yet in Liechtenstein Multilateral Convention 21.11.2013 force in Liechtenstein 71. Liberia TIEA 03.10.2011 30.03.2012 DTAA including 72. Libya DTAA 02.03.1981 01.07.1982 EOI provisions under revision 73. DTAA 26.07.2011 10.07.2012 Lithuania Multilateral Convention 07.03.2013 01.06.2014 74. DTAA 02.06.2008 09.07.2009 Luxembourg Multilateral Convention 29.05.2013 01.11.2014 75. Macau, China TIEA 03.01.2012 16.04.2012 76. Macedonia DTAA 17.12.2013 12.9.2014 77. DTAA 14.05.2001 14.08.2003 Malaysia Revised DTAA 09.05.2012 26.12.2012 248 G BG B Department of Revenue III 78. Revised DTAA 09.05.2012 26.12.2012 79. SAARC Multilateral Maldives 13.11.2005 19.05.2010 Agreement DTAA 28.09.1994 08.02.1995 80. Malta Revised DTAA 08.04.2013 01.04.2015 Multilateral Convention 26.10.2012 01.09.2013 DTAA including 81. DTAA 24.08.1982 06.12.1983 EOI provisions Mauritius under revision Multilateral Convention 23.06.2015 01.12.2015 82. DTAA 10.09.2007 01.02.2010 Mexico Multilateral Convention 27.05.2010 01.09.2012 83. Moldova Multilateral Convention 27.01.2011 01.03.2012 31.07.2012 27.03.2013 84. Not yet in Monaco TIEA 13.10.2014 force in Monaco DTAA including 85. Mongolia DTAA 22.02.1994 29.03.1996 EOI provisions under revision DTAA including 86. Montenegro DTAA 08.02.2006 23.09.2008 EOI provisions under revision 87. Extension by the Montserrat Multilateral Convention 01.10.2013 United Kingdom DTAA 30.10.1998 20.02.2000 Not yet in Protocol 08.08.2013 88. force Morocco Not yet in Multilateral Convention 21.05.2013 force in Morocco 89. Mozambique DTAA 30.09.2010 28.02.2011 DTAA including 90. Myanmar DTAA 02.04.2008 30.01.2009 EOI provisions under revision DTAA including 91. Namibia DTAA 15.02.1997 22.01.1999 EOI provisions under revision DTAA 18.01.1987 01.11.1988 92. Revised DTAA 27.11.2011 16.03.2012 Nepal SAARC Multilateral 13.11.2005 19.05.2010 Agreement DTAA 30.07.1988 21.01.1989 93. Netherlands Protocol 10.05.2012 02.11.2012 Multilateral Convention 27.05.2010 01.09.2013 DTAA 17.10.1986 03.12.1986 DTAA including 94. New Zealand EOI provisions Multilateral Convention 26.10.2012 01.03.2014 under revision 95. Nigeria Multilateral Convention 29.05.2013 01.09.2015 96. Not yet in Niue Multilateral Convention 27.11.2015 force in Niue 97. DTAA 02.02.2011 20.12.2011 Norway Multilateral Convention 27.05.2010 01.06.2011 249 G BG B Annual Report 2015-2016 DTAA including 98. Oman DTAA 02.04.1997 03.06.1997 EOI provisions under revision 99. SAARC Multilateral Pakistan 13.11.2005 19.05.2010 Agreement DTAA including DTAA 12.02.1990 21.03.1994 EOI provisions 100. under revision Philippines Not yet in Multilateral Convention 26.09.2014 force in Philippines DTAA 21.06.1989 26.10.1989 101. Poland Protocol 29.01.2013 01.06.2014 Multilateral Convention 09.07.2010 01.10.2011 DTAA 11.09.1998 30.04.2000 DTAA including 102. Portugal EOI provisions Multilateral Convention 27.05.2010 01.03.2015 under revision DTAA including 103. Qatar DTAA 07.04.1999 15.01.2000 EOI provisions under revision DTAA 10.03.1987 14.11.1987 104. Romania Revised DTAA 08.03.2013 16.12.2013 Multilateral Convention 15.10.2012 01.11.2014 DTAA 25.03.1997 11.04.1998 DTAA including 105. Russia EOI provisions Multilateral Convention 03.11.2011 01.07.2015 under revision 106. TIEA 19.12.2013 29.08.2014 San Marino Multilateral Convention 21.11.2013 01.12.2015 107. Saint Kitts and Not yet in TIEA 11.11.2014 Nevis force DTAA 25.01.2006 01.11.2006 DTAA including 108. Not yet in Saudi Arabia EOI provisions Multilateral Convention 29.05.2013 force in under revision Saudi Arabia DTAA including 109. Serbia DTAA 08.02.2006 23.09.2008 EOI provisions under revision Yet to enter 110. TIEA 26.08.2015 Seychelles into force Multilateral Convention 24.02.2015 01.10.2015 DTAA 24.01.1994 27.05.1994 Protocol 29.06.2005 01.08.2005 111. Protocol 24.06.2011 01.09.2011 Singapore Not yet in Multilateral Convention 29.05.2013 force in Singapore 112. Extension by Saint Maarten Multilateral Convention 01.09.2013 the Netherlands 113. Slovak DTAA 01.01.19931 Republic Multilateral Convention 29.05.2013 01.03.2014 DTAA 13.01.2003 17.02.2005 DTAA including 114. Slovenia EOI provisions Multilateral Convention 27.05.2010 01.06.2011 under revision DTAA 04.12.1996 28.11.1997 115. South Africa Protocol 26.7.2013 26.11.2014 Multilateral Convention 03.11.2011 01.03.2014 250 G BG B Department of Revenue III DTAA 08.02.1993 12.01.1995 116. Not yet in Spain Protocol 26.10.2012 force Multilateral Convention 11.03.2011 01.01.2013 DTAA 27.01.1982 19.04.1983 117. Revised DTAA 22.01.2013 22.10.2013 Sri Lanka SAARC Multilateral 13.11.2005 19.05.2010 Agreement DTAA 118. including EOI Sudan DTAA 22.10.2003 15.04.2004 provisions under revision DTAA 24.06.1997 25.12.1997 119. Sweden Protocol 07.02.2013 16.08.2013 Multilateral Convention 27.05.2011 01.09.2011 DTAA 02.11.1994 29.12.1994 Protocol 30.08.2010 07.10.2011 120. Switzerland Not yet in Multilateral Convention 15.10.2013 force in Switzerland DTAA 06.02.1984 25.06.1985 DTAA 121. including EOI Syria Revised DTAA 18.06.2008 10.11.2008 provisions under revision 122. Tanzania DTAA 27.05.2011 12.12.2011 DTAA 123. including EOI Tajikistan DTAA 20.11.2008 10.04.2009 provisions under revision DTAA including EOI 124. DTAA 22.03.1985 13.03.1986 Thailand provisions under revision Revised DTAA 29.06.2015 13.10.2015 DTAA 125. Trinidad and including EOI DTAA 08.02.1999 13.10.1999 Tobago provisions under revision 126. Tunisia Multilateral Convention 16.07.2012 01.02.2014 DTAA 31.01.1995 01.02.1997 DTAA 127. Not yet in including EOI Turkey Multilateral Convention 03.11.2011 force in provisions Turkey under revision DTAA 128. including EOI Turkmenistan DTAA 25.02.1997 07.07.1997 provisions under revision Extension by 129. Turks & Caicos Multilateral Convention the United 01.12.2013 Kingdom DTAA including EOI DTAA 30.04.2004 27.08.2004 provisions 130. Uganda under revision Not yet in Multilateral Convention 04.11.2015 force in Uganda 251 G BG B Annual Report 2015-2016 131. Ukraine DTAA 07.04.1999 31.10.2001 DTAA Multilateral Convention 27.05.2010 01.09.2013 including EOI provisions under revision 132. United Arab DTAA 29.04.1992 22.09.1993 Emirates Protocol 26.03.2007 03.10.2007 Protocol 16.04.2012 12.03.2013 133. United Kingdom DTAA 25.01.1993 26.10.1993 Protocol 30.10.2012 27.12.2013 Multilateral Convention 27.05.2010 01.10.2011 134. United States DTAA 12.09.1989 18.12.1990 DTAA Multilateral Convention 27.05.2010 Not yet in including force in EOI United States provisions under revision 135. Uruguay DTAA 08.09.2011 21.6.2013 136. Uzbekistan DTAA 29.07.1993 25.01.1994 Protocol 11.04.2012 20.07.2012 137. Vietnam DTAA 07.09.1994 02.02.1995 DTAA including EOI provisions under revision 138. Zambia DTAA 05.06.1981 18.01.1984 DTAA including EOI provisions under revision 252 G BG B Department of Revenue III Annexure - 2 Summary of Outcome under BEPS Project deductibility. The influence of tax rules on the location of debt within multinational groups has been established in Action 1 – Address the Tax Challenges of the Digital a number of academic studies and various media reports Economy have shown how groups can easily multiply the level of The Action 1 report concludes that the digital economy debt at the individual group entity level via intra-group cannot be ring-fenced as it is the economy itself. The report financing. At the same time, the ability to achieve analyses BEPS risks exacerbated in the digital economy excessive interest deductions including those that finance and shows the expected impact of the measures developed the production of exempt or deferred income is best across the BEPS Project. Rules and implementation addressed in a coordinated manner given the importance mechanisms have been developed to help collect value- of addressing competitiveness considerations and of added tax (VAT) in the country where the consumer is ensuring that appropriate interest expense limitations do located in the case of cross-border business-to-consumers not themselves lead to double taxation. The common transactions. This will help to level the playing field between approach aims at ensuring that an entity’s net interest domestic and foreign suppliers and facilitate the efficient deductions are directly linked to the taxable income collection of VAT due on these transactions. Technical generated by its economic activities and fostering options to deal with the broader tax challenges raised by increased coordination of national rules in this space. the digital economy such as nexus and data have been Action 5 - Counter Harmful Tax Practices More discussed and analysed. As both the challenges and the Effectively, Taking into Account Transparency and potential options raise systemic issues regarding the future Substance framework for the taxation of cross-border activities that go beyond BEPS issues, OECD and G20 countries have Current concerns on harmful tax practices are primarily agreed to monitor developments in this regard. about preferential regimes which can be used for artificial Action 2 – Neutralise the Effects of Hybrid Mismatch profit shifting and about a lack of transparency in connection Arrangements with certain rulings. The Action 5 report sets out a minimum standard based on an agreed methodology to assess A common approach which will facilitate the convergence whether there is substantial activity in a preferential regime. of national practices through domestic and treaty rules have In the context of IP regimes such as patent boxes, been developed under Action 2 to neutralise hybrid mismatch consensus was reached on the “nexus” approach. This arrangements. This will help to prevent double non-taxation approach uses expenditures in the country as a proxy for by eliminating the tax benefits of mismatches and to put an substantial activity and ensures that taxpayers benefiting end to costly multiple deductions for a single expense, deductions in one country without corresponding taxation from these regimes did in fact engage in research and in another, and the generation of multiple foreign tax credits development and incurred actual expenditures on such for one amount of foreign tax paid. By neutralising the activities. The same principle can also be applied to other mismatch in tax outcomes, but not otherwise interfering with preferential regimes. In the area of transparency, a the use of such instruments or entities, the rules will inhibit framework has been agreed for mandatory spontaneous the use of these arrangements as a tool for BEPS without exchange of information on rulings that could give rise to adversely impacting cross-border trade and investment. BEPS concerns in the absence of such exchange. The results of the application of the elaborated substantial activity Action 3 – Strengthen CFC rules and transparency factors to a number of preferential regimes The report on CFC rules establishes guidance based on are included in the report. best practices for the building blocks of effective CFC rules, while recognizing that the policy objectives of these Action 6 - Prevent Treaty Abuse rules vary among jurisdictions. It identifies the challenges The Action 6 report includes a minimum standard on to existing CFC rules posed by mobile income such as preventing abuse including through treaty shopping and that from intellectual property, services and digital new rules that provide safeguards to prevent treaty abuse transactions, and allows jurisdictions to reflect on and offer a certain degree of flexibility regarding how to appropriate policies in this regard. The work emphasizes that CFC rules have a continuing, important role in tackling do so. The new treaty anti-abuse rules included in the BEPS, as a backstop to transfer pricing and other rules. report first address treaty shopping, which involves strategies through which a person who is not a resident Action 4 – Limit base erosion via interest deductions of a State attempts to obtain the benefits of a tax treaty and other financial payments concluded by that State. More targeted rules have been A common approach to facilitate the convergence of designed to address other forms of treaty abuse. Other national rules has been elaborated in the area of interest changes to the OECD Model Tax Convention have been 253 G BG B Annual Report 2015-2016 agreed to ensure that treaties do not inadvertently prevent use of transfer pricing methods in a way which results in the application of domestic anti-abuse rules. A clarification diverting profits from the most economically important that tax treaties are not intended to be used to generate activities of the MNE group, and the use of certain type double non-taxation is provided through a reformulation of payments between members of the MNE group (such of the title and preamble of the Model Tax Convention. as management fees and head office expenses) to erode Finally, the report contains the policy considerations to the tax base in the absence of alignment with the value- be taken into account when entering into tax treaties with creation activity undertaken. The combined report certain low or no-tax jurisdictions. contains revised guidance which responds to these issues and ensures that the Transfer Pricing Guidelines secure Action 7 – Prevent the Artificial Avoidance of PE outcomes that see operational profits aligned with the Status economic activities which generate them. Tax treaties generally provide that the business profits of a BEPS creates additional transfer pricing challenges for foreign enterprise are taxable in a State only to the extent developing countries beyond those also experienced by that the enterprise has in that State a permanent developed countries. The report contains guidance on establishment to which the profits are attributable. The transactions involving cross-border commodity transactions definition of permanent establishment included in tax treaties as well as on low value-adding intra-group services, two is therefore crucial in determining whether a non-resident areas identified by developing countries as of critical enterprise must pay income tax in another State. The report importance. This guidance will be supplemented with further includes changes to the definition of permanent work mandated by the G20 Development Working Group, establishment in Article 5 of the OECD Model Tax which will provide knowledge, best practices, and tools for Convention, which is widely used as the basis for negotiating developing countries to price commodity transactions for tax treaties. These changes address techniques used to inappropriately avoid tax nexus, including via replacement transfer pricing purposes and to prevent the erosion of their of distributors with commissionaire arrangements or via the tax bases through common types of base-eroding payments. artificial fragmentation of business activities. Together with Action 11 – Measuring and monitoring BEPS the changes to tax treaties proposed in the reports on Actions 2 and 6, the changes will restore taxation in a number of There are hundreds of empirical studies finding evidence cases where cross-border income would otherwise go of tax-motivated profit shifting, using different data untaxed or would be taxed at very low rates as result of the sources and estimation strategies. While measuring the current provisions in tax treaties. scope of BEPS is challenging given the complexity of BEPS and existing data limitations, a number of recent Actions 8-10 - Assure that transfer pricing outcomes studies suggest that global CIT revenue losses due to are in line with value creation BEPS could be significant. Action 11 assesses currently Transfer pricing rules, which are set out in Article 9 of tax available data and methodologies and concludes that treaties and the Transfer Pricing Guidelines, are used to significant limitations severely constrain economic determine on the basis of the arm’s length principle the analyses of the scale and economic impact of BEPS and price for transactions within an MNE group. The existing improved data and methodologies are required. Noting standards in this area have been strengthened, including these data limitations, a dashboard of six BEPS indicators the guidance on the arm’s length principle and an has been constructed, using different data sources and approach to ensure the appropriate pricing of hard-to- assessing different BEPS channels. These indicators value-intangibles has been agreed upon within the arm’s provide strong signals that BEPS exists and suggest it length principle. The work has focused on three key areas. has been increasing over time. New OECD empirical Action 8 looked at transfer pricing issues relating to analyses estimate, while acknowledging the complexity controlled transactions involving intangibles, since of BEPS as well as methodological and data limitations, intangibles are by definition mobile and they are often that the scale of global corporate income tax revenue hard-to-value. Misallocation of the profits generated by losses could be between USD 100 to 240 billion annually. valuable intangibles has heavily contributed to base The research also finds significant non-fiscal economic erosion and profit shifting. Under action 9, contractual distortions arising from BEPS, and proposes allocations of risk are respected only when they are recommendations for taking better advantage of available supported by actual decision-making and thus exercising tax data and improving analyses to support the monitoring control over these risks. Action 10 has focused on other of BEPS in the future, including through analytical tools high-risk areas, including the scope for addressing profit to assist countries to evaluate the fiscal effects of BEPS allocations resulting from controlled transactions which and countermeasures for their countries. Going forward are not commercially rational, the scope for targeting the enhancing the economic analysis and monitoring of BEPS 254 G BG B Department of Revenue III will require countries to improve the collection, compilation to-government exchange of information. In limited and analysis of data. circumstances, secondary mechanisms, including local filing can be used as a backup. An agreed implementation plan Action 12 – Require taxpayers to disclose their will ensure that information is provided to the tax aggressive tax planning arrangements administration in a timely manner, that confidentiality of the reported information is preserved and that the Country-by- The lack of timely, comprehensive and relevant Country reports are used appropriately. information on aggressive tax planning strategies is one of the main challenges faced by tax authorities worldwide. Taken together, these three documentation tiers will Early access to such information provides the opportunity require taxpayers to articulate consistent transfer pricing to quickly respond to tax risks through informed risk positions, and will provide tax administrations with useful assessment, audits, or changes to legislation. The Action information to assess transfer pricing risks, make 12 report provides a modular framework of guidance determinations about where audit resources can most drawn from best practices for use by countries with effectively be deployed, and, in the event audits are called mandatory disclosure rules which seeks to design a for, provide information to commence and target audit regime that fits host countries’ need to obtain early enquiries. By ensuring a consistent approach to transfer information on aggressive or abusive tax planning pricing documentation across countries, and by limiting schemes and their users. The framework is also intended the need for multiple filings of country-by-country reports as a reference for countries that already have mandatory through making use of information exchange among tax disclosure regimes, in order to enhance the effectiveness administrations, MNEs will also see the benefits in terms of those regimes. The recommendations provide the of a more limited compliance burden. necessary flexibility to balance a country’s need for better and more timely information with the compliance burdens Action 14 – Make dispute resolution mechanisms for taxpayers. It also sets out specific best practice more effective recommendations for rules targeting international tax Countries recognize that the changes introduced by the schemes, coupled with the development and BEPS Project may lead to some uncertainty, and could, implementation of more effective information exchange without action, increase double taxation and MAP and co-operation between tax administrations. disputes in the short term. Recognizing the importance Action 13 – Re-examine Transfer Pricing of removing double taxation as an obstacle to cross- Documentation border trade and investment, countries have committed to a minimum standard that will address obstacles that Improved and better-coordinated transfer pricing currently prevent the effective and efficient resolution of documentation will increase the quality of information double taxation cases. In particular, this includes a strong provided to tax administrations and limit the compliance political commitment to the effective and timely resolution burden on businesses. The Action 13 report contains a of disputes through the mutual agreement procedure. The minimum standard based on a three-tiered standardised commitment also includes the establishment of an approach to transfer pricing documentation. First, the guidance on transfer pricing documentation requires effective monitoring mechanism to ensure the minimum multinational enterprises (MNEs) to provide tax standard is met and countries make further progress to administrations with high-level information regarding their rapidly resolve disputes. In addition, a large group of global business operations and transfer pricing policies in countries has committed to quickly adopt mandatory and a “master file” that is to be available to all relevant tax binding arbitration in their bilateral tax treaties. administrations. Second, it requires that detailed Action 15 - Develop a Multilateral Instrument transactional transfer pricing documentation be provided in a “local file” specific to each country, identifying material Drawing on the expertise of public international law and tax related-party transactions, the amounts involved in those experts, the Action 15 report explores the technical feasibility transactions, and the company’s analysis of the transfer of a multilateral instrument to implement the BEPS treaty- pricing determinations they have made with regard to those related measures and amend bilateral tax treaties. It transactions. Third, large MNEs are required to file a country- concludes that a multilateral instrument is desirable and by-country report that will provide annually and for each tax feasible, and that negotiations for such an instrument should jurisdiction in which they do business the amount of revenue, be convened quickly. Based on this analysis, a mandate profit before income tax and income tax paid and accrued has been developed for an ad-hoc group, open to the and other indicators of economic activities. Country-by- participation of all countries, to develop the multilateral country reports should be filed in the ultimate parent entity’s instrument and open it for signature in 2016. So far, 87 jurisdiction and shared automatically through government- countries are participating in the work on an equal footing. 255 G BG B Annual Report 2015-2016 14. Income Tax Settlement 14.4. An assessee is required to make an application Commission to the Settlement Commission in the prescribed form to get his case settled. He has to disclose an Additional 14.1. The Income Tax Settlement Commission (ITSC) Income not disclosed before the assessing officer and the was set up in pursuance of the recommendations of the Additional Tax Payable on the Additional Income should Wanchoo Committee (1971) w.e.f. 01.04.1976. It is an be more than Rs. 50 lakhs in search cases and Rs. 10 Alternate Disputes Resolution (ADP) body within the lakhs in other cases. The applicants are required to pay realm of Direct Taxes for Settlement of Income Tax and the Additional Tax together with the interest before filing Wealth Tax cases. The main objective for setting up of the application in the Settlement Commission. The this Commission was to give a statutory basis for Commission then decides upon the admissibility of the settlement of cases in the interest of revenue. The application and in case of admitted applications, the Settlement Commission was established as a forum of Commission carries out the process of Settlement in a mediation in place of litigation. The aim was to move the time bound manner by giving opportunity to both the parties. conflicting parties to a consensus rather than subjecting The Application shall be disposed of by the Settlement them to the adversarial procedure inherent in the regular Commission within 18 months from the date of filing of the administration of justice. This was envisaged as an application. It has wide power of granting. immunity from institution for statutory arbitration. penalty and prosecution under the Income Tax Act, 14.2. The Settlement Commission has seven benches 1961and Wealth Tax Act, 1957, which are major source of as under: litigation. The orders passed by the Commission are final and conclusive. At present the benefit of the Settlement 1. One Principal Bench and Two Additional Benches mechanism can be availed by a tax payer only once in life- at New Delhi. time, who has made the first application as on or after 15t 2. Two Additional Benches at Mumbai. June, 2007. Further details about the Commission are 3. One Additional Bench at Kolkata. available on its Website. [www.itscindia.gov.in]. 4. One Additional Bench at Chennai. 14.5. A Statement showing the number of Application 14.3. Each bench has three Members. The Principal filed and disposed of from the year 2009 -10 till 2015-16 Bench is presided over by the Chairman and each (up to December 2015) is given as Table-A & B Additional Bench is presided over by the Vice Chairman. respectively:- Table- A - Statement of Consolidated Receipt and Disposal of Applications by the Settlement Commission (It & Wt) Financial Total No. of No. of Additions/ Total for Total Total Year cases cases due to High disposal disposal u/s pendency 245D(4) pending at the received Court order for during the beginning of during the disposal year the year i.e. 1st year (including) April rejection 1 2 3 4 5 6 7 2009-10 1340 48 53 1388 203 1238 2010-11 1356 108 138 1611 423 1184 2011-12 1209 350 (-)6 1553 376 1177 2012-13 1186 410 (-)4 1592 443 1149 2013-14 1114 363 1 1324 673 441 2014-15 696 507 8 1211 635 576 April, 494 434 18 946 268 678 to Dec., 2015 256 G BG B Department of Revenue III Table- B - Statement regarding Additional Taxes in Application Received from 01.04.2015 to 31.12.2015 SI. Benches No. of No. of Application Amount of Additional No. Applications admitted Taxes (in Rs. Crores) received 1. Principal Bench, 19 25 195.66 New Delhi 2. Additional Bench-I, 9 14 41.96 New Delhi 3. Additional Bench-II, 17 38 14.07 New Delhi 4. Additional Bench-I, 12 77 150.2 Mumbai 5. Additional Bench-II, 22 39 153.15 Mumbai 6. Additional Bench, 22 29 37.79 Kolkata 7. Additional Bench, 61 50 115.94 Chennai Total 162 272 708.77 257 G BG B Annual Report 2015-2016 15. Authority for Advance Rulings valuing rupees one hundred crore or more in total. (ncome Tax) 15.5. The ruling given by the Authority is of binding 15.1. The scheme of advance rulings was introduced nature and no further appeal against this is provided under by the Finance Act, 1993. Chapter XIX-B of the Income- the Act. tax Act, which deals with advance rulings, came into force 15.6. Central Sales Tax Appellate Authority- The with effect from 1-6-1993. Under the scheme the power Authority for Advance Rulings (Income-tax) has also been of giving advance rulings has been entrusted to an notified vide notification dated 17.03.2005 (as amended independent adjudicatory body. Accordingly, a high level vide notification dated 07.06.2005 as Central Sales Tax body headed by a retired judge of the Supreme Court Appellate Authority to settle inter-state disputes falling has been set-up. This is empowered to issue rulings, under Section 6A read with Section 9 of the Central Sales which are binding both on the Income-tax Department Tax Act, 1956. It started functioning w.e.f. 01.03.2006. and the applicant. The procedure prescribed is simple, inexpensive, expeditious and authoritative. 15.7. Performance 15.2. Advance Ruling means written opinion or The Authority has given rulings on diverse issues authoritative decision by an Authority empowered to concerning taxation of non-residents. So far it has render it with regard to the tax consequences of a pronounced rulings/orders in 1306 (52 in the current transaction or proposed transaction or an assessment in financial year till December, 2015) cases of Income Tax regard thereto. It has been defined in section 245N(a) of Act and 78 (13 in current financial year till December, the Income-tax Act, 1961 as amended from time-to-time. 2015) cases of Central Sales Tax on intricate issues concerning law and facts. The rulings delivered in income- 15.3. The Authority gives rulings on the taxation issues raised by non-residents relating to transactions undertaken/ tax mattes have facilitated the non-residents in their proposed to be undertaken with a resident. Residents investment ventures in India, Many of the questions having transactions with non-residents can also seek ruling coming up before the Authority are such where direct in relation to the tax liability of a non-resident. Public Sector decisions of High Courts or the Supreme Court are not Undertakings can also apply to the AAR for a ruling. available as such. 15.4. The scope of the Authority has been expanded 15.8. Statistical information about the performance of further vide notification dated 28.11.2014 and now a the Authority from financial year 2010-11 to 31st resident taxpayer can also seek ruling in relation to his December, 2015 concerning Income Tax cases and income tax liability arising out of one or more transactions Central Sales Tax cases is given in Table I and 2 below: Table-1 Pendency Position of Income Tax Cases as on 31st December, 2015 Financial Opening Application Total Disposed off C/f year balance Received 2010-11 44 182 226 13 213 2011-12 213 246 459 105 354 2012-13 354 158 512 88 424 2013-14 424 133 557 64 493 2014-15 493 79 572 40 532 2015-16 532 52 584 52 532 Table-2 Pendency Position of Central Sales Tax Cases as on 31st December, 2015 Financial Opening Application Total Disposed off C/f year balance Received 2010-11 07 09 16 01 15 2011-12 15 41 56 11 45 2012-13 45 13 58 - 58 2013-14 58 14 72 02 70 2014-15 70 25 95 02 93 2015-16 93 14 107 13 94 258 G BG B Department of Revenue III SI. Benches No. of No. of Application Amount of Additional No. Applications admitted Taxes (in Rs. Crores) received 1. Principal Bench, 19 25 195.66 New Delhi 2. Additional Bench-I, 9 14 41.96 New Delhi 3. Additional Bench-II, 17 38 14.07 New Delhi 4. Additional Bench-I, 12 77 150.2 Mumbai 5. Additional Bench-II, 22 39 153.15 Mumbai 6. Additional Bench, 22 29 37.79 Kolkata 7. Additional Bench, 61 50 115.94 Chennai Total 162 272 708.77 259 G BG B Annual Report 2015-2016 16. Central Economic Intelligence Heads of Intelligence and Investigative Agencies under Bureaul (CEIB) the Department of Revenue and discusses the trends of intelligence emerging in the economic field. It shares 16.1. Organization and Functions strategic intelligence in the areas of Customs, Central 16.1.1. The Central Economic Intelligence Bureau is the Excise and Service Tax, Income Tax, Hawala, Drugs and nodal agency on economic intelligence. It was set up in FICN and identifies other cases with inter agency 1985 for coordinating and strengthening the economic ramifications, for joint and / or coordinated action. intelligence and enforcement activities under the Ministry 16.2.3. Group on Economic Intelligence (GEI): of Finance. 16.2.4. The Group on Economic Intelligence (GEI) 16.1.2. The Bureau is headed by a Special Secretary provides a co-ordination platform for sharing of cum Director General who is assisted by two (02) intelligence between the Member Agencies. Inputs shared Additional Director Generals (JS-equivalent), Joint through this platform help in pooling of resources for Secretary (COFEPOSA), Additional/ Joint Directors (DS/ coordinated action for combating economic offences, Director equivalent), Under Secretaries, Deputy Directors some of which also form predicate offences and the (US equivalent) and other staff. The Bureau has a Intelligence so gathered on Trade Based Money sanctioned strength of 113 officers & staff. Presently it is Laundering is instrumental in booking cases under PMLA working with a working strength of 56 only. & FEMA. The Bureau, on its own, also develops inputs in 16.1.3. In terms of its existing charter, the CEIB the field of economic offences and shares them with functions as appropriate Intelligence and Enforcement Agencies for further action. a) The Secretariat for the Economic Intelligence Council (EIC) 16.2.5. Other issues discussed / monitored under the GEI were: b) Coordinator and repository of economic intelligence (ECOINT) and i. Information on important offenders. c) Administers the COFEPOSA Act 1974 at Central ii. Dossier Status. Government Level. iii. Identification of issues for examination by GEI 16.1.4. As part of its mandate, the CEIB like unlawful imports, MLM Schemes, Cross Border Money Laundering, etc. i. Maintains databases on economic offenders and offences 16.2.6. All above tasks relating to examination/ analysis of Economic offences are spread across vast spectrum ii. Acts as a Think Tank and studies and analyses ranging from illegal export/ import, money laundering, macro level economic activities Fake Indian Currency detection, smuggling of red sanders tax evasion trends, misuse of financial channels like iii. Supervises and monitors the functioning of Commercial Banks, Urban Cooperative Banks, Regional Economic Intelligence Councils Insurance, NBFCs etc which bring to the fore the policy (REICs), which are coordinating bodies at the gaps highlighted by CEIB. This data & modus operandi field level and comprise of representatives from can be used for National Risk Assessment. various Central and State enforcement and investigative agencies dealing with economic 16.2.7. Regional Economic Intelligence Councils: offences. The Bureau monitors the functioning of 30 REICs which iv. Organizes training programmes in premier are nodal agencies at the regional level for coordinating training institutions for officers of the Department action of the enforcement/intelligence Agencies at the of Revenue/ Member agencies of REICs. field level. An additional revenue of Rs.4358.41 lacs have 16.2. Major activities undertaken by the been realized based on the information exchange in the Bureau during the current financial REICs during 2015-16 (till September 2015). year 2015- 16 (upto December 2015) 16.2.8. Coordination in some areas are as follows: Coordination regarding detection and destruction of illicit 16.2.1. Head of Agencies (HOA): opium poppy cultivation: The Bureau coordinates with field Agencies for reporting on illicit opium cultivation in various 16.2.2. The Head of Agencies Committee comprises of States and in destruction thereof. 260 G BG B Department of Revenue III Secure Information Exchange Network (SIEN): As per Crores during the period 2014-15 and till date the decision of the EIC in 2007, a secured network have been realized by IG (Registration) and platform for online exchange of intelligence and Service Tax Authorities in REIC Jaipur, Bhopal information has been fully operationalised in the Bureau and Bangluru. Further demands/SCNs to the where under twelve Member Agencies can communicate tune of Rs. 22.81 Crores were raised / issued by with each other in a secured environment. Service Tax and Commercial Taxes Departments, Jaipur. Further a demand of Rs. 16.2.9. Studies in the Bureau and Reports of Inter- 78.05 Lakhs has also been raised by the Ministerial Groups: Commercial Tax Department. I The IMG has met and highlighted the following b) STRs relating to Multi-Level Marketing (MLM) issues: Schemes received from FIU-IND were duly analysed and disseminated to concerned Chief a) Problems of regulatory gaps to check the Cross Secretaries of States for appropriate action. Border Money Laundering/Trade Based Money During 2014-15, the Karnataka Government had Laundering arising in trade transactions; booked 55 cases having transactions amounting b) In some cases huge amounts of remittances have to Rs.174 Crores against MLM Companies based been made as advance against imports through on the inputs shared by CEIB. banking channels but practically no imports have c) During the period January 2015 to December taken place, thereby indicating clear case of 2015, 67 cases related to Central Excise duty money laundering activity in the guise of trading; evasion amounting Rs. 760.22 crores have been c) If the importer does not approach the declared bank shared with 30 Regional Economic Intelligence within stipulated time (approximate time which he Council (REIC) forums. ought to declare at the time of import), such d) Thirty Seven (37) cases of Service Tax/ Central information may be captured and sent by the Excise duty evasion amounting to Rs. 1347.25 concerned bank back to RBI, and RBI can flag it crores have been shared with Income Tax as a suspect case informing concerned LEAs; Department. d) Various typologies of TBML; e) During the period from January 2015 to December 2015, 26 cases of Customs duty e) Suggestions were also given on the system of evasion amounting to Rs. 172.99 crores were electronic flow of data from banking channels and shared with 30 Regional Economic Intelligence corresponding change in RBI guidelines as well Council (REIC) forums. as FEMA Regulations; and II. Bank Fraud f) The cases of third party payments coming from unconnected countries or tax havens like Dubai An information on misuse of Bank Loans and Technology and Hong Kong, though exports from India have Up-gradation Fund Scheme (TUFS) of more than Rs. taken place to countries like Australia, USA, 3000 Crores and violation of various Acts by a Group Panama etc were also discussed. Company was recorded and developed in the Bureau. The Group consisting of 8 companies has taken more II Disclosure of the Source of undisclosed Income: than Rs. 3000 Crores from various Public Sector Banks A mechanism is being designed to share potential by submitting forged/ fake document and instead of and relevant cases, wherein, the source of undisclosed investing this money in the projects has diverted more income has been reflected in the IT returns by field than 95 % of the same for formations of CBDT in REICs. The Bureau is coordinating  Buying Lands/Flats/Building/Malls at various with CBDT on the issue. places across the country 16.2.10. Some Major cases coordinated by the  Buying shares Bureau relate to:  Jacking up prices of shares of listed companies I. Dissemination of cases culled out from reports received in the Bureau:  Parking of money overseas. a) On account of sharing of the information having On the basis of the information shared by the Bureau, inter Agency implication, an amount of Rs. 13.89 Income Tax Department has been able to establish that 261 G BG B Annual Report 2015-2016 the Group Companies has purchased machinery/fabrics updates from concerned member agencies to keep to the tune of Rs. 502.44 crores from non-existing data base current and relevant. Bureau also has details concerns. On verification, these purchase bills have been of over 30,000 offence cases, booked by various found to be bogus. agencies. DGCEI has issued 16 Show Cause Notice (SCNs) 16.3. Fake Indian Currency Notes (FICN): demanding duty of Rs. 17.46 crores and Service Tax amounting to Rs. 1.59 crores has already been In pursuance of GOM Report tasking the NSCS to track recovered. the developments relating to Fake Indian Currency Notes and to alert concerned Agencies, the Central Economic III. Money Stashed in Overseas Accounts: Intelligence Bureau was directed vide the Cabinet The Bureau had forwarded to CBDT, ED, FIU, DRI and Secretariat (NSCS) U.O. No.C-183/1/2001/NSCS (CS) DGCEI, a list containing over 600 names and addresses dated 22nd May, 2001 to take steps to keep NSCS of individuals/entities of Indian origin who may have informed on a continual basis regarding the development stashed funds abroad in tax havens. Certificates of as far as printing, smuggling and circulation of Fake Indian Incorporation of 11 legal entities listed in the ICIJ Report Currency were concerned. which were received from two FIUs of foreign countries 16.4. Administration of COFEPOSA Act: were shared with CBDT for further action. Smuggling foreign exchange racketeering and related CBDT has informed that 542 Indian persons have been activities violations have a deleterious effect on the traced so far and 431 persons found to be ‘Resident’. On verification of Income Tax Returns in these cases, it was national economy and thereby a serious adverse effect found that details of offshore entities/ transactions were on the security of the stat. To deal with this menace, the not disclosed to the Income Tax Department. During the Conservation of Foreign Exchange and Prevention of course of investigation, 183 persons have admitted their Smuggling Activities Act, 1974 (COFEPOSA Act) has relationship with such offshore entities/transactions. An been enacted to provide for preventive detention law to amount of about Rs. 135 Crore has been admitted by detain smugglers and foreign exchange manipulators certain assesses as their undisclosed income relatable from indulging in these prejudicial activities. The to offshore transactions. Out of these, in 3 cases COFEPOSA Division of the Department functioning prosecution complaints has been filed under Income Tax under the Central Economic Intelligence Bureau Act 1961. administers this Act. During the year 2015, Preventive Detention Orders were passed against 72 persons and IV. Bogus Sales Bills: 66 persons (including some absconders from Detention Based on the initiative taken by the Bureau, the Orders of previous years) were detained under the Commercial Taxes Department of various State COFEPOSA Act. Governments had started taking various steps including 16.5. Coordination with FIU-IND: development of computerized modules to detect evasion of VAT/Bogus sales bills. During this year on Bogus sales There is a regular inflow of inputs from FIU-IND, which is bills issue REIC Pune has collected Rs. 173.93 Crores disseminated for further action by the Bureau after due and REIC Meerut has collected Rs 1.14 Crores. process. The inputs are found useful for economic intelligence. 16.2.11.NEIN DATABASE 16.6. Training: CEIB maintains a database of Dossiers of Economic Offenders/ Suspected Tax Evaders, on the basis of the The Bureau organizes training courses at various inputs received from the Law Enforcement Agencies specialized training institutions to enhance the across the country. CEIB so far has 6235 dossiers. investigative skills and intelligence gathering techniques The Bureau periodically reviews the dossiers and seeks for the Revenue officers. 262 G BG B Department of Revenue III 17. Directorate of Enforcement v) To handle appeals under FEMA. 17.1. Organization and Functions vi) To handle appeals and prosecution cases under 17.1.1. The Directorate of Enforcement is headed by the the erstwhile FERA, 1973. Director of Enforcement. The other officers of the vii) To process and recommend cases for detention Directorate are Special Directors, Additional Directors, under the Conservation of Foreign Exchange and Joint Directors, Deputy Legal Advisor, Deputy Directors, Prevention of Smuggling Activities Act Assistant Legal Advisors, Assistant Directors, Enforcement Officers and Assistant Enforcement Officers (COFEPOSA) in respect of contraventions under assisted by other ministerial staff. In view of the enhanced FEMA. role of the Directorate in the enforcement of the viii) To initiate investigations under PMLA to Prevention of the Money Laundering Act (PMLA), 2002, the strength of the Directorate was restructured by ascertain whether proceeds of crime have been Government in March, 2011. generated from the Scheduled offence booked by the concerned Law Enforcement Agency and 17.1.2. The Directorate has a Head Quarters Office at such proceeds have been laundered. If a prima New Delhi, 05 Regional Offices at New Delhi, Mumbai, Kolkata, Chennai and Chandigarh besides 16 Zonal facie case of money laundering is made out, to Offices and 22 Sub Zonal Offices. attach the property derived from the proceeds of crime. 17.2. Functions of Executive Wing ix) To file prosecution complaints in the designated The Directorate of Enforcement implements two Acts viz. PMLA Court for the offence of money laundering Foreign Exchange Management Act, 1999 (FEMA) and Prevention of Money Laundering Act, 2002 (PMLA). under PMLA. FEMA replaced the Foreign Exchange Regulation Act, x) To provide and seek mutual legal assistance to/ 1973 (FERA) with effect from 01.06.2000. The from contracting states in respect of attachment/ Directorate also continues to perform the residual work under the repealed FERA, 1973. The Directorate also confiscation of proceeds of crime as well as in implements the provisions of COFEPOSA, 1974. respect of transfer of accused persons under PMLA. The main functions of the Directorate are as under:- xi) To facilitate international cooperation in Anti- i) To collect, develop and disseminate intelligence relating to contraventions of FEMA. The Money Laundering (AML) efforts. intelligence inputs are received from various 17.3. Highlights of the Performance and sources such as Central and State Intelligence Achievements during the year 2015- agencies, RBI, complaints, information gathered 16 (1st January- 31st December, 2015) by officers, etc. ii) To investigate suspected contraventions of the The performance and achievements of the Directorate provisions of FEMA relating to activities such as during the year 2015-16 (up to December, 2015) are as Hawala, unauthorized dealings in foreign per Table - 1 (in respect of FEMA and FERA) and exchange, non-realization of export proceeds, Table - 2 (in respect of PMLA). unauthorized retention of funds abroad including bank accounts, unauthorized acquisition of 17.4. Performance / Achievements in immovable properties abroad, contraventions 2014-15 relating to Foreign Direct Investments (FDIs), External Commercial Borrowings (ECBs), The performance and achievements of the Directorate Foreign Currency Convertible Bonds (FCCBs), during the financial year 2014-15 are as per Table - 3 (in etc.) respect of FEMA and FERA). The performance and achievements of the Directorate during the financial year iii) To adjudicate cases of violations of the erstwhile FERA, 1973 and FEMA, 1999. 2014-15 are as per Table - 4 (in respect of PMLA). iv) To realize penalties imposed on conclusion of Comparison in disposal of the cases viz-a-viz the adjudication proceedings. corresponding period of 2014 is as under: - 263 G BG B Annual Report 2015-2016 FEMA Cases under Investigation Pending at Registered Disposed off Pendency as Percentage beginning of during the during on 31.12.2015 disposal w.r.t. the year, year, 01.01.2015- pendency 01.01.2015 01.01.2015- 31.12.2015 31.12.2015 5222 1406 1528 5100 29.26% (5955) (818) (1551) (5222) (26.0%) PMLA Cases under Investigation Pending at Registered Disposed off Pendency as Percentage beginning of during the during on 31.12.2015 disposal w.r.t. the year, year, 01.01.2015- pendency 01.01.2015 01.01.2015- 31.12.2015 31.12.2015 1445 143 339 1249 23.46% (1531) (189) (275) (1445) (17.9%) Remarks: - Figures in the brackets are the figures for the corresponding period of 2014 17.5. E- Governance v) MPR (Monthly Progressive Report): A web based application has been developed to enter Enforcement Directorate, Headquarters Office and zonal and consolidate the statistical information related offices have their own LAN, which is connected to to monthly progressive report to FERA, FEMA, NICNET WAN, ED HQ and Zonal offices are using the and PMLA related cases. office automation tool like Microsoft Office, to accomplish the day to day activities like preparing letter, excel sheet vi) MIP (Monthly Integrated Proforma): A web and graphs based application has been developed to enter and consolidate the information related to Some e-governance initiatives taken by the Directorate monthly Integrated Proforma for PMLA. of Enforcement are as under:- vii) Employee Information System (EIS): This is a i) Website: Directorate has a web site having the web based application to store, process and contents in both English and Hindi, where citizen can get information related to this office, various generate the various reports of an employee. It acts enforced and other related information. provides the information of an employee such Recently, the website has been completely as present post, place of posting, date of joining revamped to provide for a new and user friendly in Enforcement Directorate, date of birth and interface. Apart from it, various new features like retirement, mode of recruitment, next date of Details of Confirmed Attached Properties, promotion and post, information of sanctioned Information about senior officers, contact post, working post and vacant post at Directorate information of PIOs for providing information and its subordinate offices. under RTI Act etc. have also been added. viii) Legal Cases Monitoring System (LCMS): This ii) Comp DDO: A pay roll system has been is a web based application to monitor the status implemented for managing the salary of its of the legal cases filed by the Directorate or by employees. the Party in Supreme Court, PMLA Tribunal, PMLA Adjudication Authority and PMLA Special iii) E-mail: NIC email id has been provided to Court. It captures the information such as Petition officials. Number, Petitioner Name, Role of DoE, Concern iv) Video Conferencing: A web based Video Zone Name, ECIR Number, PAO Number etc. It Conferencing system has been introduced in the records the status/progress of the case on last Directorate. date hearing. 264 G BG B Department of Revenue III ix) Enforcement Directorate Offenders Tracking xiv) FTS: FTS application is being reconfigured to System (E-DOT): A web based application for FEMA meet the requirement of the Directorate. A new instance and PMLA cases has been developed to capture and of data base and application has been created on the create a database for FEMA and PMLA related cases existing server. New sections and users are being created starting from the T-3 file stage. This has been developed as per the requirement of the Directorate. in ASP.Net technology to provide the user friendly 17.6. Grievances Redressal Machinery interface to the users, and SQL Server as a backend database to store the data. Forms have been designed Grievance officers have been nominated at Headquarters with user friendly interface. Office and Zonal / Sub-Zonal Offices of the Directorate for re-dressal of public/staff grievances and prompt action x) Notice Board Application: A new application is being taken to redress their grievances. ‘Notice Board’ has been developed for uploading/ publishing/viewing the various circulars/downloadable 17.7. Gender Budgeting / Empowerment of forms/training related information/important judgments Women: under FEMA/PMLA etc. The uploaded information is No fresh case has been reported regarding sexual grouped into major category and then in sub categories. harassment at work place during the year 2015-16. On login, it will display the list of all the major categories and which in turn is hyperlinked to display the details of 17.8. Activities Undertaken for Disability uploaded information for this major category. This Sector & SC/ST & Other Weaker application is a ROLE based and there are four pre- Sections of the Society. defined ROLE viz. ‘ADMIN’, ‘ENTRY’, ‘PUBLISH’ and The rules framed by the Government and guidelines ‘VIEW’. There are further options for raising queries based issued from time to time are adhered to and followed by on various parameters like Category, Circular Year, the Directorate. Circular Number and subject. 17.9. Other initiatives in ED xi) Expenditure Monitoring System (EMS): This application is developed to capture the details of budget A. Swachh Bharat Abhiyan launched by our estimates, budget allocation, and monthly expenditure Hon’ble Prime Minister on 2nd October, 2014 is being by the various officers of the directorate. vigorously followed by this Directorate. On 2nd October, a pledge ceremony was organized across all offices of xii) National Risk Assessment Monitoring Enforcement Directorate where all the officers and staff System: This is a web based application developed for members took pledge to keep our nation ‘Swachh’. creating a database with respect to National Risk Further, various drives have been organized including Assessment exercise being undertaken at the installation of banners for creating awareness among Directorate. The basic objectives of this application is to citizens and government officials towards the cause of provide the option for capturing the offender’s details such this “Abhiyan”. Regular inspection of the office premises as ECIR No., FIR No., Predicate offence and its is also being done. corresponding section, status of predicate offence and total value of POC accessed by LEA and ED, status of B. The Biometric Attendance System has also LR sent to foreign countries and modus operandi used been installed in various offices of this Directorate by the offenders/conspirator. including the Headquarters where it was installed during October, 2014. The same is being continuously xiii) Discussion forum: This is a web based application monitored for any aberration from defined rules & for collaboration or discussion where officials can hold regulations by employees. conversations in the form of posted messages/replies. A discussion forum is an area where participants can discuss C. A Vigilance Awareness Weak was also a topic or a group of related topic. Within each subject, organized by the Directorate during 3rd to 7th November, participants can create multiple threads. A thread includes 2015 to create awareness among staff to check corruption the initial post and all replies to it. Users can participate in at every level so that a corruption free society could be any available topics relevant to the department. attained. 265 G BG B Annual Report 2015-2016 Table – 1 (FERA & FEMA) STATISTICAL DATA FROM JAN, 2015 TO DEC, 2015 A Searches & Seizures FEMA 1 Searches Conducted 90 2 FE seized (Rs. in Lakhs) 562.29 3 IC seized (Rs. in Lakhs) 3609.53 B Investigation FEMA 1 Initiated 1406 2 Disposed 1528 3 Pending 5100 4 SCNs issued 569 C Adjudication FERA FEMA Total 1 Cases Adjudicated 272 + 643 915 2 Cases pending adjudication 602 + 1264 1866 3 Confiscation of Foreign Exchange (Rs. 0.62 + 125.78 126.4 in Lakhs) 4 Confiscation of Indian Currency (Rs. in 24.54 + 610.75 635.29 Lakhs) D Penalties FERA FEMA Total 1 Imposed (Rs. in Lakhs) 2644.33 + 10283.9 12928.23 2 Realized (Rs. in Lakhs) 59.52 + 4289.61 4349.13 3 Pending for realization (Rs. in 875982.4 + 182214.2 1058196.61 Lakhs) E COFEPOSA FERA FEMA Total 1 Orders issued 0 + 3 3 2 Detained 1 + 7 8 F Prosecutions FERA FEMA Total 1 Disposal 20 + 0 20 i) Conviction 4 + 0 4 ii) Acquittal 4 + 0 4 iii) Discharge 6 + 0 6 iv) Withdrawn 1 + 0 1 v) Otherwise disposed off 5 + 0 5 vi) Cases reduced 0 + 0 0 2 Pending 2865 + 0 2865 266 G BG B Department of Revenue III Table – 2 (PMLA) STATISTICAL DATA OF PMLA CASES FROM JAN, 2015 TO DEC, 2015 Total at the Sl. ACTIONS end of the No. month 1. No. of ECIRs 143 2. No. of provisional Attachment Orders issued 136 3. Value of properties under attachment (in Lacs of Rupees) 364084.09 4. No. of PAOs confirmed 127 5. Value of assets under PAO confirmed by the Adjudicating Authority (in Lacs of Rupees) 305510.76 6. No. of PAOs not confirmed by the Adjudicating Authority 2 7. Value of Assets in respect of PAOs not confirmed by the Adjudicating Authority ( in Lacs of rupees) 14.59 8. No. of Appeals before Tribunal a) Filed by the party 107 b) Filed by the Directorate 4 Total: 111 9. No. of persons arrested 41 10. No. of cases in which prosecution complaints filed 78 *02 PAOs was partially not confirmed 267 G BG B Annual Report 2015-2016 Table – 3 (FERA & FEMA) STATISTICAL DATA FROM JAN, 2014 TO DEC, 2014 A Searches & Seizures FEMA 1 Searches Conducted 80 2 FE seized (Rs. in Lakhs) 761.62 3 IC seized (Rs. in Lakhs) 1671.88 B Investigation FEMA 1 Initiated 818 2 Disposed 1551 3 Pending 5222 4 SCNs issued 671 C Adjudication FERA FEMA Total 1 Cases Adjudicated 231 + 846 1077 2 Cases pending adjudication 863 + 1338 2201 Confiscation of Foreign Exchange (Rs. in 3 Lakhs) 0 + 65.81 65.81 Confiscation of Indian Currency (Rs. in 4 Lakhs) 0 + 620.54 620.54 D Penalties FERA FEMA Total 1 Imposed (Rs. in Lakhs) 3836.76 + 4253.4 8090.16 2 Realized (Rs. in Lakhs) 477.07 + 537.21 1014.28 Pending for realization (Rs. in 3 Lakhs) 873400.46 + 177345.12 1050745.58 E COFEPOSA FERA FEMA Total 1 Orders issued 0 + 0 0 2 Detained 0 + 1 1 F Prosecutions FERA FEMA Total 1 Disposal 42 + 0 42 i) Conviction 10 + 0 10 ii) Acquittal 4 + 0 4 iii ) Discharge 4 + 0 4 iv ) Withdrawn 10 + 0 10 v) Otherwise disposed off 10 + 0 10 vi ) Cases reduced 4 + 0 4 2 Pending 3267 + 0 3267 268 G BG B Department of Revenue III Table – 4 (PMLA) STATISTICAL DATA OF PMLA CASES FROM JAN, 2014 TO DEC, 2014 Sl. Total at the end ACTIONS No. of the month 1. No. of ECIRs 189 2. No. of provisional Attachment Orders issued 138 3. Value of properties under attachment (in Lacs of Rupees) 275516.33 4. No. of PAOs confirmed 122 5. Value of assets under PAO confirmed by the Adjudicating Authority (in Lacs 181613.72 of Rupees) 6. No. of PAOs not confirmed by the Adjudicating Authority 4* 7. Value of Assets in respect of PAOs not confirmed by the Adjudicating 772.05 Authority ( in Lacs of rupees) 8. No. of Appeals before Tribunal a) Filed by the party 118 b) Filed by the Directorate 4 Total: 122 9. No. of persons arrested 9 10. No. of cases in which prosecution complaints filed 55 *One PAO was partially not confirmed 269 G BG B Annual Report 2015-2016 18. Financial Intelligence Unit – India  34,259 STRs disseminated (FIU-IND)  Collaboration with domestic Law Enforcement 18.1. Background and function of FIU-IND and Intelligence Agencies 18.1.1. Financial Intelligence Unit-India (FIU-IND) was  Regular interaction and exchange of information set up by the Govt. of India to coordinate and strengthen collection and sharing of financial intelligence through an  Received 348 requests for information from effective national, regional and global network to combat Intelligence & Law Enforcement agencies money laundering and related crimes.  Provided information in 333 cases requested by The main functions of FIU-IND include all matters the agencies pertaining to  Regional and global AML/CFT efforts a) Analysis of information/reports received from Reporting Entities as per the provisions of  55 requests received from foreign FIUs Prevention of Money-laundering Act, 2002, (PMLA)  49 requests sent to foreign FIUs and Rules made thereunder and their dissemination to authorized domestic agencies for further action.  Increasing awareness about money laundering and terrorist financing b) Enforcement of the provision of PMLA insofar as it relates to FIU-IND  Contribution in 20 seminars and training workshops covering 578 participants c) Egmont Group and exchange of information with foreign FIUs  Arranged 4 training programmes with LEAs and d) Interface with reporting entities and their attended by 82 participants. regulators and domestic agencies authorized to  Improving compliance with the PMLA receive information from FIU-IND including promoting awareness about AML/CFT, capacity  20 review meetings held with Reporting Entities. building and training. ð Strengthening legislative and regulatory 18.2. Highlights of the Performance/ framework achievements during 2015-16 (Upto October 2015)  Regular interaction with the Department of Revenue and Regulators  Collection of information  Involvement in framing of the amendments to  10, 79,389 Cash Transaction Reports (CTRs) Prevention of Money Laundering Act, 2002 and PML received (Maintenance of Records) Rules, 2005.  68,550 Suspicious Transaction Reports (STRs)  Participation in proceedings of the AML Steering received Committee for evolving Risk Based approach and framing  1, 32,195 Counterfeit Currency Reports (CCRs) of the National ML/ TF Risk Assessment. received\ 18.3. e-Governance Activities  2,70,978 NPO Transaction Report (NTRs) received 18.3.1. FIU-initiated project FINnet 2006 with the objective to ‘Adopt Industry Best Practices and  Analysis and Dissemination of Information appropriate technology to collect, analyze and  59,019 STRs processed (retained + disseminate valuable financial information for combating disseminated 24760+34259). money laundering and related crimes. 270 G BG B Department of Revenue III 19. Integrated Financial Unit (IFU) 19.2. Details of expenditure and financial proposals scrutinized and approved Integrated Finance Division of the Department of Revenue is under the direct supervision of Additional Secretary & a) Creation and continuation of posts, Financial Advisor (Finance). There are three units dealing construction/purchase/hiring of offices, as well with budget, finance and expenditure management in as residential accommodation for the field respect of the grants pertaining to Department of formations of Central Board of Excise & Customs and Central Board of Direct Taxes, Revenue, Direct Taxes and Indirect Taxes. Director Department of Revenue and its attached (Finance), D/o Revenue/Excise & Customs and Director offices. (Finance), Direct Taxes/Expenditure assist the AS&FA (Fin). b) Procurement of goods and services including procurement of anti-smuggling equipments i.e. 19.1. Activities undertaken by the scanners and marine vessels. Integrated Finance Unit c) Proposals for deputation abroad of officers of All offices under the Department of Revenue, which inter- the Department, CBDT, CBEC and their field alia include Revenue headquarters, Central Board of offices. Direct Taxes, Central Board of Excise & Customs, Narcotics Control Division, Central Bureau of Narcotics, d) Restructuring proposals, redeployment of Chief Controller of Factories, Central Economic personnel in field formations and constituent Intelligence Bureau, Financial Intelligence Unit (FIU-IND), units. Enforcement Directorate, Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Settlement Commission e) Comprehensive Computerization of Department (IT/WT), Authority for Advance Rulings, Appellate Tribunal of Revenue, its field formation including Customs for Forfeited Property, Adjudicating Authority under PMLA, and Central Excise formations and Income Tax Income Tax Ombudsman, National Committee for field formations. Promotion of Social & Economic Welfare, all field offices f) Proposals from Committee of Management of Income Tax Department which include Directorate (COM), D/o Revenue which oversees the General of Income Tax (Systems), Directorate General functioning of Government Opium & Alkaloid of Income Tax (Legal & Research), Directorate of Income Works (GOAWs). Tax (O&M Services), Directorate of Income Tax (Infrastructure), National Academy of Direct Taxes and g) Grants-in-aid to National Institute of Public other field offices under the Central Board of Direct Taxes, Finance & Policy and Central Revenue Sports & all field offices under Central Board of Excise & Customs Cultural Board. which include Directorate General of Systems & Data Management, Directorate General of Human Resource h) Proposals for Standing Finance Committee Development, Directorate of Revenue Intelligence, (SFC), Committee on Non-Plan Expenditure Directorate General of Central Excise Intelligence, (CNE) and Cabinet Committee on Economic Directorate General of Service Tax, National Academy Affairs (CCEA) relating to comprehensive of Customs, Excise & Narcotics, etc., are serviced by computerization plan of CBDT/CBEC, capital the three units of Integrated Finance Division in terms of expenditure involving construction of office/ Budget formulation, allocation, expenditure monitoring, residential complexes and readymade office/ control, enforcing economy, scrutiny and sanction of residential buildings of all the three expenditure proposals beyond the delegated powers of Departments, and construction of Rajaswa field offices. Bhawan. 271 G BG B Annual Report 2015-2016 i) Proposals received for sanction of financial j) Schemes proposed by CBDT/CBEC for utilizing the budget provision under 1% Incremental assistance from the Customs & Central Excise Revenue Incentive Scheme for obtaining Welfare Fund and Special Equipment Fund. approvals of the competent authority. Revision of norms were finalized in respect of setting up of/refurbishing of recreation/sports k) Proposals involving relaxation/interpretation of clubs, gymnasiums, Departmental Canteens, financial rules and all proposals requiring crèches for children of Departmental officials and reference to the Department of Expenditure. guest houses. Scope of cash award scheme for 19.2.1 The expenditure budget/non-tax revenue receipts meritorious children with special emphasis on girl of Department of Revenue, Direct Taxes and Indirect children and children of group ‘D’ staff was Taxes for BE 2015-16 /RE 2015-16 and BE 2016-17 was revised. As a result, more wards of the prepared, discussed with Secretary (E) and finalized as employees were benefited. below: Grant Grant No. 2015-16 2016-17 BE RE BE D/o Revenue 43 16187.69 17082.25 11925.01 Direct Taxes 44 5408.56 4752.00 5387.00 Indirect Taxes 45 5665.10 4600.50 5340.50 19.2.2Integrated Finance Unit has taken the allocation, was done in respect of important following steps/ initiatives in 2015-16: schemes of Compensation to States/UTs for loss of revenue due to implementation of VAT/ (i) Implementation of Cash Management Plan as CST; Setting up of Tax Information Exchange per Monthly Expenditure Plan (MEP) and System (TINXSYS); Government Opium & Quarterly Expenditure Allocations (QEA) as envisaged by Budget Division. Alkaloid Works; Comprehensive computerization of the Income Tax Department; (ii) Review of Monthly and Quarterly Expenditure vis- Acquisition of residential and office à-vis budgetary allocations and MEP / QEA and accommodation; Strengthening of IT capability report to Revenue Secretary and Expenditure for e-governance of CBEC; Acquisition of ships Secretary through quarterly DOs. and fleets to strengthen Marine capability & (iii) Enforcement of instructions on economy in Acquisition of Anti-Smuggling equipments. expenditure by periodic review of expenditure 19.2.3. In addition, the allocation and monitoring of the and advisories to spending authorities for expenditure control in line with the economy budget relating to advances, viz. House Building instructions issued by the Department of Advance, Vehicle Advance, Computer Advance etc. was Expenditure. also done (iv) Preparation and review of Outcome Budget 19.2.4. The Integrated Finance Unit has been watching and monitoring of Outputs and Outcomes, with the formulation of schemes of important expenditure reference to the targets and budgetary proposals from their initial stage. 272 G BG B Department of Revenue III 20. National Committee For appoints any former Chief Justice of India as Chairman Promotion of Social and of the Committee and other 13 persons of public Economic Welfare eminence, hailing from various walks of life, as Members of the Committee. The first Committee was constituted 20.1. The Government of India in early 1992 constituted under the Chairmanship of Justice Mr. P.N. Bhagwati, the National Committee for Promotion of Social & former Chief Justice of India. The Secretariat of the Economic Welfare for recommending the projects for National Committee comprises of:- promotion of sports, social and economic welfare, pollution i. Secretary (Joint Secretary level); control, etc. received from Trusts/Institutions, to the Central Government for Notification under Section 35 AC of Income ii. Director/ Deputy Secretary; Tax Act, 1961. The funding of the approved projects is iii. Section Officer and Staff through donations on which the donors are entitled to 100% 20.3. The present National Committee for Promotion tax exemption under the Income Tax Law. of Social and Economic Welfare was reconstituted and 20.2. The National Committee for Promotion of Social subsequently notified on 4th March, 2014 for a period of and Economic Welfare is constituted by the Central three years. Government for a term of (03) three years and consists of 14 Members including its Chairman. The Government The composition of the same is as follows:- Sl. Name of the Designation Place No. Committee Members 1. Justice Mr. R.C. Lahoti, Chairman Noida, Uttar Pradesh former Chief Justice of India 2. ShriAmardeep Singh Cheema Member Batala, Punjab 3. ShriAmiya Kumar Sharma Member Guwahati, Assam 4. ShriBaldevChowdhary Member Lucknow, Uttar Pradesh 5. Smt. ChetnaSinha Member Satara Maharashtra 6. Shri D.R. Mehta Member Jaipur, Rajasthan 7. Shri Enrico Piperno Member Kolkata, West Bengal 8. ShriHabib A. Fakih Member Mumbai, Maharashtra 9. Prof. NaladiSamuyelu Member Guntur, Andhra Pradesh 10. Dr.Naresh Gupta Member New Delhi 11. ShriSanjiv Kumar Arora Member New Delhi. 12. Smt. ShameemaRaina Member Srinagar, J&K. 13. Smt. ShashikalaVamanan Member Chegalpattu, Tamil Nadu. 14. ShriVinayakLohani Member Kolkata, West Bengal 273 G BG B Annual Report 2015-2016 20.4. The functions and procedures of the National recommended for approval, while 3 cases has been Committee are governed by Rules 11-F to 11-O of the invoked under sub-sections (4) & (5) of the Income Tax Income Tax Rules, 1962. The procedure of filing the Act, 1961 and the organizations were asked to show application and the manner in which the applications are cause why the exemptions granted u/s 35 AC be not to be considered and decided by the National Committee cancelled from the date of exemption. In the 135th are enumerated in Rules 11-L and 11-M of the Income Business meeting held on 07.09.2015, a total of 157 Tax Rules, 1962. Upon receipt of the applications, the cases were discussed out of which 67 were recommended for approval. While In the 136th Business Secretariat of the National Committee processes and meeting held on 12.10.2015, a total number of 144 cases scrutinizes these to verify that they are complete in all were put before the Committee for discussion out of respects and all documents/information as required under which 46 were recommended for approval. the Rule are enclosed. 21. National Institute of Public 20.4.1. Thereafter, Appraisal Reports containing the Finance and Policy (NIPFP) salient points of the applicant institution/Trust are prepared and put up for consideration of the National 21.1. The National Institute of Public Finance and Committee. The National Committee either rejects or Policy has no direct dealing with the general public; grants approval to the project/scheme of the Trusts/ therefore, there is nothing to reflect their endeavor Institutions. The National Committee records only towards excellence in public service delivery. However, summary findings of the decisions taken by it. The this year also the Institute’s contribution by way of policy approved projects/schemes are recommended by the advice has led to a large extent to restore internal and National Committee to the Central Government to be external fiscal balance in the country. notified as eligible projects or schemes. The Committee’s decision to approve a project or scheme is of 21.2. The NIPFP is a premier research organization recommendatory value and is subject to acceptance by conducting research, policy advocacy, and capacity the Central Government. In the cases, where the building activities in the field of public economics and projects/schemes of the institutions/ associations are macro finance. Established in 1976 as an autonomous recommended by the National Committee and institution under the Societies Registration Act, 1860 the subsequently accepted by the Central Government, the Institute has made significant contribution to policy same are notified in the Official Gazette and in the cases reforms at all levels of Government of India. The NIPFP where the National Committee does not find the scheme provides research, advisory, and capacity building or project fit for approval, decision is communicated to support on macroeconomics, fiscal policy, and the applicants by the Secretariat of the National intergovernmental finance at both national and Committee. international levels. The vision of the Institute is to 20.5. In the financial year 2015-16, the present “promote stable and sustainable development” (refer National Committee headed by Justice Mr. R.C. Lahoti NIPFP brochure). held three meetings till December, 2015. In the 134th Business Meeting held on 09.05.2015, a total number 21.3. The Governing Body is chaired by an Economist of 161 cases were discussed out of which 78 were of Eminence and at present Dr. Vijay Kelkar, Chairman 274 G BG B Department of Revenue III of the Forum of Federations, Ottawa & India Development Division deals with matters relating to implementation Foundation, New Delhi and Chairman of Janwani, is the of Official Language Policy of the Union and takes follow Chairman of the Governing Body. Government is up action on the orders and instructions issued by the represented by the Secretary (Revenue), Secretary Department of Official Language from time to time. (Economic Affairs), Chief Economic Adviser of the Ministry Entire translation work of the Department from English of Finance. There are three eminent Economists in the to Hindi and vice-versa is ensured by the Official Governing Body and representatives of FICCI and Language Division. ASSOCHAM. There is an Academic Committee advising The Department of Revenue is notified under Rule 10(4) the Director. of the Official Language Rules, 1976. 13 sections of the 21.4. Research conducted in matters relating to tax Department have been specified for doing their entire policy and administration, public expenditure and control, work in Hindi. public debt and its management, inter-governmental fiscal 22.2. Performance of the OL Division during relations, economics and pricing of public and industrial the year under report: enterprises in addition to other aspects of public finance have resulted in efficiency and growth potential and a. All the documents pertaining to CBEC, CBDT & competitiveness of the Indian economy in medium to long Revenue HQs were invariably issued bilingually term time frame. as per the requirement under Section 3(3) of the 21.5. The Institute has enhanced and improved Official Languages Act, 1963; understanding of the above issues by conducting several b. All gazette notifications, replies to Parliament training courses, seminars, and policy dialogue for public Questions and Assurances pertaining to CBEC, servants and policy makers and disseminating its CBDT and Revenue HQs were furnished research output. Expert advice of the NIPFP faculty in the successive Finance Commissions, high level bilingually; committees have aided policy makers to devise schemes c. Notes and monthly summaries for the Cabinet, for eliminating revenue deficit to bring about greater fiscal Action Taken Reports(ATRs) on the Report of the discipline”. Comptroller & Auditor General of India, Annual 22. Implementation of Officla Report and Outcome Budget of the Ministry of Language Policy Finance were translated and made available bilingually; and 22.1. The Department of Revenue has a full-fledged Official Language Division which is entrusted with the d. A number of Double Tax Avoidance Agreements implementation of Official Language Policy of the entered into with various countries were Government of India. The Division is headed by Director translated into Hindi; and (OL) and operates through four Official Language Sections; each headed by an Assistant Director (OL) e. Material received from all the sections of the and supervised by two Deputy Directors (OL). The Department of Revenue (HQs), CBDT and CBEC 275 G BG B Annual Report 2015-2016 was translated into Hindi and uploaded on the prizes of Rs. 5000/-(First prize), Rs. 3000/- (Second prize) Ministry’s website. and Rs. 2000/- (Third prize) and also 3 consolation prizes of Rs. 1000/- each were given. 22.3. Hindi Salahkar Samiti: 22.6. Incentive Schemes: Action to re-constitute the Joint Hindi Salahkar Samiti has been initiated after the constitution of the 16th Under the incentive scheme of the Department of Official Lok Sabha. Nomination of 3 Members of non-government Language, Ministry of Home Affairs, cash awards of Rs. by the Department of official language is awaited. 2000/-, Rs. 1200/- and Rs. 600/- are given to those officials Therefore, Publication of resolution is awaited. who do noting/drafting and other official work in Hindi. 22.4. Official Language Inspections: In order to encourage original and creative book writing in Hindi, two Incentive Schemes are run by the The officers of the Hindi Division of the Department also Department for reviewing and writing original books in carried out inspections of 12 offices of Central Excise & Hindi on subjects of Income Tax, Central Excise, Customs/Income Tax under the control of the Department Customs, Narcotics and Service tax. These schemes are during the year under report with the view to assess the open to all the citizens of India. There are attractive prizes progress in use of Hindi in the office and suggested ways in each category (i.e. original book writing in Hindi and to accelerate the use of Hindi in the official work. reviewing) for winners. The Scheme for the year 2015- Parliamentary Committee on official language, III 16 has been circulated to all the Ministry/Departments of Committee inspected various offices of CBDT and CBEC Government of India and the particulars are also posted in which representatives from Ministry were also there. on the Department’s website to give it a wide publicity. 22.5. Hindi Day / Hindi Pakhwara: The scheme has been published in the newspapers. On the occasion of Hindi Day, a message was issued by 22.7. Training: the Hon’ble Finance Minister exhorting all the officers/ employees of the Department to do their maximum day- During the year 2015-16, 4 LDCs/UDCs/Assistants/MTS to-day work in Hindi. and 6 Stenographers were nominated for training in Hindi typing and Hindi stenography, respectively, in the courses Hindi Pakhwara was celebrated from 01 September, 2015 run by the Central Hindi Training Institute, Ministry of to 15 September, 2015. Various competitions like Hindi Home Affairs. noting & drafting, Essay writing, Extempore Speech competition, Quiz competition, Hindi typing and Hindi 22.8. Hindi Workshop: Shorthand competition were organized during the Hindi Pakhwara. Also, there was an award scheme for doing In order to remove hesitation amongst Hindi knowing maximum work in Hindi during the Hindi fortnight for the employees to do their work in Hindi, a two day gazetted officers as well as the non-gazetted officers Departmental Hindi workshop was organized on 2 & 3 separately. Those who secured first, second and third November, 2015 in which 16 officials were imparted positions in these competitions have been given cash training in Hindi noting/drafting. 276 G BG B Department of Revenue III 23. Implementation of the Right to Headquarters office, there are 34 CPIOs, one CPIO for Information Act, 2005 each of the section. The no. of applications received, applications rejected and requests accepted by the CPIOs 23.1 Central Board of Excise and Customs in CBEC during the year 2015 are given below: (CBEC) CBEC is implementing the provisions of Right to Information Act, 2005 since its enforcement. In the no. of applications No. of cases transferred to No. of No. of Quarter ending received during the other Public Authorities requests requests on quarter under Section 6 (3) rejected accepted 31.03.2015 740 234 5 488 30.06.2015 445 317 0 89 30.09.2015 1072 289 0 798 23.1.1 There are 20 Appellate Authorities, who decides and appeals accepted by the CPIOs in CBEC during the the appeals received under the RTI Act from various year 2014 are given below: applicants. The no. of appeals received, appeals rejected Quarter no. of appeals received during No. of appeals No. of appeals ending on the quarter rejected accepted 31.03.2015 48 0 42 30.06.2015 22 5 3 30.09.2015 44 4 43 23.1.2 Registration fee collected under section 7(1) these three quarters is as given below: and the additional fee collected under section 7(3) during Quarter Fee collected under section Additional fee collected under section ending on 7(1) (in Rs.) 7(3) (in Rs.) 31.03.2015 1870 5523 30.06.2015 594 2054 30.09.2015 2250 8427 23.1.3 The fee is excluding the amount of fee received 23.1.6 Appeals against the information provided in for submitting applications online on the RTI portal. response to RTI online applications are also made online, which are transferred to concerned First Appellate 23.1.4 The Government has also launched RTI Portal Authority, who also provide requisite reply to the citizen which facilitates filing of applications online by the Citizens. on the portal itself. CBEC has received 166 appeals from The applications concerning Department of Revenue are January, 2015 to December 2015. accessed by the two Nodal Officers, one for Customs and the other for rest of the matters pertaining to CBEC. 23.2 Central Board of Direct Taxes (CBDT) Thereafter, these applications are transferred, online, to As per the requirements of the Right to Information Act, concern CPIOs in the Board, who are required to provide 2005, CPIOs and Appellate Authorities are functional in requisite information, online, on the Portal itself so that the the domain of TDS administration. In none of the cases applicant may immediately access the requisite information was denied. information. So far, CBEC has received 1977 applications from January, 2015 to December 2015. The scope of services provided in ASKs was contemplated to be expanded by enabling the Sevottam 23.1.5 At present, the facility for transferring the Software to receive RTI applications during the month of applications received on the RTI portal is limited to the June, 2013. The facility to receive RTI applications and CPIOs in the Board only. Hence, applications pertaining appeals through Sevottam Software has been made to the field formations are transferred manually with the available from 01-05-2014. direction provide information directly to the citizen. 277 G BG B Annual Report 2015-2016 Mandatory information as stipulated in Section 4 of the being displayed on the weblink as desired by the RTI Act has been displayed on the weblink of DGIT (Vig.) DoP&T. Quarterly Report is timely uploaded on the at www.incometaxindia.gov.in. Monthly disposal is also website of the CIC. Details of RTI Applications (from Jan. to Dec. 2015) Item Disposal RTI Applications 429 RTI First Appeals 52 23.3 Authority for Advance Rulings (Central These Manuals have been posted on the website of the Excise, Customs & Service Tax) Ministry of Finance to facilitate easy access to the general public. The information is being updated from time to The provision of the Right to Information Act, 2005 has been time. Further, all the records in the Section are being implemented. Twelve manuals, as prescribed under Right properly maintained, so that as and when any information to Information Act and related to the Authority, have been is sought, the same can be readily furnished at the updated regularly on the website of the Authority i.e. http:// earliest. Upto 31.12.2015, 74 applications seeking www.cbec.gov.in/aar/aar.htm PIO/Appellate Authority/ information under RTI Act, 2005 have been disposed. Transparency Officer under the said Act has also been duly 23.9 Income Tax Settlement Commission designated and details are posted on the website as well as on the Notice Boards of the Authority. During the year 2015- The Settlement Commission is very sensitive to the 16 (upto December, 2015) 21 RTI applications and 1 appeal implementation of the RTI Act, 2005. In all seven Benches were received and disposed of within stipulated time. including Principal Bench at New Delhi, the officers of the level of Joint/Addl. DIT and Administrative Officer have 23.4 Financial Intelligence Unit-India (FIU- been designated as CPIO under the said Act. The Director IND) of Income Tax (Investigation) and Secretary, who are During the year 2015-16 (Upto December, 2015) 22 RTI equivalent to the Joint secretary to the government of applications received, 20 disposed off, NIL denied and 2 India in each Bench have been designated as first are under process under the Right to Information Act, 2005. Appellate Authority under the said Act. 23.5 Customs, Excise & Service Tax 23.10 Directorate of Enforcement Appellate Tribunal During the year 2015-16 (up to December, 2015), 150 The Public information Officer and 1st Appellate Authority RTI applications were received in the Headquarters office of the Directorate, which were promptly disposed of within have been nominated by the Public Authority in each the stipulated period. Bench of the Tribunal and they are acting in accordance to the provisions of the Right to Information Act, 2005, in 23.11 Central Bureau of Narcotics dispensing the information. Various provisions of Right to Information Act, 2005 have 23.6 Set up for Forfeiture of illegally been implemented in the Central Bureau of Narcotics. Acquires Property Central Public Information Officers have been nominated. Detailed functions and various aspects of the work done During the year, the Competent Authorities have taken by the Department are also available on CBN website immediate steps/ initiatives towards receipts under Right http://www.cbn.nic.in. to Information Act, 2005. The applications were disposed 23.12 Chief Controller of Factories of within time limit to the satisfaction of the RTI applicants. A cell in each unit of this organization, such as the 23.7 Customs & Central Excise Settlement factories at Ghazipur and Neemuch, as also at the Delhi Commission and Gwalior office of the CCF have been set up. These Right to information Act, 2005 has been implemented. cells function directly under the officials designated as Twelve manuals, as prescribed under RTI related to the CPIO / APIO. The applications received are regularly Commission were duly prepared. CPIOs & ACPIOs have disposed off within the prescribed time-frame. been nominated. 23.13 NIPFP 23.8 State Taxes Section During the year, from 1st April, 2015 to 31st December, 2015, Necessary action has been taken under section 4 of the 15 RTI applications were received and were disposed off in RTI Act, 2005 to publish the information/ manuals on time with no pendency. One CAPIO, CPIO & AAs have been various aspects of functioning of the Sales Tax Section. designated by Public Authority in Bench of the Tribunal. 278 G BG B Department of Revenue III 24. Swachh Bharat Campaign Department of Revenue, North Block. Efforts for Swachhta Abhiyan for overall cleanliness have also been 24.1. Department of Revenue has initiated several extended to Hudco Vishala Building, Jeevan Deep steps as a part of Swachh Bharat Campaign initiated by Building and Church Road Hutments. Many rooms have Government of India on the occasion of 150th Anniversary been renovated in the offices of Department of Revenue. of Mahatma Gandhi. 24.3. To increase awareness amongst personnel of the 24.2. Initially to encourage cleanliness in the working Department, competitions in the form of cartoons and premises, awareness drives for maintaining cleanliness essays were conducted and there was keen participation. in office spaces and premises were done in the The winners were adjudged for both the topics “My Department. Action was taken to improve overall contribution to cleanliness in my office and public places” cleanliness by increasing greenery, cleaning of gardens and “Cleanliness in my office”. The winners were awarded and making the building more aesthetic. Further, with Mementos and Certificates of appreciation. temporary structures have been removed in corridors of Gardens of Department of Revenue after Swachh Bharat Campaign 279 G BG B Annual Report 2015-2016 280 G B I - eruxennA 5102/21/13 ot 5102/10/10 fo doirep eht rof s’CBO DNA s’TS ,s’CS FO NOITATNESERPER )TDBC( sexaT tceriD fo draoB lartneC :noitazinagrOG B Department of Revenue III 281 G B )CEBC( smotsuC dna esicxE fo draoB lartneC :noitazinagrOG B Annual Report 2015-2016 282 G B )DNI-UIF( aidnI - tinU ecnegilletnI laicnaniF :noitazinagrO .CIN htiw derdacne era stsop )owt( 2 * .CIN htiw derdacne era stsop )ruof( 4 **G B Department of Revenue III 283 G B )xaT ecivreS dna smotsuC ,esicxE lartneC( gniluR ecnavdA rof ytirohtuA :noitazinagrOG B Annual Report 2015-2016 284 G B tcA gnirednuaL yenoM fo noitneverP rednu lanubirT etalleppA :noitazinagrOG B Department of Revenue III 285 G B )PFTA( ytreporP deifitroF rof lanubirT etalleppA :noitazinagrOG B Annual Report 2015-2016 286 G B ytreporP deriuqcA lagellI fo erutiefroF rof ytirohtuA tnetepmoC :noitazinagrOG B Department of Revenue III 287 G B )TATSEC( lanubirT etalleppA xaT ecivreS & esicxE ,smotsuC :noitazinagrOG B Annual Report 2015-2016 288 G B noissimmoC tnemeltteS esicxE lartneC & smotsuC :noitazinagrOG B Department of Revenue III 289 G B noissimmoC tnemeltteS xaT emocnI :noitazinagrOG B Annual Report 2015-2016 290 G B scitocraN fo uaeruB lartneC :noitazinagrOG B Department of Revenue III 291 G B tnemecrofnE fo etarotceriD :noitazinagrOG B Annual Report 2015-2016 292 G B yciloP dna ecnaniF cilbuP fo etutitsnI lanoitaN :noitazinagrOG B Department of Revenue III 293 G B uaeruB ecnegilletnI cimonocE lartneC :noitazinagrOG B Annual Report 2015-2016 294 G B )xaT emocnI( sgniluR ecnavdA rof ytirohtuA :noitazinagrOG B Department of Revenue III 295 G B )xaT ecivreS & smotsuC ,esicxE lartneC( sgniluR ecnavdA rof ytirohtuA :noitazinagrO setsaC deludehcS rof dnats sCS )i( sebirT deludehcS rof dnats sTS )ii( setsaC drawkcaB rehtO rof dnats sCBO )iii(G B Annual Report 2015-2016 296 G B II- eruxennA 5102/21/13 ot 5102/10/10 fo doirep eht rof SEITILIBASID HTIW SNOSREP EHT FO NOITATNESERPER )TDBC( sexaT tceriD fo draoB lartneC :noitazinagrOG B Department of Revenue III 297 G B )CEBC( smotsuC dna esicxE fo draoB lartneC :noitazinagrOG B Annual Report 2015-2016 298 G B )TATSEC( lanubirT etalleppA xaT ecivreS & esicxE ,smotsuC :noitazinagrOG B Department of Revenue III 299 G B ytreporP deriuqcA lagellI fo eruiefroF rof seitirohtuA tnetepmoC :noitazinagrOG B Annual Report 2015-2016 300 G B tnemecrofnE fo etarotceriD :noitazinagrOG B Department of Revenue III 301 G B yciloP dna ecnaniF cilbuP fo etutitsnI lanoitaN :noitazinagrOG B Annual Report 2015-2016 302 G B scitocraN fo uaeruB lartneC :noitazinagrO :etoN )noisiv wol ro ssendnilb morf gnireffus snosrep( deppacidnaH yllausiV rof sdnats HV )i( )tnemriapmi gniraeh morf gnireffus snosrep( deppacidnaH gniraeH rof sdnats HH )ii( .)yslap larberec ro ytilibasid rotomocol morf gnireffus snosrep( deppacidnaH yllacidepohtrO rof sdnats HO )iii(G B Department of Revenue III Annexure - III Prosecutions & Penalties in Central Excise & Service Tax and Para No. 3.1(Sub Para 3.1. l) and Para No. 5.2 of Summary of important observations included in Audit Performance Audit Report No. 33 of 2014- Central Excise Reports presented to Parliament during 2015 Administration in Automotive Sectors for detailed (A) Central Board Of Excise And Customs examination. Ministry’s Detailed Background Note on (CBEC) these 2 reports has been sent to Lok Sabha Secretariat on 24.6.2015 & 29.6.2015respectively. 1. During this financial year 2015-16, 243 Draft Audit Para’s (DAPs) of A, B & D category (Central Excise & 6. Similarly, chapter Il (Service Tax liability in Service Tax) and 43 Audit Para’s in respect of Central Insurance sectors) and Chapter Ill (Service Tax liability Excise & Service Tax were received from C&AG office. in Port Sectors) were also selected for detailed examination by the Public Accounts Committee. Ministry’s 2. Out of 244 DAPs, reply on 229 DAPs has been Detailed Background Note on these 2 chapters were also sent to C&AG office of India. Ministry’s comments on 15 sent to Lok Sabha Secretariat on 9th October, 2015 and DAPs are pending. Out of 43 Audit Para’s, Action Taken Note (A TN) on all the Audit Para’s have been sent to I * August, 2015 respectively. C&AG office. Now 9 Vetting Comments received from 7. Further, Para 2.2. I (Incorrect availing of C&AG are pending. exemption of Audit Report No. 12 of 2009-10 and Para 3. During the year, 7 Draft Review Para’s were No. 3.4 to 3.8 (Scrutiny resulting in non-recovery of duty received from C&AG office, and Ministry’s Comments on and interest) of Audit Report No. 17 of 2013 was also all of them have been sent to C&AG Office. selected for detailed examination and Ministry’s Detailed Background Note on these were also sent to Lok Sabha 4. Audit Report No. 7 of 2015 of Central Excise & Secretariat on 24th September, 2015. Audit Report No. 4 of 2015 of Service Tax was laid in the Parliament of 5.5.2015. Ministry’s Action Taken Notes on Further, it may be stated that after finalization of ATN/ these two Audit Reports have been sent to Audit. settled by C&AG, the same will be upload in the portal of 5. During the year, PAC has selected 2 Performance Monitoring Cell during the year on the direction of Audit Reports No. 29 of 2014 Administration of Committee of Secretaries (COS). Year No. of paras/PA Details of the Paras / PA reports reports on which on which ATNs are pending ATNs have been No. of ATNs No. of ATNs sent but No. of ATNs which submitted to PAC not sent by returned with have been finally after vetting by Audit the Ministry observations and vetted by Audit but even for the Audit is awaiting their have not been first time resubmission by the submitted by the Ministry Ministry to the PAC 2015-16 - - 7 32 (B) Central Board Of Direct Taxes (CBDT) 2012 for the first time from the month ended 31st Oct 2014. 1. The Draft Paras reported by Comptroller and Auditor General (C&AG) of India are examined in CBDT 2. The position of audit paras is reconciled on a and Action Taken Notes (ATNs) are prepared and monthly basis with C&AG and as on 30.12.2015 there is furnished to C&AG, on which C&AG issues vetting no pendency of draft paras for initial reply to C&AG. comments, either finalising the ATN or issuing a rejoinder 3. Report No.3 of 2015 of C&AG for the year ended with comments for reconsideration. After incorporating March, 2014 has been tabled in Parliament on 20th March, the vetting comments of C&AG, the Ministry sends the ATNs to the Monitoring Cell (MC) under the Department 2015 and the time period for submitting the ATNs was of Expenditure (DOE) for placing before the Public upto 20th July, 2015. This Report includes 469 draft paras Accounts Committee (PAC) of Parliament. Beside this, pertaining to ARY 2013-14. CBDT had received batches the C&AG and MC have also started including the of the DPs included in this report from July, 2014 to Performance Audit Reports as single/separate ATN October 2014 and has acted on them expeditiously. Out pendency with regard to reports laid in Parliament since of the 469 draft paras covered in this report, initial replies 303 G BG B Annual Report 2015-2016 have been sent to C&AG in all 469 draft paras within the 5. Beside this, ATNs in the case of Report No. 20 stipulated 4 month period i.e. before the deadline of 20th of 2014 on “Allowance of Depreciation and Amortization” July, 2015. {tabled in Parliament on 28th November 2014} and Report No. 32 of 2014 on “Appreciation of Third Party reporting/ 4. Beside this, various Performance Audits are certification in assessment proceedings” {tabled in conducted by the C&AG time to time and after the entry Parliament on 19th December, 2014} were also submitted conference held, the CBDT is required to provide the view to C&AG on 27th March and 18th April 2015 respectively. on the Summary of Recommendations on the initial draft 6. CBDT has to submit a back ground note on the report. The CBDT has duly submitted its reply within the reports selected by the Public Accounts Committee (PAC) prescribed time period on “Functioning of Internal Audit to them. In following reports, Background Note was in Income Tax Department” and “Assessment of submitted to the PAC as per their requirements during Assessee on Pharmaceuticals sector”. the time period allowed by the PAC: Report Subject Date of Background No. Note 20 of 2014 Allowance of Depreciation and Amortization 20th March, 2015 21 of 2014 Performance of Special Economic zones (SEZ) in India 10th March, 2015 32 of 2014 Appreciation of Third Party reporting/certification in 16th March, 2015 assessment proceedings 05 of 2015 Assessment of Assessee on Pharmaceuticals sector 24th June, 2015 7. Action Taken Reports (ATRs) are submitted to 57 replies in the case of old Performance Audit Reports the PAC on the observations/ recommendations were sent to C&AG. 2 Reports were fully complied with contained in the Report of the PAC. The CBDT submits & closed. ATRs in the prescribed format to C&AG. After receiving The last Committee of Secretaries (COS) meeting took the Vetting Comments of C&AG and counter-comments place on 26.02.2014. In pursuance of Monitoring Cell of Ministry, the complete ATR’s are submitted to PAC. letter dated 19.1.2015, the Second meeting of the Total 8 Action taken reports (ATR’s) of the Tenth Report Standing Audit Committee (SAC) took place on 14.5.2015. of PAC (Sixteenth Lok Sabha) on Action Taken on the Recommendations contained in Eighty-seventh Report System Reviews / appraisals of PAC (15th Lok Sabha) on ‘Tax administration’ was A Exit Conference submitted to PAC on 10th June, 2015, within the due date . Beside this 16 ATRs for the Report No. 23 of 2012-13 (i) Exit conference on performance audit of on “IT Applications in Income Tax Department” were sent “Assessment of Assessees in to PAC on 29th May, 2015 within the time allowed by the Pharmaceutical Sector” was held on 15th PAC. January 2015. The report is tabled in Parliament on 20th March, 2015 (Report No.5 of 2015). 8. In the case of Report No 20 of 2013 on “Exemptions to Charitable Trusts and Institutions” Oral (ii) Exit conference of ‘Functioning of Internal Evidence held by PAC on 25/11/2014. CBDT’s reply on Audit in Income tax Deptt’ was held on 17th list of points arising out of Oral Evidence given to PAC June, 2015. The report is tabled in Parliament was submitted on 19th January, 2015. on 11th August, 2015 (Report No.25 of 2015). CBDT’s reply to C&AG on Report related to “Accelerated B Entry conference Depreciation in Wind Sector” was submitted to C&AG on 16th April, 2015. (i) Entry conference on the Performance Audit of “Allowance of deduction to the assesses The counter comments of the CBDT on Chapter V of engaged in Infrastructure Development- Section Report No 10 of 2014, “Grievance Redressal Mechanism” 80IA of Income-tax Act” was held on 5th August, were submitted to PAC on 04/09/2015. 2015. CBDT’s reply to C&AG on the draft report on “Write off of (ii) Entry conference on the Performance Audit of Arrears of Tax Demand in Income Tax Department” was “Implementation of TDS/TCS Schemes” was submitted on 30/11/2015. held on 20th November, 2015. 304 G BG B Department of Revenue III The outcome of these reviews is likely to be included in (C) INTEGRATED FINANCIAL UNIT (IFU): the C&AG Audit Report to be tabled in the Parliament The Integrated Finance Unit has been watching the during 2015-16. All CCsIT/ DGsIT and concerned settlement of audit objections, inspection reports, draft Directorates were requested to issue directions to all audit paras and reports of PAC / Standing Committee. officers to extend full cooperation to the Audit teams of Status of Action Taken Notes of the Audit Paras C&AG and to ensure that relevant information and records concerning to Department of Revenue is as under: requisitioned were produced / furnished to the Audit Teams without any delay. Status of Action Taken Notes of the Audit Paras concerning Department of Revenue Sl. Year Details of the Paras / PA reports No. on which ATNs are pending No. of paras/PA No. of ATNs No. of ATNs sent but No. of ATNs which reports on which not sent by the returned with have been finally ATNs have been Ministry even observations and vetted by Audit but submitted to PAC for the first Audit is awaiting their have not been after vetting by time resubmission by the submitted by the Audit Ministry Ministry to the PAC 1 2000 - - 1 - 2 2006 - 1 - 3 2008 - - 1 - 4 2009 - - 1 - 5 2011 - 1 - 6 2014 - 2 - Total - 4 3 - 305 G BAnnual Report 2015-2016 306G B Chapter - IV Department of Disinvestment IV Department of Disinvestment I Functions (b) Unlocking the true value of the Central Public Sector Enterprises for all stakeholders - As per Government of India (Allocation of Business) investors, employees, Company and the Rules, 1961 the mandate of the Department is as follows: Government. 1. (a) All matters relating to disinvestment of (c) Develop and deepen the capital market Central Government equity from Central through spread of equity culture. Public Sector Enterprises(CPSEs); 2. Increase public shareholding of the listed CPSEs (b) All matters relating to sale of Central through disinvestment. Government equity through offer for sale or private placement in the erstwhile CPSEs; IV Organisational Strcture Note: All other post disinvestment matters, Shri Neeraj Kumar Gupta assumed the charge of including those relating to and arising out of Secretary, Department of Disinvestment on 4th January, the exercise of call option by the strategic 2016. The Secretary is assisted by four Joint Secretaries partner in the erstwhile CPSEs, shall and one Economic Adviser. The Department functions continue to be handled by the administrative on the Desk Officer pattern and the disinvestment work Ministry or Department concerned, where is handled at the levels of Joint Secretary, Director/Deputy necessary, in consultation with the Secretary and Under Secretary. Department of Disinvestment. 2. The Organisational Structure of the Department is 2. Decisions on the recommendations of Disinvestment placed at Appendix -I. Commission on the modalities of disinvestment, including V Policy and Approach to Disinvestment restructuring; 3. Implementation of disinvestment decisions, including The current policy envisages development of people's appointment of advisors, pricing of shares, and other ownership of Central Public Sector Enterprises (CPSEs) terms and conditions of disinvestment; so as to share in their wealth and prosperity, while ensuring that the Government equity does not fall below 4. Disinvestment Commission; 51% and Government retains management control. 5. CPSEs for purposes of disinvestment of Government 2. The salient features of the Current Policy on equity only; Disinvestment are: 6. Financial policy in regard to the utilization of the i) In case of profit making minority stake sale proceeds of disinvestment channelized into the National disinvested (49% of equity of Central Public Investment Fund. Sector Enterprises) management control of 2. The Department is headed by Secretary Central Public Sector Enterprises (CPSEs) (Disinvestment), who is assisted by four Joint Secretaries will remain with the government; and an Economic Adviser. ii) Various factors such as different equity II Vision structure, financial strength, fund requirement, sector of operation etc, do not Promote people's ownership of Central Public Sector permit uniform pattern of disinvestment; Enterprises to share in their prosperity through disinvestment. Enhanced people's ownership shall lead therefore, disinvestment to be considered to better corporate governance. on merits and on a case-by-case basis; III Mission iii) Citizens have a right to own part of the shares of PSEs; that should result in 1. List all unlisted profitable Central Public Sector increased retail shareholding; Enterprises on stock exchanges to facilitate: iv) The listed profitable CPSEs (not meeting (a) Higher disclosure levels to bring about mandatory public shareholding of 10% which greater transparency and accountability now stands revised to 25%) to be made in the functioning of the Central Public Sector Enterprises. compliant through sale of shares by 307 G BG B Annual Report 2015-2016 Government or by the CPSEs through issue (i) Raise budgetary resources for the of fresh shares or a combination of both. Government. VI Benefits of Disinvestment VII Reform Measures and Policy Initiatives There are inherent advantages in the listing of shares of profitable CPSEs on the stock exchanges as it triggers Keeping in view the budgeted target of disinvestment multilayered oversight mechanism which enhances for 2015-16, the Department of Disinvestment (DoD) has corporate governance as well as provides for level playing taken further measures to accelerate the disinvestment field to CPSEs vis-á-vis private companies in regard to process by taking the following measures: accessing the resources through the capital market. The  Replacing annual plan with rolling plans process enhances shareholder value in the listed CPSEs.  Creating a pipeline of proposals for CPSEs, (a) The listed companies are mandated by which at present, are at different stages of Company Law/SEBI/ Stock Exchanges to approval. comply with higher level of disclosures. This will bring greater transparency and  Fast tracking of approval process credibility;  Disinvestment programme made more (b) With the induction of independent directors, inclusive by following an approach to reserve management accountability, competencies upto 20 per cent of shares in PSUs-OFS and performance are enhanced. transactions for retail investors on a case to (c) Investor centric research provides on a case basis. regular basis third party professional 2. As a result of these initiatives, the Government has assessment of risks as well as future realized ` 19,513 crore through disinvestment in 7 offer prospects to management to help it for sale (OFS) issues of Rural Electrification Corporation benchmark its business model with the (REC), Power Finance Corporation (PFC), Dredging industry. Corporation of India Ltd. (DCIL), Indian Oil Corporation (d) Daily trading volume and prices work as a (IOC), Engineers India Ltd. (EIL), National Termal Power barometer for the management and operate Corporation Ltd. (NTPC) and Container Corporation of as a concurrent source of feedback with India Ltd. (CONCOR) during the current financial year regard to the impact of managerial decisions (as on 15th March, 2016). as well as shop floor developments. The higher levels of public scrutiny promotes VIII Performance/Achievements ethical conduct of business and improves The Department of Disinvestment has no plan or non- corporate culture; plan scheme. The entire Budget of the Department is (e) Expectations of investors (shareholders) will under non-plan for payment of salary, wages, professional bring productive pressure upon the services and other administrative expenses, etc. The management to perform more efficiently to Budget Estimate (BE) and the Revised Estimate (RE) unlock the true value of the enterprise. for non-plan expenditure by the Department for the financial year 2015-16 is ` 44 crore and ` 35 crore (f) Listing of profitable CPSEs on the stock exchanges with a mandatory public respectively. The proposed BE for the non-plan ownership of at least 25% shareholding has expenditure for 2016-17 is ` 40 crore. been observed to increase significantly the 2. Disvestment Transactions During 2015-16: value of the Enterprise and Government's residual shareholding as well as those held (a) Rural Electrification Corporation Ltd. : by the public post-listing. The Government received an amount of `1,608.00 crore through disinvestment of its (g) The process also enhances shareholder 5% paid up equity capital in REC through value in the listed CPSEs and enables that CPSE comply with the Securities Contracts an OFS transaction on 8th April, 2015. (Regulation) Rules, 1957 for listing. (b) Power Finance Corporation Ltd. : The (h) The process of listing of CPSEs on stock Government received an amount of exchanges facilitates development and `1,671.00 crore through disinvestment of deepening of capital market and spread of its 5% paid up equity capital in PFC through equity culture. an OFS transaction on 27th July, 2015. 308 G BG B Department of Disinvestment IV (c) Dredging Corporation of India Ltd. (DCIL) : into which the proceeds from disinvestment of CPSEs were The Government received an amount of to be channelized. The corpus of the fund was to be of `53.33 crore through disinvestment of its permanent nature and the same was to be professionally 5% paid up equity capital in DCIL through managed in order to provide sustainable returns to the an OFS transaction on 21st August, 2015. Government, without depleting the corpus. NIF was to be maintained outside the Consolidated Fund of India. (d) Indian Oil Corporation Ltd. (IOCL) : The Government received an amount of 2. Pursuant to its subsequent restructuring in January- `9,369.00 crore through disinvestment of February, 2013 it has been decided that the disinvestment its 10% paid up equity capital in IOCL proceeds will be credited to the existing 'Public Account' through an OFS transaction on 24th August, under the head NIF with effect from the fiscal year 2013- 2015. 14 and they would remain there until withdrawn /invested for the approved purpose. It was also decided that the (e) Engineers India Ltd. (EIL): The NIF would be utilized for the following purposes: Government received an amount of ` 643.00 crore through disinvestment of its 10% paid  Subscribing to the shares being issued by up equity capital in EIL through an OFS the CPSEs including PSBs and Public transaction on 29th January, 2016. Sector Insurance Companies, on rights (f) National Thermal Power Corporation Ltd. basis so as to ensure 51% ownership of the (NTPC): The Government received an Government in those CPSEs/PSBs/ amount of `5,014.00 crore through Insurance Companies, is not diluted. disinvestment of its 5% paid up equity capital in NTPC through an OFS transaction on 23rd  Preferential allotment of shares of the CPSE & 24th February, 2016. to promoters as per SEBI (Issue of Capital and Disclosure Requirements) Regulations, (g) Container Corporation of India Ltd. 2009 so that Government shareholding does (CONCOR): The Government received an amount of `1,155.20 crore through not go down below 51% in all cases where disinvestment of its 5% paid up equity capital the CPSE is going to raise fresh equity to in EIL through an OFS transaction on 9th & meet its capital expenditure program. 10th March, 2016.  Recapitalization of public sector banks and 3. Keeping in view the budgeted target of disinvestment public sector insurance companies. for 2015-16 and as a part of the strategy to keep stocks readily to take advantage of better market condition  Investment by Government in RRBs/IIFCL/ without any loss of time, the Government has already NABARD/Exim Bank; identified some CPSEs for disinvestment during the year in sectors like mining and metal, oil, energy, capital goods  Equity infusion in various Metro projects; as well as some mid-size and small stocks. Best efforts  Investment in Bhartiya Nabhikiya Vidyut are being structured for further divestment through fresh Nigam Limited and Uranium Corporation of OFS for CPSEs. Other options of disinvestment through India Ltd. capital restructuring are also being initiated. Efforts is to optimize the disinvestment during 2015-16.  Investment in Indian Railways towards 4. While presenting the Budget for 2015-16, the Hon'ble capital expenditure. Finance Minister in para 26 of his Speech had mentioned 3. An amount of ` 29,438.42 crore was utilized through that "the budget reflects considerable scaling up of disinvestment figures. This will include both disinvestment NIF during the year 2014-15 for meeting capital in loss making units and some strategic disinvestment." expenditure of the Ministry of Railways and re- The Cabinet Committee on Economic Affairs in its capitalization of Public Sector Banks (PSBs). meeting held on 17th February, 2016 has approved the X Initiatives undertaken for persons with Department’s proposal for laying down procedure and Disabilities, Scheduled Castes, Scheduled mechanism for strategic disinvestment of CPSEs. Necessary guidelines in this regard have been issued on Tribes and Other Backward Classes: 29th February, 2016. A Special Reservation Cell for Scheduled Castes, IX Utilization of Disinvestment Proceeds Scheduled Tribes, Persons with disabilities and Other Backward Classes has been set up, along with a liaison The CCEA had approved the constitution of NIF on 27th January 2005. The Government of India constituted the officer, for enforcement of orders of reservation in posts National Investment Fund (NIF) on 3rd November, 2005, and services of the Central Government. 309 G BG B Annual Report 2015-2016 2. The staff strength in the Department along with  Result Framework Management representation of Scheduled Castes, Scheduled Tribes, System(RFMS) : An online mode of interaction Persons with disabilities and Other Backward Classes is between the Minister & the secretary. given in Appendix II.  RTI Online : A portal to upload RTI Reply by XI Initiatives Relating to Gender different CPIOs. Budgeting and Empowerment of Women  Online APAR(Sparrow) : An Online portal to fill online APAR for all IAS in the department. The nature of allocated work of the Department does not have any scope for gender budgeting and  NIC Mail : Mail application used for official empowerment of women. communication. XII Official Language Policy  E-Procurement : A portal for Online Tendering. Currently we are only using the The Department has a full-fledged Official Language E-Publishing part & Award of Contract. Unit to implement the Official Language Policy. The website of the Department is bilingual.  E-Service book : An online portal for maintaining service records of employees. XIII E-Governance  Biometric Attendance System : An online The status of ICT Applications implemented and portal for monitoring daily attendance being used in the Department of Disinvestment are as marked by employee using biometric per details given below:- devices in the department. (i) Website of the Department (http://  CPGRAMS portal : To Monitor Grievances. divest.nic.in ) is bilingual and being updated regularly. The existing website is in the  PRAGATI : Proactive governance and timely process of migration to Content implementation website etc. Management Framework (CMF), which will  Pension Portal : (https://bhavishya.nic.in) be GIGW (Guidelines for Indian Government Websites) compliant.  Cadre Management System ( for CSS Officer) (ii) Maintenance of the Payroll Package COMDDO - This application is used for XIV Redressal of Public Grievances Salary, Income tax, Pay slips, All Bills etc. Download and installation of patches for DA The Department is using the Centralized Public and other schedules as and when required. Grievance Monitoring System (CPGRAMS). The website of the Department also has an in built mechanism for (iii) E-office Applications (https:// receiving grievances from public. A Joint Secretary has mof.eoffice.gov.in) : Implementation of e- been designated as Director of Public Grievances for the office applications like e-file (Physical File) purpose. - File Tracking System, e-leave, e-tour, e- PIMS is in progress. Internal Complaints Committee on Sexual harassment of women employees (iv) Jeevan Pramaan : Pensioners Life Certificate System. In compliance with Supreme Court's Judgement dated 13th August, 1997 in Visakha case relating to (v) Web based Monitoring Information System prevention of sexual harassment of women at work place, are in place as below :- an internal complaints committee has been put in place  Rajya Sabha Question, Answer Monitoring for considering complaints of sexual harassment of System : A portal for uploading & viewing women employees in Department of Disinvestment. Rajya Sabha question & answers in both XV Vigilance Machinery English & Hindi. A Joint Secretary has been designated as part-time  E-Awas : Government Accommodation Chief Vigilance Officer in the Department. Management System (GAMS). XVI Right to Information Act, 2005  Data.gov.in web portal : An open platform for Research data. In order to facilitate dissemination of information 310 G BG B Department of Disinvestment IV under the provisions of the Right to Information Act, 2005, XVII Initiatives for Good Governance the following initiatives have been taken by the As per the mandate provided by the Government of Department : India (Allocation of Business) Rules, 1961, the (i) A RTI Cell has been set up to collect, transfer Department is not involved in the delivery of any public the applications under RTI Act, 2005 to the services and thus, does not have any direct interface with Central Public Information Officers/ Public the citizens or public at large. However, the Department Authorities concerned and to submit the has initiated the following measures as a part of good quarterly returns regarding receipt and governance: disposal of the RTI applications/ appeals,  Timelines have been prescribed for disposal to the Central Information Commission. of transaction related bills to avoid delay and any scope of corruption as also to promote (ii) Details of functions of the Department along good governance. with its functionaries etc. have been placed on Department's website (www.divest.nic.in) in compliance with Section 4(1)(b) of the RTI XVIII Audit Paras/Objections Act and is updated from time to time. No Audit paras/objections are pending in the (iii) One Under Secretary has been designated Department. as the Nodal Central Public Information XIX Integrated Finance Unit Officer and three other Under Secretaries as Central Public Information Officers under The Integrated Finance Unit works under Additional Section 5(1) of the Act, in respect of subjects Secretary & Financial Adviser (Finance) and deals with handled by them. expenditure and Budget related proposals of Grant No. 46 - Department of Disinvestment - which includes (iv) A Joint Secretary has been designated as Secretariat General Services covering the establishment First Appellate Authority in terms of Section budget for the Department of Disinvestment. 19(1) of the Act for all matters relating to the Department. The budget allocation Under Grant no. 46 is as under: (Rs. in crores ) Grant No. Budget Estimates 2015-16 Revised Estimates 2015-16 Plan Non-Plan Total Plan Non-Plan Total 46 - Department of Disinvestment ---- 44.00 44.00 ---- 35.00 35.00 The Integrated Finance Unit monitors all financial and consistently monitored by the IF Unit. All budget related expenditure related proposals of the Department like matters including issues concerning Standing Committee appointment of consultants, foreign deputation/visits of on Finance come within the purview of this unit. officers etc. The expenditure trend of the Department is 311 G BG B Department of Disinvestment IV 313 G B I xidneppA ERUTCURTS LANOITASINAGRO TNEMTSEVNISID FO TNEMTRAPEDG B Annual Report 2015-2016 Appendix II Representation of SCs, STs, Persons with Disabilities & OBC in respect of Department of Disinvestment as on 31.12.2015 Groups Number of Employees Number of appointments made during the previous calendar year By Direct Recruitment By Promotion By Other Methods Total SCs STs PwDs OBCs Total SCs STs PwDs OBCs Total SCs STs PwDs OBCs Total SCs STs PwDs OBCs A 20 4 0 0 0 0 0 0 0 0 2 1 0 0 0 6 2 0 0 0 B 20 4 0 0 1 3 0 0 0 0 1 1 0 0 0 0 0 0 0 0 C 12 5 0 0 5 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Total 52 13 0 0 6 3 0 0 0 0 3 2 0 0 0 6 2 0 0 0 314 G BChapter - V Department of Financial Services V Department of Financial Services 1. Work Allocation among Sections 1.4.2 Taxation matters of PSBs/FIs; dividend payable to Central Government by PSBs; scrutiny of the 1.1 Banking Operation-I (BO-I) annual financial reviews of PSBs conducted by RBI under Section 35 of the Banking Regulation Act, 1949 and follow 1.1.1 Appointment of (a) Governor/Deputy Governor up action; operation of the schemes of bank guarantee of RBI(b) Chairman & MDs of SBI (c) CMDs and EDs of by PSBs and related complaints. Nationalised Banks (d) CMDs of NABARD and NHB (e) Whole Time Director in EXIM BANK, SIDBI and IDBI (f) 1.4.3 Capital restructuring of PSBs (including Workmen Employee Directors (g) Part Time Non Official restructuring of weak PSBs) and Government’s Directors and Officer Employee Directors of Public Sector contribution to share capital, public issue of banks; Banks( PSBs). Constitution of Boards of Directors of Release of externally aided grants to ICICI Bank under RBI and PSBs. USAID, Citizen’s Charter of PSBs /RBI. 1.1.2 Determination of salary allowances and other 1.4.4 Disputes and arbitration between PSBs as well terms and conditions of Whole Time Directors of Public as between PSBs and other Govt. Departments/PSEs; Sector Banks (PSBs) and Financial Institutions (FIs) / appointment of advocates in PSBs, acquisition/ leasing/ above institutions. renting/ vacation of leased premises; residuary matters of Portuguese Bank in Goa, Estate Officers under Public 1.2 Banking Operation-II (BO-II) Premises Act, 1971; opening and shifting of administrative 1.2.1 Deposit Insurance and Credit Guarantee offices of banks. Corporation (DICGC) policy matters and publicity in PSBs, 1.4.5 All Policy matters related to Banking Operation IFSC. such as Licensing, amalgamation, reconstruction, 1.2.2 Administration of all Acts/Regulations/Rules moratorium funds, and acquisition of private sector banks; related to financial systems like the Negotiable overseas branches of Indian banks; operation of foreign Instruments Act, 1881, the Chit Funds Act, 1982 and the banks in India and functioning of PSBs, Banking Sector Price Chits and Money Circulation Schemes(Banning) Reforms. Act, 1978, etc. Payment and Settlement System Act, 2007 1.4.6 Notification regarding exemption from various for Public as well as Private Sector Banks and other sections of the Banking Regulation Act, 1949 and miscellaneous Acts/Bills appointment of appellate authority to hear appeals under 1.2.3 International Relations (Banking, Insurance and BR Act and RBI Act. Pensions Reforms; Financial Action Task Force (FATF); 1.4.7 Administration of all Acts/ Regulations/ Rules International Cooperation in Joint Investment Funds; related to PSBs, RBI and State Level Banks. Oman-India Fund and Indo-Saudi Fund. WTO and Border Banking facilities. 1.4.8 Appellate Authority on NBFCs and matters relating to NBFCs / Asset Restructuring Companies. 1.3 Banking Operation-III (BO-III) 1.5 Agriculture Credit (AC) Customer Service in Banks/Insurance Companies/FIs. Complaints /Representations received Agriculture Credit; Agricultural Debt Waiver and from individuals, associations, companies, DPARG/DPG, Debt Relief Scheme, 2008; matters relating to NABARD MPs, VIPs etc. on various customer related issues, staff (except service matters), Agriculture Finance matters or any other operational matters in these Corporation(except Service matters), State Legislations on organisations are handled for redressal. the subject, Co-operative Banks (including Urban Co- operative Banks), World Bank, ADB and kfw aided projects 1.4 Banking Operation & Accounts (BOA) relating to rural/agriculture credit, appeals made by co- 1.4.1 Preparation of annual consolidated review on the operative banks, matters relating to Micro Finance, financial working of PSBs and laying it on the Tables of both assistance to persons affected by natural calamities, riots, Houses of Parliament; pattern of accounting and final disturbances, etc. Bank credit to KVIC, handloom and accounts in PSBs; study and analysis of the working handicraft sector. Citizen Charter of NABARD. results of PSU Banks; audit of banks, appointment and 1.6 Regional Rural Banks (RRBs) fixation of remuneration of auditors of PSBs/FIs; laying of annual reports and audit reports etc., of PSBs in Legislative matters with regard to RRB Act, 1976 Parliament. and framing of rules thereunder; nomination of non- 315Annual Report 2015-2016 official directors on the Board of RRB, appointment of 1.10 Establishment (Estt.) Chairman, Recommendation of RRBs, review of Matters pertaining to the Officers and Staff of DFS performance of RRBs, wage revision, manpower including RRs, appointment, ACRs, deputation(including planning; laying of Annual Reports of all RRBs along abroad), training, IWSU, SIU, welfare, review of officers with review thereof; formation of Staff Service Regulation under FR 56(J), internal vigilance, staff grievances, and Promotion Rules for employees and officers of pension, etc.; grant of various advances to officers and RRBs, IR matters of RRBs. Citizen’s Charter of RRBs. staff, payment of fees to advocates, settlement of medical Priority Sector Lending, Micro Finance and other related claims and CGHS matters, family welfare programme. matters which includes lending to weaker sections including SC/ST, PM’s New 15 Point Programme for the 1.11 General Administration (GA) Welfare of Minorities, credit to minorities, follow up action of Select Parameters recommended by Sachar Housekeeping, cleanliness, stores, canteen, R&I, Committee, DRI Scheme, Micro Finance Institutions and library, Staff Car Drivers, vehicles to the officers of DFS, Legislations thereon, Self Help Groups as well as purchase of Computer Hardware and Maintenance of NABARD’s Micro Finance etc. Computers, Printers and other equipments, Providing of Identity Cards to the Staff of DFS and CMDs/EDs/PROs 1.6.1 Micro Finance - Matters related to Micro Finance of PSBs/FIs/PSICs etc. Institutions and Legislation thereon, Self Help Groups, as well as NABARD’s Micro Finance etc. 1.12 Parliament 1.7 Financial Inclusion (FI) 1.12.1 Collection, identification and marking of Parliament Questions, Notices, admitted Questions, and getting the Work relating to financial inclusion, coordination files approved from the Minister. Preparation of facts and with other sections, offices, institutions etc. on Financial replies for pads of Ministers; keeping track and record of inclusion; Branch expansion of banks; Lead Bank Scheme pending Assurances, Special Mentions and References and Service Area Approach; District and State Level under 377 and other matters as mentioned in the Bankers’ Committee(SLBC); Regional imbalances of Induction Material. banking network, matters related to Business Correspondents/Business Facilitators, Mobile Banking etc., 1.12.2 Coordination work relating to the Standing matters relating to e-Governance in all FIs and e-Payments Committee on Finance; Committee on Subordinate in banking system and computerisation of PSBs. Legislation; Petitions Committee; Committee on Public Undertaking (COPU) etc. 1.8 Industrial Relations(IR) 1.13 Hindi Service matters of PSBs/IDBI/FIs/NABARD/RBI. Administration of Industrial Disputes Act matters. HR Hindi Section of the Department is responsible matters relating to PSBs and RBI Unions and to ensure implementation of Official Language Act, 1963 Associations in the Banking Industry, Bipartite settlements and Official Language Rules, 1976 made there under in of policy of transfer, promotion, and HRD in banks; IB the Department as well as in the Banks, Insurance reports about political activities of bank employees; Pay companies, FIs that are under control of the Department and Allowances of bank employees in overseas branches; and take action to achieve targets fixed in Annual HR Reforms. Programme issued by Department of Official Language. Besides this Hindi Section of the Department is 1.9 Coordination (Coord.) responsible for Hindi Translation of important documents issued by the Department i.e. Annual Report, Organisation of FM’s meetings with CEOs of Performance Budget, Cabinet Note, Report of Action PSBs; and regional consultative committee meetings; Taken by the Government on the recommendation of Presidential address to the Joint Session of Parliament; Standing Committees. Besides these documents, Hindi Staff Meeting of Secretary (FS); monitoring & review of Section also provide translation of documents that come disposal of VIP references, PMO references, under section 3(3) of Official Language Act, 1963 such coordination of RBI pending matters; compilation and as General order, Office memorandum, Resolution, submission of material for Parliament Questions to other Notification, Press Release, Rules, Contracts, Tender, Ministries/Departments; Parliament Questions regarding Tender Notice etc. VIP references; Monthly DO letter to Cabinet Secretary from Secretary (FS);Appointment of CPIOs, ACPIOs, 1.14 Welfare Section AA and Nodal Section for RTI matters of DFS and to deal with CIC for Annual Report etc.; Updation of Matters relating to recruitment/promotion and welfare Induction Material for DFS; Co-ordination of VIP, PMO, measures of SCs/STs/Persons with Disabilities and Ex- President Sectt., etc. references involving more than Servicemen in Public Sector Banks/FIs and Insurance two Divisions of DFS. Companies and also ensuring proper implementation of 316Department of Financial Services V the reservation policy of the Government of India for these major frauds in PSBs (in India and abroad); PMO categories of persons in Public Sector Banks/FIs and references on anti-corruption measures; bank security; Insurance Companies. robberies & loss prevention in banks; sanction of prosecution in case of ED/CMDs; War Book matters; 1.15 Data Analysis (DA) Annual Reports of CVC; Conduct Regulation in PSBs/ Reserve Bank of India Credit Policy – Busy FIs, employment after retirement regulations in PSBs; Season – Slack Season and selective credit control; CVC/CBI references relating to DRTs/DRATs. financial sector assessment and sectoral credit analysis; 1.18.2 Office of Custodian/Special Court, Joint Banking Statistics regarding bank deposits and advances; Parliamentary Committee (JPC) (which enquired into deposits and advances of banks; rates of interest on bank irregularities in securities transactions); disciplinary action deposits and advances; Dissemination of results and against bank employees/executives involved in important information relating to RBI, IBA, studies on irregularities in securities transactions; establishment banking reforms; analysis of other international reports matters relating to Special Courts/Office of the Custodian; relevant to banking sector in India; Analysis of Reports all issues pertaining to continuation of posts, budget of committees on Financial Sector Reforms etc. matters of the O/o Custodian and Special Court including Management Information System – collection, collation extension of the Office of Custodian and appointment of of data relating to Banking Industry. Result Framework Custodian. Document (RFD), Speeches of FM/MOS on different occasions. 1.19 Debts Recovery Tribunal (DRT) 1.16 Industrial Finance-I(IF-I) Establishment of DRTs/DRATs under the Recovery of Debts due to Banks and FIs Act, 1993; Administration of the Export-Import Bank Act- framing or amending rules for implementing of the 1981 and Scheme for financing Viable Infrastructure provisions of the DRT Act; filling up of the posts of Projects (SIFTI) of IIFCL, Operational/Policy/Budgetary Chairpersons, Presiding Officers, Registrars, Assistant matters relating to Exim Bank, IIFCL, IWRFC and IIBL Registrars, Recovery officers, and other posts in DRTs/ Ltd; Matters related to IFCI Ltd, IDFC Ltd, Closure of IIBI DRATs; issuing clarifications/guidelines etc. on Ltd, related matters; Board level appointments-Whole administrative matters/review; progress and disposal of Time Directors- IIFCL, IWRFC and IIBI Ltd; Government cases by DRT/DRATs; budget provisions, monitoring, etc Nominee Directors-Exim Bank, IIFCL, IWRFC, IIBI Ltd, relating to DRTs/DRATs. IFCI Ltd. and IDFC Ltd; Non-official Directors-Exim Bank, IIFCL, IWRFC and IIBI Ltd; Sector-specific matters like 1.20 Recovery Section infrastructure, power, textiles, exports; commerce etc.; The Section deals with the issues relating to Administration of Exim Bank Act; laying of annual reports Recovery of Debts due to Banks and FIs (RDDBFI) Act, of FIs; matters related to Ratnagiri Gas and Power Pvt. 1993 & Securitization and Reconstruction of Financial Ltd (RGPPL). Citizen’s Charter of EXIM Bank and IIFCL. Assets and Enforcement of Security Interest (SARFAESI) 1.17 Industrial Finance-II(IF-II) Act, 2002 and their Rules, Central Registry, Credit Information Companies including CIBIL, Securitisation Work relating to Small Industries Development and Foreclosure, resolution/recovery of Non-Performing Bank of India (SIDBI), NHB, MSME, M/o HUPA and work Assets (NPAs) of PSBs(PSBs), One Time Settlement / relating to Housing, NCGTC, MUDRA, AAIFR, BIFR, Compromise of loan accounts etc. TUFS, M/o HRD and work related to education loans, Skill Development, SFCs, Shipping Scheme, Micro 1.21 Insurance-I (Ins.-I) Finance Institutions, Self Help Groups, Stand up India, 1.21.1 LIC Business - Review of the performance of VIP references, Audit Paras, CPGRAM, RTI, Parliament LIC; Laying of Reports of LIC in Parliament; Opening/ Questions, Assurances, Grievances, Budget winding up of branches of LIC in India; Appointment of Announcements, coordination with RBI and State Govts. Auditors for LIC; Administration of PP Act in LIC and 1.18 Vigilance references relating to Estate matters in LIC; Foreign operations/ subsidiaries of LIC; References on Social 1.18.1 Consultation with CVC/CTE; nomination of CVOs Security Schemes and other life insurance schemes; for PSBs/FIs; correspondence with CBI; Annual Action Review of performance and making budgetary Plan on Anti-Corruption measures; investigation of cases provisions for various GOI funded schemes such as of frauds by CBI & RBI; matters under Prevention of Janashree Bima Yojana, Shiksha Sahayog Yojana, Corruption Act; preventive vigilance; vigilance systems Varishatha Bima Yojana and Aam Aadmi Bima Yojana; and procedures in RBI/PSBs/FIs and Insurance Other Social Security Group Insurance Schemes under Companies; inquiry into complaints against GMs/EDs and LIC; Central Government Employees Group Insurance CMDs of PSBs/FIs and Vigilance Surveillance over them; Scheme; Postal Life Insurance Scheme;Employees’ 317Annual Report 2015-2016 Provident Fund Scheme; All Government sponsored/ GIBNA, 1972, IRDA Act, 1999 and Actuaries Act, 2006; supported schemes in life insurance; Any other life Implementation of Law Commission Reports. insurance or social security products/ scheme proposals; Others: Appellate Authority constituted under 1.22.4 Appointments - Policy issues concerning Section 110H of the Insurance Act, 1938; selection of Chief Executives in the PSU insurance companies including AICL; Appointment on the Boards 1.21.2 Coordination work relating to the following of public sector non-life companies including AICL; Committees:Committee for the Welfare of Women; Foreign deputation of Insurance executives; permission Committee for the Welfare of SC/ST; Estimates for Chief Executives of non-life companies including AICL. Committee; 1.22.5 General Insurance - Review of the performance 1.21.3 Appointments - LIC–Selection & appointment of General Insurance Companies including AICL; Matters of Chairman/ MDs, LIC, appointment of Directors on relating to Insurance Schemes of Public Sector General the Board of LIC, appointment of ex-officio members Insurance Companies including AICL and audit paras on the subsidiaries of LIC; Permission for foreign thereon; Computerization of public sector general deputation of Chairman and MDs of LIC; Permission insurance companies; References relating to Surveyors for commercial Employment after Retirement for and Agents of non-life PSICs; Foreign operations of public Chairman/ MDs, LIC and other executives of LIC; IRDA sector general insurance companies; Reference relating -Appointments of Chairperson and Members of IRDA; to Re-insurance, Third Party Administrators, Tariff Service condition of Chairman, Members and employees Advisory Committee; Opening/ winding up of branches ; of IRDA; Budget and Funds of IRDA; Other matters Administration of War Risk (Marine Hull) Reinsurance relating to Brokerage agencies, entry of new companies Schemes, 1976; Reference from RBI on permission for and regulations of IRDA. release of foreign exchange for insurance policy abroad; Laying down of Annual reports of General Insurance 1.21.4 Service Matters - Service matters, rules and Companies/ GIC/ AICL; Administration of PP Act in non- regulations in all public sector insurance companies; life insurance companies and references relating to Estate Representations on service matters by employees of matters in those companies. public sector insurance companies; Service matters of Development Officers/ Agents/Intermediaries; Wage 1.22.6 Coordination - Work relating to Budgeting, Tax Revision/ Bonus/ VRS in LIC / Public Sector General proposals, Budget Announcements relating to insurance, Insurance Cos; Implementation of Pension Scheme/ Annual Report, Economic Survey, India Reference policy matters on commercial employment. Citizen’s Annual, Economic Editors Conference, PMO/ Cabinet Charter of Life Insurance Corporation Ltd. References, CII & FICCI, within Insurance Division, matter related to e-payments in Insurance Companies, 1.22 Insurance-II (Ins.-II) computerization of Insurance Companies. 1.22.1 Grievances - Public grievances against services 1.22.7 Others - WTO multi-lateral/ bilateral agreements; provided by Public Sector Insurance Companies including Inter-Government agreement between India and any AICL and IRDA other than on service matters; Periodical other country. meetings of Public Grievances Officers of public sector insurance companies; Functioning of internal public 1.23 Pension Reforms (PR) grievances redressal machinery in public sector insurance Coordinating and introducing Pension Reforms; companies; Functioning of external redressal machinery Policy matters relating to National Pension System and like Consumer Courts,Ombudsmen, Lok Adalats, MACT its extension to State Governments and unorganised and Courts etc; Appellate Authority constituted under sector and implementation of the Co-Contributory Atal Section 110H of the Insurance Act 1938. Citizen’s Charter Pension Yojana (APY); Administrative and Legislative of Non Life Insurance Companies. matters relating to Pension Fund Regulatory and Development Authority; Matters relating to the Investment 1.22.2 Housekeeping - Care taking and maintenance Pattern for Non-Government Provident Funds, of computers, furniture, photocopiers etc. in Insurance Superannuation Funds and Gratuity Funds. Division. I-card for staff and executives of Insurance Companies. 1.24 IT Cell 1.22.3 Insurance Sector Reforms - All matters relating The IT cell handles all work related to the website to reforms in insurance sector; Reforms related of this Department, information technology, digitalization, amendments to Insurance Act, 1938, LIC Act, 1956, Digital India initiative, liaison/coordination with NIC etc. 318Department of Financial Services V Performance and significant developments. Section 138 of the Negotiable Instruments Act, 1881 deals with the offence pertaining to dishonor of cheque, drawn 2. Banking Operations and Accounts for discharge of any debt or other liability, on account of insufficiency of funds in the drawer’s account or on 2.1 Capitalization of PSBs account of the fact that the cheque amount is more than 2.1.1 The Government had announced the amount agreed to be paid by the bank, and provides “Indradhanush” a plan to revamp PSBs and as part of for penalties for such dishonour. that, a programme of capitalization to ensure that PSBs The Supreme Court, in its judgment dated 1st remain BASEL-III compliant was also announced under August, 2014, in the case of Dashrath Rupsingh Rathod which Rs. 70,000 crore is supposed to be provided versus State of Maharashtra and another (Criminal Appeal between 2015-19. The criteria used was to ensure that No. 2287 of 2009) held that the territorial jurisdiction for CET-I of all banks remain at 7.5%. Further, large banks cases relating to offence of dishonour of cheques is were also given growth capital to support credit needs of restricted to the court within whose local jurisdiction such the growing economy. Post Asset Quality Review (AQR) offence was committed, which in the present context is exercise by RBI to clean the balance sheets of PSBs, where the cheque is dishonoured by the bank on which it the numbers are being re-looked at and a revised is drawn. The Supreme Court had directed that only in programme of capitalization will be issued as part of those cases where post the summoning and appearance “Indradhanush 2.0”. of the alleged accused, the recording of evidence has 2.1.2 The Government has already infused a sum of commenced as envisaged in section 145(2) of the Rs. 19,950 crore in 13 PSBs during the current financial Negotiable Instruments Act, 1881, proceeding will year. continue at that place. All other complaints (including those where the accused / respondent has not been 2.1.3 Key Performance Indicators (KPI) for PSBs properly served) shall be returned to the complainant for 2.1.3.1 Previously, Government had put in place a filing in the proper court, in consonance with exposition mechanism of Statement of Intent on Annual Goals (SOI) of the law, as determined by the Supreme Court. to monitor the performance of the PSBson various Various FIs and industry associations had performance parameters wherein annual targets were expressed difficulties, arising out of the legal interpretation given to the PSBs after having detailed discussion with by the Supreme Court about the jurisdiction of filing cases their top management. While fixing the target of SOI for under section 138 of the Negotiable Instruments Act, PSBs on parameters such as deposits, advances priority 1881. In view of the urgency to create a suitable legal sector lending, reduction in Non-Performing Assets framework for determination of the place of jurisdiction (NPAs), recovery in written-off accounts, profit, CRAR, for trying cases of dishonour of cheques under section net interest margin (NIM), return on assets (ROA), cost- 138 of the Negotiable Instruments Act, 1881, the to-income ratio etc. various factors are taken into Negotiable Instruments (Amendment) Bill, 2015 was consideration viz., the actual performance of the bank introduced by the Government to further amend the during the preceding financial year, growth trends in the Negotiable Instruments Act, 1881. The Bill was passed industry, future plans of the bank, acceptability of the in the Winter Session of the Parliament. The Negotiable targets by the banks etc. The achievement of SOI targets Instruments (Amendment) Act, 2015 received the assent by banks formed the basis for grant of Performance of the President on the 26th December, 2015 and has Linked incentives to the whole time Directors of PSBs. been published in the Gazette of India, Extraordinary on 2.1.3.2 From 2015-16 onwards, SOI has been replaced 29th December, 2015. The provisions of the Negotiable by Key Performance Indicators (KPI) to make the targets Instruments (Amendment) Act, 2015 shall be deemed to generic rather the bank specific so that need to interact have come into force on the 15th Day of June, 2015. with bank authority is eliminated/ minimized. The Negotiable Instruments (Amendment) Act, 2.2 Banking Operation-II (BO-II) 2015 is focused on clarifying the jurisdiction related issues for filing cases for offence committed under section 138 2.2.1 Enactment of the Negotiable Instruments of the Negotiable Instruments Act, 1881. The Negotiable (Amendment) Act, 2015 Instruments (Amendment) Act, 2015, facilitates filing of The Negotiable Instruments Act, 1881 was cases only in a court within whose local jurisdiction the enacted to define and amend the law relating to bank branch of the payee, where the payee delivers the Promissory Notes, Bills of Exchange and Cheques. The cheque for payment through his account, is situated, except object of the Negotiable Instruments Act, 1881 is to in case of bearer cheques, which are presented to the encourage the usage of cheque and enhance the branch of the drawee bank and in that case the local Court credibility of the instrument so that the normal business of that branch would get jurisdiction. The Negotiable transactions and settlement of liabilities could be ensured. Instruments (Amendment) Act, 2015 provides for 319Annual Report 2015-2016 retrospective validation for the new scheme of determining 3.1.2 Capital Infusion for Improving CRAR the jurisdiction of a court to try a case under section 138 of Dr. K.C. Chakrabarty Committee on the Negotiable Instruments Act, 1881. The Negotiable “Recapitalization of RRBs for improving CRAR” had Instruments (Amendment) Act, 2015 also mandates reviewed the financial position of all RRBs in 2010 and centralization of cases against the same drawer. recommended for recapitalization of 40 out of 82 RRBs The clarification of jurisdictional issues may be for strengthening their CRAR to the level of 9% by31st desirable from the equity point of view as this would be in March, 2012. Accepting the recommendations of the the interests of the complainant and would also ensure a committee, the GoI along with other shareholders fair trial. Further, the clarity on jurisdictional issue for trying decided to recapitalize the RRBs by infusing funds to the cases of cheque bouncing would increase the the extent of Rs.2200 Crore, with proportion of credibility of the cheque as a financial instrument. This is shareholder being 50:35:15 for GoI: Sponsor Bank: State expected to help the trade and commerce in general and Government. An amount of Rs.1086.70 crore has been allow the lending institutions, including banks, to continue released to 38 RRBs in 20 States by Government of to extend financing to the productive sectors of economy, India as on 31.03.2014. as the process of pursuing the cheque bouncing cases Further, the Government has approved the relating to loan default has been made simpler and proposal to continue the process of recapitalization of efficient through the proposed amendments to the RRBs for next three years beyond 2013-14 i.e. upto 2016- Negotiable Instruments Act, 1881. 17 for the RRBs who are unable to maintain minimum 2.2.2 Operationalisation of Central KYC Registry CRAR of 9%. The additional sum of Rs.700 crore approved earlier by the Cabinet is proposed to be utilized There were various announcements in the for providing recapitalization to any RRB who is not able Government Budget that a Central Know Your Customer to maintain minimum CRAR of 9%. The Reserve Bank (KYC) depository will be developed to avoid multiplicity of India has made mandatory for RRBs to maintain CRAR of registration and data upkeep, and to facilitate inter- at minimum 9% with effect from 31.3.2014. usability of KYC records across the entire financial sector. The objective was to improve and strengthen the Rs.15 crore has been allocated in BE for 2015- institutional mechanism to verify the identity of the 16 under Plan head. Out of this, Rs.3.50 crore has been customers of the FIs and intermediaries, maintain records released to Manipur Rural Bank during 2015-16. in this regard for stricter compliance, gradually eliminate the multiplicity of registration of KYC data, improve 3.1.3 Financial Performance systemic efficiency, reduce costs by optimisation of The financial performance of RRBs improved resources and also to create a user-friendly structure for during 2014-15 with 51 RRBs out of 56, recording net all the stakeholders. profit of Rs.2744 crore as on 31st March, 2015 as against Government of India has issued a notification Rs.2694 crore in 2013-14. However, 5 RRBs viz. Ellaquai under the Prevention of Money Laundering (Maintenance Dehati Bank, Madhyanchal Gramin Bank, Nagaland Rural of Records) Rules, 2005 on 26th November, 2015, Bank, Odisha Gramya Bank and Utkal Grameen Bank authorising the Central Registry of Securitisation Asset incurred losses aggregating to Rs.176 crore during the Re-construction and Security Interest of India (CERSAI) year 2014-15. The aggregate reserves of RRBs stood to establish the Central KYC Registry. CERSAI has at Rs.18712 crore as on 31st March, 2015 as against started a pilot with the select banks, insurance companies Rs.15805 crore as on 31st March, 2014, while their net and mutual funds and based on the experience from the worth increased from Rs.22172 crore in 2013-14 to pilot run, the Central KYC Registry is expected to be made Rs.25083 crore during 2014-15. fully operational in the current financial year. 3.1.4 Accumulated Losses 3. Regional Rural Banks The number of RRBs that had accumulated 3.1 Revitalizing Regional Rural Banks (RRBs) losses remained the same as 8 as on 31st March, 2015 With the view to strengthening the RRBs for as compared to previous year. However, the aggregate playing a greater role in agriculture, rural lending and amount of accumulated losses of RRBs increased from financial inclusion the following measures were taken Rs.948 crore as on 31st March, 2014 to Rs.1072 crore as during the year 2015-16. on as on 31st March, 2015. 3.1.1 Branch Network of Regional Rural Banks 3.1.5 Non-performing Assets (NPA) The number of branches of RRBs was increased The Gross NPA of RRBs, increased from from 19,082 as on 31st March, 2014 to 19,946 as on 31st Rs.9708 crore as on 31st March, 2014 to Rs.10905 crore March, 2015 taking the network of RRBs to 644 districts. as on 31.3.2015. The Gross NPA as a percentage has During 2014-15, 864 new branches have been opened decreased marginally from 6.09% as on 31st March, 2014 by RRBs. All branches of RRBs are on CBS Platform. to 6.03% as on 31st March, 2015. 320Department of Financial Services V 3.1.6 Human Resource Development 4. Financial Inclusion A Committee on Human Resource Policy for Financial Inclusion is an important priority of the RRBs post CBS was constituted in NABARD to revisit Government. The objective of Financial Inclusion is to the existing Human Resource Policy (Thorat extend financial services to the large hitherto un- Committee) for assessment of manpower/staffing served population of the country to unlock its growth pattern, skill development needs of RRBs in the event of implementation of CBS and other related potential. To extend the reach of banking to those technological upgradation. The recommendations of the outside the formal banking system, Government and Committee have been conveyed to all Sponsor banks/ Reserve Bank of India (RBI) are taking various initiatives RRBs on 24th February, 2015 by NABARD. RRBs have from time to time. been given flexibility to adopt the recommendations with or without modifications with the approval of their Board. 4.1 Expansion of Bank Branch network (i) Number of functioning branches of Public Sector Banks - Population Group wise: RURAL SEMI-URBAN URBAN METROPOLITAN TOTAL 31.03.2011 20,373 16,388 13,416 12,757 62,934 31.03.2012 22,095 18,079 14,276 13,399 67,849 31.03.2013 23,955 19,818 15,001 13,965 72,739 31.03.2014 27,258 22,134 16,262 14,821 80,475 31.03.2015 29,377 23,746 17,335 15,525 85,983 30.09.2015 29,754 24,087 17,563 15,689 87,093 Source: RBI (ii) Number of branches of Scheduled Commercial Banks (SCBs) - Population Group wise: RURA SEMI-URBAN URBAN METROPOLITAN TOTAL L 31.03.2011 33,517 23,366 17,583 16,427 90,893 31.03.2012 36,153 26,120 18,811 17,465 98,549 31.03.2013 39,425 28,853 19,851 18,305 1,06,434 31.03.2014 44,865 31,884 21,445 19,504 1,17,698 31.03.2015 48,207 34,145 22,949 20,760 1,26,061 30.09.2015 48,958 34,883 23,423 21,133 1,28,397 Source: RBI (iii) Number of Functioning Branches as on 30.09.2015 - Bank Group and Population Group wise : RURAL SEMI-URBAN URBAN METROPOLITAN TOTAL SBI and its Associates 7,988 6,700 4,341 3,689 22,718 Nationalised Banks 21,355 16,830 12,714 11,589 62,488 Other PSBs 411 557 508 411 1,887 Old Private Sector Banks 1,417 2,599 1,469 1,087 6,572 New Private Sector Banks 3,083 4,290 3,218 3,869 14,460 Foreign Banks 8 12 57 247 324 Regional Rural Banks 14,696 3,895 1,116 241 19,948 All India 48,958 34,883 23,423 21,133 1,28,397 Source: RBI 321Annual Report 2015-2016 4.2.1 Expansion of ATMs line with many of the large emerging nations like China which have their own domestic card payment system. RBI in terms of para 4 of their Master Circular Government of India has directed banks to issue Debit issued on July 1, 2014 to all Commercial Banks and cards to all KCC and DBT beneficiaries and that every para 7 of a separate circular to RRBs has permitted new account holder should be issued a debit card. A low Scheduled Commercial Banks and RRBs to install off- cost option such as RuPay will help in achieving this site ATMs/ Mobile ATMs at the locations of their choice, objective and consequently help in fulfilling the objective as per laid down norms without prior permission of RBI, of financial inclusion. The RuPay Card works on ATM, subject to reporting. Point of Sale terminals & online purchases and is Due to these relaxed norms, number of ATMs therefore not only at par with any other card scheme in has increased considerably as per details given the world but also provides the customers with the hereunder: flexibility of payment options. (i) Number of ATMs of Public Sector Banks 4.4 USSD Based Mobile Banking (PSBs) National Payments Corporation of India (NPCI) has launched Unstructured Supplementary Service Data Off-site On-site Total As on (USSD) based mobile banking service to take the banking ATMs ATMs ATMs services to common people across the country. Banking 31.03.2011* 20032 30201 50233 customers can avail this service by dialing *99#, across 31.03.2012 24181 34012 58193 all Telecom Service Providers (TSPs)” on their mobile phones and transact through an interactive menu 31.03.2013 29411 40241 69652 displayed on the mobile screen. *99# service is currently 31.03.2014 44504 65920 110424 offered by 43 leading banks and all GSM service 31.03.2015 58763 69902 128665 providers (Global System for Mobile Communications) and can be accessed in 12 different languages including 30.09.2015 60882 75195 136077 Hindi and English. During the current financial year upto November 2015, 20.89 lakh customers initiated * The data pertains to ATMs deployed as on April 30, 2011 transactions have been done on USSD based platform. Source: RBI Reserve Bank of India (RBI) has informed that (ii) Number of ATMs of Scheduled Commercial as at the end of October 2015, 8.53 crore customers were Banks (SCBs) registered with banks for Mobile Banking Services. 4.5 Pradhan Mantri Jan-Dhan Yojana (PMJDY) As on Off-site On-site Total ATMs ATMs ATMs With a view to increasing banking penetration 31.03.2011* 34377 41268 75645 and promoting financial inclusion and with the main 31.03.2012 48141 47545 95686 objective of covering all households with at least one bank account per household across the country, a National 31.03.2013 58254 55760 114014 Mission on Financial Inclusion named as Pradhan Mantri 31.03.2014 76676 83379 160055 Jan Dhan Yojana (PMJDY) was announced by Hon’ble 31.03.2015 92191 89061 181252 Prime Minister in his Independence Day Speech on 15th 30.09.2015 94541 95303 189844 August, 2014 . The scheme was formally launched on 28th August, 2014 at National level by Hon’ble Prime * The data pertains to ATMs deployed as on April 30, 2011 Minister. Source: RBI 4.5.1 Objectives of PMJDY 4.3 RuPay Card (i) Universal access to banking facilities for all households across the country through a bank RuPay, a new card payment schemehas been branch or a fixed point Business Correspondent conceived by NPCI to offer a domestic, open-loop, (BC) within a reasonable distance. multilateral card payment system which will allow all Indian banks and FIs in India to participatein electronic (ii) To cover all households with atleast one Basic payments. The card has been dedicated to the nation by Bank Account with RuPay Debit card having the President of India on May 08, 2014. RuPay inbuilt accident insurance cover of Rs.1 lakh. symbolizes the capabilities of banking industry in India to build a card payment network at much lower and (iii) An overdraft facility upto Rs.5000/- after affordable costs to the Indian banks so that dependency satisfactory operation in the account for 6 on international card scheme is minimized. This is in months. 322Department of Financial Services V (iv) A Life Cover of Rs.30,000/- to those beneficiaries (b) As on 19.02.2016, out of 2298 claim lodged, who open their accounts for the first time from 2273 claims have been disposed off under 15.08.2014 to 31.01.2015. Life Cover of Rs.30,000/- to those beneficiaries who opened their accounts for (v) Financial literacy programme which aims to take the first time from 15.08.2014 to 31.01.2015. financial literacy upto village level. 5. Agriculture Credit (vi) The Mission also envisages expansion of Direct Benefit Transfer under various Government In order to boost agriculture productivity, farmers Schemes through bank accounts of the need access to affordable and timely credit facilities. To beneficiaries. enable adequate credit flow to agriculture sector targets (vii) Providing micro–insurance to the people. are set each year for PBSs, Private Sector Commercial Banks, RRBs and Cooperative Banks for agriculture (viii) Unorganised sectorPension schemes through credit. As against the farm credit target of Rs.8,00,000 the Business Correspondents. crore for the year 2014-15, an amount of Rs. 8,45,328.23 4.5.2 Achievements under PMJDY crore was disbursed during the year. Year wise position of target and achievement under agricultural credit flow (i) As on 17.02.2016 - is given in the following table:-  20.87 crore accounts have been opened under PMJDY out of which 12.79 crore Year Target Achievement accounts are in rural areas and 8.08 crore 2004-05 1,05,000 1,25,309 in urban areas. 2005-06 1,41,000 1,80,486  Deposits of Rs. 32730.72 crores has been 2006-07 1,75,000 2,29,400 mobilized. 2007-08 2,25,000 2,54,657 2008-09 2,80,000 3,01,908  17.36 crore RuPay Debit cards have been 2009-10 3,25,000 3,84,514 issued under PMJDY. 2010-11 3,75,000 4,68,291  Aadhaar seeding has been done in 9.04 2011-12 4,75,000 5,11,029 crore PMJDY accounts. 2012-13 5,75,000 6,07,376  Zero balance accounts has been reduced 2013-14 7,00,000 7,30,122.62 to 29.03%. 2014-15 8,00,000 8,45,328.23* 2015-16 8,50,000 5,03,898# (ii) Household Coverage: 99.99% households out of * Provisional figures #As on 30 September 2015 the 21.22 crore households surveyed have been (Provisional) covered under PMJDY. Efforts are being made Source: RBI/NABARD/PSBs/IBA to achieve 100% coverage of households particularly in the State of J&K and LWE affected 5.1 Interest Subvention Scheme districts. The Government of India has since 2006-07 been (iii) As on 19.02.2016, out of total requirement of subsidizing short term crop loans to farmers in order to 1,26,740 fixed location Bank Mitras in Sub ensure the availability of crop loans to farmers for loans Service Areas (SSAs), 1,25,956 Bank Mitras upto Rs.3.00 lakhs at 7% p.a. This Interest Subvention have been deployed by banks. has been further continued in 2015-16 for PSBs, Private (iv) Overdraft (OD) in PMJDY accounts: As on Sector Commercial Banks (in respect of crop loans 19.02.2016, 31.61 lac accounts have been disbursed by rural and semi-urban branches of private sanctioned OD facility of which 15.75 lac sector commercial banks), Regional Rural Banks and account-holders have availed this facility Cooperative Banks. involving an amount of Rs. 203.16 crore. During 2015-16, besides 2% interest (v) Insurance Claims settled subvention, 3% incentive is given for prompt repayment (a) As on 19.02.2016, out of 858 claims lodged, of loan reducing the effective rate of interest for such 832 claims have been disposed off under farmers to 4%. The year-wise amount released by the accidental insurance cover of Rs. 1 lakh Government of India under Interest Subvention scheme under RuPay debit card. is as follows: 323Annual Report 2015-2016 (Rs. in crore) Year 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Amount 1700 2600 2011 3531.19 3282.70 5400 6000 6000 12,405.16* Released *upto December, 2015 In order to discourage distress sale by farmers 5.3 Rural Infrastructure Development Fund and to encourage them to store their produce in (RIDF) warehouse against warehouse receipts, Interest The GoI established a fund to be operationalised Subvention was introduced during 2011-12 to small and by NABARD in the Union Budget 1995-96 called the Rural marginal farmers having Kisan Credit Cards for a Infrastructure Development Fund (RIDF), which was set further period of six months post-harvest, on the same up in NABARD by way of deposits from Scheduled rate as available for short term crop loan against Commercial Banks operating in India from the shortfall in their agricultural/priority sector/weaker sections negotiable warehouse receipts for keeping their lending. The Fund has since been continued, with its produce in warehouses. This provision is continuing allocation being announced every year in the Union during 2015-16 also. Budget. Over the years, coverage under the RIDF has During 2015-16, in order to provide relief to been broad based, in each tranche, and at present, a wide range of 34 activities are financed under various farmers affected by natural calamities, the interest sectors for development of rural infrastructure. subvention of 2% will also be available to banks for the first year on the restructured amount. Such restructured The annual allocation of funds announced in the loans may attract normal rate of interest from the second Union Budget has gradually increased from Rs.2000 year onwards. crore in 1995-96 (RIDF I) to Rs.25,000 crore in 2015-16 (RIDF XXI). The aggregate allocations till 2015-16 have 5.2 Kisan Credit Card reached Rs.2,42,500 crore including the Bharat Nirman component sanctioned to National Rural Roads The Kisan Credit Card (KCC) scheme was Development Agency (NRRDA) under RIDF XII-XV. introduced in 1998-99, as an innovative credit delivery As against the allocation of Rs.25,000 crore system aiming at adequate and timely credit support made for RIDF XXI tranche during 2015-16,sanctions from the banking system to the farmers for their were accorded to the extent of Rs.20,536 crore to various cultivation needs including purchase of inputs in a State Governments upto 31.12.2015. flexible, convenient and cost effective manner. The Scheme is being implemented by all Cooperative Banks, 5.4 Financing and supporting Producer Organisations through Producer’s Regional Rural Banks (RRBs) and Public Sector Development and Upliftment (PRODUCE) Commercial Banks throughout the country. KCC is one of the most effective tools for delivering agriculture Recognizing the various constraints and credit. NABARD monitors the scheme in respect of difficulties faced by farmers such as continued Cooperative Banks and RRBs, whereas RBI monitors fragmentation of farm holdings, declining profitability of small farm holding and farmers’ lack of access to the scheme in respect of Commercial Banks. A revised technology, credit and market, the Government of India, scheme for KCC has been circulated by RBI and through its Budget Announcement, 2014-15, took a noble NABARD prescribing the provision for ATM enabled initiative by announcing a corpus of Rs.200 crore in debit card which can be used at ATM/Point of sale (POS) NABARD for Producer’s Development and Upliftment terminal, with, inter alia, facilities of one-time (PRODUCE) in order to promote 2,000 Farmers’ documentation and built-in cost escalation in the credit Producers Organizations across the country over the next limit etc. two years. The number of live/operative KCCs issued by In compliance to the announcement made in the Cooperative Banks, RRBs and commercial banks as on Union Budget, 2014-15, an amount of Rs.200 crore was released to NABARD during 2014-15 for promoting and 31st October, 2015 (Provisional data) is as follows: nurturing 2000 Farmers’ Producers Organizations (FPOs) during 2014-15 and 2015-16. The Scheme is under Cooperative RRBs Commercial Total implementation by NABARD, under which 800 FPOs Banks Banks* were to be promoted during 2014-15 and 1200 FPOs 388.41 125.26 225.25 738.92 during 2015-16. Under the Scheme, the incremental * As on 31.3.2015 324Department of Financial Services V income to farmers out of collective action would mainly 6. Debts Recovery Tribunal come from the following: The Central Government has established 33 a) Production improvement on account of using Debts Recovery Tribunals (DRTs) and 5 Debts Recovery better technology, better quality of inputs and Appellate Tribunals (DRATs) all over the country under improved extension services the provisions of the Recovery of Debts Due to Banks & FIs Act, 1993 for expeditious adjudication and speedy b) Reduced input cost due to collective sourcing at recovery of debts due to banks &FIs and matters competitive market price connected therewith. The Government has approved c) Increased price realization due to value addition, establishment of six new DRTs at Bengaluru, Chandigarh, good bargain and improved scale in marketing Dehradun, Ernakulam, Hyderabad and Siliguri to bring down the pendency of cases in the existing DRTs. The other economic benefits anticipated are generation of additional employment due to increased The role of DRTs has been further enhanced by farming intensity and various post-harvest activities, enactment of the Securitization and Reconstruction of reduction in migration due to improved farm viability and Financial Assets and Enforcement of Security Interest reduction in wastage of produce due to scientific storage, (SARFAESI) Act, 2002, which provides for aggrieved handling and processing facilities. parties to make appeals before the DRTs. Against the target for forming 2,000 Farmers Producers To remove certain difficulties being faced by the Organisations (FPOs) in two years, i.e. 2014-15 and banks in conduction the recovery proceedings under the 2015-16, NABARD has sanctioned 1492 FPOs as on 30th above two Acts, the Enforcement of Security Interest and November, 2015. Recovery of Debts Laws (Amendment) Act, 2012 has 5.5 Scheme for Revival of 23 unlicensed DCCBs been enacted on 04th January, 2013. in 4 States As per data made available by DRTs, a total Recognizing the need to revamp ailing number of 19,595 cases (Original Application) involving Cooperative Banks so that they are able to cater to Rs. 40,004.05 crores approximately were disposed off the needs of farmers at their doorstep, the Union by the DRTs during the period of 01/01/2015 to 31/12/ Cabinet in its meeting held on 5.11.2014 accorded 2015. approval for implementation of the Scheme for Revival of 23 Unlicensed District Central Cooperative Banks 6.1 E-Governance (DCCBs) in four States viz. 16 in Uttar Pradesh, 3 in e-DRT project was introduced with the aim to Jammu & Kashmir, 3 in Maharashtra and 1 in West make the functioning of Debt Recovery Tribunals & Debt Bengal. The total capital infusion required for revival Recovery Appellate Tribunals transparent to the general of these 23 DCCBs is to the tune of Rs. 2375.42 crore, public. The e-DRT project is currently under progress and out of which the commitment from Central Government is expected to be completed soon. is Rs. 673.29 crore, from the concerned State Governments Rs.1464.59 crore and from NABARD There are multiple facets of the e-DRT project Rs.237.54 crore. which includes DRT portal, Scanning and Digitization of old records and e-Filing process. Provisions has been State Governments of Uttar Pradesh, made in DRT portal (www.drt.gov.in) to enable Debt Maharashtra and West Bengal signed the Memorandum Recovery Tribunals & Debt Recovery Appellate Tribunals of Understanding (MoU) for implementation of the said to daily upload and update Cause lists, Judgments, and Scheme before the close of the financial year 2014-15 Daily Orders to the DRT portal for the convenience of the and accordingly, the GoI’s share in respect of these States was released to NABARD during 2014-15. general public. The portal will also enable the general public to get information about the provisions of the The MoU with the State Government of Jammu Recovery of Debts due to Banks and FIs Act, 1993 & Kashmir was signed in the second half of 2015-16, i.e. (RDDBFI Act) and various rules related to Debt Recovery on 4.11.2015. Accordingly, Rs.111.20 crore (as per the Tribunals and Debt Recovery Appellate Tribunals. available budget) was released to NABARD on 10.11.2015 towards GoI’s share for the State of Jammu Scanning and digitization of old records is already & Kashmir under the Scheme. Remaining Rs.2 lakh will under progress. The e-filing process in Debt Recovery be released as and when the budgetary provision is Tribunals and Debt Recovery Appellate Tribunals is under available for the purpose. active consideration at the moment. 325Annual Report 2015-2016 7. Non-Performing Assets (NPAs) scenario, the system level CRAR of SCBs could decline to 10.4 per cent by March 2017 from 12.7 per cent as of 7.1 Gross Non Perofrming Assets (GNPAs) September 2015. As per the data available, the GNPA ratio of PSBs 7.3 Steps Initiated for Recovery steadily declined from 13.11 per cent in 2000-01 to 2.10 percent in 2008-09 and GNPA ratio of Scheduled To address the NPA situation, the Government Commercial Banks (SCBs) steadily declined from 12.04 has taken sector specific measures in identified sectors per cent to 2.45 percent. This reduction is on account of like Road, Steel, Power, Textiles. Six new DRTs are being good economic conditions, establishment of DRTs and established to facilitate recovery. RBI as the regulator enactment of SARFAESI Act. The following table depicts has issued guidelines which inter alia provide for early the trend of GNPA of PSBs/SCBs during last two years: Recognition of Financial Distress, Prompt Steps for Resolution and Fair Recovery for Lenders, Framework for Revitalizing Distressed Assets in the Economy – Period GNPA (%) Review of the Guidelines on Joint Lenders’ Forum (JLF), Corrective Action Plan (CAP) and Strategic Debt PSBs SCBs Restructuring (SDR). March, 2013 3.84 3.42 8. Prime Minister Mudra Yojana March, 2014 4.72 4.11 In the Union Budget 2015-16, Hon’be FM December, 2014 5.63 4.78 proposed to create a Micro Units Development Refinance March, 2015 5.43 4.62 Agency (MUDRA) Bank to refinance last mile financers June, 2015 5.93 4.97 through the Pradhan Mantri Mudra Yojana. September, 2015 6.21 5.14 Accordingly, Pradhan Mantri Mudra Yojana (Provisional) (PMMY) has been launched by the Hon’ble Prime Minister on 8th April, 2015 to provide formal access to credit for Main reasons for increase in NPAs of banks are Non –Corporate Small Business Sector. due to sluggishness in the domestic growth during the Objective of MUDRA is to bridge the gap in last recent past, slowdown in recovery in the global economy mile financing by increasing the access to finance to the and continuing uncertainty in the global markets leading unbanked. By creating a robust architecture of Last Mile to lower exports of various products like textiles, Credit Delivery, MUDRA will aim to increase the engineering goods, leather, gems, external factors confidence of the aspiring young persons to become first including the ban in mining projects, delay in clearance generation entrepreneurs as also of existing small affecting Power, Iron & Steel sector, volatility in prices of businesses to expand their activities. raw material and the shortage in availability of Power have impacted the operations in the Textiles, Iron & Steel, I. Categories of loans: Infrastructure sectors, delay in collection of receivables  Loans upto Rs. 50,000 - Shishu causing a strain on various Infrastructure projects, aggressive lending by banks in past.  Loans above Rs.50, 000 Infrastructure loan requirements are such that and upto Rs. 5.0 lakh - Kishore only the big public sector banks could assume the exposure under consortium arrangements.  Loans above Rs.5.0 lakh 7.2 Financial Stability Report (FSR) and upto Rs. 10 lakh - Tarun December, 2015 II. All loans upto Rs. 10 lakhs are to be free from According to “Financial Stability Report (FSR)”, collateral security as per RBI and MSME Act. December, 2015 of Reserve Bank of India (RBI), the macro stress test for credit risk suggests that under the III. No processing fee is being charged by banks for baseline scenario, the GNPA ratio may rise to 5.4 per loans upto Rs. 50,000/-. Application form for cent by September 2016 from 5.1 per cent in September Shishu loans has been simplified into a single 2015, but could subsequently improve to 5.2 per cent page format. by March 2017. However, if the macroeconomic 8.1 Eligibility for loan under PMMY conditions deteriorate, the GNPA ratio may increase further, and it could rise to around 6.9 per cent by March Any Indian Citizen who has a business plan for a non- 2017 under a severe stress scenario. Under such a farm sector income generating activity such as 326Department of Financial Services V manufacturing, processing, trading or service sector and to provide long term finance to viable infrastructure whose credit need is less than 10 lakh can approach projects through the Scheme for Financing Viable either a Bank, MFI, or NBFC for availing of MUDRA loans Infrastructure Projects through a Special Purpose Vehicle under Pradhan Mantri Mudra Yojana (PMMY). called India Infrastructure Finance Company Ltd (IIFCL), broadly referred to as SIFTI. IIFCL accords overriding 8.2 MUDRA Card priority to Public-Private Partnership (PPP) Projects. IIFCL MUDRA Card is an innovative credit product has been registered as a NBFC-ND-IFC with RBI since wherein the borrower can avail of credit in a hassle free September 2013. The authorized and paid up capital of and flexible manner. Since MUDRA Card will be a RuPay the company as on 30th September 2015 stand at Debit Card, it can be used for drawing cash from ATM or Rs.5,000 crore and Rs.3,900 crore, respectively. Business Correspondent or make purchase using Point On a standalone basis, till 30th September 2015, of Sale machine. Facility is also there to repay the amount IIFCL has made cumulative gross sanctions of Rs.63,888 as and when surplus is available, thereby reducing the crore under direct lending and has made cumulative interest burden. disbursements of Rs.45,142 crore (including PSBshave been allocated a total target of disbursements of Rs.6,256 crore under Refinance and Rs.70,000 crore, and private sector/ Foreign Banks a Rs.11,190 crore under Takeout Finance). target of Rs. 30,000 crore. The RRBs were given a target The company raises long-term resources both of Rs. 22,000 crore. Altogether, the target for loan from domestic markets and overseas. IIFCL has also disbursement under PMMY for F.Y. 2015-16 is fixed at established strong relationships with bilateral and Rs. 1,22,000 crore. multilateral institutions like ADB, World Bank, KfW & EIB 8.3 Achievement under PMMY as on 19.02.2016 and has committed lines of credit. 9.1.1 New Initiatives  Total Amount disbursed under PMMY- Rs. 1,02,310.21 crore In March 2015, Government has permitted following major modifications to SIFTI in order to augment  Total No of borrowers- 2.73 crore increased flow of financial assistance to the infrastructure  Women borrowers- - 2.11 crore sector:  New Entrepreneurs- 98.90 lakh a) IIFCL can sanction loans on the basis of its own appraisal and assume the role of “Lead Lender”.  SC/ST/OBC borrowers- - 1.40 crore b) IIFCL can lend with average maturity of Total Mudra Card issued – 4,70,881 repayments of 5 years in case of projects where the flexible structuring model (5/25 model) is (Amount in Rs. Crore) adopted by the consortium of lenders. No of Disbursement Loan Type Accounts Amount c) IIFCL has been allowed to invest in “AAA” rated PSU corporate bonds and borrow short term debt SHISHU to better manage its finances. (Loans up to Rs. 2,53,33,270 47,263.69 50,000) d) Government has also approved the Regular Credit Enhancement Scheme and New KISHORE Refinance Scheme of IIFCL. (Loans from Rs. 17,04,238 33,128.4 50,001 to Rs. 5.00 The above changes are expected to provide Lakh) flexibility to IIFCL in extending long term finance to TARUN infrastructure projects (Loans from Rs. 5.00 3,03,109 21,918.12 to Rs. 10.00 Lakh) In September 2015, for the first time in the Indian Infrastructure Sector, bonds with credit rating enhanced TOTAL 2,73,40,617 1,02,310.21 by partial credit guarantee provided by IIFCL under its Credit Enhancement Scheme were issued. The bond 9. Financial Institutions issue (worth Rs.451 Crore) has allowed the developer to replace existing debt for its renewable energy project with 9.1 India Infrastructure Finance Company Ltd. bonds having much higher tenor and along with a (IIFCL) substantially reduced interest burden. Asian Development IIFCL was incorporated under the Companies Act Bank (ADB) has participated as IIFCL’s Backstop as a wholly-owned Government of India company in 2006 Guarantor in the transaction. 327Annual Report 2015-2016 9.1.2 Subsidiaries of IIFCL Investment Finance, during April-November 2015, the Bank sanctioned funded and non-funded assistance to  IIFC (UK) Ltd incorporated in 2008; provides 16 Indian corporates aggregating to Rs.36.53 billion for foreign currency lending to Indian Infrastructure part financing their overseas investments in 10 countries. Projects. Till 30th September 2015, IIFC (UK) has As on November 30, 2015, Exim Bank has provided made cumulative disbursements of about USD finance to 553 ventures set up by 430 companies in 71 1.6 billion. countries. The Bank has achieved impressive business  IIFCL Projects Ltd iIPL, a 100% subsidiary of growth during FY 2014-15, recording 15% growth in both IIFCL, was set up in 2012 to provide advisory loans & advances and in the overall customer assets services including project appraisal and portfolio (aggregate of funded and non-funded portfolio) syndication services, as well as project and 13% growth in total business (customer portfolio + development services involving feasibility borrowings. Bank’s YOY growth during H1 FY 2014 to studies, project structuring, financial structuring H1 FY 2015, in (i) gross loan assets was 17% (ii) in the and development of detailed business cases. overall customer assets portfolio was 15% and (iii) in total business was 17%. Net worth of the Bank as on 31.3.15  IIFCL Asset Management Company Limited stood at Rs.9903 crore. (IAMCL) a 100% wholly owned subsidiary of IIFCL, acts as Asset Management Company of 9.2.3 E-Governance and E-Payment: the IIFCL-IDF. IIFCL-IDF has successfully raised a) Sustained initiatives in enhancing the use of Rs.300 crore from its maiden IDF scheme which knowledge management tools and digital is the first IDF scheme to be listed on the Bombay communication across its various constituents. Stock Exchange. b) Systems in place for operational business 9.2 Export-Import Bank of India (EXIM BANK) intelligence; document management and workflow; networks and security c) Move towards EXIM Bank (the Bank), established as a statutory, 100% electronic mode of payments and receipts. apex financial institution in 1982 under an Act of the All payments being made by direct transfer Parliament of India, to finance, facilitate and promote through NEFT/RTGS d) Video- conferencing India’s international trade and function as a key policy- facility in place for cost-effective review of office- input provider to GOI, seeks to sub serve the long-term wise performance, in-house training and even objective outlined in the Foreign Trade Policy of GOI, interactions with clients. 2015-20, viz. doubling of India’s exports to US $ 900 billion by 2020. 9.2.4 Initiatives undertaken for Disabled/ Handicapped and SC/ST &other weaker 9.2.1 Promotion of Equity/Inclusiveness sections of society Exim Bank offers a comprehensive range of a) The Bank awards scholarships to (i) reserved lending and service/advisory programmes, aimed at category students at the Indian Institute of aiding the globalisation efforts of Indian companies. This Foreign Trade (IIFT), New Delhi; (ii) tribal enables the Bank to promote inclusion of a large cross- students of Kalinga Institute of Industrial section of Indian exporters, in the opportunities being Technology (KIIT) University, Orissa; and (iii) thrown up by globalization. Exim Bank especially reserved category students of North Eastern distinguishes itself in the areas of project exports, export Regional Institute of Science and Technology lines of credit (LOCs) and overseas investment finance (NERIST), Arunachal Pradesh. Scholarships are (OIF), which benefit a gamut of externally-oriented Indian also awarded to one meritorious student from companies, including SMEs. reserved category at the Jawaharlal Nehru 9.2.2 Performance University (JNU) and Delhi School of Economics (DSE), New Delhi. During April-November 2015, the Bank extended an aggregate of 7 GOI-guaranteed LOCs, to 6 countries, b) Training programmes on subjects of relevance to the Bank are organized regularly for the with credits amounting to US$ 5.65 billion. As on reserved category employees. They are also November 30, 2015, 200 LOCs to 62 countries, with exposed to training in computer literacy and credits amounting to US $ 12.48 billion are guaranteed foreign languages. by the Government of India. Besides LOCs, the Bank’s new product - Buyer’s Credit under the National Export 9.2.5 Initiatives relating to Gender Budgeting and Insurance Account (BC-NEIA) aims at catalysing project Empowerment of Women exports from India. The Bank has till date sanctioned an aggregate amount of US$ 2.06 billion for 20 projects,  The Bank has ratio of almost 1:1 for male and and a robust pipeline is developing. As regards Overseas female officers. 328Department of Financial Services V  Women are currently heading important b) Concessions, as prescribed under Reservation departments/groups in the Bank such as Project Policy, are made available to SC/ ST/OBC/PWD Exports, Corporate Banking, Corporate candidates in recruitment. Communications, Marketing Advisory, Internal c) Two Liaison Officers, one for SCs and STs and Audit, Human Resource and Overseas another for OBCs, both at senior executive level, Representative Offices. Lady Officers constitute have been appointed in the Head Office. around 44% of the Top Management of the Bank. d) Recruitment is centralized in Head Office and a  Women are members of the different internal member from the reserved category is included committees constituted by the Bank [in fact in all interview committees constituted for direct women are represented in all Committees set recruitment. up in the Bank]. e) Separate rosters are being maintained for each  Women officers are regularly nominated for Grade/Scale for direct recruitments and for training for professional development, leadership, Persons with Disabilities. training in the areas of soft skills and foreign f) Half-yearly review reports as on June 30th and languages. yearly as on December 31st pertaining to  The Bank has constituted an Internal Complaint implementation of Reservation Policy is Committee for considering complaints of sexual submitted to the Board of Directors and thereafter harassment of women. The Bank considers the are forwarded to GOI. safety of all its employees, particularly women, g) Bank recruits officers from SC/ST/OBC & PWD of great importance and seeks to provide a safe categories through ‘Special Recruitment Drives’, working environment at the workplace. The as well. Bank’s corporate culture provides an enabling 9.2.7 Recent Developments environment wherein the women employees are treated with dignity, equality and are encouraged a) Lines of Credit: In keeping with GOI’s focus on and empowered to attain growth and success. large value LOCs to developing countries, Exim Bank has offered an LOC of US$ 2 billion to the  Special programs are organized for women Government of Bangladesh and an LOC of US$ focusing on self-defence techniques, under the 1 billion to the Government of Nepal. The guidance of specialized instructors who are Agreement for the LOC to the Government of experts in the field of Karate. Nepal has since been signed.  The Bank had also explored the possibility and b) Green bonds: The Bank issued 5-year US$ 500 conducted a survey with a view to assessing the million Eurodollar Green Bonds in March 2015, feasibility of setting up a crèche in order to provide for value date April 1, 2015. The Green Bonds have been included in the Bank of America Merrill child-care support to staff, particularly women. Lynch Green Bond Index. The Green Bond  Lady Officers seeking extended leave for child- issuance marks the first USD-denominated care, post maternity, as well as leave prior to Green bond offering out of India as well as the maternity, are granted the same. first benchmark-sized Green bond out of Asia in 2015 and the third ever Green bond issuance  The in-house Yoga class has special sessions out of Asia. focused on alleviating the health problems c) Focus Africa Seminar: Exim Bank organised a commonly occurring in women. seminar titled “Focus Africa” on the sidelines of  The Bank has appointed a lady medical the third edition of the India-Africa Forum Summit practitioner to visit the Bank, for the convenience (IAFS) held during October 26-29, 2015, in New Delhi. The Seminar which was inaugurated by of the lady officers who require medical Shri Arun Jaitley, Hon’ble Union Minister for consultation. Finance, Corporate Affairs and Information & 9.2.6 Steps taken to implement the provisions of Broadcasting, Government of India, saw the reservations for SCs, STs and OBCs and participation of senior level delegates from institutions and the Governments of around 54 PWDs African countries, including the ECOWAS Bank a) Implementation of Reservation Policy in the Bank for Investment and Development, PTA Bank, is monitored by the Human Resources BOAD, DBSA and Afrexim Bank, and senior Management Group and at the top management representatives from the African and Indian business community. level. 329Annual Report 2015-2016 d) On the occasion of the IAFS, Exim Bank Corporation to provide medium and long term finance to announced setting up of the Kukuza Project industry. After repeal of “IFC Act” in 1993, IFCI became a Development Company in Africa to facilitate Public Limited Company registered under the Companies Indian participation in infrastructure projects in Act, 1956. The Government of India has recently Africa. The other shareholders in the company enhanced stake in the total share capital of IFCI at 51.04% are Infrastructure Leasing & Financial Services thus making it a Government of India Undertakingw.e.f. Ltd. Group, African Development Bank and the April 07, 2015. State Bank of India.The KPDC is expected to IFCI is also a Systemically Important Non-Deposit provide specialist project development expertise taking Non-Banking Finance Company (NBFC-ND-SI) to take infrastructure projects from the concept registered with Reserve Bank of India (RBI) as per RBI stage to the commissioning stage in the African Act, 1949 and a notified Public Financial Institution under Continent. Section 2(72) of the Companies Act, 2013. e) Special Purpose Facility for Financing IFCI reported improved Operational Performance Infrastructure Projects in Neighbouring inH1 of Financial Year 2015-16 (April 01, 2015 – Countries: The Facility would have two windows, September 30 2015) viz., concessional window, and commercial window, and undertake financing and support a) Profit After Tax for H1 of FY 2015-16 increased projects. by 6% to Rs. 284 crore as compared to Rs. 268 crore in corresponding H1 of previous year; f) Project Development Company for Promotion of Trade & Investments in CLMV Countries: Exim b) As on 30th September, 2015, Business Assets Bank under the GoI’s ‘Act East Initiative’ had grew by 21.5%and 6% atRs. 34,451 crore from undertaken a Mission to Cambodia, Lao PDR, Rs. 28,362 crore and Rs. 32,757 crore, as on Myanmar and Vietnam (CLMV countries), September 31, 2014and March 31, 2015, consequent to which a Project Development respectively; Company is being set up, to be followed by a Project Development and Facilitation c) Gross NPAs reduced to 9.67% from 10.28% as Framework. on 31st March, 2015; 9.3 Industrial Finance Corporation of India (IFCI) d) Net NPAs reduced to 6.65% from 7.18% as on 31st March, 2015; 9.3.1. Background e) Net Worth increased to Rs. 6,278 crore as on IFCI Ltd. was set up in 1948 as first Development 30th September, 2015 from Rs. 5,996 crore as Financial Institution of the Country with the name as “The on 31st March, 2015. Industrial Finance Corporation of India”, a Statutory (Rs. in Crore) As on As on As on As on Particulars 31st March, 2014 31st March, 2015 30th Sept, 2014 30th Sept, 2015 Total Income 2,953.29 3,347.99 1,610.88 2,035.77 Total Expenditure 1,772.45 2,196.28 1,040.80 1,287.51 Profit After Tax 508.10 521.60 268.26 284.15 RoA (%) 1.85 1.63 1.79 1.58 Gross NPAs (%) 17.28 10.28 12.43 9.67 Net NPAs (%) 11.40 7.18 9.01 6.65 CAR (%) 21.30 18.76 20.48 17.89 9.3.2 Activities (ACRE), IDFC, Power Trading Corporation Limited (PTC), Clearing Corporation of India (CCI), GIC Housing Finance The primary business of IFCI is to provide Limited, Securities Trading Corporation of India Limited, medium to long term financial assistance to the North Eastern Development Finance Corporation Limited manufacturing, services and infrastructure sectors. IFCI (“NEDFI”), OTC Exchange of India Limited (“OTCEI”), also provides advisory services for Project Development, ICRA Limited, National Stock Exchange (NSE), Stock Project Appraisal, Strategic Analysis, Corporate Holding Corporation of India Ltd (SHCIL), Technical Restructuring, legal advisory. IFCI has also played a Consultancy Organizations (TCOs) and social sector pivotal role in institutional development and promoted institutions like RashtriyaGraminVikas Nidhi (RGVN), various organizations i.e.Tourism Finance Corporation of Management Development Institute (MDI) and Institute India (TFCI), Asset Care Reconstruction Enterprises of Leadership Development (ILD). 330Department of Financial Services V IFCI has diversified its activities through against which successful allotments were made subsidiaries and associates into infrastructure for Rs. 1972 crore of which Rs. 763 crore was development in the form of residential and commercial raised in January-November 2015 period through space, broking, venture capital, financial advisory, 2nd tranche issued in January-February, 2015. insurance broking, depository services, factoring etc. c) Setting Up of Venture Capital Fund for SC /ST : - 9.3.3 Subsidiaries & Associates The Government of Indiain the Budget of FY 2014-15, designated IFCI Ltd. with the task of IFCI has following six subsidiaries which have setting up of Venture Capital Fund for Scheduled been contributing to industrial and infrastructure sector Castes. Accordingly, the Venture Capital Fund development of the country : - for Scheduled Castes has been made operational since 16th January, 2015 with a contribution of a) Stock Holding Corporation of India Ltd. (SHCIL) Rs. 200 crore by Ministry of Social Justice and - www.shcil.com Empowerment, Govt. of India and Rs. 5 crore by b) IFCI Infrastructure Development Ltd. (IIDL) - IFCI Limited under a commitment of Rs. 50 crore www.iidlindia.com as sponsor and investor. The Venture Capital Fund is being managed by one of IFCI’s c) IFCI Venture Capital Fund Ltd. (IVCF) - subsidiary namely IFCI Venture Capital Funds www.ifciventure.com Ltd. (IFCI Venture). As on 30th November, 2015, IFCI Venture has sanctioned and disbursed Rs. d) IFCI Factors Ltd. (IFL) - www.ifcifactors.com 104.70 crores and Rs. 25.24 crores to 28 and 10 e) IFCI Financial Services Ltd. (IFIN) - www.ifinltd.in beneficiaries, respectively. f) MPCON Ltd.- www.mpconsultancy.org d) Credit Enhancement Guarantee Scheme for SC : - The Govt. of India designated IFCI as its Nodal 9.3.4 Step Down Subsidiaries Agency for Scheme of Credit Enhancement IFCI has following six stepdown subsidiaries Guarantee for Scheduled Castes Entrepreneurs incorporated under Companies Act, 1956. to provide guarantee to banks against loans extended to SC entrepreneurs with an objective a) IIDL Realtors Pvt. Ltd. to encourage entrepreneurship in marginal strata of the society. The Government of India has b) IFIN Securities Finance Limited provided Rs.200 crore to IFCI for this purpose. c) IFIN Commodities Limited The guarantee cover under the Scheme shall be ranging from Rs.15 lakh to Rs.5 Crore. The pan- d) IFIN Credit Limited India initiative shall promote entrepreneurship among SCs who are oriented towards innovation e) SHCIL Services Limited and growth technologies. IFCI has been f) Stock Holding Projects Limited coordinating with the banks for successful implementation of this social objective of the 9.3.5 Associates government. Besides above Subsidiaries & Stepdown As on November 30, 2015, there are 26 banks, Subsidiaries, IFCI has following 5 Associates as well: - which are Member Lending Institutions involved under the scheme to implement the scheme. a) Tourism Finance Corporation of India Limited Corporation Bank and Syndicate Bank have b) NITCON Ltd. sanctioned loans worth Rs. 1,917.50 lakh under the scheme and more proposals are in pipeline. c) HIMCON Ltd. Further, Honourable Prime Minister made an announcement on August 15, 2015 about launch d) HARDICON Ltd. of Start-up India, Stand-up India initiative under e) KITCO Ltd. which each bank branch should encourage at least one Dalit or Adivasi entrepreneur, and at 9.3.6 Achievements least one woman entrepreneur. It is expected that a) Aggregate Sanctions &Disbursement: - IFCI has initiative will provide requisite impetus to the made gross sanctions and disbursement ofRs. CEGSSC. 13,665 crore and Rs. 8,675 crore, respectively e) Awards & Accolades: - IFCI won Greentech HR during the Period January 2015 to November, Gold Awardfor Technology Excellence conferred 2015. on 29th May, 2015 by Greentech Foundation, b) Public Issue of Bonds : - IFCI had made Public Bengaluru. In terms of financial performance Issue of Secured Redeemable Non-Convertible during the period January-November, 2015, IFCI Debentures for Rs. 2000 crore in FY 2014-15 has figured in the listing of top 500 companies of India as per details provided below : 331Annual Report 2015-2016 IFCI has undertaken various Corporate Social Title Rank Responsibility (CSR) initiatives, with focus on skill Dun & Bradstreet India’s Top 101st development, employment generation, public health, 500 Companies environment and rural development. Further as per notification from the Ministry of Corporate Affairs under Economic Times India’s Top 260th section 135 and schedule VII of Companies Act 2013 500 Companies along with the Companies (Corporate Social Responsibility Policy) Rules, 2014 which came into effect 9.3.7 Regional Offices from April 01, 2014, IFCI formulated its CSR Policy and also formed a trust named “IFCI Social Foundation” which In order to increase pan India presence and with has been duly registered. IFCI earmarked an amount of a view to further participating in the growth of industry Rs.7.58crore for the financial year 2015-16 as per the and infrastructure of the country during the current norms laid down by the Companies Act, 2013 for its CSR Financial Year i.e. 2015-16, IFCI opened and activities. IFCI is contributing in CSR activities not only operationalized two more regional offices at Raipur and by itself but also by its various associates, subsidiaries Vijayawada, thereby increasing the total number of and technical consultancy organizations promoted by it regional offices to eighteen. all over India. During the period January – November, 9.3.8 Manpower 2015, IFCI has sanctioned an amount of Rs. 14.02 crore and disbursed Rs. 5.91 crore towards 32 CSR initiatives. IFCI has continued its focus to improve its human resource pool through Training & Development initiatives 9.3.10 Representation of SC/ST and OBCs and as also by reviving Regional Offices at various places Persons with Disabilities across India. During the period from January to November In the year 2014, pursuant to the decision of the 2015, IFCI has made 12 appointments in the Asst. Board of Directors at its meeting held in January, 2014, Manager/Manager grades (out of the recruitment process IFCI started implementing reservation policy in all future carried out earlier i.e. in the last FY 2014-15) promotions and recruitments. Consequently, the 9.3.9 Corporate Social Responsibility provisions of the reservation policy were implemented in Promotions conducted in March, 2015 and for recruitment IFCI has continued its efforts to make a difference at various levels. As desired, the information pertaining to the society at large by pursuing CSR activities and to the same is as under. REPRESENTATION OF SC, STs, and OBCs No. of A ppointm ents mad e during the prev ious ca lendar ye ar No. of Employees By Direct Recruitment By Promotion By Other Methods Group Total SCs STs OBCs Total SCs STs OBCs Total SCs STs Total SCs STs 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Group A 75 6 1 4 0 0 0 0 13 1 0 0 0 0 Group B 187 15 3 21 12 0 0 4 16 1 1 0 0 0 Group C 2 1 0 0 0 0 0 0 0 0 0 0 0 0 Group D (Excluding Safai Karamcharis) 1 0 0 0 0 0 0 0 0 0 0 0 0 0 Group D (Safai Karamcharis) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Total 265 22 4 25 12 0 0 4 29 2 1 0 0 0 REPRESENTATION OF PERSONS WITH DISABILITIES /VH DIRECT RECRUITMENT PROMOTION No. of No. of Vacancies No. of Appointments Vacancies No. of Appointments No. of Employees reserved Made Reserved Made Group Total VH HH OH VH HH OH Total VH HH OH VH HH OH Total VH HH OH 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 265 1 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 332Department of Financial Services V 9.4 Small Industries Development Bank of India supported development of India Microfinance Platform (IMFP) to provide and disseminate valuable information Small Industries Development Bank of India on the Indian MFIs. The platform is in line with MIX Market, (SIDBI), set up on April 2, 1990 under an Act of Indian which is a global, web-based, microfinance information Parliament, acts as the Principal Financial Institution for platform. the Promotion, Financing and Development of the Micro, Small and Medium Enterprise (MSME) sector and for The corpus under “India Microfinance Equity co-ordination of the functions of the institutions engaged Fund” (IMEF) was increased to Rs.300 crore with in similar activities. The business strategy of SIDBI is to additional allocation of Rs.200 crore by the Govt. of India. address the financial and non-financial gaps in MSME The primary objectives under IMEF is on providing equity eco-system. By this way, SIDBI would be complementing and quasi-equity support to smaller MFIs to help them in and supplementing efforts of banks in meeting diverse getting debt funds from the banks and FIs in order to credit needs of MSMEs. maintain growth and achieve scale and efficiency in their operations. Till December 31, 2015, the Bank had 9.4.1 Performance review of SIDBI committed an amount of Rs.163.75 crore to 58 MFIs out The total MSME outstanding credit (gross) of the of the Rs.300 crore fund. Bank was Rs.55,852 crore as at end December 31, 2015 As at Dec. 31, 2015 SFMC had extended as against outstanding credit (gross) of the Bank as on financial assistance / capacity building assistance to more December 31, 2014 of Rs. 51,847 crore. The total income than 140 MFIs n different parts of the country, mostly in of the Bank during the year (upto December 2015) stood unserved and underserved areas. Cumulatively, SFMC- at Rs.4,148 crore. V has sanctioned Rs.11,345 crore and disbursed 9.4.2 Addressing Financial Gaps Rs.9,851.75 crore to partner MFIs, benefitting cumulatively approximately 337 lakh beneficiaries mostly SIDBI provides financial support to MSMEs by women. way of (a) refinance to eligible Primary Lending Institutions (PLIs), such as, banks, State Financial 9.4.2.2 Direct Finance Corporations (SFCs) for onward lending to MSMEs and  Equity / Risk Capital (b) direct assistance in the niche areas like risk capital/ equity, sustainable finance, receivable financing, service With a view to ameliorating the problems faced sector financing, etc. by the MSMEs in accessing growth capital, SIDBI had started the risk capital operations, which have supported The highlights of various financial supports the growth requirements of a number of MSMEs by provided by SIDBI are given below: extending financial assistance for intangibles viz. 9.4.2.1 Indirect Finance marketing / brand building, technical knowhow, etc. where bank loans are generally not available. Such growth  Refinance capital is offered in the form of risk capital / sub-debt which is collateral free, having higher moratorium on The Bank is primarily a refinancing Institution. It repayment and a flexible structuring. provides refinance support to more than 900 Primary Lending Institutions (PLIs) having a combined network  Promoting Energy Efficiency (EE) and of over 1,00,000 branches. Refinance / Indirect support Cleaner Production (CP) is extended for (i) Setting up of new projects and for technology up-gradation / modernisation, diversification, As a part of its Green initiative, SIDBI has expansion, rehabilitation, energy efficiency, adoption of developed specialized financial products to promote clean production technologies, etc. of existing MSMEs, energy efficiency (EE), cleaner production (CP) and (ii) Service sector entities and (iii) Infrastructure environment protection in the MSME sector. These development and upgradation. focused schemes have two-pronged approach: (a) concessional finance to encourage investment in energy  Microfinance efficient investments and (b) information dissemination to various MSME sectors on energy efficiency measures SIDBI’s micro finance assistance serves as a and technologies. In order to provide impetus to financing potent tool of inclusive growth and attainment of some of for the above measures, SIDBI has contracted Lines of the Millenium Development Goals by catering to the Credit from international agencies viz., KfW, Germany, bottom-of-the-pyramid sections of the society. SIDBI JICA, Japan and AfD, France. works with and through a large number of Micro Finance Institutions (MFIs) who have been nurtured, incubated SIDBI’s strategic partnership with World Bank and strengthened through a comprehensive range of (WB) and Bureau of Energy Efficiency (BEE), Ministry of financial and non-financial assistance. SIDBI has Power, Govt. of India for financing energy efficiency in 333Annual Report 2015-2016 MSMEs has provided an impetus to EE based India’ fund with a corpus of Rs. 1,000 crore to investments. SIDBI is executing a Global Environmental make our MSMEs world class manufacturing Facility (GEF) funded project, viz. “Financing Energy hub. Under the fund, concessional finance is Efficiency at MSMEs” in five MSME clusters viz. Kolhapur provided to identified MSME sectors. – foundry, Tirunelveli – Limekilns, Ankleshwar –  India Aspiration Fund: SIDBI has launched chemicals, Pune – forging and Faridabad – mixed cluster Rs.2,000 crore India Aspiration Fund (IAF) to give to increase demand for energy efficiency investments in boost to the start-up Venture Capital ecosystem the target MSME clusters and to build their capacity to in the country. IAF is designed to act as a Fund access commercial finance. With a view to create a demonstration effect of financing of comprehensive of Funds managed by SIDBI and is contributing energy efficiency retrofit investments (CERI) proposals, to MSME focused VCFs, which will enable them a revolving fund scheme for financing End-to-End Energy to raise private capital, thus enhancing the flow Efficiency Investments in MSMEs viz. “4E Financing of equity to start-ups and growth stage MSMEs Scheme” has been created to provide loans for energy in the country. This initiative of SIDBI not only efficiency projects to MSMEs at concessional rates and gives boost to the budding Start-up ecosystem soft terms. but also strengthens the domestic Venture Capital industry. It is important to note that  Addressing Delayed Payments Rs.2,000 crore of seed capital under IAF can be In order to help the MSMEs for quicker realization leveraged to raise Rs.25,000 crore of equity of their receivables, SIDBI fixes limits to well-performing capital, which can then further be used to raise purchaser companies and discounts usance bills of debt of further Rs.50,000 crore (2:1 debt-equity). MSMEs / eligible service sector units supplying Thus, an initial IAF corpus of Rs.2,000 crore can components, parts, sub-assemblies, services, etc. so that effectively raise to Rs. 75,000 crore of finance the MSMEs / service sector units receive their sale for the MSME sector. proceeds quickly. SIDBI also offers invoice discounting  SIDBI Make in India Soft Loan Fund for Micro, facilities to the MSME suppliers of purchaser companies. Small & Medium Enterprises (SMILE): SIDBI has It may also be noted that, Reserve Bank of India has launched a new scheme named ‘SIDBI Make in decided for setting up of electronic Trade Receivables Discounting System (TreDS) for financing of trade India Soft Loan Fund for Micro, Small & Medium receivables of MSMEs, from corporate and other buyers, Enterprises (SMILE)’ with a corpus of Rs. 10,000 through multiple financiers, which would improve the crore to make available soft loan to MSMEs, in liquidity in the MSME sector significantly. It has since the nature of quasi-equity to meet the required accorded in-principle approval to SIDBI and NSE Strategic debt-equity ratio and term loan on relatively soft Investment Corporation Ltd. (NSIC) in December, 2015, terms for establishment of new MSMEs, as also for setting up of the TreDS platform. for pursuing opportunities for growth for existing MSMEs.  Service Sector Financing 9.4.4 ADDRESSING PROMOTIONAL & Service sector contributes about 60% of the DEVELOPMENTAL GAPS national GDP and is also the fast growing segment of the Indian economy contributing significantly in SIDBI adopts a ‘Credit Plus’ approach by employment generation and exports. The Bank had providing various Promotional & Developmental (P&D) therefore, identified service sector as one of the thrust support primarily aimed at capacity building of the MSME areas for lending and has charted out a focused business sector. The brief highlights of various P&D activities of development strategy, encouraging product innovation SIDBI are given below: suited to the needs of the industry, improving credit delivery and having in place a pricing policy which  Promoting Young Entrepreneurship –SIDBI has supports business growth linked to risk. developed a website www.smallB.in, which is a virtual mentor and handholding forum for the 9.4.3 Recent Initiatives potential / budding and even existing  SIDBI Make in India Fund: The ‘Make in India’ entrepreneurs to set up new units and grow the campaign necessitated identification and creation existing ones. The website is quite exhaustive, of a favourable eco-system for encouraging the covering various aspects such as how to set up start-ups and drive the manufacturing domain new business, business plan preparation, with sustained employment opportunity creation understanding various requirements for obtaining and to raise the level of skilling for successful credit from banks / FIs, knowing Policies and and sustainable enterprise creation. SIDBI has Regulations, schemes and incentives offered by come out with a scheme called ‘SIDBI Make in the Central and State governments, etc. 334Department of Financial Services V  MSME Advisory – With a view to help MSMEs in energy efficiency, marketing, etc. About 12,000 obtaining credit, SIDBI has set up MSME MSMEs/artisans/entrepreneurs have benefitted Advisory Centres (MACs), in partnership with from these initiatives. industry associations to guide new / existing 9.4.5 International Co-ordination entrepreneurs regarding availability of schemes of commercial banks, government subsidies /  As a part of sharing international best practices benefits, provide borrowers with debt counselling, and innovative ideas, SIDBI had become a answering queries raised by banks etc. For member of International Development Finance manning the MACs, SIDBI has appointed Club (IDFC), which is a group of 20 national, Knowledge Partners (KPs) who are retired bank bilateral and regional development banks from officials, suitably trained for the purpose. Africa, Asia, Europe and Central and South America. Members of IDFC pool their global  Capacity building of smaller banks – Regional expertise, best practices and in-depth local know- Rural Banks (RRBs) / Urban Cooperative Banks how on strategic topics of mutual interest apart (UCBs) / District Central Cooperative Banks from financing a wide range of projects from (DCCBs) are well suited to meet last mile credit poverty alleviation and habitat protection to requirement of micro enterprises. In order to education, health and public transportation. enable these banks to purvey credit to MSMEs, During the year, SIDBI attended the meeting of SIDBI is extending capacity building training CEOs in Lima, Peru and Sherpa meeting at Rio support to these institutions for handling micro de Janeiro, Brazil. enterprises loans. The assistance is in the areas of free access to software on Downscaling  SIDBI has also renewed its membership of “The Methodology developed for lending to micro Montreal Group” (TMG), Canada, as one of the enterprises. Besides organizing sensitization founder members. TMG is an association of 8 programmes on this methodology covering Development Banks engaged in financing and chairmen of about 27 RRBs and 10 UCBs, MoUs development of MSMEs. During the year, TMG with 29 RRBs and 5 UCBs have been signed. initiated discussion on three key topics viz. Green Based on a comprehensive 2-day video based financing, Risk Management, Innovative training module, “Training of Trainers” Products and Services in which senior officials programmes have been conducted benefitting of SIDBI are key representatives. During the year, about 400 officials of 42 RRBs / UCBs. SIDBI attended the Annual General Meeting of TMG in Paris, France. SIDBI is hosting the next  Skill Development –With a view to strengthening Annual meeting in April 2016 in Mumbai. the technical and managerial capacities of the MSME entrepreneurs, the Bank supports reputed  Encouraged by the success of previous cluster management/ technology institutions to offer interventions undertaken by the Bank during FY certain structured management/ skill 2009-2012 under the MSME Financing and development programmes, viz. “Skill-cum- Development Project funded by the World Bank Technology Upgradation Programme” (STUP) and the DFID, UK, the Bank proposed fresh and “Small Industries Management Assistants intervention in MSME Clusters. The Bank Programme” (SIMAP). Cumulatively more than believes that, a balanced approach towards 42,500 participants have benefitted from 1550 fulfilling both, the credit needs and the non-credit STUPs and 300 SIMAPs. needs, strengthens the ecosystem for MSMEs in a much better way. It was with this objective  Micro Enterprises creation:SIDBI has designed SIDBI decided to conduct study of both financial Micro Enterprises Promotion Programme and non financial issues in 30 MSME clusters (MEPP) which aims at promoting viable rural where availability of adequate and timely enterprises leading to employment generation in institutional credit, infrastructure gaps and lack rural areas. MEPP was implemented in more of support services were affecting the growth and than 121 districts in 24 States. Cumulatively, more competitiveness of these cluster. The studies than 41,000 rural enterprises have been were funded by KfW. promoted. These enterprises have provided employment to over 1 lakh persons, mostly in  The 30 clusters were selected from 5 zones in rural areas. the country representing North, South, East and North East, West and Central Zone. While the  Cluster Development:SIDBI has adopted cluster financial gap studies focused on assessment of based approach for providing credit and non- credit gap, the non-financial gap study included credit support to the MSME sector. Under cluster assessment of gaps in the areas of business development approach, SIDBI provides various development services, marketing and Business Development Services (BDS), such as, infrastructure. The 30 MSME clusters chosen for new technologies, use of IT, skill development, 335Annual Report 2015-2016 study covered around 95,000 MSME units. In all, Scheme (IDLSS) (Ministry of Commerce & Industry) and 13 agencies were selected for undertaking these Scheme of Technology Upgradation of Food Processing studies. SIDBI has since published these reports. Industries (Ministry of Food Processing Industries).  Based on the findings of study conducted, SIDBI 9.4.7 Subsidiaries / Associates has identified 5 gaps which are common to most SIDBI has also emerged as the Institutions of the clusters (a) Skill Development (b) Builder in desired areas to strengthen the MSME eco- Infrastructure (c) Knowledge (d) Credit and (e) system by setting up of various subsidiaries and Policy Advocacy. Apart from these, certain cluster associates. specific gaps were also observed.  SIDBI Venture Capital Limited:In order to promote  As a precursor to the detailed interventions innovation by providing venture capital assistance covering all gaps in the identified clusters, SIDBI to knowledge-based MSMEs, SIDBI set up SIDBI has initiated a successful short term Cluster Venture Capital Ltd. (SVCL), a subsidiary of Level Intervention Programme (CLIP) covering SIDBI set up in July, 1999, as an investment 2 common gap areas, i.e., (i) Knowledge and management company, presently managing four (ii) Skill Development Gap in FY 2015. Under venture capital funds, viz. the National Venture CLIP, out of the 30 MSME clusters studied, Fund for Software and Information Technology SIDBI initiated interventions in 9 MSME clusters Industry (NFSIT), the SME Growth Fund (SGF), viz (i) Agartala (ii) Bhagalpur (iii) Coimbatore (iv) India Opportunities Fund (IOF), Samridhi Fund Hyderabad (v) Jamnagar (vi) Kolkata (vii) (SF) and TEX Fund (TF). These VC funds Ludhiana (viii) Panipat and (ix) Rajkot. CLIP will provide assistance to knowledge based MSMEs. be followed by a detailed, long term 3 year The cumulative corpus of these funds as on intervention in identified clusters starting FY December, 2015 was about Rs.1500 crore. 2016.  Credit Guarantee Fund Trust for Micro and Small  SIDBI has collaborated with GiZ under the Enterprises: In order to encourage banks to lend Responsible Enterprise Finance Project wherein more to micro and small enterprises (MSEs), GiZ is providing Technical Assistance of Euro 3 Government of India and SIDBI have set up the million. The project has four components (1) Credit Guarantee Fund Trust for Micro and Small Environment & Social Governance (ESG) Enterprises (CGTMSE) in July 2000, to provide Framework for MSME Financing which aims at credit guarantee support to collateral free / third- strengthening FIs to integrate ESG concerns in party guarantee free loans upto Rs. 100 lakh their operations and strategic decision making, extended by banks and lending institutions for (2) Sustainability – oriented Financial products MSEs. Cumulatively, as on December 31, 2015, and services (3) Risk Capital for social 21.65 lakh MSE guarantees for an amount of enterprises and (4) Voluntary Framework / Rs.1.04 lakh crore (68% for loans below Rs. 25 Guidelines for Indian Financial Sector. Under the lakh) have been approved under Credit project, SIDBI and GiZ have also launched Guarantee Scheme. program for Accelerating Investments in Social Enterprises (PRAISE), recognizing and  SMERA Ratings Limited:Further, to support supporting social enterprises in India, which aims banks in quicker credit sanction to MSMEs, at igniting investments in the social enterprises SIDBI, along with few PSBsand Dun & Bradstreet sector and creating meaningful outcomes for the (D&B), set up SMERA Ratings Ltd. in September enterprises. Further under the project draft ESG 2005 as an MSME dedicated third-party rating guidelines have been developed in consultation agency to provide comprehensive, transparent with banks and FIs. and reliable ratings of MSMEs. SMERA has achieved considerable success in rating 36,972 9.4.6 SIDBI as Nodal / Implementing Agency for MSMEs as at December 2015, spread across Government Schemes. various categories, industries and states, out of SIDBI is the Nodal Agency for implementation of which MSEs constituted almost 99%. certain MSME related schemes of the Government of  India SME Technology Services Limited:In order India (GoI) for encouraging implementation of technology to support banks in quicker credit sanction to upgradation and modernization in the MSME sector. MSMEs, SIDBI set up India SME Technology SIDBI provides Nodal Agency services for implementation Services Limited (ISTSL) in 1995 to offer of Credit Linked Capital Subsidy Scheme (CLCSS) and technology advisory and consultancy services for Technology and Quality Upgradation Programme projects / assignments related to Energy (TEQUP) (Ministry of MSME), Technology Upgradation Efficiency and Demand Side Management, Fund Scheme for Textile Industry (TUFS) (Ministry of Renewable Energy (particularly solar), MSME Textiles), Integrated Development of Leather Sector Cluster Development and Evaluation Studies and 336Department of Financial Services V Capacity building, awareness creation and skill 9.5 National Housing Bank (NHB) development. Activities & Operations during FY 2014-15 and 2015-16 (Half Year July – December, 2015).  India SME Asset Reconstruction Company Ltd.:India SME Asset Reconstruction Company (The financial year of National Housing Bank Ltd. (ISARC) is the country’s first MSME focused (NHB) is from July – June). Asset Reconstruction Company striving for 9.5.1 Performance during the year speedier resolution of non-performing assets During the year 2014-15 (July - June), refinance (NPA) in the MSME sector by unlocking the idle aggregating Rs.21,847.23 crore was disbursed, out of NPAs for productive purposes which would which Rs. 5,544.43 crore was disbursed for rural housing facilitate greater flow of credit from the banking under the Golden Jubilee Rural Housing Refinance sector to the MSMEs. Set up in April 2008, Scheme and the Rural Housing Fund. ISARC’s objective is to acquire non-performing For the half year July, 2015 to December, 2015, assets (NPAs) and to resolve them, through its refinance aggregating Rs.7,808.78 crore was disbursed, innovative mechanisms, with a special focus on out of which Rs.1,588.84 crore was disbursed for rural the NPAs of MSME sector. As on December, housing under the Rural Housing Fund. 2015, ISARC has assets under management of The breakup of the releases made during 2014- over Rs. 378 crore. 15 (July - June) is as under: (Amount in Rs. crore) Achievement Scheme UCBs + ACHFS + HFCs SCBs + RRBs Total ARDBs Regular 3521.40 8576.00 25.00 12122.40 GJRHRS 558.90 0.00 65.00 623.90 RHF 2101.34 2819.19 0.00 4920.53 LIH 50.20 0.00 0.00 50.20 UHF 902.12 2797.89 0.00 3700.01 Women 256.19 174.00 0.00 430.19 Total 7390.15 14367.08 90.00 21847.23 The breakup of the releases made during 2015-16 (July to December, 2015) is as under: (Amount in Rs. crore) Achievement Scheme UCBs + ACHFS + HFCs SCBs + RRBs Total ARDBs Regular 3487.65 1380.00 0.00 4867.65 RHF 1103.02 485.82 0.00 1588.84 UHF 72.84 1238.61 0.00 1311.45 Special Urban Housing Refinance 40.84 0.00 0.00 40.84 Scheme for Low Income Households Total 4704.35 3104.43 0.00 7808.78 of loans given by Primary Lending Institutions (PLIs) in 9.5.2 Performance under Rural Housing rural areas. Out of the total refinance releases of Rs. During the half year July 2015 to December 2015, 21847.23 crore made during the year 2014-15, 25.37% 20.35% of total disbursements of Rs.7808.75 crore i.e. aggregating Rs. 5544.43 crore have been made under Rs.1588.84crore have been made under the Rural the Rural Housing Fund (RHF) and the Golden Jubilee Housing Fund (RHF) in respect of loans given by Primary Rural Housing Refinance Scheme (GJRHRS) in respect Lending Institutions (PLIs) in rural areas. 337Annual Report 2015-2016 9.5.3 Rural Housing Fund (RHF) Rs. 3,000 crore for 2011-12, another Rs. 4000 crore for 2012-13 and another Rs. 6,000 crore for 2013-14 and The Hon’ble Finance Minister, in his Union further by Rs. 8,000 crore in 2014-15. Budget speech for 2008-09, announced the setting up of the Rural Housing Fund to enable primary lending Till June 2015, total amount of Rs. 22,778 crore Institutions to access funds for extending housing finance was received by the Bank under the Fund. Further, during to targeted groups in rural areas at competitive rates. the period July 2015 -December 2015, an amount of The corpus of the fund for 2008-09 was Rs.1,778.18 Rs.2,000 crore has been received by NHB under the crore, which was enhanced by Rs. 2,000 crore during Scheme pertaining to the year 2014-15. 2009-10, another Rs. 2,000 crore for 2010-11, another (Amount in Rs. crore) 2012-13 2013-14 2014-15 2015-16 (July – December 2015) Amount allocated by RBI / Gol 4000.00 6000 8000 - Amount deposited by Banks 4000.00 6000 4000 2000 # Amount disbursed under Rural 4027.42 6000 2364.22 1588.84 Housing Fund (RHF) # Rs. 2000 crore was received from the allocation of 2014-15. Under RHF, refinance is given to PLIs for lending i.e. classified as BPL or marginally above the poverty line, towards rural housing undertaken by people falling under v)Scheduled Castes, Scheduled Tribes and vi) Persons the weaker section category. The housing loans eligible from minority communities as may be notified by under this scheme are Direct Housing loans up to Rs.15 Government of India from time to time. The Interest rate lakh disbursed by the PLIs to i) rural population with on refinance currently applicable under the Scheme is income up to Rs.2 lakh ii)Small and marginal farmers 6.12%. Further, to ensure that the intended benefit of with land holding of 5 acres and less and landless lower interest rates reaches to ultimate borrowers, on- laborers, tenant farmers and share croppers iii) Women lending rates have been capped. Cumulative iv) loans eligible under Swarnjayanti Gram Swarozgar disbursements under RHF since inception till 31.12.2015 Yojana (SGSY) and Differential Rate of Interest (DRI) have been Rs. 22,764.47 crore. Rural Housing Fund - Allocation & Utilization Utilization Institution Category Year Allocation ACHFS & HFCs SCBs UCBs RRBs Total ARDBs 2008-09 1778.18 1544.88 0.00 15.00 201.60 0.00 1761.48 2009-10 2000.00 1794.86 0.00 4.00 184.96 32.00 2015.82 2010-11 2000.00 1687.54 182.00 0.00 134.12 0.00 2003.66 2011-12 3000.00 2125.25 721.42 13.32 143.04 0.00 3003.03 2012-13 4000.00 1939.94 1802.03 0.00 285.45 0.00 4027.42 2326.18 1023.39 0.00 94.12 0.00 3443.69* 6000.00 2013-14 355.23 2201.08 0.00 0.00 0.00 2556.31^ Total 2681.41 3224.47 0.00 94.12 0.00 6000.00 2014-15 1746.11 398.00 0.00 220.11 0.00 2364.22 8000.00 2015-16 1103.02 261.86 0.00 223.96 0.00 1588.84 Total 26778.18 14623.01 6589.78 32.32 1487.36 32.00 22764.47 * Disb in 2013-14^ Disb in 2014-15 338Department of Financial Services V 9.5.4 Urban Housing Fund (UHF) The purpose of this Scheme is to provide refinance assistance in respect of housing loans In the Union Budget 2013-14, the Hon’ble extended by PLIs in urban areas for the construction/ Finance Minister announced the establishment of an purchase of Dwelling Units, Repairs/Renovation/ Urban Housing Fund, having initial corpus of Rs. 2,000 upgradation of dwelling units and for incremental crore. As against total allocation of Rs. 6,000 crore, the housing. The eligible loan size is up to Rs. 10 lakh Bank has received full amount of Rs. 6,000 crore. The position of UHF mobilized year wise till 31.12.2015 is disbursed on or after 01.04.2013 against the dwelling as under: unit whose carpet area does not exceed 60 m2 or the cost of dwelling does not exceed Rs.16 lakh. The UHF Amount Amount Allocations Received disbursed targeted beneficiaries under the Scheme are borrowers 2013-14 2000 2000 2000 in urban areas with total household income not 2014-15 4000 4000 2573.21 exceeding Rs. 4,00,000/- per annum. The Interest rate 2015-16 * - 1311.45 for refinance currently applicable under the Scheme is Total 6000 6000 5884.66 6.87%. Cumulative disbursements made under UHF till * No allocation by GoI for the year 2015-16 31.12.2015 have been Rs. 5,884.66 crore. Utilization Institution Category Year Allocation ACHFS & HFCs SCBs UCBs RRBs Total ARDBs 128.70 744.50 0.00 0.00 0.00 873.20* 2000.00 2013-14 19.30 1107.50 0.00 0.00 0.00 1126.80^ Total 148.00 1852.00 0.00 0.00 0.00 2000.00 2014-15 882.82 1660.50 29.89 0.00 0.00 2573.21 4000.00 2015-16 72.84 1207.57 0.00 31.04 0.00 1311.45 Total 6000.00 1103.66 4720.07 29.89 31.04 0.00 5884.66 * Disb in 2013-14 ^ Disb in 2014-15 9.5.5 Focus on Economically Weaker Section claims by PLIs. NHB is sensitizing the PLIs by organizing (EWS) and Lower Income Group (LIG) regional workshops, in different parts of the country. The disbursement of refinance during the year Under the ‘Credit Linked Interest Subsidy’ 2014-15 focused on EWS and LIG. The refinance Scheme, beneficiaries of Economically Weaker Section disbursements in respect of housing loans under Rs.15 (EWS) and Low Income Group (LIG), not owning a lakhs amounted to 51.73 % of the total disbursements, pucca house anywhere in India and seeking housing with refinance in respect of housing loans upto Rs.5 lakhs loans (for new construction and for addition of rooms, amounting to more than 15.08% of the total kitchen, toilet etc. to existing dwellings as incremental disbursements. housing) from Banks, Housing Finance Companies and other such identified institutions would be eligible for an 9.5.6 Pradhan Mantri Awas Yojana – Credit Linked interest subsidy at the rate of 6.5% for a maximum Subsidy Scheme tenure of 15 years. To encourage the Primary Lending Institutions The credit linked subsidy will be available only (PLIs) like Banks and Housing Finance Companies for loan amounts upto Rs.6 lakh and additional loans (HFCs) in promoting Housing for All by 2022, the beyond Rs. 6 lakh, if any, will be at nonsubsidized rate. Government of India, Ministry of Housing & Poverty The interest subsidy will be credited upfront to the loan Alleviation (MoHUPA) has implemented, Credit Linked Subsidy Scheme (CLSS), as a Central Sector Scheme, account of beneficiaries and the Net Present Value (NPV) under the second vertical of the Pradhan Mantri Awas of the interest subsidy to be calculated using a discount Yojana (PMAY) Housing for All (Urban) Scheme. The rate of 9%.The carpet area of houses being constructed National Housing Bank (NHB) is a Central Nodal Agency, should be upto 30 square metres and 60 square metres which has signed MoU with 138 Primary Lending for EWS and LIG, respectively in order to avail of the Institutions (PLIs) so far, for implementing the Scheme. credit linked subsidy. The beneficiary, at his/her discretion To expedite the claim submission under CLSS, NHB has can build a house of larger area but the interest also developed an online portal for lodging the CLSS subvention would be limited to first Rs. 6 lakh only. 339Annual Report 2015-2016 The following three verticals of Pradhan Mantri appraisal and follow-up of housing loans including Awas Yojana (PMAY) Housing for All (Urban) Scheme qualified staff for handling such loans to the satisfaction are being implemented as Central Sponsored Schemes of the concerned PLI), for the following purposes: by MoHUPA in partnership with the State Governments  construction / purchase of new dwelling units for EWS:  purchase of existing dwelling units a) Slum rehabilitation of Slum Dwellers with participation of private developers using land as  repairs / renovation / extension / up-gradation of a resource existing dwelling units b) Affordable Housing in Partnership with Public & The total disbursements so far under the World Private sectors Bank line of credit to PLIs is Rs.110.06 crore, facilitating construction of 4389 dwelling units. c) Subsidy for beneficiary-led individual house construction 9.5.8.2 Special Refinance Scheme for Flood Affected Areas of Jammu & Kashmir So far, about Rs. 55 Crore have been released to 18 Primary Lending Institutions benefiting 3812 claims. Torrential rains and floods had affected large parts of Jammu & Kashmir in 2014, displacing large 9.5.7 Equity Participation by NHB segments of the population and resulting in large scale As part of its promotional role, National Housing destruction of property. Rebuilding of the ravaged dwelling Bank participates in the equity of housing finance units and rehabilitation of the affected people will be a companies and other institutions which can play an mammoth task requiring multi-pronged action, with important role in the development of the sector. Currently, involvement of all stakeholders. As an effort in this the Bank’s contribution in the equity of three housing direction, the National Housing Bank (NHB), with the finance companies, namely, Cent Bank Home Finance support of the Government of India and the Reserve Bank of India, has launched Special Refinance Scheme for Limited, Mahindra Rural Housing Finance Limited and Flood Affected Areas of Jammu & Kashmir with the SEWA Grih Rin Ltd. stood at 16%, 12.50% and 7.41% objective of improving the flow of housing finance at of their total paid up capital, respectively. concessional rates to the residents of J&K to help in The Bank also has contributed 4.98% equity construction of new dwelling units and repairs, renovation shareholding in Central Registry of Securitisation Asset and up-gradation of existing dwelling units. Reconstruction and Security Interest of India (CERSAI). Under the Scheme, NHB will provide refinance The Company is a Government Company with Central assistance to the Scheduled Commercial Banks (SCBs), Government shareholding of 51%. 10 PSBshold the Regional Rural Banks (RRBs), and Housing Finance balance amount of equity capital. Companies (HFCs) for their housing loans in the state of 9.5.8. New Schemes Jammu & Kashmir. The funds under the scheme will be provided at concessional rates of interest. 9.5.8.1 Special Urban Housing Refinance Scheme for Low Income Households (WB-ULIH) 9.5.8.3 Refinance assistance for flood affected areas (Refinance Scheme launched under the NHB- of Tamil Nadu WB Urban Low Income Housing Project) The refinance assistance will be provided to The Government of India has entered into an Housing Finance Companies in respect of their direct agreement with the International Development housing loans extended in the flood affected areas in the state of Tamil Nadu for reconstruction of existing dwelling Association (IDA) under which IDA will provide a $100 million equivalent Credit to the GoI. IDA has also entered units & repairs / renovation / up-gradation of dwelling units. into an agreement with NHB for the implementation of The eligible loan size is up to Rs. 10 lakhs disbursed on the project, which includes extending refinance in respect or after 01-12-2015 but before June 30, 2016 extended of housing loans conforming to certain parameters laid in respect of dwelling units located in flood affected district down under the programme. Thus, a refinance scheme of Tamil Nadu (declared urban area as per 2011 Census). has been formulated in accordance with the parameters The Interest rate for refinance currently applicable under of the programme in order to provide a better focus to the Scheme will be extended at interest rate of 6.50% the programme. The Scheme aims to serve the urban p.a. fixed rate which shall remain fixed for the entire tenure housing needs of the low income households which are without reset. The interest rates on individual loans dependent on informal sector for earning their livelihood. covered under refinance under the refinance assistance Refinance will be provided by NHB to the Primary Lending should not be more than 8.50% p.a. Disbursements of Rs. 25 crore have been made till January 21, 2016 on a Institutions (PLIs) in respect of their housing loans which are secured either through collateral of property financed prospective basis. or are alternatively secured. Refinance assistance will 9.5.9 Resources mobilized during the half year be provided under the Scheme to PLIs in respect of their ended 31st December, 2015 (2015-16) housing loans in the urban areas extended to low income household either directly or through intermediaries like NHB raised both short term and long term MFIs (having proper systems and procedures for resources. Short term resources included issuance of 340Department of Financial Services V Commercial Papers (CPs) and Short Term Loans from (TAG), NHB launched RESIDEX for tracking prices of Banks. Long Term borrowings includes issuance of Rural residential properties in India, in July 2007. Housing Fund (RHF), foreign borrowings and Deposits from public under “SUNIDHI” and “SUVRIDDHI” term The Index helps the general consumers and deposit schemes. The net incremental borrowing was Rs. property buyers and borrowers in their decision-making 2,667.01 crore for the six months ended 31.12.2015 by enabling comparisons over time and across cities and localities based on the emerging trends. It provides The total borrowing outstanding as on 31.12.2015 insights into the property market for the lending agencies was Rs. 44,160.60 crore. in their credit evaluation and assessment of the value (present and potential) of the security against the loan. No Tax Free Bonds have been issued during 2014-15 and 2015-16 (July-December). NHB RESIDEX can be a useful indicator for estimating the value of property to be financed and also for assessing 9.5.10 Credit Risk Guarantee Fund Trust for Low the value of security cover on the outstanding loan. Income Housing (CRGFTLIH) Builders and developers may also benefit from the index by assessing the demand scenario in a locality, and The Credit Risk Guarantee Fund Trust for Low mapping the housing needs in different parts of the Income Housing (CRGFTLIH) was setup by the country. NHB RESIDEX may be useful to policy makers, Government of India on May 01, 2012 with an objective banks, housing finance companies, builders, developers, to ensure better flow of institutional credit for housing in investors and individuals. NHB RESIDEX is being well- urban areas to cater to the needs of the targeted received from all the corners of the industry e.g. banks, segments (EWS/LIG borrowers). The Credit Risk HFCs, Builders & Developers and Government of India. Guarantee Fund Scheme provides guarantee for all housing loans up to Rs. 8 lakh sanctioned and disbursed NHB RESIDEX tracks the movement in prices by the lending institutions (effective from October 01, of residential properties on a quarterly basis. This is being 2014), subject to guarantee cover limited upto Rs. 5 lakh done since 2007. The latest NHB RESIDEX for the only. Prior to this all housing loans up to Rs. 5 lakh were quarter January-March, 2015 covers 26 cities. eligible without any collateral security and/or third party guarantee to the new borrowers in the EWS/LIG The RESIDEX for the quarter January-March, categories in urban areas for the purpose of home 2015 constructed for 26 cities has taken into account the improvement, construction, acquisition and purchase of price trends for residential properties in different locations new or second hand dwelling units of size upto 430 sq ft and zones in each city and is based upon the transaction (40 sq mtr). The Guarantee Cover available under the data received from Central Registry of Securitisation Scheme is to the extent of 90% of the sanctioned housing Asset Reconstruction and Security Interest of India loan amount up to Rs. 2 lakh and 85% of the sanctioned (CERSAI). The data based on actual transactions are loan amount above Rs. 2 lakh. put through a Model that depicts the trend in the market. The RESIDEX is expected to bring greater uniformity and The major Banks and HFCs have already standardisation as well as greater transparency in the entered into agreements to implement these initiatives valuation of properties across the industry. of the GOI. Till December 31, 2015, 62 institutions have signed MoU with the Trust under the Scheme. During With a view to widen the scope of RESIDEX, the period, the Trust has issued guarantee cover in NHB is exploring the possibility of tie-up with the respect of 1366 loan accounts of 12 Member Lending professional institutions in the similar field. NHB RESIDEX Institutions (MLIs) involving a total loan amount of Rs. is, at present, in the process of being revamped. 36.98 crore provided to EWS/LIG households. These MLIs include 8 Scheduled Commercial Banks; 3 Housing Price Movement for the quarter January- Finance Companies and 1 Regional Rural Bank. March, 2015 (26 Cities) 9.5.11 NHB-RESIDEX-The Residential Property The movement in prices of residential properties Price Index for the quarter January-March, 2015 has shown marginal increasing trend in seventeen (17) cities ranging from Keeping in view the prominence of housing and 0.5% in Delhi to 3.1% in Guwahati, and fall in seven (7) real estate as a major area for creation of both physical cities ranging from -0.5% in Chennai to -2.3% in and financial assets and its contribution in overall national Chandigarh in comparison to the previous quarter wealth, a need was felt for setting up of a mechanism, October-December, 2014. Index for 2 cities namely which could track the movement of prices in the Ahmedabad and Kochi has remained stagnant. residential housing segment. National Housing Bank, at the behest of the Ministry of Finance, undertook a pilot Rising Trend: Residential housing prices in 17 study to examine the feasibility of preparing such an index cities have shown increase in prices in this quarter ended at the National level. The pilot study covered 5 cities viz. March, 2015 (January-March, 2015) over the previous Bangalore, Bhopal, Delhi, Kolkata and Mumbai, for which quarter ended December, 2014 (October-December, index was constructed till the period 2005 taking 2001 as 2014). Maximum increase was observed in Guwahati the Base Year. Based on the results of the pilot study (3.1%) followed by Bhopal (2.6%), Surat (2.4%), and recommendations of the Technical Advisory Group Hyderabad (2.1%), Indore (2.1%), Patna (1.9%), 341Annual Report 2015-2016 Bengaluru (1.8%), Coimbatore (1.7%), Nagpur (1.6%), observed in Chandigarh (-2.3%), followed by Pune (1.6%), Dehradun (1.6%), Meerut (1.2%), Raipur Bhubaneswar (-2.1%), Kolkata (-1.4%), Ludhiana (1.2%), Lucknow (1.0%), Faridabad (0.9%),Vijayawada (-1.4%), Jaipur (-1.0%), Mumbai (-0.8%), and Chennai (0.6%), and Delhi (0.5%). (-0.5%). Declining Trend: 7 cities have shown decline Index for 2 cities namely Kochi and Ahmedabad in prices over the previous quarter with maximum fall has remained stagnant. Table - NHB RESIDEX Price Movement for the quarter Jan-March, 2015 (26 Cities) CITIES 2007 Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Index Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 Index Index Index Index Index Index Index Index Index Index Index Hyderabad 100 84 90 88 84 88 93 95 95 93 95 97 Faridabad 100 216 205 207 202 204 209 209 211 216 222 224 Patna 100 138 151 152 147 150 159 150 154 153 157 160 Ahmedabad 100 180 191 192 186 191 197 209 213 217 215 215 Chennai 100 312 314 310 303 318 330 349 355 362 366 364 Jaipur 100 85 87 112 110 108 105 101 102 101 103 102 Lucknow 100 175 189 183 187 191 185 194 193 196 198 200 Pune 100 201 205 221 219 219 235 232 241 242 247 251 Surat 100 138 150 140 142 145 154 165 161 160 164 168 Kochi 100 80 87 89 86 86 85 85 86 88 88 88 Bhopal 100 206 216 230 227 220 223 226 229 232 233 239 Kolkata 100 191 209 197 189 199 196 206 211 209 215 212 Mumbai 100 198 217 222 221 222 222 229 233 238 240 238 Bengaluru 100 98 106 109 108 107 111 107 108 109 113 115 Delhi 100 178 195 202 199 190 196 199 193 189 189 190 Bhubanes-war 100 168 172 197 195 193 202 195 196 197 192 188 Guwahati 100 158 166 153 147 149 160 154 159 160 163 168 Ludhiana 100 168 179 167 157 150 150 145 147 146 147 145 Vijayawada 100 181 185 184 174 167 161 160 163 161 162 163 Indore 100 196 194 195 184 180 184 181 187 188 191 195 Chandigarh 100 194 191 192 188 183 175 174 173 169 Coimbatore 100 184 178 178 173 170 176 180 176 179 Dehradun 100 183 184 184 186 191 187 188 187 190 Meerut 100 191 189 176 171 165 159 159 161 163 Nagpur 100 163 168 162 175 180 181 180 184 187 Raipur 100 156 155 157 159 166 166 165 171 173 342Department of Financial Services V 10. Representation of SCs, STs, OBCs and 2015. Sector-wise break-up of priority sector advances PWDs. of PSBs, as on March 31, 2015, is given at Annexure-III. Representation of SCs, STs, OBCs and Persons 11.2. Economic Empowerment of Women with Disabilities (PWDs) in PSBs/ FIs and Insurance 11.2.1 To help overcome the hurdles faced by women Companies is at Annexure I & II respectively. in accessing bank credit and credit plus services, the 11. Priority Sector Lending and Lending Government of India had drawn up a 14-point action plan to Women and Minorities (now 13-point action plan) in the year 2000 for implementation by PSBs. The PSBs were advised to 11.1 Priority Sector Lending (PSL) earmark 5 per cent of their ANBC for lending to women. A target of 40 percent of Adjusted Net Bank Credit As reported by PSBs, as on March 31, 2015, the amount (ANBC) or Credit Equivalent amount of Off-Balance Sheet outstanding towards credit to women was Rs.3,58,040.73 Exposures (OBE), whichever is higher, as of preceding crore, forming 7.61 per cent of ANBC of public sector March 31st, has been mandated for lending to the priority banks. Particulars of Credit to women, as reported by sector by domestic scheduled commercial banks and foreign PSBsare given at Annexure-IV (a), Annexure-IV (b) and banks with 20 branches and above. Within this, sub-targets Annexure-IV (c). of 18 percent, 10 percent and 7.5 percent of ANBC or Credit 11.3 Prime Minister’s New 15 Point Programme for Equivalent amount of OBE, whichever is higher, as of the Welfare of Minorities preceding March 31st, have been mandated for lending to agriculture, weaker sections, and micro enterprises, 11.3.1 In order to ensure improved financial services respectively. Within the 18 percent target for agriculture, a for the welfare of minorities, Reserve Bank of India issued target of 8 percent of ANBC or Credit Equivalent amount of a Consolidated Master Circular dated July 1, 2015 to all OBE, whichever is higher, is prescribed for lending to small scheduled commercial banks advising them to take care and marginal farmers. The sub-targets for small and to see that minority communities secure, in a fair and marginal farmers and micro enterprises are required to be adequate measure, the benefits flowing from various achieved by domestic scheduled commercial banks in a Government sponsored special programmes. This phased manner. Domestic scheduled commercial banks Master Circular also envisages creating a separate cell are also required to ensure that their share of lending to in each bank to ensure smooth flow of credit to minority non-corporate farmers does not fall below the system wide communities and also covers the role of the lead bank in average of the last three years of direct lending to non- the 121 districts identified for purpose of earmarking of corporate farmers. targets and location of development projects under the For Foreign Banks with 20 branches and above, Prime Minister’s New 15 Point Programme for the welfare the total priority sector target and target for lending to of minorities. agriculture and weaker sections have to be achieved 11.3.2 The following are some of the major instructions/ within a maximum period of five years starting from April guidelines issued by RBI vide their latest Master Circular 1, 2013 and ending on March 31, 2018. Foreign banks dated July 1, 2015 to all SCBs on “Credit Facilities to with 20 branches and above have submitted an action Minority Communities” to ensure adequate credit flow to plan for achieving the targets over a specific time frame the minority communities: which has been approved by RBI. The sub-targets for small and marginal farmers and micro enterprises for  A Special Cell should be set up in each bank to these banks would be made applicable post 2018 after a ensure smooth flow of credit to minority review in 2017. communities and it should be headed by an For Foreign Banks with less than 20 branches, a officer holding the rank of Deputy General target of 40 percent of Adjusted Net Bank Credit (ANBC) Manager/Assistant General Manager or any other or Credit Equivalent amount of Off-Balance Sheet similar rank who should function as a ‘Nodal Exposures (OBE), whichever is higher, as of preceding Officer’; March 31st has been mandated for lending to the priority  The Lead Bank in each of the minority sector, which has to be achieved in a phased manner by concentration districts should have an officer who the year 2020. shall exclusively look after the problems The outstanding priority sector advances of regarding the credit flow to minority communities. PSBsincreased from Rs. 16,18,971 crore as on March It shall be his responsibility to publicise among 31, 2014 to Rs.17,50,893 crore as on March 31, 2015, the minority communities various programmes registering a growth of 8.15 per cent. Advances to of bank credit and also to prepare suitable agriculture by PSBs amounted to Rs 7,56,234 crore schemes for their benefit in collaboration with constituting 16.13 percent of ANBC, as on March 31, branch managers; 343Annual Report 2015-2016  The minority communities receive a fair and Educational Loan Scheme and circulated to banks in the equitable portion of the credit within the overall year 2001. The Scheme is for all students including target of the priority sector; students belonging to the economically weaker sections and those below the poverty line. Indian Nationals who  The progress made in regard to the flow of credit have secured admission to a higher education course in to the minority communities should be reviewed recognised Institutions in India or abroad through an regularly at the meetings of the District entrance test/merit based selection process are eligible Consultative Committees (DCCs) and the State for educational loans under the Scheme. Level Bankers Committees (SLBCs); The Scheme has been modified from time to time  There should be good publicity about various anti- keeping in view the changing needs of the students. IBA has vide circular dated 17th August, 2015 revised the poverty programmes of the Government where existing Model Educational Loan Scheme and circulated there is large concentration of minority to Banks for adopting the scheme. The main features of communities and particularly in the districts which revised Model Educational Loan Scheme are as under. have a concentration of minority communities. a) Provision for charging of differential interest rates 11.3.3 As per progress reported by PSBs, total based on status of collateral, employability and outstanding loans to minority communities as on March reputation of institutions. 31, 2015 stood at Rs.3,64,192 crore which works out to b) Relaxation in margin and security for loans 20.80 per cent of total priority sector advances of PSBs. guaranteed by NCGTC. 11.4 Lending to Weaker Sections c) Extension of repayment period (after moratorium) upto 15 years for all loans. 11.4.1 As per extant guidelines of Reserve Bank of India (RBI) on Priority Sector Lending (PSL), all Scheduled d) Uniform one year moratorium for repayment after Commercial Banks (SCBs) including Foreign Banks with completion of studies in all cases. 20 and above branches are required to lend 10 per cent e) Provision for moratorium taking into account of Adjusted Net Bank Credit (ANBC) or Credit Equivalent spells of unemployment/under-employment, say amount of Off-Balance Sheet Exposure, whichever is two or three times during the life cycle of the loan. higher, to Weaker Sections. Moratorium may also be provided for the incubation period if the student wants to take up To achieve inclusive growth, priority sector loans a start-up venture after graduation. to distressed persons (other than farmers) not exceeding 12.1 Service Area Norms for Education Loans- RBI Rs.1,00,000 per borrower to prepay their debt to non- guidelines institutional lenders and loans to individual women beneficiaries up to Rs.1,00,000 per borrower are allowed RBI has advised the banks on November 09, 2012 that Service Area Norms are to be followed only in to be categorized under Weaker sections. the case of Government Sponsored Schemes as advised The performance of PSBs on lending to in its circular dated December 8, 2004 and are not Weaker Sections as on March, 2013, 2014 and 2015 applicable to sanction of educational loans. Hence, banks is as under: have been advised not to reject any educational loan application for reasons that the residence of the borrower does not fall under the bank’s service area. As at the year Amount % to ANBC ended outstanding 12.2 Performance of Education Loans March,2013 3,47,352.21 9.83 The total outstanding education loans of March,2014 4,33,943.68 10.56 PSBs(PSBs) as on December 31, 2015 stood at Rs. March, 2015 4,88,805.92 10.42 65,740 crore in 25,44,672 accounts. This reflects increase of Rs.4,564 crore in total outstanding loans over the 12. Education Loan correspondence period of the last year. In percentage terms it is an increase of 7.45 per cent. In order to realize the demographic dividend of the country, every meritorious student should have access Year-wise break-up of education loans to bank credit to pursue higher education, if they so desire. outstanding as on March 31, 2004 to December 31, 2015 Indian Banks’ Association (IBA) had prepared the Model is given below: 344Department of Financial Services V 12.4 Interest Subsidy Scheme for Educational As on Amt. O/s Year on No. of Loans March (Rs. Year A/c 31st Crore) Growth Government has announced an interest waiver scheme that aims to provide benefit to the students who 2004 3,19,337 4,550 have taken education loan up to 31.3.2009 and which is 2005 4,68,207 6,713 47.54 outstanding as on 31.12.2013. Government bears the 2006 6,79,945 10,012 49.14 liability of outstanding interest as on 31.12.2013, but the borrower has to pay interest for the period after 1.1.2014. 2007 9,44,397 14,283 42.65 A provision of Rs 2600 crore under the scheme was 2008 12,46,870 19,847 38.75 provided. So far banks have claimed Rs 1822.13 crore in respect of 3,62,044 students. 2009 16,03,385 27,646 39.51 2010 19,28,350 35,628 29.81 12.5 Skill Loan Scheme 2011* 22,37,031 43,074 20.03 Given a huge thrust on skill development, a need is felt 2012* 24,60,493 49,069 13.92 to provide institutional credit to individuals for taking skill development courses aligned to National Occupations 2013* 25,09,465 53,520 9.07 Standards and Qualification Packs and leading to a 2014* 25,72,716 58,256 8.84 certificate/diploma/degree by the Training Institutes as per National Skill Qualification Framework (NSQF). 2015* 25,68,586 61, 967 6.37 Ministry of Skill Development and Entrepreneurship, Govt December, 25,44,672 65,740 7.45 of India has launched a Skill India Mission on 15th July, 2015* 2015. The, “Skill Loan Scheme” has been developed to Source: IBA *Source: PSBs support the national initiatives for skill development. Bank-wise (PSBs) details of education loan outstanding Skill Loan Scheme aims at providing a loan facility to as on March 31, 2015 are given at Annexure - V. individuals who intend to take up skill development 12.3 Interest Subsidy Scheme for Educational courses as per the Skilling Loan Eligibility Criteria. Loans 12.6 Vidya Lakshmi Portal Ministry of Human Resource Development had formulated and circulated in May, 2010 to all Scheduled Vidya Lakshmi Portal is a first of its kind portal providing Banks a Central Scheme to provide ‘Interest Subsidy’ for single window for Students to access information and the period of moratorium on educational loans taken by make application for Educational Loans provided by students of economically weaker sections from scheduled banks under the Educational Loan Scheme of the Indian Banks as also Government Scholarships. The Portal has Banks’ Association. The scheme is applicable to the the following features: following categories of loans. a. Information about Educational Loan Schemes of  Educational loan disbursed/availed after 1st April, Banks; 2009 from Scheduled Banks which follow IBA Model Educational Loan Scheme; b. Common Educational Loan Application Form for  Students belonging to economically weaker Students; sections, i.e, whose parental income from all sources do not exceed Rs.4.5 lakhs per annum; c. Facility to apply to multiple Banks for Educational Loans;  The scheme is applicable starting from academic year 2009-10, disbursement starting on or after d. Facility for Banks to download Students’ Loan 01.04.2009, irrespective of date of sanction; Applications; Year-wise claim details under education loan interest subsidy scheme e. Facility for Banks to upload loan processing status; Amount f. Facility for Students to email grievances/queries Period No. of Accounts (Rs. in crore) relating to Educational Loans to Banks; 2009-10 644299 296.88 2010-11 898320 735.50 g. Dashboard facility for Students to view status of 2011-12 983586 1198.88 their loan application and 2012-13 1077505 1681.85 h. Linkage to National Scholarship Portal for 2013-14 911792 1540.77 information and application for Total 4515502 5453.88 i. Government Scholarships. Source: Nodal Bank for the scheme (Canara Bank) 345Annual Report 2015-2016 Banks have been requested to give wide publicity Year Filed Disposed to this Portal so that students wanting education loans 2012 318 364 can apply for it and indicate their bank of choice. 2013 177 308 13. Vigilance 2014 149 217 13.1 Vigilance Machinery in Department of 2015 165 167 Financial Services Department of Financial Services is the Further, the Special Court has stated that the administrative department for Public Sector total number of Pending Matters as on 31.12.2015 is Banks(PSBs), FIs (FIs) and Public Sector Insurance 184 which include Suits – 20 and Special Cases Companies(PSICs). A Joint Secretary level officer has (Criminal) – 07. been designated as Chief Vigilance Officer of the Department. She is assisted by a Director(Vig.) and 13.2.2 Office of the Custodian Under Secretary (Vig.) in the discharge of her functions. To help the Custodian in discharging the duties under The Vigilance Section in the DFS deals with, inter alia, the Special Court (TORTS) Act, 1992, at present there are the following issues pertaining to PSBs, FIs and PSICs:- three offices – with headquarters at New Delhi, office at Mumbai mainly attending to the Court matters on day to 13.1.1 Vigilance matters of all Public Sector Banks/ day basis and third one at Bangalore mainly to deal with FIs/ Insurance Companies/and RBI matter relating to Fair growth Financial Services Ltd (FFSL) a) Consultation with CVC/CTE/CBI on matters & Fair Growth Investment Ltd (FGIL), Bangalore based relating to complaints, clearance, sanction of notified firms. Office of the Custodian has been sanctioned prosecution and any other matter of the Board 29 posts including Custodian and two posts of Directors. level appointees. These are renewed on a year-to-year basis by Ministry of Finance, DFS with the approval of IFA. b) Appointment of CVOs in PSBs, FIs and PSICs. Since inception a total of 12915 cases were filed 13.1.2 CVC/CBI/Vigilance references relating to in the Special Court, which were defended/contested by the Custodian and 12738 cases have been disposed of a) All officials in the Department of Financial by the Special Court, leaving a balance of 177 cases as Services. on 31st December, 2015. Similarly a total of 479 appeals b) Government appointees in DRTs/ DRATs. were filed in the Supreme Court, of which 436 cases have been disposed of, leaving 43 cases pending. As on 31st c) Members and Chairman in of BIFR and AAIFR. December, 2015, while the outstanding liabilities of notified parties totaled to Rs. 31419.27 crore, the assets d) Officers of Custodian’s office, BIFR and AAIFR. were only to the tune of Rs. 2129.59 crore. Till 31st 13.2 Organisation under Vigilance Section December 2015, Rs. 6415.49 crore has been recovered by the Custodian, out of which, Rs. 5644.97 crore has 13.2.1 Office of Special Court been distributed to Income Tax Department, Banks etc. The Special Court (Trial of offences relating to and Rs. 770.52 crore is available for further distribution. Transactions in Securities) Act, 1992 came into force on Out of a total of 22.48 crore attached shares, 16.31 crore shares have been sold and a sum of Rs. 3307.93 crore 06.06.1992. The Act was necessitated by reasons of the realized. Of the remaining 6.17 core shares, 1.77 crore unprecedented situation wherein very large amount of are traded shares and 4.40 crore are untraded shares public monies had been siphoned off into private pockets. with current value of Rs. 1154.72 crore. A total of 179 The legislature sought to set up a Special Court through immovable properties of notified parties had been this Act for (a) speedy trial of offences (b) immediate attached by the Custodian, out of which, 146 have been attachment and freezing of all assets of parties suspected disposed, to realize a value of Rs. 171 crore. Rs. 5.96 to be involved in the scam and (c) a reasonable and crore has been realized by sale of 171 jewellary items equitable distribution of the property. through Customs department and Rs. 19.08 lakh by sale The Special Court has been sanctioned four of gold items through SBI. Cash balance in the attached posts of judges. To support their day to day functioning, accounts and fixed deposits of notified parties as on 31st the office of the Special Court functions with a staff of 51 December 2015 is Rs. 770.50 crore. officials at various levels. These are renewed on a year- 13.3 Performance to-year basis by Ministry of Finance, DFS with the approval of IFA. Details of cases filed, disposed off for a) The Vigilance Division of the Department the last four years are given below: monitors the progress on disposal of complaints 346Department of Financial Services V received from various sources and pendency of also the administrative division for the Insurance disciplinary / vigilance cases regularly and Regulatory and Development Authority of India (IRDAI). meeting with CVOs is undertaken in this The name ‘Insurance Regulatory and Development Department at appropriate intervals. Authority’ was changed to ‘Insurance Regulatory and Development Authority of India’ through the Insurance b) During the period of 01.01.2015 to 31.12.2015 a Laws (Amendment) Act, 2015). total no. of 205 CVC references have been received out of which 100 cases have been 14.3 The Public Sector Insurance Companies disposed off. operating in the sector are as follows. c) During the period of 01.01.2015 to 31.12.2015 a) Life Insurance Corporation of India a total no. of 4 CVOs have been appointed in b) National Insurance Company Limited PSBs/PSICs/FIs. c) Oriental insurance Company Limited d) Instructions have been issued from time to time as and when any gap in the system is observed d) United India Insurance Company Limited to strengthen the preventive vigilance in these organisations. e) New India Assurance Company Limited 13.4 The Vigilance Awareness Week was observed f) General Insurance Corporation of India Limited from 26th Oct., 2015 to 31st Oct., 2015. A pledge was (National Re-Insurer) administered by the Secretary (Financial Services) on g) Agriculture Insurance Company of India Limited 26.10.2015 to the officers of the Department. CVC also (Company floated by Non Life Public Sector addressed talk on preventive vigilance to all Government insurance companies along with NABARD) Nominee Directors (GNDs)/Officers of DFS on 26th October, 2015. In this connection a CD containing h) ECGC Limited (Government of India enterprise circulars/instructions/Manuals as on vigilance matters for export credit guarantee) issued by CVC and DFS was also released by the Hon’ble 14.4 Legislative Framework governing the Finance Minister on 27th October, 2015. Insurance Sector 13.5 A Committee under Chairmanship of The Insurance Division is responsible for policy Secretary(FS) has been constituted with formulation and administration of the following Acts: representatives of CBI, Serious Fraud Investigation Office (SFIO), Central Economic Intelligence Bureau a) The Insurance Act 1938 (CEIB), Enforcement Directorate (ED) and RBI to monitor large value bank frauds. b) The Life Insurance Corporation Act 1956 13.6 An web-based portal is being used to monitor c) The General Insurance Business vigilance related matters in PSBs/PSICs/FIs. (Nationalisation) Act, 1972 14. Insurance Sector d) The IRDA Act, 1999 14.1 Insurance in India e) The Actuaries Act 2006 Insurance, being an integral part of the financial f) The Securities and Insurance Laws (Amendment sector, plays a significant role in India’s economy. Apart and Validation) Act, 2010. from protecting against mortality, property and casualty risks and providing a safety net for individuals and The Government promulgated an Ordinance enterprises in urban and rural areas, the insurance sector namely - the Insurance Laws (Amendment) Ordinance, encourages savings and provides long-term funds for 2014 on 26th December, 2014 to make amendments to infrastructure development and other long gestation the Insurance Act, 1938, the General Insurance Business projects of the Nation. The development of the insurance (Nationalization) Act, 1972 and the Insurance Regulatory sector in India is necessary to support its continued and Development Authority Act, 1999 in accordance with economic transformation. the Insurance Laws (Amendment) Bill 2008 as reported by the Select Committee of the Rajya Sabha. The 14.2 The Insurance Division of the Department of Ordinance was replaced by the Insurance Laws Financial Services (Amendment) Act, 2015. With the coming into force of The Insurance Division deals with policy and the Insurance Laws (Amendment) Act, 2015, the foreign legislative matters as well as monitoring of the investment cap in an Indian Insurance Company has gone performance of both life and nonlife insurance up from 26 to 49% with the safeguard of Indian ownership segments of the public sector insurance industry. It is and control. 347Annual Report 2015-2016 14.5 The Insurance Division of the Department is insurance companies that have set up operations in the also responsible for life segment post opening up of the sector twenty are in joint venture with foreign partners. Of the twenty two a) Monitoring of the performance of the public sector private insurers who have commenced operations in the insurance companies. non-life segment, eighteen are in joint venture with foreign b) Framing of rules and regulations in respect of partners. service conditions of employees of the public The Authority received R1 application during sector insurance companies. June, 2015 seeking registration from Aditya Birla Health c) Co-ordination of vigilance activities in the public Insurance Co. Ltd. as a Standalone Health Insurance sector insurance industry. Company which is considered by the Authority in November, 2015 subject to the applicant company fulfilling d) Appointment of Chief Executives and Directors certain requirements. This is the first application received on the boards of public sector insurance from an applicant in the standalone health insurance companies and Chairman and Members of the business space seeking Certificate of Registration from IRDA. the Authority after notification of the Insurance Laws (Amendment) Act, 2015, increasing the Foreign Equity e) Administration of the Aam Aadmi BimaYojana. participation to 49%. 14.6 Reforms in the Insurance Sector Foreign Investment Promotion Board (FIPB) in The insurance sector was opened up for private Department of Economic Affairs (DEA) receives participation with the enactment of the Insurance proposals of Foreign Investment in various sectors in Regulatory and Development Authority Act, 1999. The India. As per the extant provisions, foreign investment in IRDAI at present consists of the Chairman, 4 full-time Insurance Companies is permitted up to 49%. Investment members and 4 part-time members. The Authority is up to 26% is under automatic route and beyond 26% and functioning from its Head Office at Hyderabad, Telangana. upto 49% requires Government approval. Proposals The core functions of the Authority include (i) licensing/ pertaining to Foreign Investment beyond 26% and upto registration of insurers and insurance intermediaries; (ii) 49% in Insurance Sector are referred by DEA to financial and regulatory supervision; (iii) regulation of Department of Financial Services (DFS) for examination. premium rates; and (iv) protection of the interests of the DFS examines the proposals related to insurance policyholders. With a view to facilitating development of companies in consultation with IRDAI and accordingly, the insurance sector, the Authority has issued regulations recommendations/views are conveyed to FIPB which on protection of the interests of policyholders; obligations takes final decision on the proposals. As on 29th February, towards the rural and social sectors; micro insurance and 2016, foreign investment proposals of six insurance registration of agents, licencing/registration of corporate companies have been approved by FIPB involving a total agents, brokers and third party administrators. IRDAI quantum of Rs. 2,566.26 Crores. has also laid down the regulatory framework for 14.8 Industry Statistics registration of insurance companies, maintenance of solvency margin, investments and financial reporting (a) Life insurance industry requirements. The post liberalization period has been witness 14.7 New entrants in the insurance industry to tremendous growth in the insurance industry, more particularly in the life segment. The first year premium is Since its opening up in 2000 the number of a measure of new business procured/underwritten by the participants in the Insurance industry has gone up from life insurers. During 2014-15 this was Rs.113327.95 seven insurers (including the Life Insurance Corporation croreas compared to Rs.120325.22 crore in 2013-14 of India [LIC], four public-sector general insurers, one registering a decline of 5.82% against a growth of 12.08% specialized insurer, and the General Insurance during the year 2013-14. In terms of linked and non-linked Corporation as the national re-insurer) in 2000 to fifty three insurers as on 31st March 2015 operating in the life, non- business during the year 2014-15, 11.71 per cent of the life, and re-insurance segments (including specialized first year premium was underwritten in the linked segment insurers, namely Export Credit Guarantee Corporation while 88.29 per cent of the business was in non-linked and Agricultural Insurance Company [AIC]). Five of the segment as against 7.16 per cent and 92.84 per cent in general insurance companies, namely Star Health and the previous year. The total premium, which includes first Alliance Insurance Company, Apollo Munich Health year premium and renewal premium during 2014-15, was Insurance Company, Max BUPA Health Insurance Rs.328101.14 crore as compared to Rs.314301.66 crore Company, Religare Health Insurance Company and Cigna in 2013-14 registering a growth of 4.39 per cent against TTK Health Insurance Company function as standalone a growth of 9.44 per cent in the previous year. In terms of health insurance companies. Of the twenty three private linked and non-linked business during the year 2014-15, 348Department of Financial Services V 12.68 per cent of the total premium was procured in the given below: linked segment while 87.32 per cent of the business was a) Pradhan Mantri Jeevan Jyoti Bima Yojana in non-linked segment as against 11.95 per cent and (PMJJBY) – The PMJJBY is available to people 88.05 in the previous year. in the age group of 18 to 50 years having a bank Of the new business premium underwritten, LIC account who give their consent to join / enable accounted for Rs.78507.72 crore (69.27 per cent market auto-debit. Aadhar would be the primary KYC for share) and the private insurers accounted for the bank account. The life cover of Rs. 2 lakhs Rs.34820.23 crore (30.73 percent market share). The shall be for the one year period stretching from market share of these insurers was 75.47 per cent and 1st June to 31st May and will be renewable. Risk 24.53 per cent respectively during the year 2013-14. coverage under this scheme is for Rs. 2 Lakh in case of death of the insured, due to any reason. 14.9 Non-life insurance industry The premium is Rs. 330 per annum which is to be auto-debited in one instalment from the The non-life insurers had underwritten gross subscriber’s bank account as per the option given direct premium of Rs.87151 crore in 2014-15, as against by him on or before 31st May of each annual Rs.79934 crore in 2013-14 registering a growth of 9.03 coverage period under the scheme. The scheme per cent. This premium includes the business done is being offered by Life Insurance Corporation outside India by the public sector insurers. The net and all other life insurers who are willing to offer premium for the financial year 2014-15 was Rs.71295 the product on similar terms with necessary crore as against Rs.64887 crore in the year 2013-14. approvals and tie up with banks for this purpose. The private sector (including standalone health The last date for enrolment under PMJJBY insurers) had underwritten Rs.38033 crore as against (without self- certificate of good health) is further Rs.34225 crore in the previous year achieving a growth extended from 30.11.2015 to 31.05.2016). rate of 11.13 per cent whereas the public sector (including By 15th February, 2016, Cumulative Gross specialized insurers) had underwritten premium of enrolment reported by Banks is over 2.94 Crore Rs.49119 crore as against Rs.45679 crore in the previous under PMJJBY.16786 Claims were registered year with a growth rate of 7.53 per cent. The market share under PMJJBY till 15th February, 2016 out of of the public and private insurers stood at 56.36 and 43.64 which 13427 have been disbursed. per cent during the year 2014-15 as against 57.17 and 42.83 respectively in 2013-14. b) Pradhan Mantri Suraksha Bima Yojana (PMSBY) –The Scheme is available to people in the age One of the benefits of opening up of the group 18 to 70 years with a bank account who insurance sector has been the extension of health cover give their consent to join / enable auto-debit on to a wider cross-section of the society. Health premium or before 31st May for the coverage period 1st accounted for 26.06 per cent (Rs.22715 crore) of the June to 31st May on an annual renewal basis. gross direct premium of the non-life insurance industry Aadhar would be the primary KYC for the bank (including standalone health insurance companies) in account. The risk coverage under the scheme is 2014-15 as against 24.61 per cent (Rs.19670 crore) in Rs. 2 lakh for accidental death or total permanent 2013-14. Health insurance is one of the fastest growing disability and Rs. 1 lakh for partial permanent segments in the non-life insurance industry in recent disability. The premium of Rs. 12 per annum is years, and has grown 15.48 per cent during 2014-15. to be deducted from the account holder’s bank At the time of opening up of the sector in 2000-01, the account through ‘auto-debit’ facility in one health premium was Rs.519 crore, viz., 5.29 per cent of instalment. The scheme is being offered by Public the gross premium underwritten. It has grown to Sector General Insurance Companies and all Rs.22,715 in 2014-15 which includes standalone health other non-life insurers who are willing to offer the insurers premium of Rs. 2,943 crore in 2014-15 as product on similar terms with necessary against Rs.2,245 crore in 2013-14. approvals and tie up with banks for this purpose. 14.10 From Jan Dhan to Jan Suraksha The last date for enrolment under PMSBY has also been extended beyond 30.11.2015. It is For creating a universal social security system pertinent that there is no requirement of any for all Indians, especially the poor and the under-privileged certificate of good health in PMSBY. the Hon’ble Prime Minister launched three Social Security Schemes in the Insurance and Pension sectors; namely By 15th February, 2016, Cumulative Gross the Pradhan Mantri Suraksha Bima Yojna, the Pradhan enrolment reported by Banks is over 9.34 Crore Mantri Jeevan Jyoti Bima Yojana and the Atal Pension under PMSBY. 3346 Claims were registered Yojana on pan India basis on the 9th of May, 2015. Salient under PMSBY till 15th February, 2016 out of features of the two schemes related to Insurance are which 1903 have been disbursed. 349Annual Report 2015-2016 14.11 Penetration and Density 14.14 Micro insurance The potential and performance of the insurance In order to facilitate penetration of micro sector is being generally assessed in the context of two insurance to the lower income segments of population, parameters, viz., Insurance Penetration and Insurance IRDAI has formulated the micro insurance regulations. Density. Insurance penetration is defined as the ratio of Micro Insurance Regulations, 2005 provide a platform premium underwritten in a given year to the gross to distribute insurance products, which are affordable domestic product (GDP). Insurance density is defined to the rural and urban poor and to enable micro as the ratio of premium underwritten in a given year to insurance to be an integral part of the country’s wider the total population (measured in US$ for convenience insurance system. The main thrust of micro insurance of comparison). regulations is protection of low income people with affordable insurance products to help them cope with The insurance penetration was 2.32 (Life 1.77 and recover from common risks with standardized and Non-life 0.55) in the year 2000 when the sector was popular insurance products adhering to certain levels opened up for private sector, and has increased to 3.3 in of cover, premium and benefit standards. These 2014 (Life 2.6 and Non- life 0.7). Insurance Penetration regulations have allowed Non Government in some of the emerging economies in Asia, i.e., Malaysia, Organizations (NGOs) and Self Help Groups (SHGs) to Thailand and China during the same period i.e.2014 was act as agents to insurance companies in marketing the 4.80, 5.8 and 3.2 respectively. The insurance density in micro insurance products and have also allowed both India was US$9.9 in 2000 which has increased to US$55 life and non-life insurers to promote combi-micro in 2014 (Life 44 and Non-life 11). The comparative figures insurance products. The Authority having reviewed the for Malaysia, Thailand and China during the same period Micro Insurance Regulations, 2005 comprehensively, i.e. 2014 were US$524, US$323 and US$235 notified Micro Insurance Regulations,2015. It has the respectively. following important improvements. 14.12 Investments of the Insurance sector  Expanding the definition of who can be a Micro As on 31st March, 2015 the accumulated total Insurance Agent to include Business investments held by the insurance sector was Correspondents of scheduled commercial Rs.24,08,236 crore. During 2014-15, Assets under banks ,District Cooperative Banks, Regional Management (AUM) had grown by 14.83 per cent. Life Rural Banks, Urban co-operative banks insurers continue to contribute a major share with around ,Primary Agricultural Cooperative Societies 93.33 per cent of the total investments held by the ,Other Cooperative Societies, RBI regulated insurance industry. Similarly, public sector insurers NBFC – MFIs. continue to contribute a major share of 78.48 per cent in total investments though investments by private sector  In addition to One Life Insurance Company and insurers are growing at a fast pace in recent years. one General Insurance Company, a Micro Insurance Agent may work with Agriculture 14.13 Rural and Social Sector Business Insurance Company of India Ltd and with one standalone health insurance company. The life insurers underwrote 65.34 lakh policies in the rural sector, viz., 25.3 per cent of the new individual  Enhancement of maximum cover to Rs 2 lakh to policies underwritten (258.74 lakh policies) by them in qualify as MI in Life and Health Insurance, Rs 1 2014-15 . LIC underwrote 25.65 per cent of the new lac in dwelling, livestock, crop insurance. individual policies and private insurers underwrote 23.9 per cent of the new individual policies in the rural sector.  Other Product related improvements : LIC covered 205.96 lakh lives and private insurers Guaranteed Surrender Value (after 3 years) if at covered 97.40 lakh lives in the social sector. least one Yearly Premium is paid, Allowing the flexible premium payment options, Allowing All the non-life insurers underwrote gross direct remittances of premiums in advance, Allotment premium of Rs.9602 crore in the rural sector, viz., 11.97 of lapsed policies of terminated agents to another per cent of the gross direct premium underwritten MI agent. (Rs.80,243 crore) by them in 2014-15. Public sector insurers underwrote 11.96 per cent of their gross direct  Market Conduct related prescriptions: M I Agents premium and private insurers underwrote 11.98 per cent shall issue acknowledgements on collection of in the rural sector. In the social sector 2,832.62 lakh lives premiums and Insurers are accountable to were covered during the year 2014-15. The contribution premium collections of MI Agents, Agents of private sector was 262.03 lakh lives and public sector responsibility for Claim intimation, settlement. accounted for 2570.53 lakh lives. The insurance companies are by and large fulfilling the obligations in  Making available Policy documents in the the rural and social sectors. languages recognised under constitution. 350Department of Financial Services V Micro insurance regulations issued by the IRDAI insurance business as ‘effecting of contracts which have provided the necessary impetus in promoting provide for sickness benefits or medical, surgical or insurance to the lower income segments including rural hospital expense benefits, whether in-patient or out- sector. There were 20,855 micro insurance agents patient travel cover and personal accident cover’. It is operating in the micro insurance sector at the end of 2014- an important milestone to recognize health insurance 15 (as against 20,057 agents in 2013-14). In micro- as a standalone class as it will lead to more number of insurance-life, the individual new business premium in players likely to enter this field as standalone health the year was Rs.28.89 crore through 8.16 lakh policies insurers. (as against Rs.95.65 crore under 27.67 lakh policies in The number of health insurance products 2013-14 ) and the group business amounted to Rs.315.60 available to the public has gone up significantly from crore premium for 231.28 lakh lives (as against Rs.141.77 around 10 in the Year 2000 to around 500 in the Year crore for 131.79 lakh lives in 2013-14 ). Individual death 2014-15. claims paid under micro insurance portfolio for the year 2014-15 amounted to Rs. 21.58 crore on 13,138 policies Various Insurers have introduced products which (as against Rs. 23.63 crore on 15,610 policies in cover persons with HIV, diabetes, cancer, mental illness, 2013-14) and in the group category Rs. 426.62 crore infertility etc. Products providing daily hospital cash, was paid as death claims on 1,33,268 lives (as against ambulatory services, tele-advice, non-allopathic Rs.447.98 crore on 1,42,117 lives in 2013-14). medicines, outpatient consultation, diagnostic services, policies exclusively for sr. citizens, etc have been 14.15 Recent Initiatives taken by IRDA introduced. Recent initiatives taken by the Authority in the 14.17 Data Standards insurance sector include: The Authority had embarked on the task of  IRDA Notice on Spurious Phone Calls made compiling the data standards to facilitate easy interfacing mandatory in all Insurance Advertisements. of IT systems of multiple entities in the insurance sector.  Guidelines on Company Trade-logo Agreements The data standards bring about common definitions for issued. the information exchange. This helps in easy interfacing of multiple systems both within and outside an  Relaxation in claim processing of Lender organization. Borrower group schemes. In order to support the Insurance Repository  In order to further improve the penetration of System, standard Extensible Mark up Language (XML) insurance by encouraging young entrepreneurs schema consisting of the field definitions, field properties and also industry veterans to take up insurance and message content was earlier shared for exchange distribution, the Authority has notified IRDA of data between multiple players for the Life Segment. (Licensing of Insurance Marketing Firm) Similarly, schemas have been finalized to support the Regulations, 2014. This will encourage small needs of ‘Health’ and ‘Motor’ lines of business. These players to distribute products of multiple insurers schemas would support the ‘individual lines’ of Non-life as specified in the regulations. insurance transactions in the Insurance Repository 14.16 Health Insurance System. Schemas would soon be devised to support other lines of Non-life business so as to enable the complete Standardized common definitions have been on-boarding of the Non-life insurers onto the Insurance released in health insurance sector and comprehensive Repository system. regulations for health insurance business have been put in place. The regulations are aimed to protect the interests 14.18 Policyholder’s Protection of policyholders by seeking to bring about greater A very important aspect of policyholder’s transparency, simplicity and standardization. These protection is consumer education and effective grievance include building of a data repository, standardization of redressal. A number of initiatives have been taken by formats, definition of pre-existing disease, extending the IRDAI in this direction. health insurance enrollment to cover senior citizens up to the age of at least 65 years, providing for separate  Inexpensive, effective and speedy mechanisms grievance redressal mechanism for senior citizens and for disposal of grievances set up. insurance portability.  Specific timeframes and turnaround times (TATs) During 2014-15 the Government has notified specified. Insurance Laws (Amendment) Act, 2015 wherein health  Integrated Grievance Management System insurance was classified as one of the classes of the (IGMS). business. Section (6) (c) of the Act defined health 351Annual Report 2015-2016  Created Central Repository of industry-wide 14.20 Anti-Money Laundering (AML)/Combating the complaints of policyholders. Financing of Terrorism (CFT)  Grievance Call Centre for registering complaints The Anti-Money Laundering (AML) and over phone. Combating the Financing of Terrorism (CFT) (AML/CFT) guidelines for the insurance sector were issued in March,  Consumer education through multi-pronged 2006. The sector entered into the ninth year of an effective approach under the Bima Bemisaal banner. AML/CFT regime in 2014-15. IRDAI works closely with  Newspaper advertisements, Publication of various departments of the Ministry/agencies in the Handbooks. implementation of AML/CFT guidelines and has initiated various measures towards effective accomplishment of  Television/Radio advertisements, Animation films the AML/CFT guidelines in the insurance sector.  Consumer Education Website 14.21 Life Insurance Corporation of India (LIC) (www.policyholder.gov.in). LIC of India was incorporated on 1st September,  Conducting Annual Seminars. 1956 by amalgamating 243 Companies by the Act of  Sponsoring seminars by consumer bodies. Parliament called Insurance Act, 1956. LIC is governed by the Insurance Act 1938, LIC Act 1956, LIC Regulations 14.19 Consumer education initiatives during the FY 1959 and Insurance Regulatory and Development 2014-15 under the Bima Bemisaal brand Authority Act 1999. As on 31st March, 2015, LIC has 8  All insurers were asked to have a Board approved Zonal Offices, 113 Divisional Offices, 2048 Branch Insurance Awareness Policy for taking up Offices, 73 Customer Zones, 1381 Satellite Offices and consumer awareness and education initiatives 1245 Mini Offices in India. on their own. The Corporation has Branch Offices in Fiji,  In order to impart basic insurance knowledge to Mauritius and United Kingdom. It also operates through citizens, published handbooks on ‘Introduction Joint Venture (JV) Companies in overseas Insurance to Insurance’, ‘A Handbook on Insurance’, Market, namely Life Insurance Corporation (International) ‘Employment opportunities in insurance sector’ B.S.C.(c), registered in Manama (Bahrain); Kenindia and ‘Crop Insurance’. Assurance Company Ltd. registered in Nairobi; Life Insurance Corporation (Nepal) Ltd. registered in  Launched E-Books on ‘Introduction to Insurance’, ‘A Handbook on Insurance’, ‘Employment Kathmandu; Life Insurance Corporation (Lanka) Ltd. opportunities in insurance sector’ targeting registered in Colombo and Saudi Indian Company for Co- students. operative Insurance (SICCI) registered in Riyadh. A Wholly owned subsidiary, Life Insurance Corporation  Undertook electronic and print media campaigns (Singapore) Pte Ltd. has been established on 30.4.2012. for educating the general public against spurious Among the above two joint ventures (JVs), Kenindia callers and promoting the habit of right insurance Assurance Co. Ltd., Nairobi, Kenya and Saudi Indian buying amongst the masses. Company for Co-operative Insurance (SICCI), Riyadh,  Launched Facebook & Youtube pages to Kingdom of Saudi Arabia are composite companies leverage the platform provided by the social transacting life and non-life business; and two JVs, LIC media for spreading insurance awareness. (Nepal) Ltd. & SICCI are listed on their respective Stock Exchanges.  Carried out insurance awareness campaign through Delhi Metro Trains, Delhi Metro Stations 14.21.1 Performance during the year 2014-15 and outside the Delhi Metro Stations.  LIC of India procured Rs 78,302.64 crore First  Focused Insurance Awareness Campaign was Year Premium (FYP) under 2,01,71,063 policies launched in the State of Tripura in collaboration and registered 13.62 % de-growth in FYP & a with Government of Tripura. de-growth of 41.55 % in Number of Policies as at 31st March 2015. The market share of the  Conducted 2nd Pan India Insurance Quiz Corporation in FYP is 69.21% (LY- 75.33%) and Competition for the insurance industry. 77.85% (LY- 84.44%) in Number of Policies.  Playing an active role as a member of Core Committee of National Centre for Financial  The Total Premium Income of the Corporation Education, an institution, jointly formed by all for the financial year (FY) ending 31st March, financial sector regulators in India for 2015 is Rs 2,39,482.77 crore. Gross investments implementation of the National Strategy for of the Corporation for FY 2014-15 stand at Rs Financial Education. 3,10,735.61crore and the total investments as 352Department of Financial Services V on 31/3/2015 stand at 19,46,249.32 crore. The far as such disputes relate to claims, disputes regarding Conservation Ratio has improved to more than premium paid or payable in terms of the policy and non- 92% as against 90.76% and Overall Expenses issuance of insurance documents. Ombudsman Offices Ratio has decreased to 15.65% from 17.08% are located at Ahmedabad, Bengaluru, Bhopal, last year (ratio recalculated from 15.61% to Bhubaneswar, Chandigarh, Chennai, Delhi, Guwahati, 17.08% due to regrouping of ST and education Hyderabad, Jaipur, Kochi, Kolkata, Lucknow, Mumbai, cess on ST in expenses). Patna and Pune.  The Corporation recruited 1,61,591 Agents For ensuring quick redressal of customer during the fiscal 2014-15 and the number of grievances the Corporation has introduced Customer Agents as on 31.03.2015 stood at 11,63,604. friendly Integrated Complaint Management System through our Customer Portal (website) which is http://  During the fiscal 2014-15, the First Insurance of www.licindia.in, where a registered policy holder can the Corporation stood at 89.70 % in Number of directly register complaint/ grievance and track its status. Policies. Similarly, Rural Insurance of the Customers can also contact at e-mail id Corporation was 25.65 % in Number of Policies. co_crmgrv@licindia.com for redressal of any grievances.  LIC has settled 222.17 lakh Maturity Claims 14.22 Social Security Schemes having paid Rs. 79,365.71 crore. Similarly 10.15 lakh Death claims have been settled for an a) Aam Admi Bima Yojana (AABY) amount of Rs. 11092.45 crore. The percentage The Aam Admi Bima Yojana (AABY) has come of claims outstanding to claims payable as on into effect from 01.01.2013, as per Ministry of Finance 31/3/2015 stands at 0.23%. letter F.No.I-3011/6/2009 by merger of erstwhile 14.21.2 Financial Inclusion Janashree Bima Yojana (JBY) & Aam Admi Bima Yojana (AABY). The Scheme provides life insurance protection Sustained and conscious efforts are made to to the rural & urban persons living below poverty line or carry the message of Life Insurance to the rural areas, marginally above poverty line. Persons between age 18 especially the backward and remote areas. As part of years and 59 years and who are the members of the Financial Inclusion, during 2013-14 LIC has opened 1245 identified 48 occupational groups are eligible to be Mini Offices in unrepresented towns of India having a covered under this scheme. The Scheme provides population of 10,000 or more. Mini Offices entertain policy coverage of Rs.30,000/- on natural death. On death/ total service requests from customers and collect premium. permanent disability due to accident, the benefit is 14.21.3 Grievance Redressal Rs.75,000/-. On partial permanent disability due to accident, the benefit is Rs.37,500/-. The premium for the The Corporation has Grievance Redressal scheme is Rs.200/- per member per annum, 50 per cent Officers at Branch/ Divisional/ Zonal/ Central Office to of which is contributed by the member and/ or State Govt. redress grievances of customers. Their names and time and/or Nodal Agency and remaining 50 per cent is drawn of availability are published in newspapers with wide as subsidy from the Social Security Fund constituted by circulation from time to time and also available on our Government of India & maintained by LIC of India. website. The spirit of customer relations and customer Scholarship as a free add-on benefit is also provided to care has been ingrained in our complaint redressal a maximum of two children of the beneficiary studying system with emphasis on placing customer oriented between 9th to 12th standard (including ITI courses) @ personnel at all touch points. IT enabled support system Rs.100/- per month for each child payable half yearly on has been operationalized to reduce manual interventions 1st July and 1st January, each year. and minimize grievances. As on 31st March 2015, about 4.32 Cr. people The claimants not satisfied with the decision of have been covered under AABY Scheme and about 32 repudiation of death claim have the option to appeal for lakh lives were covered under Social Security Group review to Zonal Office Claims Dispute Redressal Schemes (SSGS - closed). During the financial year Committee or Central Office Claims Dispute Redressal (2014-15), 30,41,921 scholarships were disbursed to Committee. A retired District Judge / High Court Judge beneficiaries for an amount of Rs. 274 Cr. & an amount is a member of each of the Claims Dispute Redressal of Rs 414.43 Cr. has been paid towards total number of Committees. For redressal of grievances, the policyholder 1,27,803 claims under all Social Security Schemes. / claimant can approach Insurance Ombudsman. The Ombudsman functions within a set geographical b) PMJDY Scheme jurisdiction and can entertain disputes relating to partial / Pradhan Mantri Jan Dhan Yojana was launched total repudiation of claims, delay in settlement of claims, on 28.08.2014. Under this scheme Bank accounts were any dispute on the legal construction of the policies in so opened and benefits were given to the account holders. 353Annual Report 2015-2016 One of the benefits is providing the Life Insurance cover December 2015. As on 31st December, 2015, 351 Banks of Rs 30,000/- for the Natural Death only through Life are registered as APY – Service Providers which include Insurance Corporation of India. There is also a benefit of Public Sector Banks, Private Banks, Foreign Banks, Accident Insurance Cover of Rs 1 lac, provided by Regional Rural Banks, District Commercial Banks, Government through General Insurance Companies. Schedule Commercial Banks, Urban Commercial Banks and Department of Post. Fresh / new registration under For availing the Life insurance coverage of Rs NPS-Lite/ Swavalamban scheme have been discontinued 30000/- * on death arising out of any cause under this from 1st April 2015. scheme, a Person should be between 18 to 59 years of age and he/ she should have been enrolled under PMJDY d) National Pension System between 15.08.2014 to 31.01.2015 & should be holder of a valid and in force RuPay Card. As on 31st March With a view to providing adequate retirement 2015, 60 lac members were covered under PMJDY and income on cost-effective basis, the National Pension during the financial year (2014-15), an amount of Rs 21 System (NPS) has been introduced by the Government lacs has been paid towards total number of 70 claims. of India. It has been made mandatory for all new recruits to the Government (except armed forces) with effect from (* Subject to Govt guidelines and eligibility criteria 1st January, 2004 and has also been rolled out for all provided) citizens with effect from 1st May, 2009 on a voluntary basis. The features of the NPS design are self-sustainability, c) Atal Pension Yojana portability and scalability. Based on individual choice, it The Government of India in order to provide is envisaged as a low-cost and efficient pension system retirement saving product at an affordable cost in the backed by sound regulation. As a pure “defined unorganised sector has been making an effort to offer contribution” product, returns would be totally market such product from time to time. In this regard, driven. The NPS provides various investment options and Swavalamban Scheme was launched in 2010-11. choices to individuals to switch over from one option to However, as there was no clarity of benefits after another or from one fund manager to another, subject to retirement under the Swavalamban Scheme, the certain regulatory restriction. coverage under this scheme was inadequate. To address The NPS architecture is transparent and web- this concern, the Government announced a new initiative enabled. It allows a subscriber to monitor his/her called Atal Pension Yojana (APY) in his Budget Speech investments and returns. The facility for seamless for 2015-16 and which was formally launched by portability is designed to enable subscribers to maintain Honorable Prime Minster of India on 9th May 2015. The a single pension account throughout the saving period. APY is primarily focused on all citizens in the unorganised sector, who join the National Pension System (NPS) PFRDA set up as a regulatory body for the administered by the Pension Fund Regulatory and pension sector, is engaged in consolidating the initiatives Development Authority (PFRDA). However, all citizens taken so far regarding the full NPS architecture and of the country in the eligible category may join the scheme. expanding the reach of NPS distribution network. The Under the APY, the subscribers would receive the process of making NPS available to all citizens entailed guaranteed minimum pension of Rs.1000 per month or the appointment of NPS intermediaries, including Rs.2000 per month or Rs.3000 per month or Rs.4000 institutional entities as Points of Presence (POPs) that per month or Rs.5000 per month, at the age of 60 year, will serve as pension account opening and collection depending on their contributions, which itself would be centres, a Centralised Recordkeeping Agency (CRA) and based on the age of joining the APY. The minimum age Pension Fund Managers (PFMs) to manage the pension of joining APY is 18 years and maximum age is 40 years. wealth of the investors. Therefore, minimum period of contribution by any subscriber under APY would be 20 years or more. The As on 31st December 2015, 27 State APY has been implemented from 1st June, 2015. The Governments have also notified NPS for their employees. Central Government co-contributes 50% of the total Till 31st December 2015, a total of 112.82 lakh members/ contribution subject to a maximum of Rs. 1000 per subscribers (including APY) have been enrolled under annum, to each eligible subscriber’s account, for a period the NPS. Assets Under Management which includes the of 5 years, i.e., from Financial Year 2015-16 to 2019-20, returns on the corpus, under the NPS have witnessed an who join the APY between the period 1st June, 2015 and increase from Rs. 80,855 crore as on 31 March 2015 to 31st March 2016 and who are not members of any Rs. 1,07,802 crore as on 31 December 2015, registering statutory social security scheme and who are not income an increase of 33.33 per cent. The number of Subscribers, tax payers. The APY has a total of about 18 lakh Corpus and Assets Under Management (AUM) under subscribers and corpus of Rs. 262 crore as on 31st NPS are given as under: 354Department of Financial Services V wherever necessary. CRA shall continue sending Corpus AUM Number of the physical PRAN card as per the approved Employer/Sector (Rs. In (Rs. In subscribers process. crore) crore) Central  With a view to optimize the cost of operations, in 1601200 34044 44752 Government case of the Atal Pension Yojana, physical PRAN State card is not provided to the subscriber. The 2841248 43751 51913 Government acknowledgement slip generated at the time of registration itself serves as the PRAN card as it Private Sector 561678 8077 8887 contains all the necessary details required by the NPS-Lite 4464268 1712 1988 subscriber. Atal Pension Yojana 1813547 260 262  The National Pension System Trust has been set-up and constituted by Pension Fund Total 11,281,941 87,844 107,802 Regulatory and Development Authority (PFRDA) for taking care of the assets and funds under PFRDA as a statutory body has notified NPS in the interest of the beneficiaries Regulations for governing the intermediaries under NPS (subscribers). The National Pension System involved in collection and remittance of subscribers’ Trust (NPS Trust) works as the operational arm contribution, record keeping, fund management and other for the NPS and APY subscriber. Its website related functions keeping in view the subscribers’ interest. (www.npstrust.org.in) provides all relevant These Regulations spell out the eligibility norms for information to the stakeholders and the registration, functions, roles and responsibilities of the subscribers. intermediaries, the provisions for inspection, audit and Representation of SC, STs, OBCs ,PWDs and grievance handling and the process for adjudication. New Position of Action Taken Notes: Representation of SCs, initiatives like electronic Permanent Retirement Account STs, and OBCs and persons with disabilities (PWDs) in Number (e-PRAN) library for faster registration, on-line the attached and subordinate office (PFRDA) is at facilities for joining, exit/ withdrawal, change in Annexure VI (a) & VI (b). subscribers’ details have been introduced. 14.23 General Insurance Corporation of India Following developments have taken place during (GIC Re) the year (up to December 2015): General Insurance Corporation of India (GIC Re)  A facility has been provided to all NPS was approved as ‘Indian Reinsurer’ on 3rd November, subscribers to modify/ update their contact details 2000. As an Indian Reinsurer, GIC Re has been giving by directly login on CRA system. reinsurance support to non-life as well as Life Insurance  The processing of all withdrawal claims on online companies in India. GIC Re also manages Marine Hull mode has been made mandatory from April 01, Pool, Indian Terrorism Insurance Pool and Motor Third 2015. NSDL e-Governance Services Ltd, the Party Declined Risk Insurance Pool for Commercial Central Recordkeeping Agency for NPS is vehicles on behalf of Indian Insurance industry. GIC Re provides required support through guidance and aims at optimizing the retention within the country and training of the nodal offices (PAO’s/DDO/ POP’s/ developing adequate reinsurance capacity. The Aggregators etc), so that the advantages of the Corporation continued to offer maximum support for all web enabled withdrawal/exit functionality can be classes of business to the Indian Insurers. Property and used effectively to the full extent. This Engineering Risks are covered up to functionality has been made available through Rs. 2000 Crore. Per location capacity of the Terrorism Pool the website of CRA and can be initiated at any managed by GIC Re is Rs. 1500 Crore. GIC Re continues levels of the functionaries. to lead the reinsurance programme of the Companies in SAARC nations, African countries and Middle East. In the  The Statement of Transaction (SOT) can be process, it has emerged as a preferred Reinsurer in the viewed and downloaded by NPS-Lite Collection Afro-Asian region. GIC Re is expanding its global presence Centre (NLCC) financial year-wise. The e-PRAN and now plans to enter the Latin American market having card can be generated /downloaded by NLCCs. got the ‘Eventual Reinsurer’ status in Brazil. GIC Re has The NLCCs can also print the e-PRAN card. The been selected as a Manager for Nat Cat Pool promoted e-PRAN card is similar to a physical PRAN card by the Federation of Afro-Asian Insurers and Reinsurers and will display the same details alongwith (FAIR). photograph and signature of the subscriber. However, physical PRAN card cannot be GIC Re is financially strong as reflected by its replaced by e-PRAN card. The subscribers will high grade ratings from credit rating agencies. It is rated be required to produce the physical PRAN card A- (Excellent) by A M Best and AAA (In) by CARE. GIC 355Annual Report 2015-2016 Re is also the 4th largest aviation reinsurer globally. During Gross Direct Premium Income (GDPI) in 2014-15 was the year 2014-15, Gross premium of GIC Re was Rs.11,282.64 Crores against GDPI of Rs.10,260.99 Rs. 15,183.97 crore as against Rs. 14,680.12 crore in Crores in 2013-14 showing a growth of 9.96% against a the previous year. The Net premium of the GIC Re was growth of 11.60% in the previous year. The Incurred Rs.13,857.01 crore as against Rs.13,212.62 crore and Claim Ratio for the year 2014-15 is 77.54% as against net earned premium was Rs.13,558.25 crore as against 81.18% in 2013-14. Profit After Tax was Rs.967.64 Rs.13,608.81 crore in the previous year. The net incurred Crores in 2014-15 against Rs. 823.32 Crores in claims were at Rs.11891.77 crore i.e., 87.7 % of net 2013-14. It has 1,995 offices including micro offices earned premium as against Rs. 12,107.29 crore i.e. and 14,757 employees. Foreign Operations: National 89.0% of net earned premium in the previous year. GIC has foreign operations in Nepal and operations are Re’s Profit after tax amounted to Rs. 2,693.72 crore as conducted through 8 offices there. on 31st March 2015 compared to Profit after tax of Rs. 14.24.2 The New India Assurance Company Limited 2,253.17 crore as on 31 st March 2014. The total assets and net worth as on 31st March 2015 was Rs.78,093.32 Incorporated in 1919, with Headquarters at crore and Rs. 13,001.61 crore, respectively. The present Mumbai has a Paid-up Share Capital of Rs.200 crore. paid up capital of the Corporation is Rs. 430.00 crore. Gross Direct Premium Income (GDPI) in 2014-15 is Rs. 15,480.36 Crores against GDPI of Rs. GIC Re has international presence through its 13,727.61Crores in 2013-14 showing a growth of 12.77 Branch offices in Dubai, London and Kuala Lumpur and % against a growth of 15.62 % in the previous year. The a Representative office in Moscow. GIC Re also has a Incurred claim Ratio for the year 2014-15 is 84.02% as wholly owned foreign subsidiary at South Africa named against 83.52% in 2013-14. Profit after Tax is Rs. 1,431.23 as GIC Re South Africa Ltd. Apart from reinsurance Crores in 2014-15 against Rs.1,088.96 Crores in business, GIC Re continues to participate in the share 2013-14. It has 2221 offices and 18,240 employees. capital of Kenindia Assurance Company Ltd., Kenya; India Foreign Operations: NIA has a presence in 28 countries. International Insurance Pvt. Ltd., Singapore; Asian It has now expanded to Guyana and has representative Reinsurance Corporation, Thailand; East Africa office in Myanmar. It has taken a license to opeate in Reinsurance Company Ltd., Kenya. ‘GIC Bhutan Re DIFC, Dubai through a Regional Office. Limited’, the maiden reinsurance company in Bhutan, a 14.24.3 The Oriental Insurance Company Limited joint Venture of GIC Re and local promoter was operationalized from December 2013. Incorporated in 1947 with headquarters at New Delhi and has a Paid-up Share Capital of Rs.100 crores. 14.24 Public Sector General Insurance Companies Gross Direct Premium Income (GDPI) in 2014-15 was The General insurance industry was nationalized Rs. 7,561.93 Crores against GDPI of Rs. 7,282.54Crores in 1972 and 107 insurers were grouped and amalgamated in 2013-14 showing a growth of 3.84% in 2014-15 as against a growth of 8.09% in 2013-14. The Incurred Claim into four Companies – National Insurance Co. Ltd., The Ratio for the year 2014-15 is 81.89% against 85.84% in New India Assurance Co. Ltd., The Oriental Insurance 2013-14.Profit After Tax was Rs. 392.10 Crores in 2014- Co. Ltd. and 15 as against Rs. 460.29 Crores in 2013-14. It has 1915 United India Insurance Co. Ltd. The four entities offices with 14574 employees. Foreign Operations: were set up as subsidiaries of General Insurance ‘Oriental’ has its foreign operations in Nepal, Dubai & Corporation of India (GIC) which also played the role of Kuwait with.”B++”(very good) rating from AM Best & Re-insurer. With the opening up of the Insurance Sector, Co.(Europe) and given the highest rating by CRISIL and ICRA also. Insurance Regulatory and Development Authority (IRDA) came into existence in 1999 and GIC became the Indian 14.24.4 United India Insurance Company Limited, Reinsurer and the four Public Sector General Insurance Companies were delinked from GIC. Incorporated in 1938 with headquarters at Chennai has a Paid-up Share Capital of Rs.150 Crores. Gross Direct The Public Sector General Insurance Companies Premium Income (GDPI) in 2014-15 was Rs.10691.73 provide coverage for insurance other than Life such as, Crores against GDPI of Rs.9,708.93Crores in 2013-14 Fire, Marine (Cargo & Hull), Motor, Workmen’s showing a growth of 10.12 % in 2014-15 against 4.78 % in Compensation, Personal Accident, Aviation, Engineering, 2013-14. The Incurred Claim Ratio for the year 2014-15 Liability, Health, etc. The Public Sector General Insurance is 84.42% against 82.56% in 2013-14.Profit after Tax was Companies witnessed a growth rate of 9.85% during Rs.300.57 Crores in 2014-15 against Rs.527.60 Crores in 2014-15 collecting a total GDPI (Gross Domestic 2013-14. ‘United India’ has 1992 offices with 16366 Premium Income) of Rs.45,016.66 Crores against employees. Rated “iAAA” by ICRA. Rs.40,980.06 Crores during 2013-14. Motor and Health With respect to Grievance Redressal, Public Insurance have been the major drivers of growth. The Sector General Insurance Companies redressed 98.21% Company-wise details are as follows: Grievances (16831 out of a total of 17137) and had only 306 outstanding Grievances in 2014-15. ‘National’ 14.24.1 National Insurance Company Limited redressed 97.44% out of a total of 5317 and outstanding Incorporated in 1906 with Headquarters at grievances were 139. ‘New India’ redressed 97% out of Kolkata has a Paid-up Share Capital of Rs.100 crore. a total of 3330 Grievances and 101 grievances were outstanding. ‘Oriental’ redressed 99.55% grievances out 356Department of Financial Services V of a total of 2459 and 11 grievances were outstanding. The Company continued to implement “National ‘United India’ redressed 99% of grievances out of a total Agricultural Insurance Scheme” (NAIS) during the year of 6031 and 55 grievances were outstanding. after Government of India (GoI) permitted it to be 14.24.5 AGRICULTURE INSURANCE COMPANY OF implemented on the request of many State Governments. INDIA LIMITED National Crop Insurance Programme (NCIP) launched ‘AGRICULTURE INSURANCE COMPANY OF during the previous year was also implemented with its INDIA LIMITED’ (AIC) was incorporated to cater to the three component Schemes namely Modified National insurance needs of the persons engaged in agriculture Agricultural Insurance Scheme (MNAIS), Weather Based and allied activities in India under the Companies Act, Crop Insurance Schemes (WBCIS) and Coconut Palm 1956 on 20th December 2002. The Authorized Share Capital of the Company is Rs. 1500 crore. The Paid-up Insurance Schemes (CPIS) by the Company during the Equity Share Capital of the Company of Rs. 200 crore year in many States. The company also has other percentage-wise is held by following Government commercial crop insurance products. Corporation / Bank / Company:- a) National Agricultural Insurance Scheme 1 General Insurance Corporation of 35.00% (NAIS) India 2 National Bank for Agriculture And 30.00% National Agricultural Insurance Scheme (NAIS) Rural Development (NABARD) was implemented in many States both during Kharif-2014 3 National Insurance Company 8.75% and Rabi 2014-15. The Scheme was implemented in 216 Limited and its nominee Districts across 10 States during Kharif-2014 season and 4 The New India Assurance 8.75% in 349 Districts across 16 States during Rabi 2014-15. Company Limited and its nominee Since introduction in Rabi 1999-2000 to Rabi 5 The Oriental Insurance Company 8.75% 2014-15, NAIS covered about 24.02 crore farmers Limited covering 35.76 crore hectare area for sum insured of Rs. 6 United India Insurance Company 8.75% 386285.73 crore against premium of Rs. 11563.26 crore. Limited Claims amounting Rs. 38432.40 crore became payable TOTAL 100.00% benefitting 6.62 crore farmers. The year wise coverage under NAIS is as follows: National Agricultural Insurance Scheme (NAIS) No. of farmers (Rs in Lakhs) S. Area Insured Year insured Gross Claims No. (lakh ha) Sum Insured Premium Reported 1 2011-12 16793860 233.86 3477104 97203 11551 2 2012-13 16791031 243.85 4290914 132644 28470 3 2013-14 9746756 142.32 2900503 97772 15640 4 2014-15 3973542 64.72 1255176 29752 9355 Modified National Agricultural Insurance 25% of likely claim as advance, for providing immediate Scheme (MNAIS) relief to farmers in case of severe calamities; Threshold Yield based on average yield of past seven years, National Crop Insurance Programme (NCIP) excluding up to two years of declared natural calamities; introduced with effect from 1stNovember, 2013 has minimum indemnity level of 80 percent is available MNAIS as a component which is an improved version (against 60 percent in NAIS); and premium rates are of NAIS. The Scheme before being incorporated in NCIP actuarial supported by up-front subsidy in premium, was implemented separately as MNAIS on pilot basis which ranges from 25 percent to 75 percent, equally from Rabi 2010-11 to Kharif 2013. The modified version shared by Centre and States. Insurer is responsible for has many improvements viz. Insurance Unit for major the claims liabilities. The Company has been crops are village panchayat or other equivalent unit; in implementing MNAIS since its inception. During Kharif case of prevented / failed sowing claims up to 25 percent 2014, the MNAIS was implemented by the Company in of the sum insured is payable, post-harvest losses 133 Districts across 13 States and during Rabi 2014-15 caused by cyclonic rains are assessed at farm level for as part of NCIP in 87 Districts across 9 States. the crop harvested and left in ‘cut & spread’ condition up to a period of 2 weeks; individual farm level Since introduction as pilot in Rabi 2010-11 to assessment of losses in case of localized calamities, Rabi 2014-15, under MNAIS, AIC covered about 1.10 like hailstorm and landslide; on-account payment up to crore farmers insuring 1.25 crore hectare area for sum 357Annual Report 2015-2016 insured of Rs. 27845.53 crore against premium of Rs. The year-wise coverage under MNAIS is as 2603.92 crore. Claims amounting to Rs. 2281.15 crore follows: became payable benefitting more than 29.67 lakh farmers. Modified National Agricultural Insurance Scheme (MNAIS) No. of (Rs in Lakhs) S. Area Insured Year farmers Gross Claims No. insured (lakh ha) Sum Insured Premium Reported 1 2011-12 1035159 11.62 275930 26636 14945 2 2012-13 2411431 24.19 600831 69050 65864 3 2013-14 3592966 38.75 877232 90594 110428 4 2014-15 3685027 47.53 969479 69711 38700 b) Weather Based Crop Insurance Scheme pulse crops besides insuring perennial crops like Apple, (WBCIS) Citrus crops, Grapes, Mango, Pomegranate, Cashew nut, Oil palm and spices etc. During Kharif 2014, the Scheme Apart from the above, two yield guarantee was implemented by the Company, in 102 Districts across insurance Schemes, the Government of India had 14 States and during Rabi 2014-15 as part of NCIP in 88 introduced another Pilot namely, Pilot Weather Based Districts across 11 States. Crop Insurance Scheme (WBCIS) with effect from Kharif 2007, which became full-fledged Scheme as a component Since introduction as pilot in Kharif 2007 to Rabi 2014-15, under WBCIS, AIC covered about 3.45 crore of NCIP with its introduction. The Scheme operates on farmers insuring 4.63 crore hectare area for sum insured an actuarial basis with premium subsidy contribution from of Rs. 63494.68 crore against premium of Rs. 6021.72 Union and State Governments. The Company has since crore. Claims amounting Rs. 4784.10 crore became implemented the Scheme in various States during all payable benefitting around 2.17 crore farmers. previous Kharif and Rabi seasons starting Kharif 2007. WBCIS is a parametric insurance product designed to In order to increase the penetration of crop provide insurance protection to the cultivator against insurance AIC is using of the four GIPSA Companies to adverse weather incidence during the cultivation period, sell crop insurance. This Co-Insurance arrangement such as deficit & excess rainfall, frost, heat (temperature), between AIC and the four GIPSA Companies covers only relative humidity, wind speed etc., which are deemed to Non-Loanee farmers under WBCIS and MNAIS in adversely impact the crop yield. addition to some In House products. As per the Co-Insurance agreement and MOU, Crops and ‘Reference Unit Areas (RUA)’ are business will be co-shared in the ratio of 51:49 with AIC notified before the commencement of the season by the and the four GIPSA Companies. Also, the Company shall State Government. Each RUA is linked to a Reference be solely and exclusively responsible for claim Weather Station (RWS), on the basis of which pay-out / assessment and payment so as to ensure smooth claims are processed. The pay-outs are made on the implementation of the Schemes. Claim paid are also co basis of adverse variations in the current season’s shared between AIC and GIPSA Companies. weather parameters as measured at Reference Weather Station (RWS). Claim under WBCIS is area based and The year wise coverage under WBCIS is as automatic. The Company insured many food, oilseed and follows: Weather Based Crop Insurance Scheme (WBCIS) No. of (Rs in Lakhs) S. Area Insured Year farmers Sum Gross Claims No. (lakh ha) insured Insured Premium Reported 1 2011-12 8433659 114.45 1503759 139456 93598 2 2012-13 7254298 99.69 1370632 130210 132491 3 2013-14 6288237 82.15 1202856 118431 96494 4 2014-15 2780434 30.12 658451 68054 67678 c) Coconut Palm Insurance Scheme (CPIS) in the country. Dwarf and Hybrid coconut palms in age range of 4 to 60 year and Tall variety coconut palms in AIC in collaboration with Coconut Board designed age range of 7 to 60 year are eligible for coverage. On Scheme for coconut i.e. Coconut Palm Insurance premium, 50% subsidy is paid by Coconut Development Scheme (CPIS), which is now a component of NCIP. The Board (CDB) and 25% by concerned participating Scheme is available to all Coconut growing States/UTs concerned State Government and balance 25% of the 358Department of Financial Services V premium is paid by farmer/grower. In case, the State policies are also available with a premium rebate of 7.5% government does not agree to bear 25% share of and 12.5% respectively. premium, farmers / growers are required to pay 50% of premium. Besides annual policy, 2 years and 3 years The year-wise coverage under CPIS is as follows: Coconut Palm Insurance Scheme (CPIS) (Rs in Lakhs) No. of farmers S.No. Year Gross Claims insured Sum Insured Premium Reported 3 2011-12 8454 5510.95 29.77 92.47 4 2012-13 12279 7843.90 40.57 76.80 5 2013-14 13970 8694.60 70.87 95.49 6 2014-15 2845 2500.56 17.60 30.75 d) Other Commercial Products through post is sent to those complainants who have lodged their grievance through post. Apart from the above, the Company continued to implement various in-house products, including Rainfall The Banks and Insurance Companies have Insurance, Varsha Bima, Coffee Rainfall Insurance grievance redressal mechanism indicated on their Scheme, Pulp Wood, Bio fuel Insurance and Rubber respective websites for information and usage by the Plantation Insurance. Besides this the Company, also customers. The first level of grievance redressal is Branch implemented some products on experimental basis. Manager in Banks and Insurance Companies followed by Zonal Managers and then General Manager (Customer 15. Disposal of Public Grievances Care) in Head Office. The grievances concerning private Timely redressal of public grievances relating to banks and private insurance companies are resolved banking and insurance Sectors is an important tool through Reserve Bank of India (RBI) and Insurance towards upgrading the quality of customer service in this Regulatory and Development Authority (IRDA) very crucial segment of financial sector. Department of respectively. The PSBs have also established Administrative Reforms and Public Grievances (DARPG) Ombudsman for settlement of grievances. The has established CPGRAMS (Centralised Public unresolved grievances are placed below the Customer Grievance Redressal and Monitoring System), (an online Service Committee of the Board chaired by CMD/CEO web-based system), to resolve public grievances. to review and settlement of grievances / complaints. In the Department of Financial Services, a large The RBI has set up 15 Banking Ombudsmen number of grievances/complaints concerning Banking across the country under Banking Ombudsmen Scheme and Insurance Sectors are received directly from citizens, 2006. Similarly, there are 17 Insurance Ombudsmen set both online and by post. The postal grievances are also up by IRDA. In case the petitioners are not satisfied with digitized and processed through CPGRAMS for its the kind of disposal, they can file their complaints with onward transmission to the designated Nodal Officers the Banking Ombudsmen concerned for the settlement i.e. Deputy General Manager/General Manager (DGM/ of their grievance through mediation and passing of GM) of concerned Public Sector Banks/Public Sector awards within a period of 30 days. Insurance Companies (PSBs/PSICs) for its redressal within a maximum time limit of 60 days. Action taken As per CPGRAMS database the details of reports are uploaded on the system and a scanned copy receipt, disposal and pending grievances during the of the reply is provided to the complainant as (pdf) file period 01.01.2015 to 08.12.2015 in respect of banking that can be viewed by the complainant online. Reply and insurance sectors are as follows: Sector Brought Received Disposed Pending % of Less than More than Forward as on Disposal 60 days 60 days 08.12.2015 as on old old 08.12.2015 Banking 1395 50273 46247 5421 93 4605 816 Insurance 269 6447 5820 896 92 567 329 Total 1664 56720 52067 6317 5172 1145 16. Audit Paras A Summary of Audit observations made available by the Office of C&AG pertaining to DFS is at Annexure – VII. 359G B Department of Financial Services V 361 G BG B Annual Report 2015-2016 362 G BG B Department of Financial Services V 363 G BG B Annual Report 2015-2016 364 G BG B Department of Financial Services V 365 G BG B Annual Report 2015-2016 366 G BG B Department of Financial Services V 367 G BG B Annual Report 2015-2016 368 G BG B Department of Financial Services V 369 G BG B Annual Report 2015-2016 370 G BG B Department of Financial Services V 371 G BG B Annual Report 2015-2016 372 G BG B Department of Financial Services V 373 G BG B Annual Report 2015-2016 374 G BG B Department of Financial Services V 375 G BG B Annual Report 2015-2016 376 G BG B Department of Financial Services V Annexure-V Bank wise Education Loan Data Progress for March, 2015 ( Amt in Cr) Name of Bank No. of Accounts Amount O/S Allahabad Bank 49015 1404.61 Andhra Bank 56036 1820.54 Bank of Baroda 87835 2097.69 Bank of India 135429 2918 Bank of Maharashtra 29516 702.82 Canara Bank 274867 5524.00 Central Bank of India 126692 3442.63 Corporation Bank 53254 1359.72 Dena Bank 18640 420.41 Indian Bank 173748 3287.55 Indian Overseas Bank 231457 3958.31 Oriental Bank of Commerce 47292 1314.47 Punjab National Bank 157314 4397.29 Punjab & Sind Bank 6717 240.34 Syndicate Bank 114362 2745.28 UCO Bank 55496 1318.73 Union Bank 98811 2481.28 United Bank of India 20221 488.72 Vijaya Bank 42297 903 State Bank of India 568815 15464 State Bank of Bikaner & Jaipur 21398 507.67 State Bank of Mysore 29334 656.88 State Bank of Patiala 16082 499.86 State Bank of Hyderabad 49203 1306.01 State Bank of Travancore 90955 2275.60 IDBI Bank Ltd 13636 428.12 Bhartiya Mahila Bank 164 2.99 TOTAL 2568586 61966.52 377 G BG B Annual Report 2015-2016 378 G BG B Department of Financial Services V 379 G BG B Annual Report 2015-2016 380 G BG B Department of Financial Services V 381 G BG B Annual Report 2015-2016 382 G B ...dtnoCG B Department of Financial Services V 383 G BG B For Public Contact Purposes: Ministry of Finance Department of Economic Affairs North Block, New Delhi – 110001 Phone : 23095120, 23092453 Website: http://www.finmin.nic.in/the _ministry/dept_eco_affairs/index.asp Department of Expenditure North Block, New Delhi – 110001 Phone : 23095661, 23095613 Website: http://www.finmin.nic.in/the _ministry/dept_expenditure/index.asp Department of Revenue North Block, New Delhi – 110001 Phone : 23095384, 23095385 Website: http://www.finmin.nic.in/the_ministry/dept_revenue/index.html Department of Disinvestment Block 11 & 14, CGO Complex, Lodhi Road, New Delhi – 110003 Phone : 24368528, 24368523, 24368044 Website: http://www.divest.nic.in Department of Financial Services Jeevan Deep Building, Parliament Street, New Delhi – 110001 Phone : 23748721, 23748734 Website: http://www.finmin.nic.in/the-_ministry/dept_fin_services/fin_services.asp vi G B