Annual Report 2017-18

ANNUAL REPORT 2017-18 MINISTRY OF FINANCEContents Page No. INTRODUCTION v CHAPTER I Department of Economic Affairs 1. Economic Division 1 2. Budget Division 3 3. Financial Markets Division 7 4. Financial Stability and Development Council (FSDC) 15 5. Financial Sector Legislative Reforms Commission (FSLRC) Division 17 6. Infrastructure Policy & Finance (IPF) Division 20 7. Investment Division 26 8. Multilateral Institutions Division 28 9. International Economic Relations Division 33 10. Aid Accounts & Audit Division 36 11. Administration Division 38 12. Bilateral Cooperation Division 40 13. Integrated Finance Division 46 14. Directorate of Currency 46 15. Audit Observations 50 Annexures 51 Organisation Chart 58 CHAPTER II Department of Expenditure 1. Establishment Division 59 2. Public Finance-States Division 61 i3. Public Finance Central Division 63 4. Public Procurement Division 64 5. Official Language 64 6. Integrated Finance Unit (IFU) 65 7. Chief Advisor Cost 66 8. National Institute of Financial Management (NIFM) 67 9. Controller General of Accounts 68 10. Chief Controller of Accounts 75 11. Central Pension Accounting Office 80 Annexures 82 Organisation Chart 84 CHAPTER III Department of Revenue 1. Organization and Functions 85 2. Revenue Headquarters Administration 86 3. Narcotics Control (NC) Division 89 4. State Taxes 99 5. Adjudicating Authority under Prevention of money Laundering Act, 2002 102 6. The Appellate Tribunal under Department of Revenue 102 7. The Appellate Tribunal under SAFEMA 102 8. Setup for Forfeiture of Illegally Acquired Property 102 9. Central Board of Excise and Customs 104 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 146 14. Income Tax Settlement Commission 198 15. Authority for advance Ruling (Income Tax) 199 ii16. Central Economic Intelligence Bureau (CEIB) 200 17. Directorate of Enforcement 204 18. Financial Intelligence Unit, India (FIU-IND) 210 19. Integrated Financial Unit (IFU) 211 20. National Committee for Promotion of Social and Economic Welfare 212 21. National Institute of Public Finance and Policy (NIPFP) 213 22. Implementation of Official Language Policy 213 23. Implementation of the Right to Information Act, 2005 214 24. Swachh Bharat Campaign 216 Annexures - I - Representation of SCs/STs/OBCs 217 Annexure - II - Representation of PWDs Annexure - III - Summary of Audit Reports / Paras Organisation Chart 244 CHAPTER IV Department of Investment and Public Asset Management 1. Functions 245 2. Vision 245 3. Mission 245 4. Organisational Structure 245 5. Policy and Approach to Disinvestment of CPSEs 245 6. Policy Initiatives and Performance 246 7. Initiatives Undertaken for Persons with Disabilities, Schedule Castes, Scheduled Tribes and Other Backward Classes 249 8. Initiatives Relating to Gender Budgeting and Empowerment of Woman 249 9. Official Language Policy 249 10. E-Governance 249 iii11. Redressal of Public Grievances 250 12. Vigilance Machinery 250 13. Right to Information Act, 2005 250 14. Initiatives for Good Goverance 250 15. Audit Paras/Objections 250 16. Integrated Finance Unit 250 Annexures 251 Organisation Chart 252 CHAPTER V Department of Financial Services 1. Work Allocation among Sections 253 2. Banking 257 3. Financial Inclusion 258 4. Flagship Schemes of DFS for Financial Inclusion 259 5. Aadhaar-based authentication and digital payment as facilitators 264 6. Agriculture Credit 265 7. Priority Sector Lending and Lending to Women and Minorities 268 8. Industrial Finance 270 9. Insurance Sector 272 10. Pension Sector 277 11. Legislative 278 12. Miscellaneous 278 Annexures 281 Organisation Chart 284 ivIntroduction Introduction The Ministry comprises of the five Departments (WPI), increased to 1.7 per cent in 2016-17 from (-) 3.7 namely:— per cent in 2015-16 and 1.2 per cent in 2014-15. It  Department of Economic Affairs averaged 2.9 per cent in 2017-18 (Apr-Jan) and stood at 2.8 per cent in January 2018 (Table 1).  Department of Expenditure  Department of Revenue Table 1: Inflation in WPI and CPI (in per cent)  Department of Investment and Public Asset CPI-C WPI Management All All Groups CFPI Food  Department of Financial Services Commodities Base 2012=100 2011-12=100 1. Department of Economic Affairs Weight 100 39.1 100 24.4 Economic Growth 2014-15 5.9 6.4 1.2 4.3 As per the second advance estimates (2nd AE) of 2015-16 4.9 4.9 -3.7 1.2 national income released by Central Statistics Office, the 2016-17 4.5 4.2 1.7 5.8 growth of GDP at constant (2011-12) market prices for the year 2017-18 is estimated to be 6.6 per cent, which 2017-18 3.4 1.6 2.9 2.3 is lower as compared to the growth of 7.1 per cent in (Apr-Jan)(P) 2016-17. The growth of gross value added (GVA) at Apr-17 3.0 0.6 3.9 2.4 constant (2011-12) basic prices is estimated to be 6.4 May-17 2.2 -1.0 2.3 0.1 per cent in 2017-18 (2nd AE). The growth in GVA was 7.1 per cent in 2016-17. At the sectoral level, GVA in Jun-17 1.5 -2.1 0.9 -1.0 agriculture and allied sector, industry sector and services Jul-17 2.4 -0.4 1.9 2.2 sector have been estimated to grow by 3.0 per cent, 4.8 per cent, and 8.3 per cent respectively in 2017-18. The Aug-17 3.3 1.5 3.2 4.5 estimated growth of GDP at constant prices for first, Sep-17 3.3 1.2 3.1 2.1 second and third quarters of 2017-18 was 5.7 per cent, Oct-17 3.6 1.9 3.7 3.2 6.5 per cent and 7.2 per cent respectively. Nov-17 4.9 4.4 4.0 4.4 On the expenditure side, the share of total final consumption expenditure is estimated to be 70.2 per Dec-17 5.2 5.0 3.6 2.9 cent in 2017-18, as compared to 69.9 per cent in Jan-18 5.1 4.7 2.8 1.7 2016-17. The share of fixed investment is estimated to Source: Office of Economic Adviser, DIPP and be 28.5 per cent in 2017-18 same as in 2016-17. Exports Central Statistics Office. and imports of goods and non-factor services are expected to grow at the rate of 4.4 per cent and 9.9 per Note: WPI inflation for last two months and CPI-NS cent respectively in 2017-18. inflation for last one month are provisional. Savings rate (measured as a share of gross savings to GDP) was 30 per cent in 2016-17 and 31.3 The Government has fixed the inflation target of 4 per cent in 2015-16. Investment rate (measured as a per cent with tolerance level of +/- 2 per cent for the period share of gross capital formation to GDP) was 30.6 per beginning from August 5, 2016 to March 31, 2021. cent in 2016-17 and 32.3 per cent in 2015-16. The Government monitors the price situation on a Prices regular basis as controlling inflation is a key priority and Consumer Price Index (Combined) (CPI-C) inflation has taken a number of measures to control inflation (Base 2012=100) for 2016-17 declined to 4.5 per cent especially food inflation. The steps taken, inter alia, include, from 4.9 per cent in 2015-16 and 5.9 per cent in (i) A scheme titled Price Stabilization Fund (PSF) is being 2014-15. It averaged 3.4 per cent in 2017-18 (Apr-Jan) implemented to control price volatility of agricultural and stood at 5.1 per cent in January 2018. Food inflation commodities like pulses, onions, etc.; (ii) A dynamic buffer based on Consumer Food Price Index (CFPI) declined stock of pulses of up to 20 lakh tonnes has been built to 4.2 per cent in 2016-17 from 4.9 per cent in 2015-16 under the Price Stabilization Fund (PSF) Scheme through and 6.4 per cent in 2014-15. It averaged 1.6 per cent in both domestic procurement as well as imports.; (iii) Higher 2017-18 (Apr-Jan) and was 4.7 per cent in January 2018. Minimum Support Prices (MSP) for pulses has been Inflation measured in terms of Wholesale Price Index announced so as to incentivize production and thereby vAnnual Report 2017-2018 enhance availably of food items which may help moderate Welfare on 22.09.2017, production of kharif foodgrains prices; (iv) States/UTs have been advised to impose stock during 2017-18 is estimated at 134.7 million tonnes limit on Onions. States were requested to indicate their compared to 138.5 million tonnes in 2016-17. requirement of onions so that import of requisite quantity may be undertaken to improve availability and help Production of Major Kharif Crops (in Million moderate the prevailing high prices; (v) Government Tonnes) imposed 20% duty on export of sugar for promoting S. Crops 2016-17 2017-18 availability and moderating price rise; and (vi) Export of No. (4th AE) (First AE) edible oils was allowed only in branded consumer packs of up to 5 kg. with a minimum export price of USD 900 per 1 Rice 96.4 94.5 MT. With a view to incentivizing domestic production this Total Coarse restriction has been removed on oil except for palm oil, 2 32.7 31.5 Cereals mustard oil and sunflower oil. 3 Total Pulses 9.4 8.7 Agriculture and Food Management Total Kharif 4 138.5 134.7 During the South West Monsoon Season (June- Foodgrains September) of 2017, the country as a whole received rainfall 5 Total Oilseeds 23.4 20.7 of 95 per cent of its long period average (LPA). Seasonal 6 Sugarcane 306.7 337.7 rainfall over Northwest India, Central India, South Peninsula and Northeast (NE) India were recorded at 90%, 94%, 7 Cotton@ 33.1 32.3 100% and 96% of respective LPAs. South West Monsoon @ Production in million bales of 170 kg each (June to September 2017) rainfall for the country as a whole Source: Directorate of Economics & Statistics, and the four broad geographical regions is given in the Department of Agriculture, Cooperation & Farmers table below: Welfare. Region Actual Long Period Actual % The total area sown under Rabi crops as on 19th (mm) Average (LPA) of LPA January 2018 stands at 617.79 lakh hectares as (mm) compared to 620.99 lakh hectare during the same All India 841.3 887.5 95 period in 2017. Northwest 552.9 615.0 90 Agricultural credit in India has been growing India consistently at above 17 percent annually during the Central India 918.8 975.5 94 last decade. During 2017-18, banks have disbursed East & 1386.4 1438.3 96 Rs.5.88 lakh crore (provisional as on 30th September, India 2017) against the annual agriculture credit target of `10 lakh crore for 2017-18. South 717.6 716.1 100 Peninsula Industry Source: India Meteorological Department. The performance of the industrial sectors based on the Index of Industrial Production (IIP) comprising mining, Out of the total 36 meteorological subdivisions, 25 manufacturing and electricity shows a fair growth in subdivisions constituting 65% of the total area of the industrial production during April-December 2017-18. country received normal seasonal rainfall, 5 According to the monthly data on the IIP released by the subdivisions received excess rainfall (18% of the total Central Statistics Office (CSO) under the Ministry of area), and 6 subdivisions (17% of the total area) Statistics and Programme Implementation (MOSPI), the received deficient seasonal rainfall. Index of Industrial Production (IIP) based industrial growth during April-December 2017-18, was 3.7 per cent as As per the Fourth Advance Estimates released by compared to 5.1 per cent growth achieved during the Department of Agriculture, Cooperation and Farmers corresponding period of the previous year. During Welfare, the country achieved a record production of December - 2017, the IIP registered 7.1 per cent growth. food grains estimated at 275.7 million tonnes in 2016- Out of the three broad sectors, electricity sector has growth 17, which is higher by 10.7 million tonnes than the of 5.1 per cent during April-December 2017-18 against 6.3 previous record production of food grains achieved in per cent growth achieved during this period of the previous 2013-14. As per the First Advance Estimates (AE) year. Mining and manufacturing sectors grew at 2.8 per released by Ministry of Agriculture and Farmers cent and 3.8 per cent respectively against the viIntroduction corresponding figures of 4.3 percent and 5.0 per cent of Production growth (per cent) in Core the previous year. The growth of different used based Infrastructure-Supportive Industries industrial group is given below. April-December Industry Growth of IIP in April-November, 2017-18 (in Per 2016-17 2017-18 cent) (Base 2011-12=100) Coal 1.5 1.3 Crude oil -3.2 -0.4 Growth of IIP in April-December, 2017-18 (in Per cent) (Base 2011-12=100) Natural Gas -3.3 4.0 April-December Refinery Products 6.7 3.9 Industry Group Weight Fertilizers 1.2 -0.6 2016-17 2017-18 Steel 10.9 6.7 Mining 14.4 4.3 2.8 Cement 2.8 2.7 Manufacturing 77.6 5.0 3.8 Electricity 6.4 4.9 Electricity 8.0 6.3 5.1 Overall growth 5.3 4.0 Growth by use-based industrial group So urce: Office of the Economic Adviser, DIPP, Primary Goods 34.0 5.4 3.5 Ministry of Commerce & Industry. Capital Goods 8.2 3.4 3.8 In major infrastructure sectors, power generation, Intermediate Goods 17.2 3.4 1.7 highways construction, railways freight earnings, cargo & passengers handled at both terminals (international Infrastructure/Const and domestic) of the airport and cargo handled at major ruction 12.3 5.1 4.3 ports were higher during April-November of 2017-18 as Goods compared to the same period of previous year. Consumer Durables 12.8 4.8 -1.2 Goods Services Consumer  As per the First Advance Estimate of National Non- 15.3 7.5 10.3 Income 2017-18, released by CSO on January durables Goods 5, 2018, the services sector with a share of 55.2 General Index 100.0 5.1 3.7 per cent in India's gross value added continued to be the key driver of India's economic growth Source: CSO contributing almost 72.5 per cent of gross value added growth in 2017-18. While the growth of As may be seen from the table, except consumer service sector as a whole is expected to be at durables goods, other used based goods sector has 8.3 per cent in 2017-18, the growth in services attained positive growth. The consumer non-durables exports was 16.2 per cent in H1 of 2017-18. goods registered phenomenal higher growth.  As per RBI's BoP data, India's services exports at US$ 163.1 billion grew by 5.7 per cent in Infrastructure Sector 2016-17 compared to negative growth of (-) 2.4 per cent in 2015-16. During April-September of The index for eight core industries comprising coal, 2017-18, it recorded a robust growth of 16.2 per crude oil, natural gas, refinery products, fertilizers, steel, cent with a turnaround in some major sectors cement and electricity with a combined weight of nearly like travel and software services. 40 per cent in the IIP grew by 4.0 per cent during April- Notwithstanding domestic software companies December, 2017-18 as compared to growth rate of 5.3 facing pricing pressure on traditional services per cent achieved during the corresponding period of and a challenging global business environment, 2016-17. During April-December, 2017-18, six out of the software services exports, accounting for about eight core sectors namely coal, natural gas, refinery 40.4 per cent of total services, increased by 2.3 products, steel, cement and electricity sectors achieved per cent. India's services imports also exhibited positive growth and remaining two sectors i.e, crude oil a much higher growth of 17.4 per cent in April- September 2017-18 as payments on transport and fertilizers sectors have recorded negative growth. sector (contributing 15 per cent share) The Eight Core Industries recorded 4.0 per cent growth increased by 15.0 per cent. Owing to higher during December - 2017. The growth of eight core growth of 16.2 per cent in exports of services, infrastructure supportive industries is given below. net services receipts rose by 14.6 per cent during viiAnnual Report 2017-2018 April-September of 2017-18 as against a decline healthy living and to accelerate the efforts to achieve of 10 per cent in the corresponding period of 2016- universal sanitation coverage, the Prime Minister of India 17. Net surplus in services financed about 49 per launched the Swachh Bharat Mission on 2nd October, cent of India's merchandise deficit in 2017-18 H1 2014. As per baseline survey conducted by Ministry of and cushioned the current account deficit. Drinking Water & Sanitation, the number of persons defecating in open rural areas, which were 55 crore in Social Infrastructure October, 2014, declined to 25 crore in January, 2018, at The all India expenditure on social services by the a much faster pace compared to the trend observed Centre and States as a percentage of GDP has remained before 2014. stagnant in the range of 6 per cent during 2012-13 to Several studies have pointed out that there are health 2014-15. However, there has been a marginal decline and economic gains from being ODF (Open Defecation to 5.8 per cent in 2015-16 which has further moved up Free) areas. According to the World Bank estimates, the to 6.6 per cent in 2017-18 (BE). The expenditure on lack of sanitation facilities costs India over 6 per cent of education and health as a percentage of GDP is at 2.7 GDP. Further, UNICEF has estimated that a household in per cent and 1.4 per cent respectively in 2017-18 (BE). an ODF village in rural India saves Rs. 50,000 ($800) every Status on Education year. As per the RTE indicators which reflect the Labour Reforms effectiveness of universalization of education, majority The employment sector in India poses great of the States have shown improvement in total enrolment challenge in terms of its structure which is dominated by of children between 2010 and 2016. Further, majority of informal workers, high levels of under employment, skill the States have registered increase in the percentage shortages and labour markets with rigid labour laws and of schools which complied with the PTR (Pupil Teacher institutions. In this context, the Government has Ratio) norms. undertaken the exercise of rationalization of the 38 The Gender Parity Index (GPI) is a critical indicator Labour Acts by clubbing them into 4 labour codes viz on discrimination against girls in access to education. Code on Wages, Code on Industrial Relations, Code on Government interventions through programmes like Beti Social Security and Code on Occupational Safety, Health Bachao Beti Padhao, has improved levels of enrolment of and Working conditions. girls substantially at the primary and secondary levels as Government has taken several measures to reflected in improvement in GPI. However, in higher generate employment across different sectors. The education, gender disparities in enrolment still prevail, for technology enabled transformative initiatives such as which various programmes are being implemented by the Shram Suvidha Portal, Ease of Compliance to maintain Government to improve female enrolment in higher Registers under various Labour Laws/Rules are some education. of the steps towards employment generation. The Status on Health Universal Account Number have been effected in order to reduce the complexity in compliance and to bring The report 'India: Health of the Nation's States', 2017 transparency and accountability for better enforcement has for the first time provided comprehensive set of findings of the labour laws. Further, the government initiated on the distribution of diseases and risk factors across all the National Career Service portal (www.ncs.gov.in) by States of the country from 1990 to 2016. Though linking all employment exchanges of the country to malnutrition still remains the biggest risk factor (14.6 facilitate online registration and posting of jobs for job- percent) for disease burden in the country, its share as a seekers and to provide employment related services like factor in disease burden has dropped in India substantially career counselling, vocational guidance, information on since 1990. Of the total disease burden in India, 33 per skill development courses and internships. cent was due to communicable, maternal, neonatal, and nutritional diseases (termed infectious and associated External Sector diseases) in 2016. The contribution of non-communicable India's Merchandise Trade developments during diseases has increased from 30 per cent of the total 2017-18 disease burden in 1990 to 55 per cent in 2016 and of injuries from 9 per cent to 12 per cent. Around 5 per cent  The World Economic Outlook update January of health loss is attributable to unsafe water, poor 2018 has pointed out that global economy is sanitation, and lack of handwashing which is being gathering pace and is expected to accelerate addressed successfully by the government through the from 3.2 per cent in 2016 to 3.7 percent in 2017 Swachh Bharat Mission (SBM). and 3.9 percent in 2018 which reflects an upward revision of the earlier projections by the Swachh Bharat Mission-Gramin IMF. World trade volume is projected to increase Taking cognizance of the role of cleanliness in from 2.5 percent in 2016 to 4.7 percent in 2017 viiiIntroduction and 4.6 percent in 2018. The value of India's  Net invisibles receipts were higher at US$ 52.5 merchandise exports (customs basis) increased billion in 2017-18 (April-September) as by 5.2 per cent to US$ 275.9 billion in 2016-17. compared to US$ 45.6 billion in 2016-17 (April- In 2017-18 (April-January), exports increased September) mainly due to increase in both net by 11.8 per cent (US$ 247.9 billion vis-à-vis US$ services and net private transfers. Net services 221.8 billion in the corresponding period of the receipts increased by 14.6 per cent on a y-o-y previous year). basis during H1 of 2017-18.  Imports had also increased by 0.9 per cent in Major Components of Balance of Payments (US$ 2016-17. Imports registered a growth of 22.2 billions) per cent from the US$ 310.2 billion (April- Items 2016-17 2017-18 January) 2016-17 to US$ 379.1 billion in (April- (April- (April- January) 2017-18. Imports of petroleum, oil and lubricants (POL) increased by 26.4 per cent in September) September) 2017-18 (April-January) to US$ 87.8 billion from PR P US$ 59.7 billion in the corresponding period of the previous year, mainly due to the rise in Exports 134.0 149.2 international crude oil prices. Non-POL imports Imports 183.5 224.0 for 2017-18 (April-January) increased by 21.0 Trade Balance -49.4 -74.8 per cent to US$ 291.2 billion from US$ 240.7 billion in the corresponding period of the Net Invisible 45.6 52.5 previous year. Current Account -3.9 -22.2  In 2016-17, trade deficit declined by 8.6 per cent Deficit (CAD) to US$ 108.5 billion. However, during 2017-18 External Assistance 0.6 0.7 (April-January) trade deficit increased to US$ (Net) 131.2 billion from US$ 88.3 billion in the Commercial Borrowing -3.4 -1.5 corresponding period of the previous year. (Net) Balance of Payments (BoP) Developments during FDI (Net) 20.9 19.6 2017-18 Portfolio 8.2 14.5  India's balance of payments situation which has short Term Debt -0.5 4.6 been benign and comfortable since 2013-14, NRI Deposits 3.5 1.9 continued to be so in the first half of 2017-18, Errors & Omissions -0.7 1.0 despite some rise in current account deficit Capital Account (CAD) in the first quarter, with a relatively lower CAD in the second quarter. India's CAD stood (Including errors & 20.0 42.1 at US$ 7.2 billion (1.2 per cent of GDP) in Q2 of omission) 2017-18 narrowing sharply from US$ 15.0 billion Overall Balance 15.5 20.9 (2.5 per cent of GDP) in the preceding quarter. Change in reserves (- On a cumulative basis, India's CAD increased indicates increase; + -15.5 -20.9 from US$ 3.8 billion (0.4 per cent of GDP) in H1 indicates decrease) (on of 2016 -17 to US$ 22.2 billion (1.8 per cent of BoP basis) GDP) in H1 of 2017-18. Source RBI. P : Provisional. PR = Pre Revised.  During, 2017-18 (April-September), merchandise exports (on BOP basis) increased  During 2017-18 (April-September) net FDI inflows by 11.3 per cent to US$ 149.2 billion from a level declined to US$ 19.6 billion from US$ 20.9 billion of US$ 134.0 billion in 2016-17 (April- during the corresponding period of the previous September). While imports increased by 22.1 year. Net portfolio inflows were increased by 78.0 per cent to US$ 224.0 billion in 2017-18 (April- per cent to US$ 14.5 billion in 2017-18 (April- September) as compared to US$ 183.5 billion September) as against US$ 8.2 billion in in the corresponding period of the previous year. corresponding period of previous year. Net capital This led to higher trade deficit of US$ 74.8 billion flows remaining higher than the CAD, there was in 2017-18 (April-September) as compared to net accretion to India's foreign exchange reserves US$ 49.4 billion in the corresponding period of (on BoP Basis) to the tune of US$ 20.9 billion in the previous year. ixAnnual Report 2017-2018 H1 of 2017-18 as compared to the US$ 15.5 billion borrowings. At end-September 2017, long-term in H1 of 2016-17. external debt was US$ 403.0 billion, witnessing an increase of 5.0 per cent over the end-March Foreign Exchange Reserves 2017 level of US$ 383.8 billion. Long-term  The level of foreign exchange reserves particularly external debt accounted for 81.3 per cent of total foreign currency assets is largely the outcome external debt at end-September 2017 vis-à-vis of Reserve Bank of India's intervention in the 81.4 per cent at end-March 2017. foreign exchange market to stabilize the rupee  The share of US dollar denominated debt value. Foreign Exchange Reserves stood at US$ continued to be the highest in external debt 421.7 billion as on 16th February, 2018 as against stock at 50.0 per cent at end-September 2017, US$ 370.0 billion at end-March 2017. The current followed by Indian rupee (35.7 per cent), SDR position is at a comfortable level to cushion the (5.7 per cent), Japanese yen (4.4 per cent) and exchange rate volatility from any international Euro (3.2 per cent). Government (Sovereign) macroeconomic uncertainty. external debt at end-September 2017 stood at Exchange Rate of Rupee US$ 107.3 billion. The share of Government  During 2017-18 (April-January), the average external debt in India's total external debt was monthly exchange rate of rupee (RBI’s 21.6 per cent at end-September 2017 compared reference rate) varied between `65.08 per US to 19.4 per cent at end-March 2017. dollar in October 2017 and `63.64 per US dollar  India's foreign exchange reserves provided a in January 2018. The rupee appreciated by 3.5 cover of 80.7 per cent to the external debt stock per cent from `65.88 per US dollar in March at end-September 2017 (78.4 per cent at end- 2017 to `63.64 per US dollar in January 2018. March 2017). The ratio of short-term external In the monthy of January 2018, rupee debt to foreign exchange reserves was 23.2 per appreciated against US dollar by 0.9 per cent cent at end-September 2017, as compared to and depreciated against Pound sterling, Euro 23.8 per cent at end-March 2017. The ratio of and Japanese Yen by 1.8 per cent, 1.9 per cent concessional debt to total external debt was at and 0.7 per cent over the previous month of 9.1 per cent at end-September 2017 from 9.3 December 2017. per cent at end-March 2017. Monthly Average Exchange of Rupee per  The external debt management policy, followed Foreign Currency by the Government of India emphasizes US Pound Japanese monitoring of long and short-term debt, raising Euro Dollar Sterling Yen** sovereign loans on concessional terms with longer maturities, regulating external Apr-17 64.51 81.54 69.17 58.57 commercial borrowings through various May-17 64.42 83.21 71.23 57.45 restrictions and rationalizing interest rates on Non Resident Indian (NRI) Deposits. As a result, Jun-17 64.44 82.51 72.41 58.14 external debt has remained within manageable Jul-17 64.46 83.75 74.20 57.34 limits. Aug-17 63.97 83.04 75.60 58.22 Monetary Developments During 2017-18 Sep-17 64.44 85.73 76.79 58.22 During 2017-18 (till January), monetary policy Oct-17 65.08 85.92 76.48 57.64 remained steady with only one policy rate cut in August. Nov-17 64.86 85.77 76.12 57.49 It kept the rates unchanged in both October and the latest meeting held in December. Accordingly, the Reverse Dec-17 64.24 86.11 76.00 56.88 Repo Rate under the Liquidity Adjustment Facility (LAF) Jan-18 63.64 87.65 77.45 57.26 stands at 5.75 per cent, and the Marginal Standing Facility (MSF) rate and the Bank Rate at 6.25 per cent. Source: Reserve bank of India, RBI's reference rate. ** Per 100 Yen As the Y-o-Y effect of demonetisation wore off, the growth rate of both Currency in Circulation and M0 turned External Debt sharply positive. However, bank credit growth remains  India's external debt stock stood at US$ 495.7 subdued, especially to the industrial sector. Non Food billion at end-September 2017 recording an Credit (NFC) grew at 8.85 per cent Y-o-Y in November increase of US$ 23.9 billion over the level at end- 2017 as compared to 4.75 per cent in November 2016. March 2017. The maturity profile of India's external Bank credit lending to Services and Personal Loans debt indicates dominance of long-term segments continue to be the major contributor to overall xIntroduction NFC growth. Credit growth finally picked up in industrial Ensure Food Security and Enhance Resilience in sector after remaining persistently negative from October Vulnerable Tribal Areas of Odisha" has been approved for 2016 to October 2017. funding by GCF Board. The performance of the banking sector, Public Sector Banks (PSBs) in particular, continued to be subdued in 2. Department of Expenditure the current financial year. The Gross Non-Performing Advances (GNPA) ratio of Scheduled Commercial Banks The Department of Expenditure is the nodal (SCBs) increased from 9.6 per cent to 10.2 per cent Department for overseeing the public financial management between March 2017 and September 2017, whereas, their Restructured Standard Advances (RSA) ratio declined from system in the Central Government and matters connected 2.5 per cent to 2.0 per cent. with state finances. It is responsible for the implementation of the recommendations of the Finance Commission and The 10 year G-sec yield, meanwhile, has hardened in the current financial year. In April 2017, G-secs traded Central Pay Commission, monitoring of audit comments/ with a moderate hardening bias, after the release of the observations, preparation of Central Government Accounts. minutes of the Monetary Policy Committee meeting on It further assists central Ministries/Departments in April 20, 2017, which enunciated upside risks to inflation controlling the costs and prices of public services, and was perceived to be hawkish by the market. reviewing system and procedure to optimize outputs and An ecosystem for the new insolvency and outcomes of public expenditure. The Department has under bankruptcy process took shape in 2017-18. The IBC its administrative control the National Institute of Financial mechanism is being used actively to resolve the NPA Management (NIFM), Faridabad, which is an autonomous problem of the banking sector. The stock markets also body. The principal activities of the Department include hit record highs this financial year. overseeing the expenditure management in the central The stock markets also hit record highs this financial Ministries/ Departments through the interface with the year. S&P BSE Sensex, the benchmark index of BSE, Financial Advisers and the administration of the Financial closed at 34,433 points as on January 10, 2018, witnessing Rules/ Regulations/ Orders, pre-sanction appraisal of major a gain of 16.5 per cent from its closing of 29,621 points on schemes/ projects, handling bulk of the central budgetary March 31, 2017. resources transferred to State. Climate Change Finance The business allocated to the Department of The 23rd session of the Conference of Parties Expenditure is carried out through its Establishment (COP23) to the United Nations Framework Convention on Division, Plan Finance-State and Plan Finance Central Climate Change was held from 6 to 17 November 2017 in Divisions, Office of Chief Adviser Cost, Controller General Bonn, Germany. At the multilateral level, the international of Accounts and Central Pension Accounting Office. community is currently engaged in writing the "Paris rule book" which includes guidelines and modalities for the implementation of the Paris Agreement for the 3. Department of Revenue transparency framework for action and support, features 1. The Department of Revenue exercises control in and accounting of Nationally Determined Contributions (NDCs) etc. respect of revenue matters relating to Direct and Indirect Union taxes. The Department is also entrusted with the The Paris Agreement pertains to the post-2020 period. administration and enforcement of regulatory measures At the national level, the roadmap for implementation of India's NDC is being prepared, by constituting an provided in the enactments concerning Goods and Service Implementation Committee and six Sub-Committees. A Tax (GST), Central Sales tax, Stamp duties and other sub-committee chaired by Department of Economic Affairs, relevant fiscal statutes. Control over production and is looking into the financing of India's NDC. disposal of opium and its products is vested in this Under the Paris Agreement, the developed countries Department. have obligations to provide financial support to developing countries. The developed countries had made a 2. Tax policies are formulated in order to mobilize commitment to a goal of mobilising USD 100 billion financial resources for the nation, achieve sustained annually by 2020 for supporting climate action in developing growth of the economy, attain macro-economic stability countries. Green Climate Fund (GCF) which is the and promote social welfare. The underlying theme of dedicated multilateral climate fund for international climate the tax proposal for the Budget 2017-18 was stimulating finance, has so far been pledged an amount of USD 10.3 growth, relief to middle class, affordable housing, curbing billion. As of date only one project from India entitled black money, promoting digital economy, transparency in "Ground Water Recharge and Solar Micro Irrigation to political funding and simplification of tax administration. xiAnnual Report 2017-2018 3. The Income Tax offices throughout the country (Prohibition) Amendment Act, 2016, and came intensified their drive against tax evaders in the wake of into force w.e.f. 1st November 2016. The demonetization of high value currency in November, 2016. amended Act defines benami transactions The Income Tax Department launched 'Operation Clean and benami property. The ITD has set up 24 Money' on 31st January 2017 for collection, collation and dedicated Benami Prohibition Units across analysis of information on cash transactions, extensive India for taking effective action under the Act. use of information technology and data analytics tools for (iv) Proactively engaging with foreign governments identification of high risk cases, expeditious e-verification with a view to facilitate and enhance the of suspect cases and enforcement actions in appropriate exchange of information under Double cases. Around 18 lakh persons were identified in whose Taxation Avoidance Agreements (DTAAs)/Tax case, cash transactions do not appear to be in line with Information Exchange Agreements (TIEAs)/ the tax payer's profile. More than 20,500 I-T returns were Multilateral Conventions etc. and proactively selected for scrutiny in 2017 on the basis of cash deposits furthering global efforts to combat tax evasion/ in their bank account during demonetization. The black money, inter alia, by joining the Department has also issued more than 1.9 lakh notices Multilateral Competent Authority Agreement to such persons in whose bank accounts cash of amount in respect of Automatic Exchange of exceeding `15 lakh was deposited during demonetization Information (AEOI) but they have not filed any return of income. During the (v) A few measures were also taken for F.Y. 2017-18 (up to 31.12.2017), searches were conducted combating the menace of Black Money. India in 423 groups resulting in seizures of assets worth `776 and USA signed an Inter-Governmental crore and admission of undisclosed income of `11,858 Agreement (IGA) to implement the Foreign crore. During the same period, 5,020 surveys conducted Account Tax Compliance Act (FATCA) of the resulted in detection of undisclosed income of `3,632 USA to promote transparency between the crore. Prosecutions were filed in criminal courts in 880 two nations on tax matters. Implementation cases (up to October 2017) and 650 prosecutions were of AEOI under CRS and FATCA. This will compounded. During F.Y. 2016-17, 1.31 crore new enable the Government of India to receive taxpayers were added to the tax base. The efforts made information about tax payers hiding their to combat the menace of black money are as follows: money in offshore financial centres and low (i) Constitution of the Special Investigation tax or no tax jurisdictions through multi- Team (SIT) on Black Money under layered entities with non-transparent Chairmanship and Vice-Chairmanship of two ownership from the jurisdictions that are former Judges of Hon'ble Supreme Court; signatories to the MCAA which are 96 in (ii) Enactment of a comprehensive law - 'The number at present. The number is likely to Black Money (Undisclosed Foreign increase in future. A 'Joint Declaration' for the Income and Assets) and Imposition of Tax implementation of AEOI between India and Act, 2015 which has come into force w.e.f. Switzerland was signed for activation of AEOI 01.07.2015 to specifically and more effectively between India and Switzerland. Multilateral deal with the issue of black money stashed Convention to implement tax treaty related away abroad. Most importantly, for the first measures to prevent base erosion and profit time, this law has included the offence of shifting. On this aspect, the Hon'ble Finance willful attempt to evade tax etc. in relation to Minister, Shri Arun Jaitley, signed the undisclosed foreign income/assets as a Multilateral Convention to implement Tax Scheduled Offence under the Prevention of Treaty Related Measures to prevent Base Money-laundering Act, 2002 (PMLA). Erosion and Profit Shifting at Paris on 7th (iii) Amendment of the Benami Transactions June, 2017 on behalf of India. More than 65 (Prohibition) Act, 1988 with a view to, inter countries, including India, signed the alia, enable confiscation of benami property convention in Paris on 07.06.2017. Setting and provision for prosecution. With a view to up a Multi-Agency Group (MAG) for bridge the gaps and put in place appropriate expeditious and coordinated investigation of effective legislation, the existing Act was revelations in Panama Paper Leaks and amended through Benami Transactions Paradise Paper Leaks. xiiIntroduction 4. The Customs and Central Excise officers continued iii. Tax neutrality for business as the scope of their drive vigorously against duty evasion. During the Input Tax Credit has been widened F.Y.2017-18 (upto Dec 2017), 614 cases of Central Excise considerably. It has also ensured that integrity duty evasion involving `7241.75 crores were detected. In of tax chain is maintained throughout the respect of Service Tax 2938 cases were registered involving supply chain up to the stage of consumption. Service Tax evasion amount to `9659.61 crores. In the erstwhile regime, credit of certain Similarly¸2024 cases were registered evading Customs indirect taxes, such as SAD on imports paid duty amounting to `1056.12 crores during the F.Y 2017- by a traders or the CST was not available. 18(upto Nov. 2017). As border control agencies, field iv. GST has aided in widening of the tax base, formations of CBEC keep constant vigil on the illicit imports e.g., entire textile chain has now been brought through ports, airports, Land Customs Stations (LCS), under tax net. Further, a segment of land and Inland Container Depots (ICDs), Foreign Post Office (FPOs) real estate transactions has been brought into and Courier Terminals, Each Customs Commissionerate the tax net as "works contracts", referring to is having intelligence and investigation units for checking housing that is being built. This in turn would smuggling and other commercial frauds, Besides, the allow for greater transparency and Directorate of Revenue Intelligence, having pan India formalization of cement, steel, and other presence, are the specialized agencies under CBEC sales, which have tended to be outside the involved in anti-smuggling and anti-evasion activities. tax net. The formalization will occur because builders will need documentation of these 5. CBEC has put in place non-intrusive methods of input purchases to claim tax credit. examination and checking by installing X-Ray Baggage Inspection Systems, Container Scanners and Pallet v. Another benefit of GST is in formalization of Scanners to check smuggling by concealment besides economy and consequently the information deploying marine vessels for patrolling. Indian Customs flow that will eventually augment direct tax has participated in various global multilateral enforcement collections. Under the GST, there will be operations from time to time organized by World Customs seamless flow and availability of a common Organization (WCO) is an intergovernmental organization set of data to both the Centre and states, comprising of customs administration of 180 countries making direct tax collections more effective. comprising 98% of world trade. vi. The long-term benefits include the GST's impact on financial inclusion. Small 6. In a historic tax reform, the Goods and Services Tax businesses can build up a real time track was rolled out on 1st July, 2017. It brought a new era of record of tax payments digitally, and this can indirect taxation with the motto of "One Tax, One Market, be check-posts while others are in process One Nation". It subsumed almost all major indirect taxes of eliminating them. If this trend continues, like Central Excise Duty, Service Tax, VAT, CST, the reduction in transport costs, fuel use, and Entertainment tax, Octroi, Luxury tax, a large number of corruption could be significant. cesses/surcharges and various other state and central levies on goods and services. Provision has also been vii. GST makes the supply chain and logistics made for compensation to states for loss of revenue arsing efficient. With introduction of GST, the check on account of implementation of Goods and Service Tax posts in the states have been removed as with effect from 1st July, 2017 for a period of five years. the whole nation has no same tax and Significant implications of the GST regime are: compliance structure. Overall, logistics costs are 3-4 times the international benchmarks. i. Uniform taxation of goods and services across The passage of the GST will dramatically all states. All business process are made reduce these costs and give a boost to inter- common, including the IT processes relating state trade in the country. to registration, return, payment and refund of viii. To guide taxpayers in relation to GST matters, taxes. This has paved the way for making CBEC has issued a range of frequently asked the whole nation a common market. questions on 11 sectors and other topics ii. The pre-GST regime suffered from cascading related to GST law, procedures, tax rates, of taxes in which VAT and other states levies specific industry or sector. The information is were being imposed on value inclusive of available on CBEC GST portal http://cbec- central taxes. GST has removed such gst.gov.in under Services section as well as cascading of taxes. on www.cbec.gov.in. xiiiAnnual Report 2017-2018 ix. GST has significantly raised the turnover The Department of Disinvestment has been re-named threshold to `20 lakh for an entity to be as Department of Investment and Public Asset taxable in GST. Further, the threshold for Management (DIPAM) with effect from 14th April, 2016. composition has been increased in general to `1 crore (`75 lakh for special category states except Jammu & Kashmir and 5. Department of Financial Services Uttarakhand). Certain other measures taken to encourage the MSME sector are as As per Allocation of Business Rules (AOBR), follows: functions of Department of Financial Services(DFS) inter-  Service providers whose annual alia include matters pertaining to Banking, Insurance, aggregate turnover is less than `20 lacs Pension Reforms, Development Financial Institutions etc. (`10 lacs in special category states The Department of Financial Services (DFS) oversees except J & K) have been exempted from several key programs / initiatives and reforms of the obtaining registration even if they are making inter-State taxable supplies of Government concerning the Banking Sector, the Insurance services. This measure is expected to Sector and the Pension Sector in India. The key flagship significantly reduce the compliance cost schemes being currently run / managed by the Department of small service providers. include the Pradhan Mantri Jan Dhan Yojana (PMJDY),  Small and medium businesses with Stand Up India, Pradhan Mantri Suraksha Bima Yojana annual aggregate turnover up to `1.5 (PMSBY), Pradhan Mantri Jeevan Jyoti Bima Yojana crores would be required to file quarterly (PMJJBY), Pradhan Mantri Mudra Yojana (PMMY), Atal return Pension Yojana (APY) and the Pradhan Mantri Vaya  The reverse charge mechanism under sub- Vandana Yojana (PMVVY). section (4) of section 9 of the CGST Act, The Department provides policy support to the 2017 and under sub-section (4) of section Public Sector Banks (PSBs), Public Sector Insurance 5 of the IGST Act, 2017 has been Companies (PSICs) and Financial Institutions (FIs) like suspended till 31.03.2018. NABARD, SIDBI, IIFCL etc. through policy guidelines,  The requirement to pay GST on advances legislative and other administrative changes. It also received was proving to be burdensome monitors the performance of these PSBs, PSICs and FIs for small dealers and manufacturers. In and undertakes policy formulation in respect of the Banking order to mitigate their inconvenience on and Insurance Sector in India. DFS also deals with this account, it has been decided that legislative and other issues pertaining to the concerned taxpayers having annual aggregate regulatory bodies such as the Insurance Regulatory and turnover up to `1.5 crores shall not be Development Authority of India (IRDAI) and the Pension required to pay GST at the time of receipt Fund Regulatory and Development Authority (PFRDA) and of advances on account of supply of with certain legislative matters related to Reserve Bank of goods. India (RBI). x. After implementation of GST regime, rates were rationalised significantly to address the In addition to the aforesaid policy issues, the concerns of trade and consumers. Revenue Department is also responsible for certain functional issues collected under GST till January, 2018 stood concerning the Regulatory Bodies [RBI, IRDAI and at `5,40,327 crore. PFRDA], the PSBs, PSICs and Financial Institutions. Foremost among these functional issues is the 4. Department of Investment and appointment of key functionaries of Governor/Deputy Public Asset Management Governor of Reserve Bank of India, Chairman/Members of IRDAI and PFRDA, Chairman/Managing Director and Chief The Department of Disinvestment was set up as a separate Department on 10th December, 1999 and was Executive Officers (MD & CEOs), Executive Directors later renamed as Ministry of Disinvestment from 6th (EDs), Chairman cum Managing Directors (CMDs) etc. of September, 2001. From 27th May, 2004, the Department public sector banks, insurance companies and other of Disinvestment is one of the Departments under the financial institutions. Matters relating to international Ministry of Finance. banking relations are also dealt by the Department. xivChapter - I Department of Economic Affairs I Department of Economic Affairs 1. Economic Division meetings of the Consultative Committees and Working Groups set up by the Government. The officers of the 1.1 The Economic Division tenders expert advice to Economic Division participate in consultations with various the Government on important issues of economic 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 including agriculture, the Central Statistical Organisation, the Ministry of industry and infrastructure sectors of the economy. Commerce and Industry and the Economic and Statistical Wings of their Ministries. An international Seminar the 1.3 As part of its regular activities, the Economic 7th Delhi Economics Conclave-(2017) was organized on Division brings out the Economic Survey annually, which 22.07.2017 wherein researchers, policy makers, industry is placed in the Parliament prior to the presentation of leaders, bankers and economists & academicians from the Central Government Budget. The Economic Survey India and abroad participated. provides a comprehensive overview of important developments in the economy. It also analyses recent 1.7 The work of the Economic Division is organized economic trends and provides an in-depth appraisal of under the following units: policies. Over the years, the Economic Survey has acquired the status of an authoritative source and a useful  Macro compendium of the annual performance of the Indian  Public Finance economy. Further, the Fiscal Responsibility and Budget  Prices Management (FRBM) Act, 2003 requires the Ministry of  Agriculture and Food Management Finance to review every quarter the trends in Receipts and Expenditure in relation to the Budget and place it  Industry and Infrastructure before both Houses of Parliament. As part of this exercise,  Services the Economic Division prepares the MidYear Economic  Trade and BoP Unit Analysis in the second quarter of each year for placing it before Parliament. In addition, at the end of first quarter  External Debt Management and third quarter a Macro-Economic backdrop statement  Social Infrastructure, Human Capital and is prepared and provided to the Budget Division for Development incorporating in the review of quarterly receipts and  Financial Intermediation and Monetary expenditure. Management 1.4 The Division also brings out the Economic and  Climate Finance Accounting and Analysis the Functional Classification of the Central Government’s  Coordination Budget, which is circulated among the Hon’ble Members of Parliament. The publication presents an estimate of 1.8 Macro Unit the savings of the Central Government and its 1.8.1 The Macro Unit is responsible for: (a) analyzing departmental undertakings, gross capital formation and and monitoring India’s macroeconomic parameters, (viz. the magnitude of the development and consumption gross domestic product, saving, investment, etc.); (b) expenditure broken up under broad functional heads. country coordination for Special Data Dissemination 1.5 The Division also brings out every month an Standard of the International Monetary Fund; (c) abstract entitled “Monthly Economic Report”, which gives maintaining the National Summary Data Page on a routine the latest available data on the key sectors of the basis (d) compilation of the Macroeconomic Framework economy. The Division prepares, from time to time briefs Statement that forms part of the Union Budget and the on the performance of the infrastructure sector, agriculture Macroeconomic Backdrop for the FRBM (Fiscal and industrial production, trends in tax collection, the Responsibility Budget Management) statements that are balance of payments and the monetary situation. It also laid in the Parliament every quarter; (e) some related monitors the price situation on a weekly basis. In addition, calculations and projections related to annual budget the Division undertakes short term forecasting of key exercise; (f) drafting the portions of Economic Survey and Mid-year Economic Analysis related to macro- economic variables. economic parameters; (g) preparation of the Monthly 1.6 As part of its advisory functions, the Economic Economic Report; (h) attending to requirements of inputs, Division prepares analytical notes and background papers briefs, speeches, Parliamentary references, etc. related on important policy issues and provides briefs for to the state of economy. 1Annual Report 2017-2018 1.9 Public Finance Unit 1.13 Services Sector Unit 1.9.1 The Public Finance Unit deals with matters 1.13.1 Services sector unit deals with the issues related relating to public finance and budgetary operations of the to services sector in Indian Economy. It monitors and Central Government. It is responsible for the publication analyses the performance of India’s Services Sector of Economic and Functional Classification of Central including services trade on an ongoing basis. This unit Government Budget, Indian Public Finance Statistics also prepares comments on notes related to trade in which includes budgetary transactions of Centre, State services, WTO, negotiation in services, etc. for and Union Territories. The unit monitors Central fiscal Department of Commerce. parameters, such as, fiscal deficits, revenue deficits, and analyses policies relating to central plan outlays, 1.14 Trade & BoP Unit resources and expenditure. The unit also undertakes 1.14.1 The Trade & BoP Unit is responsible for analyzing review of fiscal position and analysis of fiscal issues external sector developments and offering policy advice including those relating to tax measures. on related issues. The Unit monitors India’s foreign trade 1.10 Price Unit and developments on BoP indicators closely through an institutional set-up of a special monitoring group 1.10.1 The Price unit is responsible for monitoring and comprising stakeholders in Ministry of Finance, other maintaining database on WPI, CPI & International Ministries concerned and the Reserve Bank of India. The Commodity prices and gives policy advice on price related matters. Unit tracks movements in the exchange rate of the rupee, monitors India’s foreign exchange reserves and India’s 1.11 Agriculture & Food Management Unit foreign trade. This Unit also monitors and analyses issues 1.11.1 The Agriculture and Food Management Unit related to global developments and institutions like IMF, advises the Government on policy issues relating to World Bank. Agriculture, Animal Husbandry and allied sectors, Food 1.15 External Debt Management Unit (EDMU) and Public Distribution and Food Processing. The Unit monitors and appraises on a continuous basis agricultural 1.15.1 The External Debt Management Unit (EDMU) is growth and investment, agricultural research, agricultural involved in the collection, compilation and publication of production, progress of monsoon and reservoir storage Quarterly External Debt Statistics in compliance with of water resources, pricing of major Rabi and Kharif crops, Special Data Dissemination Standards (SDDS) of IMF agricultural credit and insurance. The Unit examines and Quarterly External Debt Statistics (QEDS) of World issues pertaining to development of dairy, poultry and Bank. The Unit also brings out an Annual Status Report fisheries as well as food processing sector and on India’s External Debt. The management information recommends policies. It is also responsible for issues system on external debt management and coordination related to Public Distribution System and food security, with the office of Controller of Aid, Audit and Accounts, public procurement, buffer stock norms, Central Issue RBI, Securities Exchange Board of India and Ministry of Price, Open Market Sales Scheme, storage and Defance is handled in the unit. warehousing. The Unit critically examines proposals related to the agricultural and allied sector, food 1.16 Social Infrastructure, Employment and management and food processing, analyses recent Human Development Unit developments and suggests appropriate policy directions. 1.16.1 The Social Infrastructure, Employment and 1.12 Industry & Infrastructure Unit Human Development Unit prepares analytical notes on poverty, employment, rural development and other topics 1.12.1 Industry and Infrastructure Unit advises the on the issues like health, education, employment including Government on policy issues relating to Industry at both labour market etc. The unit also advises the Government macro and sectoral levels. The unit monitors and reviews on specific policy issues in social infrastructure, human on a continuous basis industrial growth and investment, developments in the industrial sector and investment / capital and development. financing of public sector. The Unit is also responsible 1.17 Financial Intermediation and Monetary for monitoring trends in production of core infrastructure Management Unit industries. It undertakes analysis of developments in infrastructure policy, investment and financing and 1.17.1 The Money Unit is responsible for monitoring of renders advice on infrastructure sector policy issues. money market trends, developments in monetary policy 2Department of Economic Affairs I of the Reserve Bank of India, and aggregate trends in the Central Government and of States under President’s credit flows. It analyses movements in monetary Rule. The Division is also responsible for dealing with parameters and also of yields on G-Sec/ Treasury bills, issues relating to Public Debt, Market Loans of the Central call money rates and Liquidity Adjustment Facility (LAF) Government and State Government’s borrowing and operations. The Unit also tracks developments in banking lending, guarantees given by the Government of India and financial markets, including the primary and and the Contingency Fund of India. The responsibility of secondary markets and derivative market. the Division also extends to regulate the flow of expenditure by processing proposals from other 1.18 Climate Finance Accounting and Analysis Ministries/Departments for re-appropriation of savings in Unit a Grant where prior approval of the Ministry of Finance is 1.18.1 Climate Finance Accounting and Analysis Unit required. The Division also deals with National Savings serves as the nodal point on all financing matters related Institute (NSI), Small Savings Schemes and National to climate change in the Ministry of Finance. It helps shape Defence Fund. The work relating to Treasurer, Charitable the firming up of India’s stand on financing issues related Endowment is also handled in the Budget Division. to climate change and sustainable development in fora 2.2 This Division also deals with matters relating to like United Nations Framework Convention on Climate Duties, Powers and Conditions of Service of the Change, G20, Rio+20. It is vested with the task of Comptroller and Auditor General of India and submission preparing submissions on behalf of India as well as of the Reports of the Comptroller and Auditor General of assessing submissions of other member countries in India relating to the accounts of the Union to the President these fora. The Unit provides inputs on an ongoing basis for being laid before Parliament. From 1st January, 2017 to Ministry of Environment, Forests and climate change to 31stDecember, 2017 , 41 Reports of the C&AG of India on issues related to National Action Plan on Climate were laid before the Parliament and 37 entrustments/re- Change and in the capacity development efforts on entrustments of audit of various bodies to the C&AG of emerging issues like green growth, innovative financing India were dealt by this Division. options for sustainable development by preparing positions papers and analysis of technical issues and 2.3 The Budget Division is also responsible for policy options. administration of “Fiscal Responsibility and Budget Management Act, 2003” which was brought into force 1.19 Coordination Unit w.e.f. 5th July, 2004. The Rules made under the Act were 1.19.1 Coordination Unit is responsible for organizing also made effective from that date. Quarterly Reviews the pre-budget consultations of Finance Minister with including Mid-term Review were presented in Parliament different stakeholder groups like Agriculture Sector, Social in accordance with the requirements of the FRBM Act. Sector related Group, Industry and Trade Sector, Trade Unions, Banking and Financial Institutions, Economists 2.4 Budget Division also oversees/facilitates the and IT(Software & Hardware). The Unit is also responsible implementation of ‘Gender Budgeting’ in various for Organizing Delhi Economics Conclave (DEC). The Ministries/Departments. Administrative and coordination work for printing and submission of Economic Survey to the Parliament are 2.5 The work relating to form of Accounts kept under also done by this unit. Inputs/material for Finance Article 150 of the Constitution of India is also handled in Minister’s Speeches on different occasions and for this Division. Advice on the classification of Government Annual/Spring Meetings of the World Bank & IMF, ADB receipts and expenditure and on the accounting and Credit Rating Agencies; briefs for Economic Editor’s procedure drawn up for implementation of new schemes meet, Consultative Committee meetings and of the Government is also rendered by the Division. Parliamentary Standing Committee meetings are collected and put together by this unit. Apart from these 2.6 Supplementary Demands : the unit is involved in all administrative and Parliament 2.6.1 Supplementary Demands Section is assigned related matters. with coordination and presentation of Supplementary 2. Budget Division Demands for Grants, Demands for Excess Grants and 2.1 Budget Division is responsible for the preparation of the connected Appropriation Bills and Parliamentary work. and submission, to Parliament, the Annual Budget as well Other activities of the Section relate to administration of as Supplementary and Excess Demands for Grants of the Contingency Fund of India Act 3Annual Report 2017-2018 2.6.2. This Section is also assigned the work of overall 2.7.3. National Small Savings Fund: policy related to Central Government Guarantees and Estimates of Loan Repayments and Interest Payments 2.7.3.1 In order to account for all the monetary in respect of Public Sector Units/Financial Institutions. transactions under small savings schemes of the Central Government under one umbrella, the “National Small Responsibilities: Savings Fund” (NSSF) was set up in the Public Account  Supplementary Demands for Grants. of India w.e.f. 1st April, 1999. The net accretions under  Demands for Excess Grants. the small savings schemes were being invested in the special securities of States Governments and UTs (with  Central Government Guarantees. legislature), in addition to the special securities of the  Estimates of Loan Repayments and Interest Central Government. However, based on the Payments in respect of Public Sector Units/ recommendation of the Fourteenth Finance Commission, Financial Institutions. it has been decided to advance National Small Savings  Administration of the Contingency Fund of India Fund (NSSF) loans only to the willing states, namely, Act and Rules Arunachal Pradesh, Delhi , Kerala and Madhya Pradesh 2.7 National Small Savings : which have opted for NSSF loan during the year 2017- 18. Besides, it has been decided to invest NSSF corpus 2.7.1. Small Savings Scheme: in various Public Agencies (National Highways Authority 2.7.1.1 The Small Savings Schemes currently in force of India, Food Corporation of India, Air India etc.) and an are: Post Office Savings Account, National Savings Time amount of Rs. 106684.78 crore (RE) is to be extended to Deposits ( 1,2,3 & 5 year), National Savings Recurring these agencies. Deposits, National Savings Monthly Income Scheme, Senior Citizens Savings Scheme, National Savings 2.7.4. Interest Rates on Small Savings Instruments Certificate ( VIII-Issue), Public Provident Fund, Kisan Vikas Patra and Sukanya Samriddhi Account. 2.7.4.1 (i) The rate of interest on small savings schemes has been aligned with G-Sec rates of similar 2.7.2. Small Savings Collections: maturity. 2.7.2.1 Gross deposits under various small savings (ii) The rate of interest on various small savings schemes during 2017-18 are estimated (RE) at ` schemes for the FY 2017-18 is given below: 566680.07 crore as against the deposit of ` 515999.80 crore during 2016-17. An amount of ` 10500.00 crore 2.8 Government Borrowing (RE) is to be transferred as share of net small savings collections to Arunachal Pradesh, Kerala, Madhya 2.8.1 The Central Government’s normal borrowing Pradesh and UT of Delhi during the current fiscal, as through issue of dated securities for financing the fiscal against the sum of ` 7417.38 crore transferred to all States deficit was budgeted in BE 2017-18 at ` 5,80,000 crore and UTs ( with Legislature) during 2016-17. (Gross) and ` 4,23,226 crore (net). Instrument Rate of interest % Rate of interest Rate of interest % Rate of interest % From 1.4.17 to % From 1.10.17 to From 1.1.18to 30.6.17 From 1.7.17 to 31.12.17 31.3.18 30.9.17 Savings Deposit 4.0 4.0 4.0 4.0 1 Year Time Deposit 6.9 6.8 6.8 6.6 2 Year Time Deposit 7.0 6.9 6.9 6.7 3 Year Time Deposit 7.2 77.11 7.1 6.9 5 Year Time Deposit 7.7 7.6 7.6 7.4 5 Year Recurring 7.2 7.1 7.1 6.9 Deposit 5 Year SCSS 8.4 8.3 8.3 8.3 5 Year MIS 7.6 7.5 7.5 7.3 5 Year NSC 7.9 7.8 7.8 7.6 PPF 7.9 7.8 7.8 7.6 Sukanya Samriddhi 8.4 8.3 8.3 8.1 Account Kisan Vikas Patra 7.6 ( will mature in 7.5 ( will mature 7.5 ( will mature in 7.3 ( will mature in 113 months) in 115 months) 115 months) 118months) 4Department of Economic Affairs I 2.8.2 During the year, Government continued with the of monetary policy and prudential debt management policy of announcement of half yearly indicative market consistent with fiscal sustainability through limits on the borrowing calendar based on its core borrowing Central Government borrowings, debt and deficits, requirements. greater transparency in fiscal operations of the Central 2.8.3 During the financial year 2017-18, Government Government and conducting fiscal policy in a medium- has borrowed ` 5,88,000 crore through issuance of dated term framework and for matters connected therewith or securities so far. The final position of issuance of incidental thereto. Government securities will only be known at the year- 2.10.2 During the calendar year (January 1 to end as the buyback, switching and market making are in December 31) 2017, in compliance with the relevant progress. provisions of the FRBM Act and Rules framed there 2.8.4 The weighted average yield and maturity of dated under”- securities issued during 2017-18 (April 2017 to February 12, 2018) were 6.97% and 14.12 years respectively, as 1) the following Statements were laid before both compared to 7.16% and 14.76 years in the corresponding Houses of Parliament: period of the financial year 2016-17. i) Statements of fiscal policy: 2.8.5 Detailed analysis of existing debt and liabilities of a) Medium-Term Fiscal Policy Statement the Government is brought out in the annual debt papers, published during 2011-12, 2013-14, 2014-15, 2015-16 b) Fiscal Policy Strategy Statement and 2016-17 (available on http://dea.gov.in/documents- c) Macro-Economic Framework Statement reports). d) Medium Term Expenditure Framework 2.9 Cash Management (MTEF) Statement 2.9.1 With the objective to improve the Cash ii) Quarterly Statements on Review of the trends in Management System in the Central Government, a receipts and expenditure in relation to the Budget modified cash management system, including exchequer at the end of – control based expenditure management system was introduced in respect of 15 Demands for Grants in Central (a) third Quarter of the financial year 2016-17; Government w.e.f. April 1, 2006 vide this Ministry’s O.M. (b) financial year 2016-17 No.21(1)-PD/2005 dated January 10, 2006. The system was later extended to 23 & 46 Demands for Grants w.e.f. (c) first Quarter of the financial year 2017-18; April 1, 2007 and April 1, 2012. It has now been made and applicable to all the Demands for Grants of the Union Government vide this Ministry’s O.M. No.21(1)-B(PD)/ (d) second Quarter of the financial year 2017- 2014 dated July 22, 2015 and F.No. 4(10)-W&M/2016 18 dated August 4, 2016 and F.No.15(39)-B( R)/2016 dated 2) the following disclosures were made at the time August 22, 2017. As per the guidelines of the system, all of presenting the Annual Financial Statement and the Demands for Grants are required to prepare and send their Monthly Expenditure Plans (MEPs) and Quarterly Demands for Grants for 2017-18 :- Expenditure Allocations (QEAs) to Cash Management a) Tax Revenues raised but not realised. Cell for better monitoring and compliance of the guidelines of the Ministry of Finance regarding expenditure b) Arrears of Non-Tax Revenues. management. The guidelines also provide that the c) Asset Register expenditure in the last quarter of the financial year may not exceed 33 per cent not exceed 15% of Budget d) Guarantees given by the Government Estimate exceed and MEP for the month of March may e) Liability on Annuity Projects not exceed 15% of Budget Estimate. f) Grants for creation of capital assets etc. 2.10 Fiscal Responsibility and Budget Management 2.10.3 Fiscal indicators in FY 2016-17 and estimates (FRBM) Section: for RE 2017-18 are as under:- 2.10.1 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 2016-17 2017-18 (RE) Section. The FRBM Act provide for the responsibility of Fiscal Deficit 3.5 3.5 the Central Government to ensure inter-generational equity in fiscal management and long-term macro- Revenue Deficit 2.1 2.6 economic stability by achieving sufficient revenue surplus Total outstanding liabilities and removing fiscal impediments in the effective conduct at the end of the year 50.2 50.1 5Annual Report 2017-2018 Notes PDMC has been working towards formation of statutory PDMA and initiated many necessary steps in this regard, (i) “Total outstanding liabilities” as mentioned above namely, building an independent debt database and also include total outstanding liabilities in the increased interaction with various market participants. Public Account of India and external public debt valued at current exchange rates. 2.11.5 Towards ensuring the enhanced transparency in (ii) “GDP” is Gross Domestic Product at current public debt management operations, the Government of market prices (as per new series). India has been publishing a number of documents detailing overall debt position of the country, consolidated 2.11 Debt Management Office debt data relating to public debt, debt management 2.11.1 As a first step towards the establishment of strategies of central government debt, etc. These autonomous Debt Management Office, a Middle Office publications include an annual Government Debt Status (MO) was set up in the DEA, MoF in September 2008. Paper (since 2010), Debt Management Strategy This was required to build skills and develop expertise in document (2015) and Handbook of Statistics on Central debt management functions which is a time consuming Government Debt (since 2013). Government has process. consolidated all these publications into this single report to bring complete Government Debt and its Management 2.11.2 Consequent upon the announcement in Lok Sabha related information at one place. This report ‘Status Paper in April 2015 by FM, the consultation were held with RBI on Government Debt-September’ for year 2015-16 was and other stakeholders, to discuss way ahead towards released last on Oct 21, 2016 and report for year 2016- setting up Public Debt Management Agency (PDMA). It 17 is under compilation and will be published soon. The was agreed to initially set up a Public Debt Management report covers various facets of public debt including Cell (PDMC) as an interim arrangement before setting overall debt position of the country, assessment on up of an independent PDMA in due course. The interim aspects of debt sustainability, debt management strategy arrangement will allow separation of debt management covering various risks, etc. This publication brings all functions from RBI to PDMA in a gradual and seamless components of public debt under the Debt Management manner, without causing market disruptions. It was Strategy, thus widening its scope. decided that the work for moving towards PDMA would be taken up in a phased manner. 2.12 Hindi Branch 2.11.3 Considering the extant legal provision, it was 2.12.1 The Hindi Branch is entrusted with the job of agreed only advisory functions may be assigned to PDMC translating the official documents as envisaged in the to avoid any conflict with the statutory functions of RBI. It Official Languages Act, 1963 and the rules made was also agreed that the operations concerning front thereunder. Accordingly, all Budget documents are office, comprising of electronic auction system and back presented to the Parliament in Hindi and English. Besides office, comprising of depository and registry services Budget documents and Economic Survey, Hindi Branch would continue to be housed with RBI even with an has also prepared Hindi versions of Supplementary independent PDMA coming into being since RBI has Demands, Economic Classification Report, Reports on developed adequate infrastructure for the same and the Public Statistics and Status Reports of External Debt, arrangement is working quite smoothly. Duplicating the FRBM Quarterly Reports which were laid before the set-up would create avoidable expenditure. Infrastructure Parliament. of Public Debt Management, i.e. NDS and NDS-OM for 2.12.2 Apart from the aforemention documents, other primary and secondary market operations and depository official papers prepared by various divisions in the for G-Secs will continue with RBI under this arrangement. department, were also translated by the Hindi Branch Accordingly, a Public Debt Management Cell (PDMC) was during the year under report. These include, Cabinet set up in DEA, on October 4, 2016. Notes, agreements with Foreign Governments and 2.11.4 Formation of PDMC was first step in consolidation International Agencies, Parliament Questions’ Answers/ of all components of debt under one agency. In addition Assurances, Notifications, Standing Committee Papers, to carrying out various advisory functions assigned to it Action Taken Reports, Monthly Summary for the Cabinet, under the expanded mandate compared to that of MO, Official letters and External Assistance Report etc. 6Department of Economic Affairs I 3. Financial Markets Division the Indian equity benchmark indices touched their lifetime closing highs in December 2017 (Sensex closed at 3.1 Indian Market Performance 34056.83 on 29 December 2017 and Nifty touched its highest closing of 10531.5 on 26 December 2017). 3.1.1 The NSE benchmark index NIFTY 50 gained 28.65% and BSE benchmark index Sensex gained 27.91 3.1.2 Financial year 2017-18 was a year of positive % since the start of calendar year 2017 till December 31, growth for equity in world over and performance of Indian 2017. Since April 1, 2017 till December 31, 2017, Nifty 50 markets was better than average of other emerging and Sensex gained 14.79% and 14.98 % respectively. markets as may be seen from the table below. Gains in Sensex was up by 16.88% while Nifty was higher by Indian equity were comparable to that in US, Brazil and 18.55% for the previous financial year. During this period South Korea. Performance of Major Markets in the World Performance of Major Markets in the World Performance Performance in FY 2016- in FY 2017- 17 (% 18 (% Last Day of Last Day of Last Day of change as change as Index 2015-16 2016-17 2017-18 on on (31.03.2016) (31.03.2017) (31.12.2017) 31.03.2017 31.12.2017 over last over last closing of FY closing of FY 2015-16) 2016-17) Indian Markets SENSEX, India 25341.86 29620.5 34056.83 16.88 14.98 NIFTY, India 7738.4 9173.75 10530.7 18.55 14.79 Emerging Markets SHANGHAI 3003.915 3222.514 3307.17 7.28 2.63 COMPOSITE, China Indice BOVESPA, 50055.27 64984.07 76402.00 29.82 17.57 Brazil KOSPI, South Korea 1995.85 2160.23 2467.49 8.24 14.22 TAIWAN TAIEX, 8744.83 9811.52 10642.86 12.2 8.47 Taiwan Developed Markets S&P 500, US 2059.74 2362.72 2673.61 14.71 13.16 DOW JONES, US 17685.09 20663.22 24719.22 16.84 19.63 DAX, Germany 9965.51 12312.87 12917.64 23.55 4.91 FTSE 100, UK 6174.9 7322.92 7687.77 18.59 4.98 CAC-40, France 4385.06 5122.51 5312.56 16.82 3.71 NIKKEI 225, Japan 16758.67 18909.26 22764.94 12.83 20.39 HANG SENG, Hong 20776.7 24111.59 29919.15 16.05 24.09 Kong Straits Times, 2840.9 3175.11 3402.92 11.76 7.17 Singapore 3.1.3 The markets were on upward trend since the 3.1.4 India improved its ranking significantly to 100 in 2018 from130 in 2017as per World Bank’s Doing beginning of the calendar year. One of the impacts of Business Report for these two years. The RBI eased the demonetization was the inflow of money into the domestic policy rates, after the inflationary pressures were brought markets which witnessed uptrend movement, in spite of under control and has kept it on hold despite some uptick FPIs being net sellers. The referring of cases under the in inflation. There was acceleration in the industrial activity Insolvency and Bankruptcy Code to the NCLT, the and the manufacturing sector grew on the back of improved demand and restocking post goods and recapitalization of public sector banks, and the services tax (GST) implementation. At the same time, announcement of the plan for further consolidation among the growth of real gross value added (GVA) accelerated the public sector banks boosted the sentiments in the sequentially in Q2 of 2017-18 to 6.1%, after five market. consecutive quarters of deceleration. 7Annual Report 2017-2018 Net FPI/FII Investment in India in 2011-2012 to 2016-17 INR crores Financial Year Equity Debt Total 2011-12 43738 49988 93726 2012-13 140033 28334 168367 2013-14 79709 -28060 51649 2014-15 111333 166127 277461 2015-16 -14172 -4004 -18176 2016-17 55703 -7292 48411 2017-18 * 11621 119812 131421 ** upto31-Dec-2017 Source : NSDL 3.1.5 Primary Market (Equity and Public Debt Issues) 3.2 Primary Markets 3.1.5.1 During 2017-18 (April-December), resource 3.2.1 Policy Development during the year 2017-18 mobilization from the Primary Market increased as 3.2.1.1 Relaxations for debt restructuring in compared to the corresponding period in the last financial distressed companies implemented in accordance year. During the year 2017-2018 (April-December), the with the guidelines of Reserve Bank of India and Primary Market witnessed a total of 152 issues that insolvency resolution under the Insolvency and mobilized `72,558 crores as compared to `49,705 crores Bankruptcy Code, 2016 raised through 85 issues during the corresponding period 3.2.1.1.1 In respect of debt restructuring and insolvency of FY 2016-17. During 2017-18 (April-December), there resolution in distressed companies which are listed on were 138 Public issues which raised `68, 037crore and stock exchange(s), certain exemptions have been 14 Rights issues which raised `4,521 crores. granted by way of amendments notified to the SEBI (Issue Mobilisation of Funds from Primary Market of Capital and Disclosure Requirements) Regulations, 2009 (‘ICDR’) and SEBI (Substantial Acquisition of Shares Particulars 2016-17$ 2017-18$ and Takeovers) Regulations, 2011 (‘SAST’) which have No. of Amount No. of Amount been notified on August 14, 2017. Issues (Rs crore) Issues (Rs crore) 3.2.1.1.1 Additionally, resolution plans approved by NCLT 1 2 3 4 5 under Section 31 of the Insolvency and Bankruptcy Code, 2016 have also been exempted from the preferential issue a. Public Issues 80 48,407 138 68,037 requirements (subject to lock-in conditions) stipulated (i) Debt 10 23,893 4 3,896 under ICDR and the open offer obligations stipulated (ii) Equity, of which under SAST. IPOs 70 24,515 133 64,128 3.2.1.2.Inclusion of RBI registered systemically FPOs 0 0 1 13 important NBFCs in the category of QIBs b. Rights Issues 5 1,298 14 4,521 3.2.1.2.1 Systemically important NBFCs which are Total Equity registered with RBI and having a net worth of more than Issues a(ii)+b 75 25,812 148 68,662 Rs.500 crore have been included in the category of Grand Total Qualified Institutional Buyers (QIBs). As NBFCs are well regulated entities, classifying such NBFCs under the (a+b) 85 49,705 152 72,558 Source : SEBI definition of QIBs will give Issuers access to a larger pool of funds. Accordingly, the SEBI (Issue of Capital and Notes: Disclosure Requirements) Regulations, 2009 were 1. IPOs - Initial Public Offers, FPOs - Follow on Public suitably amended on May 31, 2017. Offers 3.2.1.3 Exemption under SEBI (ICDR) Regulations, 2. The primary market resource mobilization is inclusive 2009, relating to preferential allotments, extended to of the amount raised on the SME platform. Scheduled Banks and Financial Institutions 3. $ indicates April-December of the respective financial 3.2.1.3.1 SEBI (Issue of Capital and Disclosure year. 8Department of Economic Affairs I Requirements) Regulations, 2009 [SEBI (ICDR) the investor base available for capital raising. Accordingly, Regulations, 2009] prohibit the issuer from making SEBI (ICDR) Regulations, 2009 were suitably amended preferential issue to any person who has sold any equity on July 31, 2017. shares of the issuer during the six months preceding the 3.2.1.6 Committee on Corporate Governance under relevant date. It also provides that the entire pre- the Chairmanship of Shri Uday Kotak preferential allotment shareholding of the allottees, if any, 3.2.1.6.1 SEBI formed a committee on corporate shall be locked-in from the relevant date up to a period of governance in June 2017 under the chairmanship of Mr. six months from the date of trading approval. Mutual Uday Kotak with a view to enhancing the standards of Funds and Insurance Companies were, however, corporate governance of listed entities in India. The exempted from both the aforesaid requirements. committee consisted of officials from the government, 3.2.1.3.2 The Board considered and approved the industry, professional bodies, stock exchanges, proposal for extending such relaxation to the Scheduled academicians, lawyers, proxy advisors, etc. Banks and Public Financial Institutions as is already being 3.2.1.6.2 The terms of reference of the committee were extended to Mutual Funds and Insurance Companies. to make recommendations to SEBI on the issues of Accordingly, SEBI (ICDR) Regulations, 2009 were suitably ensuring independence in spirit of Independent Directors amended on May 31, 2017. and their active participation in functioning of the 3.2.1.4 Strengthening the Monitoring of Utilization of company; improving safeguards and disclosures Issue Proceeds pertaining to Related Party Transactions; issues in 3.2.1.4.1 SEBI (ICDR) Regulations, 2009, required accounting and auditing practices by listed companies; mandatory appointment of ‘Monitoring Agency’ if the issue improving effectiveness of Board Evaluation practices; size of specified securities exceeds Rs. 100 Cr. The addressing issues faced by investors on voting and purpose for the same was to ensure adequate supervision participation in general meetings; disclosure and of the utilization of the funds raised. transparency related issues, if any; any other matter, as the Committee deems fit pertaining to corporate 3.2.1.4.2 SEBI Board considered and approved certain governance in India. The committee submitted its report proposals to further strengthen the monitoring of issue to SEBI on October 5, 2017. proceeds raised in IPOs/FPOs/Rights Issues. Key proposals approved by Board are as under: 3.2.1.7 H. R. Khan Committee Recommendations a) Mandatory appointment of Monitoring Agency 3.2.1.7.1 The Financial Stability and Development Council where the issue size (excluding offer for sale sub-committee constituted a working group under the component) is more than Rs. 100 crore. former Reserve Bank of India (RBI) Deputy Governor Sh. H.R. Khan with representation from the government b) Frequency of submission of Monitoring Agency and other regulators to study and suggest ways to Report has been enhanced from half-yearly to strengthen corporate Bond market in India. quarterly. 3.2.1.7.2. In order to strengthen the corporate Bond c) Introduction of maximum timeline of 45 days for market in India, till date, the government & regulators submission of Monitoring Agency Report from the have implemented most of the recommendations of the end of quarter in conjunction with the submission working group headed Sh. H.R. Khan on Development of the quarterly results. of corporate bonds market in India. These include: d) Mandating the disclosure of the Monitoring a) Standardization of corporate bond issuance , Agency Report on Company’s website in addition to submitting it to Stock Exchange(s) for wider b) Allowing investment by FPIs in unlisted debt dissemination. securities and pass through securities issued by securitizations SPVs /special purpose distinct e) Introduction of new requirement, i.e., comments entity (SPDE), of Board of Directors and Management on the findings of Monitoring Agency. c) Making mandatory issuance of private placement of debt securities worth Rs 500 crore or more 3.2.1.5 Extension of Lock-in relaxation to Category through electronic book mechanism, II Alternative Investment Funds (AIFs) d) Implementing trade repository for corporate 3.2.1.5.1 The exemption available to venture capital fund bond, or alternative investment fund of Category I or foreign venture capital investor in respect of lock-in in an IPO e) Permitting market makers to undertake repo / has also been extended to Category II AIFs in order to reverse repo contracts in corporate debt bring about uniformity, ease of doing business and expand securities, 9Annual Report 2017-2018 f) Allowing investment in BaselIII compliant 3.3 Reforms in Mutual Funds Industry perpetual bonds&in “additional tier 1 (BaselIII 3.3.1 Disclosure of Executive Remuneration: compliant) perpetual bonds”, 3.3.1.1 SEBI vide circular dated April 28, 2017 had given g) Credit enhancements of bonds by increasing the guidelines with regard to disclosure of executive aggregate exposure limit from the banking remuneration in mutual funds with the underlying objective system to 50% of the bond issue size, to promote transparency in remuneration policies so that executive remuneration is aligned with the interest of h) Put in place framework for market making in investors. corporate bonds, 3.3.2 Instant Access Facility (IAF) in Mutual Funds: i) Launch of corporate bond index, 3.3.2.1 IAF facilitates credit of redemption proceeds in j) Reviewing the penalty structure in place for the bank account of the investor on the same day of default in delivery of debt securities/funds for redemption request. In order to further enhance the reach trades subject to CCP clearing by the clearing of Mutual Funds (MFs) towards the retail investors, SEBI houses of the stock exchanges, has prescribed the guidelines vide SEBI circular dated k) Providing provisions pertaining to consolidation May 8, 2017 that IAF can be offered through online and re-issuance and ISIN restriction on debt mechanism and only for resident individual investors. securities, 3.3.3 Use of e-wallet for investment in MFs: l) Reduction of capital requirement for banks on 3.3.3.1 SEBI vide its circular dated May 8, 2017, with an account of Partial Credit Enhancement (PCE), objective to promote digitalization, decided that MFs/ revamping Bankruptcy Act and SARFAESI Act AMCs can accept investment by an investor through e- to strengthen the investor protection laws in the wallets (Prepaid Payment Instruments (PPIs)) subject to country, etc. certain conditions like redemption proceeds should be made only to the bank account of the investor/ unit holder 3.2.1.8 SEBI, vide its circular dated May 26, 2017 had as required under SEBI Circular dated September 30, issued guidelines on “Listing of Non-Convertible 2002. Redeemable Preference Shares (NCRPS) / Non- Convertible Debentures (NCDs) through a Scheme of a) MFs/ AMCs to ensure that total subscription through e-wallets for an investor is restricted to Arrangement”. The said Circular, inter-alia, provides for INR 50,000/- per MF per financial year; Eligibility criteria, Tenure/ Maturity, requirement of Credit rating & Valuation Report, Disclosure requirements etc. b) The limit of INR 50,000/- would be an umbrella before the Scheme of arrangement is submitted for limit for investments by an investor through both sanction by the National Company Law Tribunal (NCLT). e-wallet and/or cash, per MF per financial year; The Circular also lays down additional conditions to be c) MFs/ AMCs to ensure that e-wallet issuers should complied after the Scheme is sanctioned by the Hon’ble not offer any incentives such as cashback, High Court / NCLT and at the time of making application vouchers, etc., directly or indirectly for investing for relaxation under Sub-rule (7) of rule 19 of the in MF schemes; Securities Contracts (Regulation) Rules, 1957. d) MFs/ AMCs to ensure that only amounts loaded 3.2.1.9 SEBI, vide its circular dated May 30, 2017 had into e-wallet through cash or debit card or net issued guidelines on “Disclosure requirements for banking, can be used for subscription to MF schemes and amount loaded into e-wallet issuance and listing of green debt securities”. The said through credit card, cash back, promotional circular, inter-alia, lays down criteria for the debt securities scheme etc. should not be allowed for to be classified as “Green” or “Green debt securities”, subscription to MF schemes. disclosure requirements as well as continuous disclosure requirements for green bonds and the responsibility of 3.3.4 Review of norms for participation in the issuer of green debt securities. derivatives by Mutual Funds: 3.3.4.1 To reduce interest rate risk in a debt portfolio, 3.2.1.10 SEBI, vide its circular dated June 19, 2017 had SEBI vide circular dated September 27, 2017, allowed laid down guidelines for continuous disclosures and mutual to hedge the portfolio or part of the portfolio compliances to be made by the issuers under SEBI (Issue (including one or more securities) on weighted average and Listing of Debt Securities by Municipalities) modified duration basis by using Interest Rate Futures Regulations, 2015. (IRFs), up to a maximum of 20% of the net assets of the 3.2.1.11 SEBI vide its circular dated June 30, 2017 had scheme, subject to certain conditions: issued guidelines on Specifications related to a) Like hedging should be based on the weighted International Securities Identification Number (ISINs) for average modified duration of the bond portfolio debt securities issued under the SEBI (Issue and Listing or part of the portfolio (including one or more of Debt Securities) Regulations, 2008. securities); 10Department of Economic Affairs I b) The correlation between the portfolio or part of and Share Transfer Agents, Debenture Trustees, Bankers the portfolio (excluding the hedged portions, if to an Issue, Credit Rating Agencies, Investment Advisors, any) and the IRF is at least 0.9 at the time of Research Analysts, Portfolio Managers, Venture Capital Funds, Real Estate Investment Trusts (REITs), initiation of hedge. Infrastructure Investment Trusts (InvITs), Alternate c) In case of any subsequent deviation from the Investment Funds (AIFs), Collective Investment Schemes correlation criteria, the same may be rebalanced (CIS) etc. within 5 working days and if not rebalanced within the timeline, the derivative positions created for hedging shall be considered under the gross 3.4 Major reforms in the Secondary Markets exposure limit in terms of Para 3 of SEBI circular 3.4.1 Strengthening of framework for prevention dated August 18, 2010. of unauthorized trading by stock brokers 3.3.5 Categorization and Rationalization of Mutual 3.4.1.1 To strengthen regulatory provisions against un- Fund Schemes: authorized trades and also to harmonise the requirements across markets, SEBI in September 2017, in consultation 3.3.5.1 In order to clearly distinguish mutual fund with Government of India, has decided that all brokers schemes, to bring uniformity in the characteristics of shall execute trades of clients only after keeping evidence similar type of schemes launched by different Mutual of the client placing such order that could be, inter alia, in Funds and to ensure that an investor in mutual fund the form of physical record written and signed by client, schemes is able to evaluate different available options, telephone recording, email from authorized email id, log SEBI vide circular dated October 6, 2017, inter alia, has for internet transactions, record of SMS messages, or laid down the following: any other legally verifiable record. When dispute arises, a) Categories of Schemes: Schemes have been the burden of proof will be on the broker to produce the classified into five categories, namely, Equity above records for the disputed trades. Schemes, Debt Schemes, Hybrid Schemes, Solution Oriented Schemes and Other Schemes. 3.4.2 Comprehensive Review of Margin Trading Equity Schemes have been further classified into Facility 10 categories, debt schemes into 16 categories, 3.4.2.1 SEBI issued on June 13, 2017, comprehensive hybrid schemes into 6 categories, Solution framework on margin trading facility (MTF) including oriented schemes into 2 categories and other disclosure norms and eligibility requirements for brokers schemes into 2 categories. to provide it to clients. Margin Trading (trading with b) Type of scheme: The type of scheme has been borrowed funds/securities) is fundamentally a leveraging laid down vide the aforesaid circular to bring in mechanism which enables investors to take exposure in clarity with respect to the objective/ investment the market over and above what is possible with their strategy of the scheme. own resources. c) Definition of Large Cap, Mid Cap and Small 3.4.3 Nation-Wide awareness Campaign For SMEs Cap: In order to ensure uniformity in respect of the investment universe for equity schemes, the 3.4.3.1 SEBI, in coordination with SIDBI and Stock definition of large cap, mid cap and small cap Exchanges, initiated awareness programs to interact with have been laid down, which have to be followed SMEs from different clusters and familiarize them with by all mutual funds uniformly. The list of stocks the various products that are being offered by the stock falling in the large cap, mid cap and small cap exchanges for the benefits of SMEs and showcase the universe would be prepared by AMFI and the initiatives of SIDBI for the SME sector. During the FY same would be updated every six months.SEBI 2017-18 (till September 30, 2017), SME meets were held has also laid down the process to be followed at Raipur, Jaipur, Aurangabad and Mysore. for categorization and rationalization of schemes. 3.4.4 Cyber Security and Cyber Resilience 3.3.6 On-line registration of financial market framework of Stock Exchanges, Clearing Corporation intermediaries: and Depositories 3.3.6.1 Subsequent to the Budget announcement 2017- 18, the process of registration of financial market 3.4.4.1 SEBI laid down a detailed framework with regard intermediaries like mutual funds, brokers, portfolio to cyber security and cyber resilience that Stock managers, etc has being made fully online by SEBI. Exchanges, Clearing Corporation and Depositories are Online facility has been operationalized for Stock Brokers, required to adopt. During FY 2017-18, with regard to cyber Sub-brokers, Depository Participants, Mutual Funds, security, SEBI issued advisories to MIIs, based on then Merchant Bankers, Underwriters, Registrar to an Issue 11Annual Report 2017-2018 extant threats such as (a) WannaCry (b) Petya and (c) 3.5.3 Introduction of Options in Commodity Locky and based on inputs received from other agencies Derivatives Market like National Cyber Security Coordinator (NSCS). 3.5.3.1 In his Union Budget Speech for the year 2016- Additionally, MIIs were advised to prepare / envisage their Cyber Threat Vectors and Cyber-attack scenarios and 17, the Hon’ble Finance Minister had announced that also take corrective actions to plug the vulnerabilities. “new derivatives products will be developed by SEBI in the Commodity Derivatives Market”. Introduction of new 3.4.5 Outsourcing of activities by Stock Exchanges commodity derivatives products has been a subject of and Clearing Corporations deliberation at various forums as it is considered to be 3.4.5.1 SEBI mandated that the Core and critical conducive for the overall development of the commodity activities of stock exchanges and clearing corporations derivatives market, for attracting broad based shall not be outsourced. However, stock exchanges and participation, enhancing liquidity, facilitating hedging and clearing corporations may outsource activities to bringing in more depth to the commodity derivatives associate or group companies / entities of the exchange, market. provided there is a clear demarcation of activities with clear arms-length relationship. 3.5.3.2 Based upon the recommendations of Commodity Derivatives Advisory Committee (CDAC), Options of 3.4.6 Acceptance of Central Government Commodity Futures have been introduced in India. On Securities by Clearing Corporations towards Core October 17, 2017 Multi Commodity Exchange of India Settlement Guarantee Fund (SGF) Contribution by Ltd. (MCX) launched country’s first commodity Options Clearing Members on Gold Futures on its platform.Going ahead, Options in 3.4.6.1 SEBI, vide Circular dated April 26, 2017, SEBI Agricultural commodities are expected to offer farmers, advised clearing members to bring their contribution alternate insurance instruments to manage price risk in towards Core Settlement Guarantee Fund, in the form of agricultural markets. Central Government Securities, in addition to Cash and Bank Fixed Deposits as specified earlier. 3.5.4 Permitting Category III Alternative Investment Funds (AIFs) in the commodity derivatives market 3.5 Developments in Commodity Derivatives Markets 3.5.4.1 The Indian Commodity derivatives market, at 3.5.1 The current year 2017-18 has been particularly present, is running sans any institutional participation significant from the viewpoint of reforms in Commodity Derivatives Markets. Post the merger of regulatory thereby lacking in the desired liquidity and depth functions of erstwhile Forward Markets commission which is one of the key elements for ensuring the (FMC) with Securities and Exchange Board of India in efficient price discovery and price risk management. September 2015, the reform process has been 3.5.4.2 In this regard, SEBI has taken the initiative of accelerated to align the hedging environment in Indian allowing participation of Category III Alternative Commodity Derivatives Markets with international Investment Funds (AIFs) in the commodity derivatives standards. market, which marks the beginning of institutional 3.5.2 Integration of commodities and securities participation in the commodity derivatives market. derivative markets by integrating the participants, Category III AIFs are privately pooled investment vehicle brokers, and operational frameworks. which invest their corpus as per predefined investment 3.5.2.1 As announced in Union budget 2017-18, policy which includes leveraged instruments like ‘Integration of broking activities in Equity Markets and derivatives. Commodity Derivatives Markets under single entity’ has 3.5.5 Participation of Foreign Portfolio Investors been achieved. Necessary amendments to Securities (FPIs) in Commodity Derivatives in IFSC: Contracts (Regulation) Rules, 1957(SCRR) and SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992 have 3.5.5.1 In order to develop the International Financial been carried out. Services Centre in GIFT City at par with global IFSCs 3.5.2.2 This integration will achieve dual benefit of based in London, Singapore etc., Foreign Portfolio leveraging the widespread network of intermediaries in Investors (FPIs) have been allowed to participate in equity markets to commodity derivatives and also, of commodity derivatives contracts in GIFT – IFSC in economizing on the regulatory capital requirements. September 2017. As a graduated move, FPIs to begin 12Department of Economic Affairs I with, would be allowed to participate in derivatives 3.8 Major Developments in External Markets contracts in non-agricultural commodities, which would 3.8.1 Revisions under Combined Corporate Debt be cash settled on the settlement price determined on overseas exchanges with transactions denominated in Limit Scheme foreign currency. 3.8.1.1 On a review, and to further harmonize norms for 3.5.6 Banks permitted to offer intermediary and Masala Bonds issuance with the External Commercial clearing services in Commodity Derivatives Market Borrowings (ECB) guidelines, it has been decided that with effect from October 3, 2017, Masala Bonds will no 3.5.6.1 Following the Reserve Bank of India’s (RBI) decision, commercial banks in India are now allowed to longer form a part of the limit for Foreign Portfolio Investor offer professional clearing services to recognised (FPI) investments in corporate bonds under Combined Commodity Derivatives Exchanges, extending their Corporate Debt Limit (CCDL) Scheme. They will form a current reach limited to Equity Markets. Further, banks part of the ECBs and will be monitored accordingly. have also been allowed to offer broking/intermediation Accordingly, an additional amount of Rs. 44,001 crore services in Commodity Derivative Market via subsidiaries. arising from shifting of Masala Bonds will be released for This will further expand the reach of commodity derivatives to interiors of the country, especially making FPI investment in corporate bonds over the next two hedging instruments accessible to farmers, traders etc. quarters of FY 2017-18. An amount of Rs. 9,500 crore in each quarter will be made available only for investment 3.5.6.2 Above regulatory and operational reforms in commodity derivatives markets highlight progressive in infrastructure sector by long term FPIs. transformation of financial markets, dedicated to 3.8.2 Simplified Hedging Facility addressing the hedging-related needs of real economy in a prudent and responsive manner. 3.8.2.1 A Simplified Hedging Facility for any Over-the- 3.7 Merger of FMC with SEBI Counter Derivative Contract and Exchange Traded Derivative Contract permissible under Foreign Exchange 3.7.1 After the merger of functioning of erstwhile Management Act (FEMA, 1999) has been introduced by Forward Markets Commission, Mumbai with Securities easing the restrictions in terms of purpose, products and and Exchange Board of India, Mumbai w.e.f. 29.09.2015, rebooking of contracts, while not compromising on the an FMC Cell was created as a stop gap arrangement for basic requirements of FEMA. The facility is targeted a period of six months w.e.f. 29.09.2015, or till all the regular 41 employees of the Cell rendered surplus as a towards smaller entities with foreign exchange exposures result of merger are adjusted elsewhere, or till further who find it difficult to meet the process or documentation orders, whichever is the earliest. The tenure of the Cell requirements at banks and therefore keep their exposure has so far been extended four times and the latest unhedged and to promote a more dynamic and efficient extension is upto 28.03.2018. hedging culture. Rating Date of Foreign Currency Local Currency Agency affirmation of ratings Ratings Outlook Ratings Outlook Moody’s 16.11.2017 Baa2 Stable Baa2 Stable Revised from Revised Baa3 from Baa3 Fitch 02.05.2017 BBB- (LT) Stable BBB- Stable F3 (ST) S&P 24.11.2017 BBB- (LT) Stable BBB- Stable A-3 (ST) A-3 JCRA 16.10.2017 BBB+ Stable BBB+ Stable R&I 15.09.2017 BBB (LT) Stable No ratings were given for A-2 (ST) local currency 13Annual Report 2017-2018 3.9 International Cooperation Division retired Chief Justice of a High Court; or a sitting or retired Judge of a High Court who has completed not less than 3.9.1 Sovereign Credit Rating- 7 years of service as a Judge in a High Court and two 3.9.1.1 The following five international Sovereign Credit Members who are persons of ability, integrity and standing Rating Agencies (SCRAs) do Sovereign Credit Rating and have shown capacity in dealing with problems relating for India: to securities market and have qualification and experience  Standard and Poor’s (S&P) of corporate law, securities law, finance, economics or accountancy. They are appointed by the Central  Moody’s Investors Service Government for a term of five years and are eligible for  Fitch Ratings re-appointment, subject to the age limit prescribed by Section 15N.  Japanese Credit Rating Agency (JCRA) 3.10.3 SAT is not bound by procedure laid down by Code  Rating and Investment Information, Japan(R&I) of Civil Procedure but is guided by principles of natural 3.9.1.2 These agencies usually visit DEA every year for justice and has powers to regulate its own procedure, conducting their annual sovereign credit rating review including the places at which it shall have its sittings. wherein a meeting takes place. Indian side is usually headed by Secretary-DEA/CEA ansd attended by senior 3.10.4 Appellant may appear in person or authorize officers of various Departments/ Divisions to answer chartered accountants, company secretaries, cost queries of the agency. The latest sovereign ratings issued accountants and legal practitioners or any of its officers by these agencies are given below: to present his or its case before the Securities Appellate Tribunal. 3.9.1.3 Moody’s Investors Service (“Moody’s”) has upgraded the Government of India’s local and foreign 3.10.5 Civil Courts do not have jurisdiction to entertain currency issuer ratings to Baa2 from Baa3 and changed any suit or proceeding in respect of any matter which the outlook on the rating to stable from positive. India’s SAT is empowered to determine and no injunction can rating has been upgraded after a period of 13 years. be granted by any court or any other authority, in respect India’s sovereign credit rating was last upgraded in of any action taken or to be taken, in pursuance to any January 2004 to Baa3 (from Ba1). power conferred upon SAT under the SEBI Act. Any 3.10 Securities Appellate Tribunal (SAT) person aggrieved by any decision/order of SAT may file an appeal to Supreme Court. SAT is empowered to review 3.10.1 Securities Appellate Tribunal (SAT) is established under Section 15K of the Securities and Exchange Board its own decisions. of India Act, 1992, to exercise the jurisdiction, powers 3.10.6 SAT started functioning in 1997 as a single and authority conferred on the Tribunal under the SEBI member Tribunal and thereafter was reconstituted as Act, 1992, PFRDA Act, 2013, Insurance Act, 1938 and three members Tribunal in 2003. other law for the time being in force. 3.10.7 As on 31.12.2017, 286 appeals are pending before 3.10.2 SAT comprises of one Presiding Officer who is a SAT and its duration wise breakup is as follows: sitting/retired Judge of the Supreme Court or a sitting/ Month Appeals Balance New Total Total Less Over 3 Over 6 Over I Over2 Over5 SC & file as on Institution Disposal Appeals than 3 months months year years years Matters Year under 1.1.2017 Pending months Act Dec. SEBI 272 51 45 278 84 36 62 59 0 2017 IRDAI 08 0 0 08 0 03 03 00 02 0 14Department of Economic Affairs I 4. Financial Stability and Development issues related to Assessment of Financial Stability, Inter- regulatory Coordination, financial sector development and Council updates on the functioning of the various Technical 4.1 With a view to strengthening and institutionalizing Groups of the Sub Committee. Members of the FSDC the mechanism for maintaining financial are the members of the Sub-committee and in addition, stability,enhancing inter-regulatory coordination and Deputy Governors of RBI and Adviser (FSD), DEA are promoting financial sector development, the Financial also members of the Sub Committee. Various activities Stability and Development Council (FSDC) was set up of the Sub-committee are reported to the Council during by the Government as the apex level forum in December the Council Meeting. 2010. The Chairman of the Council is the Finance Minister. Its members include the heads of financial sector 4.4.2 During 2017, so far, the Sub-committee held two Regulators [Reserve Bank of India (RBI), Securities and meetings, i.e. on 17th April 2017 and 23rd November 2017 Exchange Board of India (SEBI), Pension Fund which reviewed the major developments on the global Regulatory and Development Authority (PFRDA) & and domestic fronts that impinge on the financial stability Insurance Regulatory and Development Authority of India of the country. The roadmap for National Centre for (IRDAI)], Chairman, Insolvency and Bankruptcy Board Financial Education (NCFE), orderly growth of pension of India (IBBI), Finance Secretary and/or Secretary, sector in India,Macroprudentialpolicy framework for India, Department of Economic Affairs, Secretary, Department Framework for Identification of Systemically Important of Financial Services, Secretary, Ministry of Corporate Financial Institutions, operationalization of Information Affairs and the Chief Economic Adviser. Adviser (FS), Utilities registered by Insolvency and Bankruptcy Board DEA is the Secretary of the Council. Secretary, MCA and of India (IBBI), implementation Status of Legal Entity Chairman, IBBI have been added as members recently, Identifier, recommendations of committee on Household vide Gazette notification dated 18.09.2017. The Council Finance, Fin-Tech and Digital Innovations–Opportunities, monitors macro prudential supervision of the economy, Challenges and Risks, Common Stewardship Code for including functioning of large financial conglomerates, and Financial Sector in India etc. were the other topics addresses inter-regulatory coordination and financial discussed during the meeting. The meeting also reviewed sector development issues, including issues relating to the functioning of the State Level Co-Ordination financial literacy and financial inclusion. Committees (SLCCs) in various States/ Union Territories, the activities of the various Technical Groups of the 4.2 During the year 2017, so far, the Council held Subcommittee and the progress achieved on the three meetings on 5th January 2017, 22nd August 2017 decisions/ recommendations emanating from the earlier and 29th December 2017. In the January meeting, besides meetings of the Sub-Committee. The Sub-committee has discussing the budget proposals from the Regulators, met 20 times so far. issues relating to Non-Performing Assets of Indian Banking System, FinTech, Digital Innovations and Cyber 4.4.3 Under the aegis of the FSDC-SC, the following Security and Financial Inclusion and Financial Literacy Technical Groups have also been set up: were discussed. In themeeting held in August, apart from (i) Inter Regulatory Technical Group (IRTG), which assessment of macroeconomic financial stability related deals with inter regulatory issues concerning financial issues, issues relating to Financial Sector Assessment stability risks and has the representation from all the Programme (FSAP) 2017, setting up of Financial Data regulators, has met 22 times in total. The Technical Management Centre (FDMC), setting up of Computer Group for Financial Inclusion and Financial Literacy Emergency Response Team in the Financial Sector (TGFIFL) has been constituted to enhance the inter- (CERT-Fin), Central KYC Registry (CKYCR) and Annual regulatory co-ordination in the matters related to Report of FSDC were discussed. The latest meeting of financial inclusion and literacy and the group has held FSDC on 29th December 2017 was held as pre-Budget 15 meetings so far. The Inter Regulatory Forum (IRF) 2018-19 consultations with the financial sector regulators. for supervision of financial conglomerates has met The Council has met 18 times so far. 21 times so far. The Early Warning Group, constituted 4.3 The Financial Stability Division (erstwhile FSDC to facilitate coordination between regulators and the Secretariat) provides secretarial assistance to Financial Ministryof Finance in order to monitor the early Stability and Development Council (FSDC).Adviser, warning signals in the financial markets as also to Financial Stability Division (FSD), Department of initiate quick action in the event of crisis has met 9 Economic Affairs,Ministry of Finance is the Secretary of times so far. the Council. 4.5 Financial Stability Board (FSB) 4.4 FSDC Sub-Committee (FSDC-SC) 4.5.1 FSB is an international body that monitors and 4.4.1 The FSDC Sub-committee set up under the makes recommendations about global financial system chairmanship of Governor, RBI, meets to broadly discuss that includes all G-20 major countries and Multilateral 15Annual Report 2017-2018 and Standard Setting Bodies. India is an active member currency options and swaps and credit default swaps of the Financial Stability Board (FSB) constituted under (CDS). The Reserve Bank of India Act, 1934 empowers the aegis of G20. India has three seats in its Plenary RBI to regulate OTC products such as interest rate represented by Secretary (EA), Deputy Governor-RBI and derivatives, foreign currency derivatives and credit Chairman-SEBI. Regular interaction with FSB takes place derivatives. In India Clearing Corporation of India Ltd. through periodic conference calls and meetings. (CCIL) provides guaranteed clearing and settlement Information is exchanged with FSB member jurisdictions functions for transactions in Money, G-Secs, Foreign frequently as per international requirements and norms. Exchange and Derivative markets in India that is the The FSD in the Department of Economic Affairs central clearing agency. coordinates with the various financial sector regulators 4.5.6 Another FSB priority area is addressing G-SIFI and other relevant departments/agencies to represent (Global-Systemically Important Finance Institutions). As India’s views with the FSB. During 2017, FSB conducted regards, G-SIB (Global-Systemically Important Bank), 2 Plenary meetings, 2 SCSI (Standing Committee on there is no G-SIB in India. In an earlier FSDC Meeting Standards Implementation) meetings, 2 RCG (Regional Consultative Group) Asia meetings, 1 Cybersecurity the matter has been discussed. Any regulator declaring Workshop, 6 SCSI telephonic conference call, 1 IMN any SIFI should bring out the proposal before the FSDC- (Implementation Monitoring Network) telephonic SC for deliberation especially on the cross-sectoral issues conference call which discussed varied issues like relating to financial stability. Such framework and resolution regimes, shadow banking, compensation guidelines may then be considered by FSDC for approval. practices, OTC derivative market reforms, policy As on 4 September 2017, RBI in addition to the SBI and measures for systemically important financial institutions, ICICI Bank, which continue to be identified as Domestic banking supervision principles, country peer review & Systemically Important Banks (D-SIBs) has also identified thematic peer review, implementation monitoring, HDFC Bank as a D-SIB. compliance of standards, Fintech, resolution regime, 4.5.7 Regarding Financial Consumer Protection i.e. vulnerability assessment etc. under FSB’s other priority area, as per Budget Speech 4.5.2 The various reform areas of FSB are broadly 2017-18, the Finance Minister, Government of India had classified under priority areas and other reform areas. stated that Cyber security is critical for safeguarding the India’s position on few areas is as below. integrity and stability of our financial sector and announced that a Computer Emergency Response Team 4.5.3 As regards, Resolution framework FSB has been for the Financial Sector (CERT-Fin) needs to be informed regarding the Insolvency and Bankruptcy Code, established. Accordingly, a Working Group was formed 2016 that has already been passed by Parliament in May that submitted its report for comments/suggestions in 2016 and published in the Official Gazette on 28th May 2016. The Insolvency and Bankruptcy Board of India was June 2017. From time to time the agenda is discussed established on October 1, 2016 in accordance with the both in FSDC meetings and FSDC Sub-Committee provisions of the Insolvency and Bankruptcy Code, 2016. meeting. Regular meetings with stakeholders are also Financial Resolution and Deposit Insurance (FRDI) Bill convened to deliberate and proceed on the matter. has already been tabled in Lok Sabha as on 10 August 4.6 Financial Sector Assessment Programme 2017 and currently under consideration of Parliament. (FSAP) 4.5.4 Regarding implementation status of Basel 4.6.1 The Financial Sector Assessment Program Committee on Banking Supervision guidelines, as per (FSAP) is a quinquennial comprehensive and in-depth Reserve Bank of India, guidelines regarding analysis of a country’s financial sector and is jointly countercyclical buffer is already in force from 5 February conducted by International Monetary Fund (IMF) and the 2015. As per Reserve Bank of India the LCR (Liquidity World Bank (WB), latter being involved in developing Coverage Ratio) requirement became effective from countries and regions. In September 2010, IMF made it January 1, 2015 for banks at 60%. As per the phase-in implementation plan of LCR, the minimum required LCR mandatory for 25 (now 29) systemically important has become 90% from January 1, 2018. Additionally, as jurisdictions, including India, to undergo financial stability per draft guideline issued in May 2015 by RBI the NSFR assessments under the FSAP, every five years. (Net Stable Funding Ratio) is implemented at the Accordingly, India underwent its first FSAP exercise in minimum requirement of 100% from January 1, 2018 2011-12 and the report was published by IMF on without any phase-in arrangement. 15thJanuary 2013. 4.5.5 Safer Over the Counter (OTC) derivative market 4.6.2 In accordance with regular cycle of mandatory is a priority area as per FSB. The OTC derivatives FSAPs, the second FSAP exercise for India has now been permitted to be traded in India are interest rate swaps successfully conducted, as committed in 2017. The (IRS), forward rate agreements (FRA), forex forwards, Scoping Mission had visited India during December 2016 16Annual Report 2017-2018 which discussed and finalised various topics for coverage was also held to consider the involvement of state level during the assessment exercise. This was followed by regulators in FDMC. Based on the meetings held under two more IMF-WB Mission visits in March 2017 and June- the chairmanship of Secretary (EA) the proposed FDMC July 2017, during which the Financial Stability Division Bill is under revision after which the same will be (FSD), DEA facilitated over 400 meetings across various processed further for finalization. Ministries/Departments, and Government agencies, all 4.9 Computer Emergency Response Team for financial sector regulators, public and private sector Financial Sector (CERT-Fin) participants for detailed discussions covering wide areas of the Indian financial sector. 4.9.1 Department of Economic Affairs agenda on “Fintech, digital innovations and cyber security” was 4.6.3 The quinquennial Financial Sector Assessment discussed in FSDC meeting held on 5th January 2017 Program (FSAP) of India jointly conducted by IMF and wherein the Council recognized the need for a fully World Bank (WB) was successfully completed in 2017 functional CERT in financial sector. Hon’ble FM in his and the IMF and the WB have published the Financial System Stability Assessment Report (FSSA) (along with Budget Speech for 2017-18 stated that Cyber security is IMF Press Release, Supplement on Bank Recapitalization critical for safeguarding the integrity and stability of our measures and Buff statement of IMFED India) and financial sector and announced that “a Computer Financial Sector Assessment (FSA) report respectively Emergency Response Team for our Financial Sector on 21/12/2017 on their respective websites. (CERT-Fin) will be established. This entity will work in Subsequently, a press release in this regard was also close coordination with all financial sector regulators and issued by DEA on the same date highlighting the major other stakeholders”. A Working Group (WG) under the observations contained in these reports and the opinion Chairmanship of Director General, Indian Computer of Indian jurisdiction on key matters. Emergency Response Team (ICERT), Ministry of Electronics & Information Technology (MeitY) with 4.6.4 The two Detailed Assessment Reports (DARs) representation from all financial sector regulators, various on Observance of Basel Core Principles and Principles Departments / organisations including D/o Economic of Financial Market Infrastructures are scheduled to be Affairs, D/o Financial Services, MeitY, has been published by IMF-WB in early Jan 2018. constituted in March 2017, to study and strengthen the 4.7 Macro Financial Monitoring Group(MFMG) cyber security framework through setting up of a computer emergency response team in the financial sector (CERT- 4.7.1 The Macro Financial Monitoring Group was set Fin). The Working Group submitted its Report and up in 2012 under the Chairmanship of CEA to discuss presentation on the report/ recommendation of Working any specific emergent issues, and meets regularly in DEA Group on CERT-Fin was held before Hon’ble Finance with representation from all the Departments of the Minister after which the report was placed in the Ministry of Finance. It aims at keeping track of the department’s website for public comments. For expansion macroeconomic and financial developments, identifying of the scope of CERT-Fin on which, consultations with vulnerabilities, and providing early warning signals. various Central agencies are going on. Before finalization 4.7.2 The Group discusses the Macro Financial of the Government proposal, consultation workshop is Monitors, which is essentially the information collated from also proposed. various “anchor divisions” on important macroeconomic and financial variables. The FSD presents some highlights of global and domestic developments for the information 5. Financial Sector Reforms and Legislation of members. The Group has held 19 meetings so far. Division 5.1 Introduction 4.8 Financial Data Management Centre(FDMC) 5.1.1 The Financial Sector Legislative Reforms 4.8.1 In the Budget Speech 2016-17 {Para 90(iii)}, the Commission (FSLRC), set up on 24thMarch, 2011 for re- Finance Minister has announced setting up of Financial writing the financial sector laws to bring them in harmony Data Management Centre (FDMC) under the aegis of with the current requirements, submitted its Report to the the FSDC to facilitate integrated data aggregation and Government on 22nd March, 2013. The Report is in two analysis in the financial sector. Subsequent to approval parts: Volume I titled “Analysis and Recommendations” of Hon’ble FM for setting up of a Statutory FDMC, a and Volume II titled “Draft Law” consisting of the draft Committee was set up under the chairmanship of the Indian Financial Code (IFC). The Commission, inter then AS (Inv), DEA to suggest a draft FDMC Bill which is alia,recommended a non-sectoral, principle-based placed in DEA website for public comments. Inter- legislative architecture for the financial sector, by ministerial consultation were held to explore feasibility of restructuring existing regulatory agencies and creating housing FDMC in existing institution such as IICA and new agencies, wherever needed, for better governance NIFM. A consultation meeting with State Governments and accountability. 17Annual Report 2017-2018 5.1.2 A new Division, namely, FSLRC Cell was created (iv) The existing DICGC will be subsumed into the in the year 2013 to process the implementation of the Resolution Corporation; FSLRC Report with the following mandate: (v) A new FRA will be created; a. To firm up the views of the Government on the (vi) A new PDMA will be created; and recommendations of the FSLRC following due consultative process with all the concerned (vii) The existing FSDC will become a full-fledged stakeholders, Regulators/Ministries/State statutory agency, with modified functions. Governments/Union Territories and public at 5.4 Implementation Status of the large; recommendations of the FSLRC b. To implement the recommendations of the 5.4.1 The status and next steps on the implementation FSLRC, duly approved by the Government; and of the recommendations of the FSLRC are as follows:- c. To deal with administrative and establishment (i) As agreed to in the meetings of FSDC, financial matters relating to FSLRC. sector regulatory agencies have been 5.1.3 On 26th September, 2017, it was decided to implementing the governance enhancing non- rename the FSLRC Division as Financial Sector Reforms legislative recommendations of the FSLRC on a and Legislation (FSRL) Division with (i) Legislative voluntary basis. Reforms and (ii) Other Financial Sector Reforms Sub- (ii) A Financial Sector Regulatory Appointment Divisions. Search Committee (FSRASC) has been created 5.2 Financial Sector Legislative Reforms for recommending names of suitable persons for Commission- Main recommendations appointment to board level positions of financial 5.2.1 The Report of FSLRC was placed in the public sector regulatory bodies with the approval of the domain on 28th March, 2013. The same was examined ACC on 24thNovember, 2015. The FSRASC has and discussed in various meetings of the Financial been reconstituted on 9th June, 2017. This would Stability and Development Council (FSDC) chaired by the bring about uniformity in the selection of board Finance Minister. The recommendations of the FSLRC members of financial sector regulators, which can broadly be divided into two parts - Legislative and was one of the recommendations of the FSLRC Non-Legislative. The legislative aspects of the on the broad structure of such regulators. recommendations relate to revamping the legislative (iii) As regards the establishment of a unified financial framework of the financial sector regulatory architecture agency for the organised trading, by way of an by a non-sectoral, principle-based approach and by incremental reform effort, the Forward Markets restructuring existing regulatory agencies and creating Commission (FMC) has been merged with the new agencies wherever needed. Securities and Exchange Board of India (SEBI) with effect from 28thSeptember, 2015 to achieve 5.3 Recommendations on the Financial the convergence of regulations of the securities Regulatory Architecture market and the commodity derivatives markets. 5.3.1 The Commission has recommended a seven FMC stands abolished and the Forward agency regulatory architecture namely, Reserve Bank of Contracts (Regulation) Act, 1952 has been India, Unified Financial Agency, Financial Sector Appellate repealed. However, there is no consensus on Tribunal, Resolution Corporation, Financial Redress merging the existing financial sector regulators Agency, Public Debt Management Agency and Financial into a single Unified Financial Agency. Stability and Development Council in the draft law- Indian (iv) The Task Forces for transforming the existing Financial Code to replace a number of existing laws. The Securities Appellate Tribunal (SAT) into the non-legislative aspects of the FSLRC recommendations Financial Sector Appellate Tribunal (FSAT) and are broadly of the nature of governance enhancing for establishing new agencies namely, Resolution principles for stronger consumer protection and greater Corporation (RC), Public Debt Management transparency in the functioning of financial sector Agency (PDMA) and Financial Data Management regulators. It features following set of changes, which Centre (FDMC) were set up on 30th September, renders it implementable: 2014. These Task Forces submitted their reports (i) The RBI will continue to exist, although with during June 2015. Another Task Force for modified functions; creating a sector-neutral Financial Redress Agency (FRA) that was set up on 5th June, 2015 (ii) The existing SEBI, FMC, IRDA, and PFRDA will as announced in the Budget Speech 2015-16 be merged into a new UFA; submitted its Report on 30th June, 2016. Its (iii) The existing SAT will be subsumed into the FSAT; Report is under examination. 18Department of Economic Affairs I (v) Apart from inviting comments on the FSLRC (d) Establishment of an independent Public Debt Report and the Draft IFC, the Department of Management Agency Economic Affairs in collaboration with the Institute An independent Public Debt Management of Company Secretaries of India (ICSI) organised Agency (PDMA) is proposed to be set up for managing a number of workshops and seminars on specific Government‘s debt and cash balance, etc. To this effect, areas of the IFC for building consensus on the the Government set up a Public Debt Management Cell Draft. Work on fine tuning the Draft IFC with (PDMC) on 4th October, 2016, as an interim arrangement comments of stakeholders suitably incorporated to make it legally flawless was initiated and the before setting up of an independent and statutory debt Draft IFC was revised in the light of the comments management Agency namely, Public Debt Management received and hosted on the website of the Agency (PDMA) of India, in due course. This interim Ministry of Finance on 23rd July, 2015, inviting arrangement will allow separation of debt management comments of stakeholders by 8thAugust 2015. functions from RBI to PDMA in a gradual and seamless Moving the Indian Financial Code (IFC) manner, without causing market disruptions. PDMC will recommended by the FSLRC in totality, after due have only advisory functions to avoid any conflict with consideration, is likely to take time. Key aspects the statutory functions of Reserve Bank of India (RBI). of the IFC being fast-tracked are as follows:- (e) Institutionalised and Statutory Monetary (a) Financial Sector Appellate Tribunal Policy Framework: The Securities and Exchange Board of India Act, e.i FSLRC has recommended establishment of 1992 has been amended through the Finance Act 2017, a statutory and an institutionalised framework to conduct for upgrading / enhancing the capacity of the Securities monetary policy, including the creation of a Monetary Appellate Tribunal (SAT) to hear appeals relating to the Policy Committee that would determine the policy interest Insurance and Pension sectors also and for providing for rate. The Reserve Bank of India Act, 1934 (RBI Act) has multiple benches. This would facilitate in moving towards accordingly been amended by the Finance Act, 2016, to a Financial Sector Appellate Tribunal, which was provide for a statutory and an institutionalised framework recommended to be the Appellate Tribunal for the entire for a Monetary Policy Committee, for maintaining price financial sector. stability, while keeping in mind the objective of growth. (b) Establishment of a comprehensive resolution The Monetary Policy Committee would be entrusted with framework for the financial sector the task of fixing the benchmark policy rate (repo rate) required to contain inflation within the specified target An announcement was made in the Budget level. A Committee-based approach for determining the Speech of 2016-17 to frame a comprehensive Code on Monetary Policy will add value and transparency to Resolution of Financial Firms and introduce it as a Bill in monetary policy decisions. The meetings of the Monetary the Parliament during 2016-17. The Financial Resolution and Deposit Insurance Bill, 2017 (the Bill) was introduced Policy Committee shall be held at least 4 times a year in the Lok Sabha on 10th August 2017 and referred to a and it shall publish its decisions after each such meeting. Joint Committee of Parliament for making a Report to e.ii. Provisions of the RBI Act relating to the the Parliament by the last day of the first week of the chapter on Monetary Policy have been brought into force following Session. The time for submission of the Report through a Notification in the Gazette of India Extraordinary to the Parliament by the JPC was subsequently extended on 27thJune, 2016. The Rules governing the Procedure upto the last day of the Budget Session, 2018. The for Selection of Members of Monetary Policy Committee enactment of the Bill will establish and empower the and Terms and Conditions of their Appointment and Resolution Corporation to contribute to the stability and factors constituting failure to meet inflation target under resilience of the financial system by carrying out speedy the MPC Framework have also been notified in the and efficient resolution of financial firms in distress, Gazette of India, Extraordinary on 27th June, 2016. The providing deposit insurance to consumers of certain Government, in consultation with the RBI, has notified categories of financial services, monitoring the the inflation target in the Gazette of India Extraordinary Systemically Important Financial Institutions and dated 5th August, 2016, for the five years ending on the protecting the consumers of financial institutions and 31st March, 2021, as under: public funds to the extent possible. Inflation Target : Four per cent. (c) Establishment of an independent Financial Upper tolerance level : Six per cent. Data Management Centre: Lower tolerance level : Two per cent. A centralised data centre named as Financial e.iii. As per the provision of section 45ZB of the Data Management Centre (FDMC) is proposed to be set up under the aegis of the Financial Stability and RBI Act, 1934, out of the six Members of Monetary Policy Development Council (FSDC) which is to be used for the Committee, three Members will be from the RBI and the analysis of financial stability and related issues. other three Members of Monetary Policy Committee will 19Annual Report 2017-2018 be appointed by the Central Government. The with Explanatory Note explaining key legal provisions of composition of the Monetary Policy Committee of the the Bill was hosted (at http://dea.gov.in/recent-update) Reserve Bank of India constituted and notified in the on the website of the Department of Economic Affairs on Gazette of India Extraordinary dated 29th September, 18th May, 2017. Public/stakeholders’ comments were 2016 is as follows: invited through the Press Release during 18th May, 2017 to 3rd June, 2017. Draft Bill has been firmed up in (a) Governor of the Bank—Chairperson, ex officio; consultation with the Ministry of Law and Justice, and (b) Deputy Governor of the Bank, in charge of after having obtained approval of the Cabinet, the same Monetary Policy—Member, ex officio; is being processed for introduction in the Parliament. (c) One officer of the Bank to be nominated by the 6. Infrastructure Policy & Finance (IPF) Central Board—Member, ex officio; Division (d) Shri Chetan Ghate, Professor, Indian Statistical  Infrastructure Policy & Finance (IPF) Division is Institute (ISI) —Member headed by Dr. Kumar V. Pratap, Joint Secretary. The (e) Professor Pami Dua, Director, Delhi School of Division has the following sections: Infrastructure Finance Economics (DSE) — Member (Infra-Fin), Infrastructure Policy & Programme (IPP), (f) Dr. Ravindra H. Dholakia, Professor, Indian Energy Sector Policies & Programmes (ESPP) and Public Institute of Management (IIM), Ahmedabad — Private Partnerships (PPP). In September 2017, a new Member section, namely Asian Infrastructure Investment Bank Ahmedabad — Member (AIIB) Section has been created under IPF Division. Each Section is headed by Adviser/Director and assisted by e.iv. The Members of the Monetary Policy Under Secretary/Deputy Director/Assistant Director. Committee referred to in sub paragraphs (d) to (f) above  E-Governance initiatives of the Division: All the would hold office for a period of four years or until further Sections of IPF Division have migrated to e-office mode orders, whichever is earlier. The Monetary Policy (e-files, leave, advances, etc). Committee is now functional. e.v. The Reserve Bank of India Monetary Policy 6.1 Infrastructure Finance Section Committee and Monetary Policy Process Regulations 6.1.1 Major Functions: were framed and notified on 14th July, 2017 for ensuring 6.1.1.1 Infrastructure Finance Section deals with full operationalisation of the MPC. The Regulations were financing requirements of infrastructure including subsequently laid in the Lok Sabha on August 4, 2017 conceiving new initiatives related to infrastructure and Rajya Sabha on August 8, 2017. financing and promotion of investment in infrastructure 5.5 Other Legislative Reforms sectors. The section deals with: 5.5.1 There have been instances of economic offenders · Matters related to infrastructure financing and promotion of investments in infrastructure fleeing the jurisdiction of Indian courts, before the sectors; commencement, or during the pendency, of criminal proceedings. The absence of such offenders from Indian · Matters relating to Infrastructure Debt Funds courts has several deleterious consequences - firstly, it (IDFs), Real Estate Investment Trusts (REITs)/ Infrastructure Investment Trusts (InvITs), Tax obstructs investigation in criminal cases; secondly, it Free Bonds, Municipal Bonds and other wastes precious time of courts; and thirdly, it undermines instruments meant for infrastructure financing; the rule of law in India. Besides, several such cases of economic offences also involve non-repayment of bank · Matters relating to New Credit Rating System for Infrastructure; loans thereby, worsening the financial health of the banking sector in India. The existing civil and criminal · Matters relating to Special Purpose Vehicle (SPV) provisions in law are inadequate to deal with the severity for Credit Enhancement of Infrastructure of the problem. Projects; · All international interfaces on infrastructure 5.5.2 In view of the above, an announcement was made financing (other than PPPs); in the Budget 2017-18 that the Government is considering to introduce legislative changes or even a new law to · Matters relating to Municipal Bonds by Urban confiscate the assets of such persons till they submit to Local Bodies (ULBs); the jurisdiction of the appropriate legal forum in India. In · Model Tripartite Agreements (MTA) for sectors pursuance to this announcement, a draft Bill titled, ‘The such as Road, Ports, etc; Fugitive Economic Offenders Bill’ (“the Bill”) was prepared · External charge- GCC Countries (United Arab to lay down measures to deter economic offenders from Emirates, Bahrain, Saudi Arabia, Oman, Qatar evading the process of Indian law by remaining outside and Kuwait, and Yemen), Turkey, Cyprus, the jurisdiction of Indian courts. The copy of draft Bill along Lebanon, Jordan; 20Department of Economic Affairs I · Matters relating to G20 Infrastructure Working 6.1.2.3 New Credit Rating System for Infrastructure Group (IWG); Projects · All policy matters relating to Project Monitoring 6.1.2.3.1 As announced in the Budget Speech 2016-17, Group (PMG) and its coordination within DEA; in consultation with DEA, Regulatory Authorities, and other Stakeholders, Credit Rating Agencies (CRAs) have · India-Saudi Arabia Joint Commission Meeting for devised a New Credit Rating System based on Expected Technical and Economic Cooperation; Loss (EL) approach, which seeks to provide additional · Matters relating to meetings of Board of Directors risk assessment mechanism for informed decision of India Infrastructure Finance Company Limited making by the investors, in addition to the existing (IIFCL) as Joint Secretary (Infrastructure Policy Probability of Default (PD) approach. The New Credit & Finance) is Government nominee on its Board Rating System for Infrastructure Projects has been of Directors; formally launched by CRAs on 12 January, 2017. The · Examination of proposals for Standing Cost New Credit Rating System will run in parallel with the Committee of Ministry of Road Transport & Current Rating System. Highways; 6.1.2.4 Creation of a Dedicated Fund to provide · Coordination and general matters pertaining to credit enhancement to infrastructure projects the Division. 6.1.2.4.1 In the Budget Announcement 2016-17, inter- 6.1.2 Major Policy Initiatives/Achievements: alia it has been announced that a dedicated fund will be 6.1.2.1 Infrastructure Debt Funds (IDFs) set up to provide credit enhancement to infrastructure 6.1.2.1.1 Government of India has conceptualized projects. The fund will help in raising the credit rating of Infrastructure Debt Funds (IDFs) to accelerate and bonds floated by infrastructure companies and facilitate enhance the flow of long term debt into infrastructure investment from long term investors. projects to help in the migration of project loans for 6.1.2.4.2 Pursuant to Budget Announcement 2016-17, it operating assets from banks to the fixed income markets. was decided that a Special Purpose Vehicle (SPV) for IDFs, through innovative credit enhancement, are Credit Enhancement to Infrastructure Projects would be expected to provide low cost long-term debt for set up as an NBFC-SPV with IIFCL as lead sponsor, and infrastructure projects. LIC and other PSUs/PSBs as co-investors. Setting up of 6.1.2.1.2 Potential investors under IDFs include off-shore the Fund is at an advanced stage subject to the institutional investors, off-shore High Net Worth notification of the regulatory framework by the Regulator Individuals and other institutional investors (Insurance (i.e. RBI). Funds, Pension Funds, Sovereign Wealth Funds, etc). IDFs are set up by sponsoring entities either as Non- 6.1.2.5 Municipal Borrowing Banking Finance Companies (NBFCs) or as Trusts/ 6.1.2.5.1 Government has initiated a pilot project for Mutual Funds (MF). IDF NBFCs have tax-exempt status developing a framework to build capacities of Urban Local and a lower withholding tax for foreign investors (5%). RBI has announced lower (50%) risk weight for assets Bodies (ULBs) to raise financing through the Capital under the IDF-NBFC Route. As on date, three IDFs under Markets for financing infrastructure projects. The pilot NBFC route and three under MFs route are in operation. initiative aims to develop a replicable model and related documents and demonstration of the model through a 6.1.2.2 Real Estate Investment Trusts (REITs)/ successful pilot transaction for a ULB. Guidelines for Infrastructure Investment Trusts (InvITs) issuance of Municipal Bonds in India have been notified by SEBI in 2015. A set of Urban Local Bodies (ULBs) 6.2.2.2.1 These are trust-based structures that maximize have been identified by the Ministry of Houseing & Urban returns through efficient tax pass-through and improved Affairs (MoHUA) for issue of municipal bonds. DEA is governance structures. Guidelines/Regulations for InvIT providing technical support including for facilitating and REIT were notified by SEBI on 26 September, 2014. regulatory compliances, project identification and hand- Budget 2016-17 provided that any distribution made out of income of Special Purpose Vehicle (SPV) to the REITs holding support to the ULBs. and InvITs having specified shareholding will not be 6.1.2.5.2 On 22 June, 2017, Pune Municipal Corporation subject to Dividend Distribution Tax. (PMC) issued Municipal Bonds worth Rs. 200 crore in 6.2.2.2.2 As on date, two InvITs have been successfully the first tranche, to raise almost Rs. 2264 crore over the launched. The first road sector InvIT raised over Rs 5,000 next five years for funding a 24x7 water project. The crore through an Initial Public Offer (IPO) and the second bonds shall have a structured payment mechanism along InvIT in the power transmission sector raised Rs 2,250 with dedicated escrow account to ensure timely servicing crore through an IPO. of the bonds. 21Annual Report 2017-2018 6.1.2.6 Financing Infrastructure in G-20 mechanisms that can draw in long term institutional investors without impairing the MDB 6.1.2.6.1 The issues pertaining to investment and credit rating. infrastructure are deliberated by the G-20 in the Investment and Infrastructure Working Group (IIWG). The 6.2 Energy Sector Polices & Programmes Section IIWG was established in 2014 during the Australian Presidency to focus on the following areas of work: 6.2.1 Major Functions: · i. Improvement in domestic investment climate; All policy related issues pertaining to energy sector, viz. Petroleum and Natural Gas, Coal, ii. Intermediation of global private savings for Power, Atomic Energy and New & Renewable productive investment; Energy; iii. Optimize Multilateral Development Bank (MDB) · Ministries/ Department: MoP&NG, MNRE, Atomic involvement; Energy, Space, Coal, Power; iv. Improve Process and Transparency of planning · Examination of the investment proposals in and prioritization and structuring of bankable investment projects. energy sector requiring the approval of Cabinet/ CCEA/ CoS/ PIB/ EFC for their viability and 6.1.2.6.2 Work undertaken under IIWG justification; a) One of the major outcomes of IIWG has been · Matters relating to ONGC Ltd, ONGC Videsh Ltd setting up of Global Infrastructure Hub (GIH) in (OVL) and International Solar Alliance (ISA); 2014 with a mandate to grow the global pipeline · of quality, bankable infrastructure projects. India Matters related to Committee on Allocation of has emphasized the need for project information, Natural Resources (CANR); knowledge dissemination and a common · International Territorial Charge: Iran, Iraq, Israel; platform where institutional investors can acquire · knowledge about a member country’s approach States: Maharashtra, Gujarat. and active strategy for investment. 6.2.2 Major Policy Initiatives/Achievements: At the G-20 Infrastructure Working Group (IWG) meeting held in December 2017 at Buenos Aires, 6.2.2.1 ESPP Section is the Secretariat of the Monitoring Argentina, India extended its willingness to work Committee (MC) set up to review the implementation with GIH so as to achieve higher infrastructure status of the recommendations of the Committee on investments. Additionally, better coordination Allocation of Natural Resources (CANR). The Monitoring across multiple institutions in the infrastructure Committee is chaired by the Cabinet Secretary. Out of space, particularly for addressing data gaps and 81 recommendations of CANR, 66 recommendations duplication of work, has been stressed upon. were accepted as it is and three recommendations with reformulations for implementation by respective b) Improvement in best practices for PPP Model: Ministries/ Departments. One recommendation was not India has suggested that knowledge sharing exercises should be taken up among member accepted. Remaining 11 recommendations are to be countries through standardized documentation implemented by the Department of Economic Affairs and capacity building instruments like tool-kits (DEA) in consultation with the concerned Ministries/ and training program for PPPs. India has offered Departments. assistance and learnings from its own 6.2.2.2 For implementation of these recommendations, experiences in PPPs to other countries and following two committees under the Chairmanship of engage in knowledge sharing exercises that will help build such capacities in member countries. Secretary, Economic Affairs have been constituted – c) The need for developing separate templates for (i) Working Committee to create a centralized greenfield and brownfield assets for them to be inventory of all Govt. Land including CPSUs: The recognized as separate asset classes has been Government Land Information System (GLIS) has been emphasized. Brownfield assets are generally created by Ministry of Electronics and Information considerably less risky as compared to greenfield Technology (MeiTy) and Ministry of Housing & Urban assets and therefore amenable to institutional Affairs. 31 Departments/ Ministries have uploaded data investment. on GLIS web portal till date. d) India has suggested, at various meetings, a need (ii) Committee for suggesting Broad Guidelines on for leveraging the credit rating and balance the issues relating to Procedures for Exchange, Transfer, sheets of MDBs through innovative financing Leasing, Licensing and Sale of land held by Govt. and 22Department of Economic Affairs I Govt. Controlled Statutory Authorities and CPSUs: The 6.3.2.5 Logistics Sector: Granted infrastructure status Report of the Committee has been sent to the Cabinet as logistics cost in India is very high compared to Secretary for consideration. developed countries. High logistics cost reduces the competitiveness of Indian goods both in domestic as well 6.2.2.3 Nine Cabinet/ CCEA/ CoS Notes/ proposals from as export market. Development of logistics sector would the line Ministries/ Departments have been examined encourage manufacturing and job creation. This will, in during the year. turn, be instrumental in improving the country’s GDP. 6.3 Infrastructure Policy & Programme Section 6.3.2.6 When infrastructure status is given, it enables the new sectors/sub-sectors to avail infrastructure lending 6.3.1 Major Functions: on easier terms with enhanced limits, access to larger · Analyzing investment proposals concerning amounts of funds as External Commercial Borrowings Road Transport & Highways, Ports, Shipping, (ECB), access to longer tenor funds from insurance Inland Water Transport, Railways, companies and pension funds and makes them eligible Telecommunications, Civil Aviation & Urban to borrow from India Infrastructure Finance Company Development sectors; Limited (IIFCL). · Matters relating to Projects (non-PPP) of Ministry 6.4 Public Private Partnerships (PPP) Cell of Road Transport and Highways; 6.4.1 Major Functions: · · Servicing Steering Committee, Inter-Ministerial PPP Policy & Programmes; Committees, High Level Committees, Group of · Scheme for India Infrastructure Project Secretaries, Institutional Mechanism on the Development Fund (IIPDF); Harmonized Master List of Infrastructure Sub- · PPP Capacity Building programmes; sectors; · Innovative interventions and PPP Pilot project · Matters related to Evaluation Committee for initiative; finalization of PIM/EOI in respect of strategic · Appraisal & approval of Central Sector PPP disinvestment of CPSEs to Division holding the Projects as per Cabinet approved guidelines and Sectoral Charge of relevant Ministry; orders for delegation of powers; · · States : Madhya Pradesh, Chhattisgarh. Scheme for financial support to PPPs in Infrastructure-Viability Gap Funding (VGF) 6.3.2 Major Policy Initiatives/Achievements: Scheme; 6.3.2.1 Following sub-sectors were recommended by the · Mainstreaming PPPs including technical Institutional Mechanism and subsequently approved by assistance and programmes from bilateral/ the Finance Minister in the year 2017 for inclusion in the multilateral agencies and support to State and Harmonized Master List of Infrastructure sub-sectors: local governments; · 6.3.2.2 Affordable Housing: Included in the International interface on PPPs and other matters Harmonized Master List of Infrastructure sub-sectors with concerning PPPs; the objective of achieving the mission of “Housing for All · Matters relating to management of PPP related by 2022”. information. 6.3.2.3 Ropeway/Cable Car: Granted infrastructure 6.4.1.1 Government of India has systematically rolled out status for boosting tourism in high altitude terrain in the Public Private Partnerships (PPP) program to bridge Uttarakhand, North East and other Himalayan States. the infrastructure gap, and create an enabling Ropeways have made great contribution internationally environment for private sector investment in infrastructure in attracting tourists across the world to the hilly areas. through PPPs for the delivery of high-priority public Ropeways are not only environmental friendly and a green infrastructure and services. The PPP Cell acts as the technology of transport but also have the potential to help Secretariat for Public Private Partnership Appraisal evacuate tourists and pilgrims in extreme weather Committee and Empowered Institution (EI)/ Empowered Committee (EC) for the projects posed for financial conditions. support through DEA’s Scheme for Financial Support to 6.3.2.4 Stations Redevelopment: Included in the PPPs in Infrastructure [Viability Gap Funding (VGF)]. Harmonized Master List of Infrastructure sub-sectors with 6.4.2 Major Policy Initiatives/Achievements : the objective of initiating Station Redevelopment program 6.4.2.1 Public Private Partnership Appraisal for 400 A1/A category stations across India and the Committee program is intended to provide state of the art amenities, comfort and convenience to passengers and other 6.4.2.1.1 The Public Private Partnership Appraisal stakeholders. Committee (PPPAC) was setup to streamline the 23Annual Report 2017-2018 procedure for approval of PPP projects, ensure speedy based on-line Toolkit that facilitates identification, appraisal of projects, eliminate delays, adopt international assessment, development, procurement and monitoring best practices and have uniformity in appraisal of PPP projects. The Toolkit is structured to cover the full mechanisms and guidelines. The PPPAC is chaired by life cycle of PPP projects. While the general structure Secretary, Economic Affairs with Secretaries of has incorporated international best practices, the Toolkit Department of Expenditure, Department of Legal Affairs, has been built on specific approaches for project NITI Aayog and the Sponsoring Ministry/Department as procurement, approval etc currently in place in India to members to consider and approve the proposals of ensure that it forms a relevant resource for practitioners Central Sector PPP Projects. During the period from in India. The on-line nature of the Toolkit ensures updating April 2017 to February 2018, 4 projects with Total of resource quickly over time as the approaches in place Project Cost (TPC) of Rs. 7851.78 crore have been develop and change. The toolkit covers four sectors, viz. recommended and approved by PPPAC. highways, ports, solid waste management and urban transport. The toolkit is available to practitioners through 6.4.2.2 Financial Support to Public Private DEA PPP Cell’s website, www.pppinindia.gov.in. Partnership in Infrastructure (Viability Gap Funding Scheme) 6.4.2.5 PPP Practitioners Guide 6.4.2.2.1 Infrastructure projects are often not 6.4.2.5.1 A comprehensive guidance for PPP commercially viable on account of their public good practitioners titled “PPP Guide for Practitioners” has been nature, having substantial sunk investment and low developed to provide step-by-step guidance on various returns. However, they continue to be economically processes in the PPP project life cycle including the pre- essential. Accordingly, the Scheme for Financial Support award phase. It highlights best practices that could be to Public Private Partnership in Infrastructure (Viability adopted by practitioners, to ensure transparency, fairness Gap Funding Scheme) was formulated to provide and accountability in the development and implementation financial support in the form of grants, one time or of PPPs. The Guide, available on DEA’s PPP Cell website, deferred, to infrastructure projects undertaken through i.e. pppinindia.gov.in, is divided into 17 modules which PPPs with a view to make them commercially viable. The discusses stages and concepts in the PPP project Scheme provides Viability Gap Funding up to 20% of the development process. The Guide is interspersed with Total Project Cost (TPC). The Government or statutory examples, key takeaways, web links and case studies. entity that owns the project may, if it so decides, provide 6.4.2.6 Post-Award Contract Management additional grants out of its budget up to further 20% of Guidelines the TPC. Viability Gap Funding under the Scheme is normally in the form of a capital grant at the stage of 6.4.2.6.1 Guidelines, Manuals and Online Toolkits have project construction. During the period from April 2017 been developed to guide Project Authorities during the to February 2018, Empowered Institution has granted Post-Award implementation phase of the PPP project. In-Principle approval to 6 projects with TPC of Rs. The Guidelines / Manuals have been designed to deal 992.78 crore and Final approval to 2 projects with with the changing contexts over the concession period, TPC of Rs. 432.35 crore and VGF of Rs. 84.98 crore. uncertainties and effectively handle disputes which are critical for the overall success of the PPP projects. While 6.4.2.3 India Infrastructure Project Development the Guidelines provide key principles of Contract Fund (IIPDF) Management during the Post-Award phase, these have 6.4.2.3.1 While quality advisory services are fundamental been further adapted to sector specific Manuals based to developing well-structured, value-for-money PPPs, the on the contractual obligations enshrined in the costs of procuring PPPs, and particularly the costs of Concession Agreements. These are further supported transaction advisors, are significant. Development of by an interactive web-based toolkit, easily accessible robust projects with a sound financial structure and through DEA’s PPP Cell website, i.e. optimal risk allocation is critical for evincing market www.pppinindia.gov.in, and have been designed to response in respect of the projects. The scheme for ‘India provide practical application-oriented assistance to Infrastructure Project Development Fund’ (IIPDF) had Project Authorities in undertaking project management. been launched to finance the cost incurred towards 6.4.2.7 Contingent Liability Management Tool development of PPP projects. The IIPDF supports up to 75 % of the project development expenses. 6.4.2.7.1 An Application Tool has been developed for estimation and management of contingent liabilities 6.4.2.4 PPP Structuring Toolkits arising from PPPs sponsored by Line Ministries, 6.4.2.4.1 PPP Toolkits have been designed to assist PPP Departments and State Owned Enterprises of the Central practitioners to strengthen decision-making at all key and State Governments. The Tool is a browser based stages of the PPP project cycle and also improve the application designed to estimate contingent liabilities of quality of the PPPs that are being developed. It is a web- PPP projects at different stages of their implementation 24Department of Economic Affairs I using an inbuilt contingent liability framework that is 6.5.2.2 The Letter of Support for the AIIB extending the aligned to various provisions relating to termination risks status, privileges, immunities and exemption set forth in and termination payments provided in the concession Chapter IX of the Articles of Agreement [as also in Chapter agreements. This Toolkit is easily accessible through IV (Article 19)], have been incorporated through the DEA’s PPP Cell website, i.e. www.pppinindia.gov.in. Gazette Notification dated 17 February, 2017 issued under UN (P&I) Act, 1947 (Act No.46 of 1947) signed on 6.4.2.8 Guidance on use of Municipal Bond 5 December, 2017 by the Secretary, Economic Affairs & Financing for Infrastructure projects: Alternate Governor on the AIIB Board of Governors. 6.4.2.8.1 PPP Cell, DEA has prepared a Guidance 6.5.2.3 India will host the next Annual Meeting of the Manual which serves as a handy reference to practitioners Asian Infrastructure Investment Bank (AIIB), which is third and policy makers on the use of Municipal Bond Financing in series, with active collaboration of the Government of for Infrastructure projects and is available at DEA’s PPP Maharashtra, in Mumbai during 22-27 June, 2018. The Cell website (www.pppinindia.gov.in). The initiative has Memorandum of Understanding (MoU) delineating the been taken to build capacities of Urban Local Bodies respective responsibilities of the Government of India and (ULBs) to raise financing through the Capital Market for the AIIB regarding the 2018 Annual Meeting of the Board financing infrastructure projects. The Guidance Manual of Governors of the AIIB for the aforesaid event has been provides actionable step-wise inputs on preparatory signed between the GoI and the AIIB on 12.12.2017. actions, the regulatory framework and process of bond issuance. 6.5.3 Projects signed for external funding with the AIIB 6.5 ASIAN INFRASTRUCTURE INVESTMENT BANK 6.5.3.1 24x7 Power for All in Andhra Pradesh: (AIIB) SECTION 6.5.3.1.1 This project is having developmental objective 6.5.1 Major Functions: to increase the delivery of electricity to customers and to 6.5.1.1 Asian Infrastructure Investment Bank (AIIB) is a improve the operational efficiency and system reliability Multilateral Development Bank (MDB) established in in distribution of electricity in selected areas in Andhra January 2016 with the objective to foster sustainable Pradesh. This project was negotiated on 11.04.2017 for economic development, create productive assets and a total external assistance of USD400 million, out of which improve infrastructure in Asia through financing of USD240 million will come in the form of IBRD loan and infrastructure projects. While the Bank was mooted by USD160 million as AIIB loan (in the ratio of 60:40). The China, as the second largest shareholder and one of the AIIB Board approved the loan in its Board meeting on founding members, India also played a critical role in its 02.05.2017. The aforesaid project has since been signed establishment and operationalization. The Bank on 22.06.2017. commenced its operation on 16.01.2016, and is now fully 6.5.3.2 Gujarat Rural Roads Project (Mukhya Mantri functional. Gram SadakYojana Project): 6.5.1.2 India’s shareholding in the AIIB is 8.5%, with a 6.5.3.2.1 The aforesaid project is having developmental total of 86,673 shares. As per the Article 5.1 of the Articles objective to improve rural road connectivity (by providing of Agreement (AoA) establishing the AIIB, the proportion all weather connectivity) to 1060 villages in all the 33 of paid-in and callable shares is in the ratio of 2:8. Thus, districts in Gujarat benefitting about eight million people. India’s paid-in shares amounts to 16,734.6 (rounded off The project was negotiated for a total external assistance to 16,735) (20% of 83,673). The par value of each share of USD329 million. The AIIB Board approved the loan in being USD 100,000, India’s paid-in component of capital its virtual Board meeting on 04.07.2017.The aforesaid amounts to USD 1,673.46 million. The paid-in capital project has since been signed on 04.08.2017. stock is payable in 5 equal instalments of USD 334.7 million each. India has paid first three instalments of 6.5.3.3 AC Transmission System Project of PGCIL: capital subscription in January, 2016, December, 2016 6.5.3.3.1 This project is having developmental objective and December, 2017 respectively. As the second largest to enhance capacity of electricity supply in Southern shareholder, India has an independent and exclusive seat Region and re-balance the peak and off-peak energy on the Board of Directors of the AIIB. Finance Minister is sharing from the surplus areas of Northern and Western India’s Governor on the AIIB Board of Governors, and regions to the deficit areas in Southern region. The project Additional Secretary (DEA) is India’s Director on the Board is estimated to cost USD303.47 million, out of which of Directors of the AIIB. USD100 million will come from AIIB, USD50 million from 6.5.2 Major Policy Initiatives/Achievements: ADB and remaining will be domestic financing. Power Grid Corporation of India Limited (PGCIL) is the borrower 6.5.2.1 India has so far recommended 17 project and GoI is the Guarantor for the aforesaid loan. The proposals for AIIB funding to the tune of USD 4,878.85 project was negotiated on 22.08.2017 for USD100 million. million (Annexure) (14 projects are in pipeline and 03 The AIIB Board approved the loan in its Board meeting are ongoing). Out of these 17 project proposals, three on 27.09.2017.The aforesaid project has since been loan agreements have been signed to the tune of USD signed on 07.12.2017. 589 million. 25Annual Report 2017-2018 7. Investment Division 7.1.6 During the recent visit of Indian delegation to Singapore from 15th to 16th November, 2017, led by 7.1 Domestic Investment & Outward Investment Hon’ble Finance Minister. FM delivered keynote from India addresses at Fintech festival and 16th Morgan Stanley 7.1.1 NIIF has been set up as a trust registered with Asia Pacific Annual Summit. Bilateral meetings with PM, Dy. PM, FM and Permanent Secretary (Finance) of Securities and Exchange Board of India (“SEBI”) as a Singapore were held. An investor’s roundtable was Category II Alternate Investment Fund (“AIF”) under the organised with marquee investors in Singapore on SEBI (Alternative Investments Funds) Regulations, 2012 November, 15, 2017. The roundtable was co-chaired by (“AIF Regulations”) in pursuant to Cabinet approval Secretary (EA) and Permanent Secretary (Finance) of dated 28th July 2015. Singapore. During the conclave, discussions on the range of issues were held including NIIF’s First close with a 7.1.2 NIIF has been created with the aim to attract subsidiary of ADIA and Domestic Institutional Investors. equity investments from both domestic and international Pursuant to discussion held in Singapore for promoting sources for infrastructure development in commercially the mutual cooperation and to develop strong a Fintech viable projects, both greenfield and brownfield, including Ecosystem in India, a Joint Working Group Co-chaired stalled projects in the country. by senior officials of both sides has been proposed. 7.1.3 First close of NIIF’s Master Fund: 7.2 International Investment Treaties & Framework 7.1.3.1 Pursuant to the MoU between Department of 7.2.1 The main function of this section is to negotiate Economic Affairs, Ministry of Finance, Government of and concludes Bilateral Investment Treaties with other India and the Government of United Arab Emirates (UAE), countries on the basis of the revised Model Bilateral Investment Treaty (BIT) Text which was approved by the signed on 11th February, 2016 to mobilise long term Cabinet in December, 2015. The new BIT text aims to investment into National Investment and Infrastructure provide appropriate protection to foreign investors in India Fund (NIIF); NIIFL has announced first close of NIIF’s and Indian investors in the foreign country, in the light of Master Fund for INR 4,166 Crore (approx. US$641 relevant international precedents and practices, while million). A subsidiary of Abu Dhabi Investment Authority maintain a balance between investor’s rights and (ADIA) has committed $25O million to the fund with Government obligations. The new Indian Model BIT text another$750million in co-investment rights. GOI has is expected to be the base text for replacing the existing BIPA with and for having new agreements. contributed 49% of the fund and the remaining investment has come from Indian private financial investors, with 7.2.2 During 2017 (i) Cabinet has approved the Bilateral ICICI Bank, HDFC Group, Kotak Life Insurance and Axis Investment Treaty (BIT) between the Republic of India bank contributing $75million in total on October 16, 2017. and the Republic of Belarus on 27th September, 2017. 7.1.4 A Green Growth Equity Fund has been announced (ii) Joint Interpretative Notes (“JIN”) on the Agreement between the Government of the Republic of India and with a corpus of GBP 500 million in April, 2017 with the Government of the People’s Republic of Bangladesh Department of international Development (DFID), UK for the Promotion and Protection of Investment has been Government. DFID will contribute GBP 125 mn with signed on 4th October, 2017 during the Hon’ble FM visit equivalent amount committed from NIIF. Balance amount to Bangladesh. to be raised subsequently. The fund manager is to be (iii) Cabinet has approved the Joint Interpretative finalised, and process for selection of the same is Declaration (“JID”) between the Government of the underway, jointly between NIIF and UK Government. Republic of India and the Government of the Republic of 7.1.5 National Investment and Infrastructure Fund (NIIF) Colombia regarding the Agreement for the Promotion and Protection of Investments between the Republic of India made its first investment on 22.01.2018 by partnering with and the Republic of Colombia on the 10thNovember, 2017. DP World; a leading enabler of global trade and an integral part of the supply chain, to create an investment platform (iv) Cabinet has approved the Investment Cooperation and Facilitation Treaty (ICFT) between the Federative for ports, terminals, transportation and logistics Republic of Brazil and the Republic of India on 30th businesses in India. The platform will invest up to US$ 3 November, 2017. billion of equity to acquire assets and develop projects in (v) A Capacity Building Workshop on International the ports sector, and beyond sea ports into areas such Investment Agreements (IIAs) with resource persons from as river ports and transportation, freight corridors, port- international experts from United Nations Conference on led special economic zones, inland container terminals, Trade and Development (UNCTAD), International Institute and logistics infrastructure including cold storage. of Sustainable Development (IISD) and Columbia Centre 26Department of Economic Affairs I for Sustainable Investments (CCSI) has been concluded 7.3.2.3.2 Post abolition of FIPB, Department of Economic on 12th and 13th December 2017 to sensitize various State Affairs has approved thirteen FDI proposals involving an Governments and Ministries/Departments of Central inflow of Rs. 1147.31 crore during the period 1st July 2017 Government on obligations and other issues such as to 31st December 2017. Further, the Department of dispute prevention and settlement under International Economic Affairs have processed and approved these Investment Agreements. proposals within the timelines as prescribed in SoP. 7.3 Foreign Direct Investment 7.3.2.4 Other Initiatives in 2017 7.3.1 The main function of this section is to provide (i) Foreign Investment in Stock Exchange: policy support on Foreign Investment policies including Government vide FEMA Notification No. 383 dated new policy initiatives in Foreign Direct Investment (FDI) 10.01.2017 has placed FDI limit of 49% under automatic Policy besides FDI policy clarifications & related matters. route in Infrastructure companies in Securities Markets, This Section primarily co-ordinates with DIPP, DFS, RBI namely, stock exchanges, commodity derivative and SEBI on foreign investment issues and also offers exchanges, depositories and clearing corporations, in them our comments / suggestions on any amendment in FDI policy as per need of the Indian economy. It also compliance with SEBI regulations. suggests measures for improving investment (ii) Convertible Note as an eligible instruments for environment in India with respect to FDI policy. As an Start-up: Government vide Notification No. 377/RB-2016 allocated subject, FDI Policy is handled by the Department dated January 10, 2017 has included convertible note as of Industrial Policy & Promotion (DIPP). an eligible financial instrument for start-up so that foreign 7.3.2 FDI Policy investor could invest through convertible note in start- 7.3.2.1 As per the extant policy, FDI up to 100% is up. ‘Convertible note’ means an instrument issued by a allowed, under the automatic route, in most of the sectors/ startup company evidencing receipt of money initially as activities. FDI under the automatic route does not require debt, which is repayable at the option of the holder, or prior approval either by the Government of India or the which is convertible into such number of equity shares of Reserve Bank of India (RBI). Investors are only required such startup company, within a period not exceeding five to notify and file documents the Regional office concerned years from the date of issue of the convertible note, upon of RBI. Under the Government approval route, occurrence of specified events as per the other terms applications for FDI proposals are considered and and conditions agreed to and indicated in the instrument. approved by the respective subject matter Ministries. 7.4 Foreign Trade and Services 7.3.2.2 Currently, Department of Economic Affairs has 7.4.1 This section deals in Policy matters related to Gold, been entrusted with processing of FDI proposals in the including Gold Monetisation Scheme (GMS) & and Indian following three areas: Gold Coin (IGC), deals with Investment Chapters related (i) Financial services which are not regulated by any to CECAs, CEPAs, FTAs etc. negotiated under the aegis Financial Sector Regulator or where only part of the of Ministry of Commerce & Industry with various countries financial services activity is regulated or where there is and regional blocs, it provides advice to Department of doubt regarding the regulatory oversight; Commerce (DoC) on policy issues related to deemed (ii) Foreign investment into a Core Investment Company; exports, imports, matters related to ECGC, NEIA, Exim and Bank etc. it also deals with policy issues related to (iii) Foreign investment into an Indian company engaged Overseas Direct Investment (ODI). only in the activity of investing in the capital of other Indian 7.4.2 Gold Monetization Scheme: Company/ies. 7.4.2.1 Gold Monetisation Scheme was launched by 7.3.2.3 Abolition of Foreign Investment Promotion Hon’ble Prime Minister on 5th November, 2015.This Board (FIPB) - scheme will benefit the manufacturers of gold jewellery 7.3.2.3.1 Union Finance Minister in the Budget Speech who are largely small and medium scale enterprises, by 2017-18 had announced for abolition of FIPB in 2017- making gold available to them. It will also benefit the 18. Accordingly, Cabinet on 24.05.2017 approved the common man by allowing him/her to earn interest on their proposal for abolition of the FIPB. This will provide ease holdings of gold lying idle. In the long-run, this scheme of doing business and will help in promoting the principle will help in reducing the country’s demand for import of of maximum Governance and minimum Government. As gold, to a large extent. The total gold mobilised under the per Standard Operating Procedure (SoP) issued by the Department of Industrial Policy & Promotion dated Medium and Long Term Government Deposit scheme 29.06.2017, eleven Ministries/Departments have been (MLTGD) of GMS is 6160 Kilograms. During the Financial notified as competent authorities for approval of foreign Year 2017-18, i.e. from April, 2017 to December, 2017, investment. The SoP also prescribes timelines for approximately 4400 kilograms of gold have been speedier disposal of FDI proposals. mobilized under MLTGD of this scheme. 27Annual Report 2017-2018 8. Multilateral Institutions Division approximately US$ 26 billion with an undisbursed balance of USD 16.6 billion. The World Bank projects are spread across sectors like Urban, Transport, Education, Health, 8.1 Introduction Rural Development, Panchayati Raj Institutions, Irrigation, 8.1.1 The MI Division is concerned with policy matters Water Supply Power, Tourism, Governance, Environment & Forest etc. of Multilateral Institutions like World Bank Group, International Monetary Fund (IMF), Asian Development 8.5 Major activities pertaining to the World Bank Bank (ADB), African Development Bank (AfDB) and in 2017-18 related Institutions. MI Division is also the nodal point for facilitating and monitoring Externally Assisted Projects 8.5.1 India as donor to IDA: (Central & State Projects all over India) which are being 8.5.1.1 During the IDA 18 Replenishment Meetings, it implemented through Multilateral Development Banks was announced by India that it would prefer the Word and other related Trust Funds / Loans / Grants. In addition, Bank Group to meet its needs through IBRD resources it also deals with Global Alliance for Vaccines and and hence, part of the IDA resources offered to India as Immunization (GAVI) and the Global Fund to Fight AIDS, transition support be made available to meet the needs Tuberculosis and Malaria (GFATM). of other IDA clients. Thus, India would no longer be a borrower from IDA. As a commitment to India’s shared 8.2 World Bank Group objective of eliminating extreme poverty, reducing 8.2.1 The World Bank is among the world’s leading vulnerability and increasing resilience across countries, development institutions with a mission to fight poverty India decided to become donor to IDA with a contribution and improve living standards for people in the developing of USD 200 million to IDA 17 replenishment. In world by promoting sustainable development through furtherance of its commitment towards the IDA countries, loans, guarantees, risk management products, and (non- India announced a pledge of INR 12.25 billion as its lending) analytic and advisory services. The World Bank contribution towards IDA 18 replenishment. Payment of is one of the United Nations’ specialized agencies. The the first contribution of INR 4,083,330,000 towards the World Bank concentrates its efforts on reaching the first instalment of India’s contribution to IDA-18 was made Millennium Development Goals aimed at sustainable in January 2018. poverty reduction. 8.5.2 Loan Signed & Disbursement: 8.2.2 India is member of four institutions of the World 8.5.2.1 Total 18 projects were signed during the year 2017, Bank Group viz., International Bank for Reconstruction and which includes 5 IDA Projects amounting to USD 647.5 Development (IBRD); International Development million of assistance, 13 IBRD Projects amounting to USD Association (IDA); International Finance Corporation (IFC) 1467.9 million of assistance. Total Disbursement for the and Multilateral Investment Guarantee Agency (MIGA). period January to December 2017 was approximately USD India has been accessing funds from the World Bank 1,769.15 million (IBRD approximately USD 798.71 million (mainly through IBRD and IDA) for various developmental and IDA approximately USD 970.43 million). projects. MI division is the focal point for India being 8.5.3 Monitoring of the World Bank Portfolio: represented in the WBG meetings for international level deliberations to discuss policy issues pertaining to the 8.5.3.1 During January-December 2017, the following World Bank Group as also to undertake projects with review meetings were conducted to monitor the ongoing, assistance from the World Bank (IBRD and IDA). pipeline and technical assistance projects of the World Bank: i. Technical Assistance (TA) Projects’ Review 8.3 World Bank Reforms meeting to review ongoing TA projects of the World Bank Group was held in February 2017. 8.3.1 In the last Capital Increase in IBRD (Spring ii. A pipeline Review meeting was held in North Meetings, April 2010), India was allocated additional Block, DEA on September 22, 2017. A total of 24,092 shares (through General Capital Increase and 38 projects pertaining to Agriculture and Water Selective Capital Increase). As a result India became the (12), Education (1), Tourism (1), Disaster 7th largest shareholder in IBRD with voting power of Management (1), Health (1), Energy (4), 2.91%. Before this revision, India’s voting power was Environment (4), Governance (2), Urban (5) and 2.77% at 11th position among shareholders. During 2016, Transport and ICT (7) sector were reviewed. India completed the subscription of allocated additional shares. Discussions are now ongoing to finalise additional iii. A Tri-partite Review Meeting for 56 WB aided capital increase in the IBRD by April 2018. projects in Agriculture (9), Irrigation/Water Resources (5), Rural and Urban Water Supply 8.4 World Bank India Portfolio (6) Transport (16), Energy (6) and Disaster Management (7) along with a State Review of 8.4.1 The World Bank portfolio as of December 2017 projects in U.P. (7) was held in Lucknow during comprises approximately 108 projects amounting to 7-8 December 2017. 28Department of Economic Affairs I 8.6 Meetings of Fund Bank approximately USD 5 billion, making India IFC’s largest portfolio exposure which accounts for 9% of its global 8.6.1 Spring meetings, 2017 of World Bank/IMF, FM’s portfolio. India is also IFC’s largest advisory client and meetings of G-20/G-24/IDA-18 Replenishment meeting regional hub for South Asia. The IFC’s investments in India were held from 20th -24th April 2017 in USA. The Finance are spread across important sectors like infrastructure, Ministry delegation led by the Hon’ble Finance Minister manufacturing, financial markets, agribusiness, SMEs and comprised of Secretary (EA), CEA. JS (MI), JS (MR) and renewable energy. Keeping in alignment with the Country other senior officials. Dr.Urjit Patel, Governor (RBI) and Partnership Strategy (CPS) of the World Bank Group in other RBI officials also joined the delegation to attend India, IFC focuses on low-income States in India. IFC’s the Spring Meetings. The Plenary Meeting of the India Commitment during the period July 2016-June 2017 Development Committee discussed, inter-alia, the (IFC Fiscal Cycle) was USD 1.96 billion (including mobilised “Forward Look” exercise carried out by the World Bank financing), the highest so far. A total of 39 Article III focussing on “A Vision for the World Bank Group in 2030 Notifications were approved during July 2016-June 2017 – Progress and Challenges”, Progress Report on the (IFC Fiscal Cycle). Since July 2017 (start of IFC Fiscal Shareholding Review and a paper on “A Stronger World year), nine Article III Notifications for IFC investment worth Bank Group for All”. The Hon’ble Finance Minister also USD 325.81 million in equivalent INR have been received held bilateral meetings with the US Treasury and by the DEA and granted no objection. Further, DEA has Commerce Secretaries, World Bank Group President, granted no objection for the signing of two MoU’s between and Finance Ministers of France, Bangladesh, Australia, the Ministry of Water Resources, River Development and Sweden and Indonesia. Ganga Rejuvenation and IFC; and posed one TA project to IFC. 8.6.2 The Annual Meetings of the IMF/World Bank, FMs Meetings of G-20 and other associated Meetings 8.8 International Monetary Fund were held in USA from 9th to 14th October, 2017. The Finance Ministry Delegation led by the Hon’ble Finance 8.8.1 India is a founder member of the International Minister comprised of Secretary (EA) and other senior Monetary Fund, which was established to promote a officials. Dr.Urjit Patel, Governor (RBI) and other RBI cooperative and stable global monetary framework. At officials also joined the delegation to attend the Annual present, 189 nations are members of the IMF. Since the Meetings. The Development Committee session IMF was established, its purposes have remained focussed on the capital adequacy question.The 96th unchanged but its operations - which involve surveillance, Meeting of the Development Committee Plenary of the financial assistance and technical assistance - have World Bank discussed the World Development Report developed to meet the changing needs of its member 2018, maximising Finance for Development, Progress countries in an evolving world economy. The Board of Report to Governors on Shareholding and Forward Look Governors of the IMF consists of one Governor and one Implementation Update. The Hon’ble Finance Minister Alternate Governor from each member country. For India, also held bilateral meetings with the US Treasury and the Finance Minister is the ex-officio Governor on the Commerce Secretaries, Italian Minister for Economy and Board of Governors of the IMF. There are three other Finance, Australian Treasurer, Iranian Minister for countries in India’s constituency at the IMF, viz. Economy and Finance, UK’s Chancellor of Exchequer Bangladesh, Bhutan and Sri Lanka. Governor, Reserve and Finance Minister of Sri Lanka. Bank of India (RBI) is India’s Alternate Governor. 8.7 International Finance Corporation (IFC) 8.8.2 Meetings of Board of Governors: 8.7.1 International Finance Corporation (IFC), a 8.8.2.1 The Board of Governors usually meets twice a member of the World Bank Group, focuses exclusively on year to discuss the work of the respective institutions, investing in the private sector in developing countries. viz. the Spring meetings and the Annual meetings of the Established in 1956, IFC has 184 members. India is IMF and World Bank. At the heart of the gathering are founding member of IFC. IFC is an important development meetings of the IMF’s International Monetary and partner for India with its operations of financing and advising Financial Committee (India is represented by the Finance the private sector in the country. India has a shareholding Minister in IMFC) and the joint World Bank-IMF of 4.01%, the sixth largest along with that of the Russian Development Committee, which discuss progress on the Federation. India holds 3.27% of the voting Power. India’s work of the IMF and World Bank. The 2017 Spring Executive Director represents a constituency equal to Meeting of the International Monetary Fund and World 4.04% voting power. There are three other countries in Bank Group was held in Washington D.C from April 17- India’s constituency at the IFC, viz. Bangladesh, Bhutan 24 2017. The Annual Meetings of the IMF and World Bank and Sri Lanka. IFC has committed over USD 15 billion in was held during October 9-15, 2017 at Washington D.C. India since the first investment in 1958. Currently, IFC The 36th Meeting of the IMFC, which is an advisory body investments are spread over about 200 clients in India. As made up of 24 IMF Governors was held at Washington of August 2017, IFC’s committed portfolio in India stoodat D.C on October 13-14, 2017. 29Annual Report 2017-2018 8.8.3 a. India and IMF: the NAB continues as a standing facility and the rolled 8.8.3.1 The membership of the Fund is committed to back NAB resources continue to be counted toward the maintain a strong, quota-based, and adequately Fund’s overall lending capacity. As NAB arrangement resourced IMF. IMF’s total resources presently include expired on November 16, 2016, India concurred to the the following: proposal to renew the NAB for a period of five more years. a. Quotas: Primary source of financing for c. India’s contribution to Bilateral Borrowing lending; Arrangements (BBA) b. New Arrangements to Borrow (NAB) acts BBAs are used as a third line of defense after as the second line of defence i.e. after quota quota and NAB resources are exhausted substantially. resources are exhausted substantially; At the Los Cabos G20 Summit in 2012, the IMFC and c. Bilateral Borrowing Agreements (BBAs) G20 jointly called for further enhancement of IMF provide a third line of defence. resources for crisis prevention and resolution through d. India’s Quota and Ranking: The 2010 IMF temporary bilateral loans. This included BRICS countries wherein US$ 10 billion was contributed each by India, Quota and Governance Reforms (including Brazil and Russia. India’s commitment of contributing US$ the 14th General Reforms of Quotas) came 10 billion is implemented through the mechanism of Note into effect on January 26, 2016. Purchase Agreement (NPA) between Reserve Bank of Consequently, India’s quota in the IMF is India (RBI) and the IMF. SDR 13,114.40 million with a shareholding of 2.75%. India ranks 8th in terms of quota India has agreed to commit USD 10 billion to the holding in IMF. Consequent to this Quota BBA 2016 as on August 10, 2017. Consequently Draft Increase in IMF, India has provided for the NPA to effect the BBA 2016 as revised from IMF and Quota increase of SDR 7292.9 million under vetted by RBI has also been approved and is expected the 14th General Review of Quotas as SDR to be signed soon. 1,823,225,000 through India’s SDR holdings for Reserve Asset Portion (25% of quota 8.8.4 South Asia Regional Training and Technical increase) and SDR 5,469,675,000 for Local Assistance Center (SARTTAC) Currency Portion (75% of quota increase) 8.8.4.1 A Memorandum of Understanding was signed through issuance of non-interest bearing, between India and International Monetary Fund for setting non-negotiable Government of India Rupee up of South Asia Regional Training and Technical Securities. Assistance Center (SARTTAC) in India by the b. India’s contribution to New Arrangements to International Monetary Fund on March 11, 2016. The Borrow (NAB) Centre has been officially inaugurated on February 13, 2017. SARTTAC will serve six member countries of In April 2009, the G-20 agreed to increase the Bangladesh, Bhutan, India, Maldives, Nepal& Sri Lanka. resources available to the IMF by up to $500 billion (which It will provide training to government & public sector would triple the total pre-crisis lending resources of about employees, enhance their technical and analytical skills $250 billion) to support growth in emerging market and and improve the quality of their inputs into policy. It will developing countries, viz. through bilateral financing from also provide technical assistance to governments and IMF member countries; and by incorporating this financing public institutes in various areas such as macroeconomic into an expanded and more flexible New Arrangements policy, macro & micro prudential regulation, financial to Borrow (NAB). As part of efforts to overcome the global sector supervision as well as national accounts statistics financial crisis, in April 2009, G-20 economies agreed to and forecasting. increase the resources available to the IMF by up to $500 billion to support growth in emerging market and 8.8.4.2 India has committed to contribute USD 32.8 developing countries. The increase was made through million of which the first instalment of USD 17.8 million to (i) increase in bilateral financing from IMF members and SARTTAC was paid in August, 2016 and the balance USD (ii) by incorporation of this financing into an expanded 17.8 million has been paid in November 2017-18. and more flexible NAB. The amended NAB, which 8.8.4.3 The SARTTAC has indicated that Technical became effective on March 11, 2011 increased the Assistance across three broad areas namely; Financial maximum amount of resources available under NAB to Regulation and Supervision, Macroeconomic Statistics SDR 370 billion from SDR 34 billion. & Financial Sector Policies and training across areas of The NAB was rolled back from SDR 370 billion Macroeconomics, Fiscal & Monetary Policy will be to SDR 182 billion, pursuant to the effectiveness of the included as part of their FY18 program as elaborated in 14th Review quota increase resulting in a decline in the the endorsed points of action of the recently held Interim financing ratio (NAB: quota) from 3:1 to 1:1. However, Steering Committee meeting as on November 17, 2017. 30Department of Economic Affairs I 8.8.4.4 Further it may be noted that a one day workshop 8.9.4 Asian Development Bank has a Board of of all Principal Secretaries of Finance/ Planning Governors (BoG), a Board of Directors (BoD), a Departments of State Governments on Involvement of President, six Vice Presidents and other necessary Multilateral Agencies in Developing Capacity of Finance officers & staff. Like other members, India is also Departments in States/ Union Territories was held on Sep represented on the BoG. The Finance Minister of India 11, 2017 at SARTTAC, New Delhi. This workshop was is the designated Governor for India. All the powers of instrumental in (i) Sensitizing the States about SARTTAC the Bank vest in the BoG. The BoG exercises its powers (ii) Getting feedback on training, technical assistance in and functions with the assistance of the BoD, to whom areas where SARTTAC can help (iii) Discussing key powers are delegated for specific functions. India is current issues in PFM Framework and trends in good represented in the BoD by a nominee of the GOI as practices. As of now, eleven states have submitted their Executive Director (ED). ED is supported by officers from TA and training requirements which have been India (two Advisers and one Executive Assistant). incorporated in the work program FY 2018. 8.9.5 Annual Meetings of BoG is held in a member 8.8.5 Article IV Consultations country in early May every year. Annual meetings are statutory occasions for Governors of ADB members to 8.8.5.1 Under Article IV of the IMF’s Articles of provide guidance on ADB administrative, financial, and Agreement, the IMF holds bilateral discussions with operational directions. The meetings provide members, usually every year, to review the economic opportunities for member governments to interact with status of the member countries. Article IV consultations ADB staff, non-government organizations (NGOs), media, are generally held in two phases. During this exercise and representatives of observer countries, international the IMF mission holds discussions with the RBI and organizations, academia and the private sector. 46th various line Ministries / Departments of Central Annual Meeting of ADB was hosted by India during 2-5 Government. The Article IV Consultations are concluded May, 2013 in New Delhi. The last (50th) Annual Meeting with a meeting of IMF Executive Board at Washington of ADB was held at Yokohama, Japan during 4-7 May DC which discusses the Article IV Report. The Mid Year 2017. The 2018 Annual General Meeting of ADB would Article IV Mission with International Monetary Fund was be held in Manila in May 2018. held during July 17-21, 2017. 8.9.6 ADB assistance to India commenced in 1986. 8.9 Asian Development Bank Average sovereign annual lending increased from $586 million between 1986-96 to $905 million between 1997- 8.9.1 Membership of ADB: 2002, $1.094 billion between 2003-07, $1.9 billion between 2008-12, and more than $2.0 billion between 8.9.1.1 India became a member of the Asian Development 2013-2017. As of 31st December 2017, there are 84 Bank (ADB) as a founding member in 1966. The Bank is ongoing sovereign loans amounting to $13.467billion. engaged in promoting economic and social progress of its developing member countries (DMCs) in the Asia Pacific 8.9.7 ADB assistance to India supports the Region. The main instruments that it uses to do this are Government’s development priorities, evolving focus making loans and equity investments, providing technical areas, and flagship initiatives such as Atal Mission for assistance for the preparation and execution of Renewal and Urban Transformation (AMRUT); Smart development projects and programs and other advisory Cities; 24×7 Power for All; Skill India; and Make in India. services, guarantees, grants and policy dialogues. The India country partnership strategy (CPS) of ADB provides the overarching framework for ADB’s operations 8.9.2 ADB has 67 members (including 48 regional in India. In line with the Government of India’s guiding and 19 non-regional members), with its headquarters principle that multilateral development partners add value at Manila, Philippines. ADB’s authorized & subscribed beyond tangible investments, ADB leverages knowledge, capital stock is US$163.12 billion of which India’s supports capacity development, and incorporates subscription is US$10.3 billion. India is holding 6.33% of innovation and best practice into its operations. The new shares, totaling 672,030 shares {@US $ 12063.5 per Country Partnership Strategy (CPS) of ADB for 2018-22 share), in ADB. India has 5.36% voting rights. Japan has been finalised in September, 2017. and the US represent the largest shareholders with 15.61% 8.9.8 ADB interventions in India span six sectors of each of shares. China and India are the third (6.44%) and operation: transport; energy; urban infrastructure and fourth (6.33%) largest shareholders, respectively. services; finance; skills; and agriculture and natural 8.9.3 India became a donor to Asian Development resources. Fund (ADF) since July 2014 and contributed US$ 30  The ADB transport sector program aims to million for the 11th Replenishment of ADF. For ADF-XII, improve connectivity and accessibility, promote India has pledged an amount of US$40 million. ADB safe and environment-friendly practices, and provides concessional finance through the ADF to the enhance in-country and subregional trade Least Developed member countries. corridors and facilities. 31Annual Report 2017-2018  Energy sector initiatives contribute to the 8.9.12 Technical Assistance (TA) program has also strengthening of power transmission and evolved in line with the loan program. TA support is being distribution networks in India. ADB supported used to build capacity, improve project preparedness and initiatives aim to provide uninterrupted power implementation, and undertake scoping studies and supply to all, while promoting low-carbon knowledge products. solutions, renewable—including solar energy, 8.9.13 Portfolio performance has improved since 2005, and energy efficiency. largely as a result of regular tripartite portfolio review  The urban sector program focuses on expanding meetings (TPRMs) organized jointly by Government of India the coverage, quality, and continuity of basic and ADB and attended by staff from Department of services to improve the urban quality of life. It is Economic Affairs (DEA), Ministry of Finance, ADB, and aligned to support the three GoI urban flagship Executing Agencies of ADB projects across all States. initiatives. Contract awards have increased from $550.5 million in 2004 to $ 2.4 billion in 2017, while loan disbursements have risen  The finance sector program endeavors to support from $381 million to $1.9 billion over the same period. leveraging of finance for infrastructure through loans and equity finance, investment funds, credit 8.9.14 ADB has set up a Technical Assistance Special lines, and guarantees. Fund (TASF) for providing technical assistance to Developing Member Countries (DMCs) for capacity  ADB’s agriculture and natural resources sector building development in the formulation, design and interventions provide assistance in the key areas implementation of projects to facilitate effective use of of water use efficiency and climate resilience. external financing. India has been voluntarily contributing to TASF since 1970.  ADB’s skills development program endeavors to contribute to an increase in the supply of qualified 8.10 African Development Fund (AFDB) labor to industries and services essential to 8.10.1 India is a non-regional member of AfDB and growth. The program includes support to State- contributes to the resources of the Bank through level efforts in skills development with a focus contributions to African Development Fund (ADF), on quality and outcomes. Multilateral Debt Relief Initiative (MDRI) and Technical 8.9.9 ADB has assured to enhance its India lending Cooperation. During Financial Year 2016-17, India programme from the current level of $2 billion a year to pledged an amount of `100cr. (Grant) and `100cr. (Bridge $3 billion per annum for the period 2018-22. Loan) each for the 14th Replenishment of ADF (ADF 14), which seeks to contribute to towards poverty reduction 8.9.10 ADB shares the vision of Government of India and economic and social development in the least on regional cooperation and integration. South Asia Sub- developed African Countries. regional Economic Cooperation (SASEC) Program brings together Bangladesh, Bhutan, India, Maldives, Myanmar, 8.10.2 The 52nd Annual Meetings (AMs) of AfDB were Nepal, and Sri Lanka in a project-based held during 22-26 May, 2017 in Gandhinagar, Gujarat. partnership.Under this flagship Program, ADB has been An Indian delegation led by Hon’ble Finance Minister, Shri. ArunJaitley attended these meetings. On May 23, 2017, working with the SASEC member countries for over 13 Hon’ble Prime Minister of India, Shri Narendra Modi years to build cross-border power lines, introduce policy inaugurated the AMs. The theme of the AMs was measures to facilitate regional trade, and connect roads “Transforming Agriculture for wealthy creation in Africa”. for movement of goods and people. SASEC countries Government of India also organized an “Africa India share a common vision of boosting intraregional trade Cooperation” seminar and an exhibition during the AfDB and cooperation in South Asia, while also developing Annual Meetings. connectivity and trade with Southeast Asia through Myanmar, to the East Asia, and the global market.The 8.11 Global Alliance for Vaccines and SASEC Vision was launched in April 2017 during the Immunizations (GAVI Alliance) SASEC Finance Ministers Meeting in New Delhi. 8.11.1 The GAVI Alliance (formerly the Global Alliance 8.9.11 Building the capacity of various executing for Vaccines and Immunization) was founded in 2000 to agencies has been an important element of ADB’s reduce the historical gap in access to life saving vaccines assistance to India. The Capacity Development Resource and reduce child mortalities. GAVI’s mission is to save Center was established at ADB’s India Resident Mission; children’s lives and protect people’s health by increasing it collaborates with leading experts and national training access to immunization in poor countries. GAVI is institutes to develop and deliver training courses for estimated to have contributed to the immunization of executing agencies on operational matters as well as additional 500 million children and in prevention of technical and substantive issues relating to ADB approximately seven million future deaths with operations in India. contribution of about USD 12 billion till 2016. 32Department of Economic Affairs I 8.11.2 India is not only a recipient, but also a contributor emerging market economies. However, G20 rose into to GAVI Alliance. As per ‘Contribution Agreement’ signed true prominence in 2008 when it was elevated from a between Government of India and GAVI, India committed forum of Finance Ministers and Central Bank Governors to contributed USD 1 million per annum for the years to that of G20 Heads of Nations in order to effectively 2013-14 to 2016-17 to the GAVI Alliance. respond to the global financial crisis of 2007-2010. This proved to be a very effective strategy and the G20 rose 8.11.3 A proposal of MoHFW was received in 2017 for to the occasion and helped in ensuring that the world enhancement of India’s contribution to the GAVI in the was kept away from a major economic collapse. next replenishment cycle 2017-21. The proposal was examined in DEA and it was decided with the approval of 9.1.2. The first G20 Summit was held in November Hon’ble Finance Minister that the Govt. of India will make 2008 in Washington DC under the shadow of the greatest a contribution of US$ two million per annum to GAVI, financial crisis in the post-war era. This was followed by i.e., a cumulative contribution of US$ 8 million for the eleven summits held in London (April, 2009), Pittsburg next replenishment cycle of GAVI of four years. Since (September, 2009), Toronto (June, 2010), Seoul the arrangements are to be formalized through a (November, 2010), Cannes (November, 2011), Los Cabos Contribution Agreement, the draft contribution agreement (June, 2012), St. Petersburg (September, 2013), Brisbane obtained from the GAVI has been forwarded to L&T (November, 2014), Antalya (November, 2015) and Division in MEA for comments/concurrence, which are Hangzhou (September, 2016). The last G20 Summit was awaited. held in Hamburg under German Presidency on 7th -8th July 2017. Argentina took over the G20 Presidency from 8.12 Global Fund to Fight AIDS, Tuberculosis and Germany on December 1, 2017. Malaria (GFATM) 9.1.3. The G20 issues are divided into Finance Track 8.12.1 The Global Fund to Fight AIDS, Tuberculosis and and Sherpa Track. Under Finance Track, there are Malaria (The Global Fund / GFATM) is an international various working/ study groups deliberating on issues like financing organization that aims to attract and disburse international financial architecture, infrastructure, additional resources to prevent and treat HIV and AIDS, sustainable financing, growth etc. Among these, G20 Tuberculosis and Malaria. The organization is public- Framework Working Group (FWG) is perhaps the most private partnership with Secretariat at Geneva, mature working group. India, along with Canada continues Switzerland. The organization began operations in to co-chair the G20 FWG that plays a pivotal role in the January 2002. GFATM supported programs have estimated to have saved 17 million lives since 2002. development and coordination of growth strategies. The other Working/ Study Groups of G20 Finance Track are 8.12.2 As per the ‘Multi-Year Contribution Agreement’ International Financial Architecture (IFA) Working Group, signed between Government of India, GFATM and IBRD Sustainable Financing Study Group (SFSG), (as Trustee of the Trust Fund for Global Fund) on 27th Infrastructure Working Group (IWG) and Global January, 2014, India committed USD 16.50 million to Partnership for Financial Inclusion (GPFI) GFATM for the fourth replenishment period 2013-16. 9.1.4. The Working Groups under Sherpa Track 8.12.3 With the approval of the Finance Minister, a include; Trade and Investment Working Group (TIWG), ‘Multi-Year Contribution Agreement’ has been signed Sustainability Working Group (SWG), Employment between Government of India and the GFATM on Working Group EWG), Anti-corruption Working Group 05.12.2016 for India’s contribution of US$ 20 million to (ACWG), Health Working Group (HWG), Development the Global Fund during the Fifth Voluntary Replenishment Working Group (DWG). Apart from these issues relating cycle 2017-19 as per following schedule (i) US$ 6 million to digitalisation and agriculture are discussed under Digital in 2017 and (ii) @US$ 7 million in 2018 & 2019. India’s Economy Task Force (DETF) and Agriculture Deputies contribution for the year 2017 (USD 6 million) has been Meetings respectively. paid in June, 2017. 9.2 G20 German Presidency 2017-Priorities 9. International Economic Relations 9.2.1. The German Presidency in 2017 delineated its Division priority as “Building an interconnected world”. The focus was on three broad based themes, with each covering 9.1. G-20 different agenda items. 9.1.1. The G20 was formed in 1999, as a forum of i. Building Resilience: World Economy, Finance Ministers and Central Bank Governors, in Trade and Investment, Employment, recognition of the fact that there was a major shift in the International Financial Architecture, global economic weight from the advance economies to International Tax Co-operation 33Annual Report 2017-2018 ii. Improving Sustainability: Climate and September 2017 for the first automatic exchange of Energy, 2030 Agenda, Digitalisation, Global financial account information under the Common Health, Empowering Women Reporting Standard (CRS). They also called on all relevant jurisdictions to begin exchanges by September 2018 at iii. Assuming Responsibility: Tackling the the latest. On the issue of tax transparency, Leaders said causes of displacement, Partnership with that defensive measures will be considered against listed Africa, Fighting Terrorism, Anti-corruption, non-cooperative jurisdictions. They called for enhancing Agriculture and food security tax certainty and tackling tax challenges raised by 9.3 Outcomes of G20 Hamburg Summit 2017 digitalisation of the economy. To fight corruption, tax evasion, terrorist financing and money laundering, 1. The G20 Summit 2017 was successfully held in Leaders agreed to advance the effective implementation Hamburg on 7th -8th July 2017. India was represented in of the international standards on transparency and the Summit by Hon’ble Prime Minister Shri Narendra Modi beneficial ownership of legal persons and legal accompanied by officials from Department of Economic arrangements, including the availability of information in Affairs (DEA) and Ministry of External Affairs (MEA). the domestic and cross border context. 2. Through intense negotiations in Sherpa 4. G20 Compact with Africa: Leaders highlighted meetings, Finance Ministers & Central Bank Governors the need for joint measures to enhance sustainable meetings, Working Group meetings, Ministerial meetings infrastructure and improve investment frameworks in and pre-Summit meetings, India was successfully able Africa. They expressed their readiness to help African to articulate its interests and ensure that priorities are countries and call on other partners to join the initiative. reflected in Leaders’ Communiqué. 9.4 Sherpa Track 9.3.1 Finance Track 1. Leaders agreed to remain collectively committed 1. Resilient Global Financial System: Leaders to mitigate greenhouse gas emissions inter alia, through reiterated their commitment to the finalization and timely, increased innovation on sustainable and clean energies full and consistent implementation of the agreed G20 and energy efficiency, and work towards low greenhouse- financial sector reform agenda. They agreed to work gas emission energy systems. towards finalizing the Basel III framework without further significantly increasing overall capital requirements 2. Leaders welcomed international cooperation on across the banking sector, while promoting a level playing the development, deployment and commercialisation of field. They welcomed the Financial Stability Board (FSB) sustainable and clean energy technologies and support assessment of the monitoring and policy tools available financing by Multilateral Development Banks to promote to address risks from shadow banking. Leaders also universal access to affordable, reliable, sustainable and acknowledged that malicious use of ICT could endanger clean energy. financial stability. 3. As regards safeguarding against health crises 2. International Financial Architecture: Leaders and strengthening health systems, Leaders recognised pledged to enhance the international financial architecture that implementation of and compliance with the and the global financial safety net with a strong, quota- International Health Regulations (IHR 2005) is critical for based and adequately resourced IMF at its centre. They efficient prevention, preparedness and response efforts. reiterated their commitment to the completion of the 15th They supported the WHO´s central coordinating role, General Review of IMF Quotas, including a new quota especially for capacity building and response to health formula, by the Spring Meetings 2019 and no later than emergencies, and encouraged full implementation of its the Annual Meetings 2019. Leaders supported the emergency reform. ongoing work to further enhance the effectiveness of IMF’s lending toolkit. Leaders also endorsed the MDBs’ 4. Leaders aimed for implementation of National Joint Principles and Ambitions on Crowding-in Private Action Plans, based on a One-Health approach, well Finance and welcomed their work on optimizing balance under way by the end of 2018 to tackle the spread of sheets and boosting investment in infrastructure and Anti-Microbial Resistance (AMR) in humans, animals and connectivity. the environment. 3. International Tax Cooperation and Financial 5. Leaders noted that migration and forced Transparency: Leaders expressed their commitment displacement trends are of major relevance for countries towards implementation of the Base Erosion and Profit of origin, transit and destination and agreed to address Shifting (BEPS) package and encouraged all relevant the root cause of displacement. They also recognized jurisdictions to join the Inclusive Framework. They that social and economic benefits and the opportunities reaffirmed their commitment to stick to the deadline of of safe, orderly and regular migration can be substantial. 34Department of Economic Affairs I 6. Leaders endorsed 4 sets of High Level Principles 9.6 G20 –Argentina Presidency-2018 on the Liability of Legal Persons, Organizing against Argentina took over the G20 Presidency from Corruption, Countering Corruption in Customs, Corruption Germany on December 1, 2017. The theme of its related to Illegal Trade in Wildlife and Wildlife Products. Presidency is “Building consensus for fair and sustainable They agreed to continue to fully implement the G20 Anti- development” with a focus on three key issues: Corruption Action Plan and Implementation Plan 2017-18. 7. Supporting the rule-based multilateral trading i. Future of work system with the WTO at its centre to promote trade and ii. Infrastructure for development investment liberalization and facilitation, Leaders committed to further strengthen G20 trade and investment iii. Sustainable food future cooperation and deepen work on investment facilitation and retention. G20 will strive to keep markets open in view 9.7 BRICS of the importance of reciprocal and mutually advantageous 1. The BRICS nations form the five key pillars of trade and investment frameworks and the principle of non- south-south cooperation. They continue to play an discrimination, and continue to fight protectionism. important role as engines of global growth as well as 9.5 India’s contribution for the Summit representative voice of emerging markets and developing countries in the global forums. 1. G20 leaders endorsed Hamburg Action Plan (HAP). HAP took note of the India’s initiatives for: 2. Under the Chinese Presidency of the BRICS a. introducing labor market reforms to provide forum in 2017, the economic and financial cooperation security to workers, increase female gained fresh impetus as the BRICS Finance Ministers participation in the workforce; and Central Bank Governors worked together to develop b. promoting the ease of doing business; a blueprint for enhanced future cooperation in new areas. In this regard, BRICS have agreed to jointly establish a c. facilitating external commercial borrowings BRICS local currency bond fund and to foster cooperation (ECBs) by startups in order to encourage on Public Private Partnership (PPP) mode of innovation; and infrastructure financing. d. popularizing a number of derivative instruments in exchanges or electronic 3. The New Development Bank has started its trading platforms. lending operations in India and till date, the Bank has approved financing of more than USD 1.4 billion for the 2. Amid increasing anti-globalization sentiment Indian projects. These projects cut across diverse sectors world-wide, India, Germany and like- minded countries such as renewable energy, road infrastructure were successful in inserting strong narrative in G20 development and improvement of water sector. Several Leaders’ Communiqué in support of open, rule based, other infrastructure projects are currently under non-discriminatory WTO consistent trade and investment consideration for the Bank financing. framework, and G20 commitment to fight against protectionism. 4. The framework of swap lines, conceived as BRICS Contingent Reserve Arrangement (CRA) with 3. G20 members also agreed to India’s call for corpus of USD 100 billion, stands operationalised in case reforming international financial architecture by agreeing any member nation requires short-term liquidity support. to completion of the 15th General Review of IMF Quotas, The BRICS Central Banks have also established the CRA including a new quota formula, by the Spring Meetings 2019 and no later than the Annual Meetings 2019. System of Exchange in Macroeconomic Information (SEMI) and are further working to strengthen the research 4. G20 Leaders expressed their commitment to capabilities of the CRA. work to finalise the Basel III framework, but on India’s request agreed to do so without further significantly 9.8 G-24 increasing overall capital requirements across the banking 1. G-24 was established in 1971 by the Group of sector, while promoting a level playing field 77 (G-77). The Intergovernmental Group of Twenty Four 5. On India’s behest, deadline for phasing out of on International Monetary Affairs and Development(G- fossil fuel subsidy was dropped. 24) coordinates the position of developing countries on monetary and development issues in the deliberations 6. A statement on countering terrorism was and decisions of the Bretton Woods Institutions (BWI). endorsed by the Leaders’ during the Summit on India’s In particular, the G-24 focuses on issues on the agendas strong call to fight against terrorism. of the International Monetary and Financial Committee 7. India hosted a G20 FWG meeting in March 2017 (IMFC) and the Development Committee (DC) as well in Varanasi. as in other relevant International fora. 35Annual Report 2017-2018 2. The governing body of the G-24 meets twice a of SDF during its 20thmeeting held from 1-3 December year, preceding the Spring and Fall meetings of the 2014 at Male, Maldives decided that the fund allocation International Monitory and Financial Committee and out of capital contributions of member states will be: 5% the Joint Development Committee of the World Bank towards social window; 47.5% towards economic window and the International Monitory Fund (IMF). The plenary and 47.5% towards infrastructure window. Funding of G-24 meetings are addressed by the heads of the IMF projects under Social Window of SDF is active and 11 and the World Bank Group as well as by senior officials projects have already been approved under this window of the United Nation (UN) System. Issues are first till date. Recently, the Board of Directors of SDF, in its discussed by the Deputies and culminate at the 28th Board Meeting held during 20-22 December, 2017 Ministerial level by the approval of a document that sets in Thimphu, Bhutan, approved the Credit Policy and E&I out the consensus view of member countries. The Policy Guidelines of SDF, enabling the activation of E&I Ministerial document is released as a public windows for project financing. Communiqué at a press conference held at the end of the meetings. Decision making within the G-24 is by 10. Aid Accounts & Audit Division (AAAD): consensus. 10.1 AAAD under Department of Economic Affairs 3. The last G-24 Ministerial meeting was held on implements the financial covenants of external Loans/ 12th October, 2017 in Washington D.C. The next meeting Grants obtained/received by Government of India from of the G-24 Ministers is expected to take place in April in various Multilateral and Bilateral donors. Main functions 2018 in Washington, D.C. handled by this Division are processing claims received 9.9 OECD from Project Implementing Authorities, to draw down funds from various donors and timely discharge of debt 9.9.1 OECD releases Economic Survey of Member servicing liability of Government of India. Besides, this countries and other key economies once in about every Division is responsible for maintaining loan records, two years. OECD released Economic Survey of India in External Debt Statistics, Compilation of various 2007, 2011, 2014 and 2017 management Information Reports, Publication of 9.10 Indo-Russia Cooperation External Assistance Brochure on annual basis, and 9.10.1 The credit protocol for financing the construction framing of estimates of External Aid Receipts and Debt of Kudankulam Nuclear Power Project (units 5 & 6) servicing. In addition, audit of Authorizations issued by between India and Russian Federation was signed on DGFT offices fro Export Promotion is also conducted 1st June,2017 at St. Petersburg, Russia. by this Division. This division is ISO 9001:2008 certified since 2007 for its functions related to External 9.11 SAARC and SAARC Development Fund (SDF) Assistance. 9.11.1 Framework on Currency Swap Arrangement 10.2 Performance/Achievement during Financial for SAARC Member Countries: The “Framework on Year 2017-18-ending December, 2017) Currency Swap Arrangement for SAARC Member Countries” was approved by the Government of India 10.2.1 External receipts on Government Account on 1st March , 2012. The Framework was formulated during financial year 2017-18 (upto 31st December, with the intention to provide a line of funding for short 2017) stands at `30,107/- crore and Assistance in the term foreign exchange requirements or to meet balance form of Cash Grant was of `1,166/- crore. During the of payments crises till longer term arrangements are same period a sum of `23,648/- crore was repaid/paid made or the issue is resolved in the short-term. Under as debt servicing. the facility, RBI offers swaps of varying sizes to each SAARC member country (Afghanistan, Bangladesh, 10.2.2 A comparison with the corresponding period of Bhutan, Maldives, Nepal, Pakistan and Sri Lanka) previous financial year is tabled below: depending on their two months import requirement and In ` crore not exceeding US$ 2 billion in total, in USD, Euro or INR. Till date Bhutan (twice), Sri Lanka (thrice) and Sl. Description 2016-17 Upto Upto Maldives (once) have availed this facility.The validity of No Dec.2016 Dec.2017 the Framework has been extended twice. At the first instance on 18thNovember, 2015, and recently the 1 Receipts 41001 28728 30107 Framework has been for a period of another two years 2 Payments i.e. till 13th November, 2019. (Principal and Interest) 31287 23634 23648 9.11.2 Operationalization of Economic and Infrastructure (E&I) Windows - The Board of Directors 3. Net Transfer 9714 5094 6459 36Department of Economic Affairs I 10.3 E-Governance 10.4.2 This office sends its officers to ISTM and other training centres for training in functional and other 10.3.1 The Activities of AAAD have been fully government areas like ethics in Governance and computerized since April 1999. A software known as Administration. Training is most important aspect to "Integrated Computerised System" (ICS) has been developed. This covers all the activities in the loan cycle increase the capacity of officials. This office has i.e. preparation of Estimates for External Assistance for developed; over a period of time; an excellent centre of receipt as well as repayment, preparation of Annual cross learning due to its continuous interaction at External Assistance Brochure, processing of claims, international, national, state and local levels. repayment of debt and maintenance of Debt Records. 10.5 Standards & Improvements in service All the Officers/Staff members of this Division are well versed with the functioning of this system. The deliveries computerized system being used in this Division required 10.5.1 All the activities of this Division have been some extra features to make the reporting more robust. organised hierarchically and standards in terms of time The system has been updated during the current financial span at each level for their accomplishment have been year in view of the requirement of using multiple selections defined. The standards set out are being adhered to by to provide input/data for preparation of replies for Parliament Question etc. The new formats allow close monitoring. The standards set out are being generating various reports using multiple selections. adhered to by close monitoring. Stakeholders of this Division are well defined consisting of three broad groups 10.3.2 A comprehensive Web-site http://aaad.gov.in to i.e. PIAs, External Funding Agencies and others. Service disseminate data on External Assistance received and to be rendered to these groups is also well defined i.e. repayment made along-with status of various activities smooth and quick disbursal of the Loans/Grants, timely in this division is operational for the benefit of credit debt servicing and to provide management information divisions of DEA, Central Ministries, State Governments, PIAs, External Agencies, General Public and other as and when required. stakeholders. This website is updated on daily basis and 10.5.2 To ensure continuous improvement in the virtually provides real time figures (time-lag of 24 hours). performance standards, quarterly Management Review In addition comprehensive data about Disbursed and Meeting (MRMs) are being held. In MRMs performance Outstanding Debt (DOD) in respect of External Sovereign is critically reviewed and methods/suggestions for Borrowing is also available on this website. Soft copies of Annual External Assistance Brochure being published maintenance/improvement of the service delivery by this Division are also available on the website for easy standards are discussed by the management. reference of all the stakeholders. 10.6 Externally Aided Projects/Schemes in 10.3.3 e-Governance by way of accepting and operations for Development of North- Eastern processing/forwarding of the draw down claims from Region and Sikkim various PIAs has been initiated by this division. Wherever 10.6.1 As part of development for North-Eastern- PIAs have been provided software support for processing the e-claims they submit e-claims to this Division (World Region and Sikkim total 47 Externally Aided Projects Bank and ADB) claims). Such software is being utilized are in operation. Out of which 41 are implemented by by the PIAs to maximum extent. In case of E-claims, SOE/ State Governments and 6 projects by Central Interim Unaudited Financial Report (IUFR), claims from Government. These Projects are mainly for development PIAs and faster disbursals. In case of World Bank, claims of Infrastructure (Roads & Power Generation) are processed in E-disbursement mode through the Environment & Forest, Urban Development, Water World Bank's software/client connection from this Division Resources etc. The total Utilization during April- to World Bank. December 2017 was `1800.84 crore. 10.4 Trainings 10.7 Audit under Export Promotion 10.4.1 In order to familiarise the officers/staff of the 10.7.1 AAAD carries out audit of Export Licenses issued PIAs, training on E-submissions are being organized by by Director General of Foreign Trade located at 44 this Division from time to time since last few years. In stations. During the financial year 2017-18 (upto this series, 50 officers/staff members of different PIAs were imparted trainings during current financial year i.e. 30.11.2017) a sum of `900 Lakhswere recovered. A total 2017-18. As a result of initiatives taken by this Division, number of 25 cases were adjudicated on the basis of 625 claims have been received in the current financial shortcomings pointed out by this division. These cases year from PIAs to this Division through E-mode. include an amount of `1653 lakhs. A comparative table 37Annual Report 2017-2018 of recoveries made during last four years and current 11.6 Redressal Of Public Grievances: financial year (as on 30th Nov. 2017) is shown below: 11.6.1 A Centralized Public Grievances Redressal And In ` lakhs Monitoring System (CPGRAM) is operational within the Government which attends to all the Public Grievances Sl. No Year Amount related to various Ministries/Departments. During the year 1 2013-14 1338 2017 a total of 4448 fresh public grievance cases were 2 2014-15 1851 received in the Department besides 858 brought forward 3 2015-16 1901 from the previous year. Out of these 5306 cases, 4363 4 2016-17 1281 cases were disposed off during the year. 5 2017-18 (Nov. 2017) 900 11.6.2 Joint Secretary (ACC) has been nominated as the Public Grievances Officer of Department of Economic 11. Administration Division Affairs. His contact details have been displayed on the PGRM portal (http:pgportal.gov.in). 11.1 Functions 11.7 Right To Information Act, 2005 11.1.1 Administration Division is responsible for personnel and office administration, implementation of Official 11.7.1 In order to facilitate dissemination of Language policy of the Government, implementation of the information under the provisions of the Right to Right to Information Act, 2005 Grants-in-aid, redressal of Information Act, 2005, Department of Economic Affairs public grievances, training of officials, Record Retention has initiated the following actions: Schedule, Complaints Committee on Sexual Harassment of Women Employees etc. (i) An RTI Section has been set up to collect, transfer the applications under the RTI Act, 2005 11.2 Staff Strength to the Central Public Information officer/Appellate 11.2.1 The staff strength in Department of Economic Authorities/Public Authorities concerned and to Affairs and its attached/sub-ordinate offices/statutory submit the quarterly returns regarding receipt and bodies along with the representation of Scheduled Castes disposal of the RTI applications/appeals to the (SCs), Scheduled Tribes (STs), Other Backward Classes Central Information Commission. (OBCs) and Persons with Disabilities therein is given in Annex. I & II respectively. The information regarding (ii) Details of the Department’s functions along with Pending ATN on PAC in respect of Admn.III is NIL. its functionaries etc. have been placed on the RTI portal of the Departments official website 11.3 Grants-in-aid (www.finmin.nic.in) as required under section 11.3.1 During the year 2017, grants-in-aid of Rs.19.25 4(1) (b) of the RTI Act. lac was sanctioned to Consumer Unity & Trust Society, (iii) All Under Secretaries/Deputy Director/Assistant Jaipur, Rajasthan by Department of Economic Affairs to Director/Sr. Accounts Officers and Economic undertake a research work on “Export-oriented FDI, FTAs Officers level officers have been designated and GST in India, Issues and Impact on SEZs and EOUs”. as Central Public Information Officers (CPIOs) 11.4 Complaints Committee on Sexual under section 5 (1) of the Act, in respect of Harassment of Women Employees subjects being handled by them. 11.4.1 In compliance with the Supreme Court’s Judgment (iv) All Deputy Secretaries/Directors/Addl. dated 13 August, 1997 in the Visakha Case relating to Economic Adviser have been designated as First preventions of sexual harassment of women at work place, Appellate Authorities in terms of Section 19 (1) a Complaints Committee for considering complaints of of the Act, in respect of US/DD & EO working sexual harassment of women employees in Department under them and designated as CPIOs. of Economic Affairs is in existence in the Department. (v) The list of CPIOs and AAs is updated and 11.5 Training of Staff Members uploaded time to time in the website of DEA for 11.5.1 Department of Economic Affairs deputes its facilitation of the viewer and RTI applicants. To officials for training to ISTM and other institutes to facilitate the receipt of applications under the RTI increase their efficiency and improvement in the quality Act, 2005 a provision has been made to receive of their work. During the period 1.1.2017 to 31.12.2017 a the applications at the facilitation counter of the total of 61 officials/officers of this Department were Department at Gate No. 8, where RTI Cell has deputed to Institute of Secretariat Training and shifted. The applications are received and further Management (ISTM), New Delhi and other Institutes for forwarded to the CPIOs/Public Authorities undergoing various trainings programmes. Concerned. 38Department of Economic Affairs I (vi) The RTI application can be filed through online vi A Scheme of incentives on Original Book writing www.rtionline.gov.in. The RTI applicant can see in Hindi on Economic subjects has been their application status including reply of their introduced in this Department. The authors under question through the website. Further, transfer the Scheme are awarded the first, second and of application can also be done online. These all third prizes of Rs. 50,000/-, Rs.40,000/- and process have resulted significant reduction in Rs.30,000/- respectively. It is an ongoing scheme; processing RTI application. vii The website of the Department is bilingual. (vii) During the year 2017 from January, 2017 to Besides other material, all Budget documents, December, 2017, 2050 RTI applications and 145 Economic Survey and other publications and appeals/CIC Hearing/complaint including 1303 important circulars are uploaded simultaneously online applications and 66 appeals, were in Hindi and English; received in the Department. An amount of Rs. viii Some of the sections of the Department and `8652/- (Rupees Eight thousand six hundred and other offices under its control were inspected to fifty two only) has been collected as RTI fees see the extent upto which the Official Language and Documents fee under the RTI Act. Act, the rules made thereunder, the Annual 11.8 Use of Hindi in Official work Programme and the orders and instructions etc. relating to Official Language are being complied 11.8.1 During the year under report, progress made in with ; and the implementation of various provisions under the Official ix Meetings of the Official Language Language policy of the Government continues to be Implementation Committee of the Department reviewed. were held regularly in which the progress of 11.8.2 All documents in Parliament were provided implementation of Official Language policy was bilingually. Section 3(3) of the Official Language Act, 1963 reviewed and appropriate action on the and Rule 5 of Official Language Rules, 1976 made suggestions given therein was taken. thereunder and other instructions issued by the 11.9 Finance Library & Publication Section Department of Official Language were fully complied with. A number of steps were taken in the Department to 11.9.1 Introduction promote the use of Hindi in official work during the year which includes : 11.9.1.1 Finance Library & Publication Section was established in 1945. Finance Library functions as the i. Annual Programme for the year 2017-18 issued Central Research and Reference Library in the Ministry by the Department of Official Language was and caters to the needs of Officials of all the Departments circulated to all the attached/subordinate offices/ of the Ministry of Finance, Ad-hoc Committees and divisions /sections under the Department and all Commissions set from time to time and research scholars efforts were made to achieve the targets fixed from the various Universities in India as well as abroad. therein ; This Library also serves as the Publications Section of ii The meeting of the reconstituted Hindi Salahkar the Ministry, coordinating in the procurement and Samiti of the Department of Economic Affairs distribution of official documents with the various (including Department of Financial Services) has institutions/individuals on demand in India and abroad. been convened on 27.12.2017; iii. In order to remove the hesitation amongst 11.9.1.2 A Publication Cell vide O.M. No.F.1 (1) – Ly/59 officials to do their official work on e-office in Hindi dated the 2nd April, 1959 was created and later integrated and to acquaint them with the rules and other with the Library forming the Finance Library and instructions regarding the Official Language Publication Section. policy of the Government. Hindi workshop was 11.9.1.3 Finance Library has been categorized as Grade organized on 14.11.2017; III Library on the basis of Department of Expenditure’s iv. Hon’ble Minister of Finance in his “Message” on O.M. No. 19(1)/IC/85 dated 24.07.1990. All the posts in the auspicious occasion of Hindi day on 14th the Library are ex cadre posts. September, 2017 appealed to the officers and staff of the Ministry of Finance as well as the 11.10 Collection Offices under its control to do their official work 11.10.1 Library has specialized collection of more than in Hindi ; 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, 2017 ; JSTOR is also available. 39Annual Report 2017-2018 11.11 Services iv. The Finance Library also undertakes the work scanning the public grievances appearing in the 11.11.1 Library provides different kinds of services viz. leading newspapers relating to the Department lending, inter-library loan, consultation, reprographic, of Economic Affairs. circulation of newspapers and magazines, reference service, current awareness service through “WEEKLY 12. Bilateral Cooperation Division BULLETIN” as well as providing services through e-mail and also extended the services of e-governance. The 12.1 Bilateral Official Development Assistance Finance Library also undertakes the work of distribution of publications of Ministry of Finance and Reserve Bank Policy: of India to State Governments, Foreign Governments and 12.1.1 India has been accepting external assistance from renowned institutions in India as well as abroad. bilateral partners in the form of loans, grants and technical 11.11.2 A useful links is also provided on intranet by the assistance for development of infrastructure, social sector Library which helps the readers in search and download and for enhancement of knowledge/skills of Indian full text of national and international reports and data. nationals at both Centre and States level. As per the guidelines issued by this Department in 2005, bilateral 11.12 Publications development assistance can be accepted from all G-8 countries, namely USA, UK, Japan, Germany, France, Italy, 11.12.1 Finance Library brings out two (print + online) Canada and the Russian Federation as well as from the publications i.e. “Weekly Bulletin” and “Current contents. European Commission. European Union countries outside 11.13 Digital Records: the G-8 can also provide bilateral development assistance to India provided they commit a minimum annual 11.13.1 A pilot project of digitization of Indian Official development assistance of USD 25 million. Documents relating to Economic and Finance Subject (Center and State since independence) and Ministry of 12.1.2 The existing policy on bilateral Official Finance, Gazette Notifications published in the Pt. 2 Sec. Development Assistance (ODA) was reviewed in 3 Sub-section (i) (ordinary) for the year 1955 to 1990 has November, 2015 and it has been decided that ODA may been digitized. So far around 03 TB Data has been be accepted from other countries also. Finance Minister digitized and available in digital format. and External Affairs Minister, with the approval of Prime Minister have been authorized to accept any such 11.14 Computerisation proposal. It has also been decided to accept offers of bilateral assistance in the form of “special loans” (i.e. 11.14.1 The Library is fully automated. The Library uses loans which have conditions for sourcing of procurement LIBSYS Library package for database management, or executing agency from the funding country) in addition retrieval, Library automation and other in-house jobs. The to the assistance on the normal route. A revised set of internet facility is also available in the Library through guidelines were issued in December, 2015. After which information is provided to the Officers of Ministry issuance of revised guidelines, the Republic of South of Finance. Korea has been recognized as bilateral partner 11.14.2 As far as accessibility of the online data is country for accepting Official Development Assistance from them concerned, e-governance has been extended to the Ministry of Finance. A link from intranet site “finance.nic.in” 12.2 Bilateral Development Cooperation with is made available to access the library information. Germany 11.15 Other Works: 12.2.1 Germany through their Ministry for Economic i. Modernization and infrastructure improvement Cooperation & Development (BMZ) has been providing was undertaken by the Library and 95% work has both financial and technical assistance to India since been completed. 1958. In 2008, the German Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) also ii. The work of reimbursement of newspapers and initiated assistance under German Government’s magazines of DEA is also undertaken by the ‘International Climate Protection Initiative’, which is an Finance Library. additional instrument of the German Government over and above and without undermining the existing sources iii. This Library also serves specifically as the of Official Development Assistance. Publications Section of the Ministry; coordinating in the procurement and distribution of official 12.2.2 During the Inter-Governmental Consultation held documents with the various institutions/ in Germany on 29-30th May 2017 a Joint Declaration of individuals on demand in India and abroad. Intent was signed between the Ministry of Finance of the 40Department of Economic Affairs I Republic of India and the Federal Ministry for Economic 12.3.2 In recent years, the cooperation between two Cooperation and Development of the Federal Republic countries has witnessed progress and a total commitment of Germany on Indo-German Development Cooperation of €106 million was made by AFD during 2017. AFD’s to continue their successful cooperation in order to meet cumulative commitment is €1517 million till 2017. Project India’s development challenges, in coherence with India’s Agreements worth €245 million for 3 projects were signed reform agenda and the internationally agreed Sustainable in 2017. Total amount of Agreements signed with AFD Development Goals (SDGs) and to confirm the three for loans till 2017 stands at €1337 million. priority areas of Indo-German development cooperation: Energy, Sustainable Urban Development as well as 12.4 India-UK Bilateral Development Cooperation Environment and Management of Natural Resources. Programme 12.2.3 Under the bilateral development cooperation, 12.4.1 The United Kingdom (UK) has been providing financial assistance is provided as Standard Loan (IDA- development assistance to India since 1958. pattern loan), Official Development Assistance (ODA)- Development assistance from UK is received mainly for Reduced Interest Loan (EURIBOR-based loan) as well achieving the (SDG’s) in the areas of health, education, as grants. The technical assistance is provided in the administrative reforms, slum development etc. form of grant and services. 12.4.2 The assistance from the UK, through its 12.2.4 The volume of Financial and Technical Department for International Development (DFID), flows cooperation since cooperation began in 1958 stands at to mutually agreed government projects and programmes € 15.93 billion. In 2017 commitment of € 1054.0 million in the form of financial and technical assistance. was made for concessional loans and various technical cooperation projects. Agreements worth €152 million for Presently, Odisha, Madhya Pradesh and Bihar are the 5 projects were signed in 2017 including two projects three focus states of DFID. worth € 35 million for North Eastern states. 12.5 Changed arrangements in India-UK 12.3 Bilateral Development Cooperation with AFD, Development Partnership France 12.5.1 With effect from January 2016, all new 12.3.1 The Government of France has been extending development cooperation programmes by the UK development assistance to India since 1968. The present Government will be either Technical Assistance (TA) French development assistance is being provided through programmes focused on sharing skills and expertise, or the French Agency for Development (AFD). The in investments in private sector under PSDI projects Memorandum of Understanding in this regard was signed focused on helping the poor. Both sides have agreed to between Department of Economic Affairs and AFD on this arrangement. 29.09.2008. This MoU was revised in May 2012. The priority areas for AFD financing in India are: 12.6 Agreement signed/yet to be signed since 2017 (i) Energy efficiency and renewable energy 12.6.1 The following three new agreements involving (ii) Urban infrastructure (public transport, water, technical assistance have been signed/Under etc.) consideration in the year 2017 between Government of (iii) The preservation of biodiversity. India and DFID. S. No. Project Name Date of Project DFID Technical Signing period Grant Assistance (£ million) 1 Technical Assistance to 14. 9.2017 14.9.2017/ 4.5 Smart Urban Develop- 30.9.2021 ment in Indian States (SmUDI) 2 Extension – Making Skill Yet to be 2021-2020 10 2020-2021 market deliver jobs for signed the poor programme 3 India-UK Growth Equity Yet to be 2017- 2030 120 from UK Fund under NIIF signed 41Annual Report 2017-2018 12.7 Brief on India-European Union (EU) the form of loan assistance, grant aid and technical Development Cooperation assistance to India is received through Japan International Cooperation Agency (JICA), Japan is the largest bilateral 12.7.1 The European Union (EU) has been providing donor to India. development assistance to India in form of Grants. The priority areas include environment, public health and education.’ 12.11.2 The Japanese ODA loans to India are mostly project tied. The interest rates are 1.5% per annum for 12.7.2 No new grants are provided by EU after 2013 as general projects with 30 years tenure including a grace per EU’s new development Cooperation strategy. period of 10 years. For environmental projects, the interest 12.8 Investments in India by European Investment rate is 1.30% per annum with 30 years tenure including Bank (EIB) grace period of 10 years. In addition, Government of Japan has introduced Front End Fee which is payable one time 12.8.1 The European Investment Bank is the European @ 0.2% of the loan amount. If disbursement of the project Union’s financing institution which was established in is completed within the agreed period, JICA will reimburse 1958 under the Treaty of Rome (1957) to provide 0.1% of JICA loan to the borrower. The Front End Fee has financing for capital investment. The members of the EIB been introduced from April, 2013 onwards in place of are the Member States of the European Union, who have Commitment Charges. all subscribed to the Bank’s capital. Outside the European Union, EIB financing operations are conducted principally 12.11.3 Government of Japan has committed JPY from the Bank’s own resources but also, under mandate, 462.449 billion (`26360 crore approx.) for 14 projects to from Union or Member States’ budgetary resources. India from January 1, 2017 to December 31, 2017. As on Under these arrangements, the EIB’s funds are utilized December 31, 2017, 51 projects are under to finance investments in countries signatory to Co- implementation with Japanese loan assistance. The loan operation Agreements with the EU. amount committed for these projects is JPY 1612.687 billion (`882652 crore approx.). The cumulative 12.9 EIB in India: commitment of ODA loan to India has reached JPY 12.9.1 EIB’s activities in India emanate from the Joint 5244.005 billion on commitment basis till December 31, Action Plan (JAP) of the Strategic Partnership between 2017. The ODA loan disbursement to India from January the EU and India. EIB intends to increase its lending 1, 2017 to, 31st December 2017 was JPY 247.721 billion activities focusing mainly on environmental sustainability (`14361.03 crore). and large infrastructure project through FDI, transfer of technology and know-how. 12.12 Grant Aid 12.9.2 EIB investments in India are governed by the 12.12.1 The Government of Japan provides Grant Aid Framework Agreement for Financial Cooperation. This to India under the following sectors and criteria: agreement was signed between India and EIB on 25th (i) Criteria November, 1993 by the Charge d’Affaires of India at Brussels. The Framework Agreement was initially valid (a) Development impacts; for a period of three years and later it was extended sine die vide amendment dated 24th November, 1998. (b) Utilization of Japanese technology/Know- how and likelihood of its dissemination to 12.10 EIB loans other areas. 12.10.1 Approval granted by DEA during 2016-17 and (ii) Sectors: 2017-18. (a) Transport Sector, including projects using 12.10.2 Finance Contract B of Euro 250 million for Lucknow information and communication technology Metro Rail Project was signed between DEA, Government (ICT) and road projects with slope protection of India and European Investment Bank on 31st March, measures (potential line ministries could 2017 in New Delhi in the presence of Hon’ble FM. include Ministry of Road Transport and 12.10.3 Finance Contract of Euro 300 million out of Highways, Ministry of Urban Development, etc.) total loan of Euro 500 million for Bangalore Metro Rail (b) Power Sector, including small-scale hydro Project has been signed between Government of India power projects and solar power projects and European Investment Bank on 5th October, 2017 in (potential line ministries could include New Delhi. Ministry of Power, Ministry of New and 12.11 Japan-Official Development Assistance Renewable Energy, etc.) 12.11.1 Japan has been extending Official Development 12.12.2 During 1st January, 2017 to 31st December, Assistance (ODA) to India since 1958. Japanese ODA in 2017, 2 proposals were signed with Govt. of Japan. 42Department of Economic Affairs I 12.13 Technical Cooperation Programme 12.16 Grassroots Funding 12.13.1 Technical Cooperation aims at transfer of 12.16.1 The Government of Japan also provides small technology and knowledge in a bid to develop and improve assistance to Indian NGOs under its Grassroots Funding human resources and thus contribute to the Socio- Programme through FCRA route on receipt of no Economic Development of India. The Technical Cooperation objection from DEA. During 1st January 2017 to 31st covers a broad spectrum of fields ranging from Basic December 2017, DEA cleared 7 proposals. Human Needs to Agriculture and Industrial Development. Priority areas for JICA in India are (i) public health and 12.17 Green Aid Plan medical care, (ii) agriculture and rural development, (iii) 12.17.1 The Government of Japan (Ministry of environmental conservation and protection, and (iv) Economic Trade and Industry) provides technical improvement of economic infrastructure. assistance under Green Aid Plan through agencies like New Energy and Industrial Development Organization 12.13.2 The main components of Technical Cooperation (NEDO), an organization of METI. The areas of are (i) Project Type Technical Cooperation Projects (ii) Development Study, (iii) Dispatch of Experts, (iv) Japanese ooperation are prevention of water pollution, air pollution, Overseas Cooperation Volunteers (JOCV) Programme, treatment of wastes and recycling and energy (v) Follow -up Cooperation Programme, (i) Training of conservation and alternative energy source. Model Indian Government personnel, (vii) Third Country projects are carried out by NEDO on the basis of the Training Programme involving training of personnel from MoU signed by NEDO with Department of Economic different countries in India. There are 11 ongoing projects Affairs, the concerned line ministry and the implementing under Technical Cooperation Programme. agency. NEDO sends Japanese experts to Indian organizations to impart training and conducts training 12.14 JOCV Programme programmes in Japan. 12.14.1 JICA’s volunteer programs, such as Japan 12.18 Bilateral Development cooperation with Overseas Cooperation Volunteer (JOCV) and Senior South Korea: Volunteer (SV), support a wide range of local activities 12.18.1 In the Joint statement for Special Partnership by Japanese citizens who intend to cooperate in the signed during the Prime Minister’s visit to South Korea economic and social development as well as in the during May 18-19, 2015, it was agreed to upgrade the reconstruction of emerging countries. Through these bilateral relationship between the two countries to a cooperation activities, participating volunteers can, not only contribute to the development of partner countries ‘Special Strategic Partnership’ and expand it into a wide but also gain valuable experience in terms of international range of areas. Accordingly, Republic of Korea was goodwill, mutual understanding and an expansion in their accepted as bilateral partner for development cooperation international perspectives. during October, 2016. In the 5th India-South Korea’s Finance Ministers meeting held during the Finance During 1st January 2017 to 31st December 2017, Minister’s visit to South Korea during June 14-17, 2017, 10 proposals were posed to Embassy of Japan and No- an MoU was signed on 14.6.2017 between EXIM Bank objection to 6 Volunteers was issued. of India with Korean EXIM Bank for bilateral financial cooperation to the tune of US$ 9 billion; and an Economic 12.15 JICA Partnership Programme Development Cooperation Fund (EDCF) agreement was 12.15.1 Recognizing the growing importance of NGOs signed between Government of India and Republic of in international cooperation, the JICAPartnership South Korea for US$ 1 billion Official Development Programme (JPP) was introduced in 2002. JPP is a Assistance (ODA) to India. The two countries are in the technical cooperation program implemented by JICA to process of finalizing a Framework Agreement on contribute to the social and economic development of Development Cooperation between the Government of developing countries at the grass-roots level, in Korea and the Government of India to facilitate collaboration with partners in Japan, such as NGOs, development cooperation projects, technical assistance, universities, local governments and public interest multilateral cooperation etc. Mumbai-Nagpur Super corporations While applying for JPP Indian NGOs are Communication Expressway Project has been included advised to seek a Japanese partner to take part in the in the Rolling Plan and Republic of South Korea has been scheme. This has two components :- requested to finance the project. 1. Japanese NGO/Institution/Local Government through JICA will support Indian organization with 12.19 India-China Financial Dialogue: Japanese expert personnel, equipment provision 12.19.1 During the visit of Prime Minister of India to and Financial support through FCRA route; China in June 2003, it was decided to launch a Financial 2. Japanese NGO/Institution/Local Government Dialogue between the two countries. Subsequently, this through JICA will provide training of Indian framework was formalized through an MoU, which was personnel in Japan. signed on 11.4.2005, during the visit of Chinese Prime 43Annual Report 2017-2018 Minister to India. The India-China Financial Dialogue is 12.21.1.3.2 Currently, following projects are being aimed at promoting mutual understanding and practical implemented by USAID in partnership with Government cooperation between the two sides in the financial sector. of India; viz. (i) Partnership Agreement for Agri. & Food The financial dialogue is held at the Secretary level every Security Program; (ii) Partnership Agreement for 12-18 months alternatively in India and China. Since Sustainable Forests and Climate Adaptation Program; (iii) signing of the MoU, eight rounds of financial dialogues Partnership Agreement for Water, Sanitation and Hygiene have been held between India and China. The eighth (WASH); (iv) Partnership Agreement for Renewable India-China Financial Dialogue was held in Beijing on 19th Energy Technology Commercialization & Innovation; (v) August, 2016 in which the two sides agreed to strengthen Partnership Agreement for Health Project; (vi) Disaster Management Support Project; and (vii) Partnership regular communication and coordination at various levels Agreement for the Energy Efficiency Technology on macro-economic policies, major international Commercialization and Innovation Project. Apart from economic and financial issues and bilateral financial these, a MOU was signed between USAID and cooperation. The 9th round of the Financial Dialogue is Government of India to support Financial Inclusion due to be held in India in 2018. through Expanded Payments Acceptance Networks and other Efforts under Pradhan Mantri Jan DhanYojana. 12.20 Norway 12.20.1 Norway provides bilateral development 12.22 United States Trade and Development assistance directly to autonomous institutions, Agency (USTDA) universities, NHPs etc. Bilateral meetings are periodically 12.22.1 USTDA promotes economic growth in emerging held between senior officers of Finance Ministries of India economies by facilitating the participation of U.S. and Norway. The last Annual Consultation was held on businesses in the planning and execution of priority 30th March, 2017 in New Delhi. development projects in host countries. The Agency’s objectives are to help build the infrastructure for trade, 12.21 United States of America match U.S. technological expertise with overseas 12.21.1 India-US Financial and Regulatory Dialogue development needs, and help create lasting business partnerships between the United States and emerging 12.21.1.1 The Indo-US Financial and Regulatory market economies. Priorities for USTDA’s program in Dialogue is part of the Economic and Financial India include energy and climate change, transportation partnership between India and the US. This dialogue (especially aviation), and information and communication provides opportunity for the financial sector regulators in technology India and the USA to discuss and exchange views on specific and technical regulatory questions in the context 12.22.2 During 2016-17 FY, following three USTDA grants of global regulatory changes. The 1st India-US Regulatory were approved by DEA: (i) Smart City Master Planning Dialogue meeting was held in June, 2008 and the and Sector-Specific Smart City Infrastructure Project plans discussions focused on financial, banking, insurance for Vishakhapatnam Grant Agreement with Govt. of Andhra sector, and commodity markets. Pradesh - Phase II - for US $ 14,59,511; (ii) Feasibility study on Petroleum Coke Utilization at IOCL Refineries in 12.21.1.2 The 7th India-US Financial & Regulatory India for US $ 744,675; (iii) Feasibility study on the Dialogue was held on 3rd March, 2017 in US Department proposed GAGAN extension Business Case project with of Treasury, Washington DC. The Indian delegation was Airport Authority of India (AAI) for US $ 831,629. represented by Joint Secretary (FM), Department of Economic Affairs and the US delegation was represented 12.23 Canada by Director, Department of Treasury, USA. The participants 12.23.1 Assistance from International Development from Indian side were IRDA, Ministry of Finance, RBI and Research Centre (IDRC) of Canada SEBI. From the U.S. side, the participants were International Banking & Securities Markets, US Treasury, 12.23.1.1 IDRC extends grant assistance to various Federal Reserve, and FDIC. During the Dialogue, issues Governments and Non-Government organizations for projects in the field of agriculture, health and family covered included Banking Sector Developments, welfare etc. A total of 9 proposals involving grants Insurance, Capital Market Developments and Deepening assistance of CAD 3.41 million were received during 2016 of US-India Financial Sector Ties. by DEA for approval out of which total 6 grant proposals 12.21.1.3 U.S. Agency International Development worth CAD 2.80 million were cleared during the year 2017. (USAID) 12.24 Lines of Credit extended to developing 12.21.1.3.1 The United States of America (USA) bilateral countries development assistance to India started in 1951 and it is mainly administered through the USAID. Since 1951, 12.24.1 Lines of Credit (LoCs) form an important USAID has provided economic assistance totalling $16.24 component of India’s diplomatic strategy and have been billion to India. very useful in generating goodwill and building long term 44Department of Economic Affairs I partnerships. The scheme also attempts to promote requests received from various developing countries. The India’s strategic political and economic interest abroad proposals are discussed and deliberated upon by a by positioning it as an emerging economic power, investor Standing Committee comprising officers of MEA and DEA. country and partner for developing countries. Indian After obtaining the approval of External Affairs Minister, Development and Economic Assistance Scheme MEA recommends the proposal to DEA for approval of (IDEAS), initially known as “India Development Initiative” Finance Minister. DEA then issues a formal letter (IDI), flows from the announcement made by the Finance conveying approval of the Line of Credit. Minister in the Union Budget for FY 2003-04. GoI has 12.24.3 LoCs are being operated through Export-Import been extending Lines of Credit to developing countries Bank of India, which raises resources from the market under IDEAS since 2005-06. Initially proposed to be and provides LoCs to recipient Governments at operated for five years from 2005-06 to 2009-10, the concessional rates. GoI backs the LoCs through a Deed scheme was granted first extension in 2010 from 2010- of Guarantee in favour of the lending bank to guard against 11 to 2014-15. Second extension to the scheme has any default by the borrowing Government in payment of been granted in 2015 for another five years i.e. 2015-16 interest and principal to the lending bank. GoI also extends to 2019-2020, with revised set of guidelines with a view Interest Equalization Support (IES) to the lending bank for to improve efficiency and make the system robust and enabling it to lend on concessional terms. transparent. The rate of interest and tenor offered to 12.24.4 During the year 2017-18 (i.e. from April 1, 2017 developing countries has also been made more attractive. to December 31, 2017), Lines of Credit totalling USD 12.24.2 Under the IDEA Scheme, MEA selects specific 748.50 million have been approved, the details of which projects keeping in view diplomatic considerations and are as under: Sl. No. Countries Amount Purpose (in USD million) African countries 1. Govt. of Rwanda 81.00 For establishment of 10 vocational training centres and 4 Business Incubation Centres 2. Mauritius 500.00 For various infrastructure projects 3. Rwanda 80.00 For Huye-Kiben-Ngoma-Munini Road Project 4. Senegal 24.50 Upgradation and rehabilitation of Health Care System 5. Zambia 18.00 For establishment of 650 pre- fabricated Health Posts Sub-Total 703.50 Non-African Countries Guyana 17.50 For upgradation of three Primary Health 6. Centres Suriname 27.50 For upgradation of transmission network 7. infrastructure and power generation. Sub-Total 45.00 Grand Total 748.50 million 12.25 Foreign Trainings Disaster Management, Governance, Natural Resources and Energy, Agriculture, Nature Conservation, 12.25.1 Department of Economic Affairs is the nodal Environmental Management, etc. Nominations are invited point for administering short term foreign training courses from all Ministries/Departments, State Governments/ offered by some bilateral partner countries under bilateral cooperation programme and some multilateral agencies. Union Territories. The nominations are screened by a These courses are intended for capacity building of the Selection Committee in DEA and thereafter officers in various spheres/fields of activities including recommended to the sponsoring Government/Agency for sectors such as Education, Health, Water Resources, acceptance. 45Annual Report 2017-2018 13. Integrated Finance Division (iii) The Division also administers two Detailed Demands for Grants i.e. Grant No.29-Department of Economic Affairs and Grant No.31-Department of Financial 13.1 The Division is responsible for the following Services. This involves finalizing the Budget functions: Estimates/ the Revised Estimates/estimating final (i) Tendering financial advice & concurrence to requirements/ surrender of savings, re- proposals involving expenditure in respect of DEA appropriations and vetting of Head wise and DFS as well as their attached and subordinate Appropriation Accounts. offices e.g. Security Appellate Tribunal (SAT)/ National Savings Institute/G-20 Secretariat/Fifteenth (iv) Coordination, compilation, printing and laying of the Finance Commission/Office of Special Court, ‘Detailed Demand for Grants(DDG)’ of the Ministry Mumbai/ Office of Custodian/ Appellate Authority for of Finance in Parliament. Industrial and Financial Reconstruction/ Board for (v) Coordination of all matters relating to the Industrial and Financial Reconstruction/ Debt examination of the DDG by the Parliamentary Recovery Tribunals, Pension Fund Regulatory and Standing Committee on Finance. Development Authority and Office of Court Liquidator, Kolkata. (vi) Monitoring of pending PAC/C&AG Audit Paras. (vii) Coordination, compilation, printing and presentation (ii) Exercising expenditure control and management, of Statements to be made by Hon’ble Finance ensuring rationalization of expenditure and Minister as required in terms of Rule 73-A, in Lok compliance of economy measures in accordance Sabha/Rajya Sabha in respect of implementation with the instructions of the Department of of Reports of the standing Committee. Expenditure including regular monitoring of expenditure through monthly/quarterly reviews and (viii) Budgetary position regarding the Grants submission of reports to the concerned Secretaries. administered by the Division is given below: 13.2 Budgetary allocation of the Grants (on net basis). (`in Crore) Grant BE 2017-18 RE 2017-18 BE 2018-19 29-Department of Economic Affairs Revenue 3731.98 4277.36 4359.64 Capital 7378.02 7333.21 8383.20 Total 11110.00 11610.57 12742.84 31 - Department of Financial Revenue 2731.98 1961.00 1739.05 Services Capital 14718.02 15010.00 4838.01 Total 17450.00 16971.00 6577.06 The best practices followed for effective expenditure 14. Directorate of Currency control includes: 14.1 Security Printing & Minting Corporation of (a) Expenditure progress reviewed quarterly with Major India Limited (SPMCIL) Head/Scheme wise details with concerned Secretaries. 14.1.1 Security Printing and Minting Corporation of India Ltd. (SPMCIL), a Miniratna Category-I, Schedule-‘A’ (b) The Major Head wise and Scheme wise expenditure Central Public Sector Enterprise (CPSE) was progress as compared to BE figures, posted on the incorporated on 13th January, 2006 to manage four India web-site of the Ministry of Finance. Government Mints, two Currency Presses, two Security (c) Strengthening of internal control mechanism by Presses and one Security Paper Mill, which were earlier getting internal audits undertaken. being managed by the Government of India (Ministry of Finance) directly. The Corporation is wholly owned by (d) Monthly monitoring of Major Schemes/Programmes the Central Government with Authorized Share Capital of Department included in the Outcome Budget. of `2500 crore and paid-up Share Capital of `1182.49 crores as on 31.03.2017. (e) Regular and close monitoring resulted in finalization of substantial number of cases of Action Taken 14.1.2 The Reserve Bank of India (RBI) is the customer Notes (ATNs) in respect of C&AG audit para during for currency notes supplied by two Currency Presses of the year. the Corporation, i.e. Bank Note Press (BNP), Dewas and 46Department of Economic Affairs I Currency Note Press (CNP), Nashik. The Ministry of pieces achieved during the previous year i.e. 2015-16. External Affairs (MEA) and Ministry of Home Affairs (MHA) Production of Coins per Employee has increased to 3.37 are customers for passports and visa stickers respectively million pieces in 2016-17 as against 3.07 million pieces and the State Governments are customers for Non- achieved during the previous year. Judicial Stamp Papers and allied stamps and the Postal 14.1.7 The Corporation has produced 825 Metric Department is the customer for postal stationery, stamps, Tonnes (MT) of the Security Inks in 2016-17 at Ink Factory, etc. supplied by the two Security Presses of the Dewas against 809 MT of Inks produced during the year Corporation, i.e. Security Printing Press (SPP), 2015-16. This is 1.93% higher than the production of Hyderabad and India Security Press (ISP). These Security Security Inks in the previous year i.e. 2015-16. Production Presses also produce various security items like cheques, of Security Inks per employee has increased to 11.00 railway warrants, income tax return order forms, saving MT in 2016-17 as against 10.93 MT achieved during the instruments, commemorative stamps etc. for various previous year. During the year 2016-17, SPM, customers. The Department of Economic Affairs (DEA), Hoshangabad has produced 3200 MT of the Security Ministry of Finance is the customer for circulating coins Paper against 3816 MT produced during 2015-16 and supplied by the four India Govt. Mints (IGMs) of the supplied 3539 MT Security Paper to the presses. Company at Mumbai, Kolkata, Hyderabad and Noida. The Corporation has one Security Paper Mill (SPM) at 14.1.8 The financial statements of the Corporation for Hoshangabad which manufactures Security Paper for use the year 2016-17 have been prepared in accordance with by Currency / Security Presses. Ind AS and comparative figures of previous year have been regrouped / rearranged accordingly. The Sales 14.1.3 The Corporation has achieved the targets in Turnover of the Corporation has increased to `5835.91 production of Bank Notes, Circulating Coins, Passports, crores in 2016-17 from `4646.59 crores in 2015-16 Security Inks and other Security Products during the year registering a growth of 25.60% over the previous year. 2016-17. However, the production of Security Paper is The Sales per Employee during 2016-17 has increased comparatively less in the financial year 2016-17 due to by 34.06% to `56.36 lacs from `42.04 lacs during the the stoppage of new paper line for some time to rectify year 2015-16. The Revenue from Operations of the the stabilisation defects at Security Paper Mill (SPM), Corporation has increased to `5966.02 crores in the year Hoshangabad. While achieving the ever highest 2016-17 from `4730.58 crores during the previous year production targets of Bank Notes, Circulating Coins, etc. i.e. 2015-16. The Corporation has achieved a net profit the Corporation has increased productivity per employee of `615.68 crores in the year 2016-17 as compared to a considerably. net profit of `358.96 crores in the year 2015-16. Net profit 14.1.4 After demonetisation of `500/- and `1000/- has increased to `745 crores after taking into account denominations Banknotes by the Government of India the 50% share of net profit of JV Company, Bank Note during November, 2016, SPMCIL achieved the herculean Paper Mill India Pvt. Ltd (BNPMIPL). The Company has task of remonetisation by printing the new design of `500/ prepaid the full amount of Term Loan of `1135.14 crores - Bank Notes and Bank Notes of smaller denominations to Govt. of India in FY 2016-17 thus it has become Debt- to meet the demand of the Bank Notes of the Country. Free as on 31.03.2017. The Currency Printing Presses of the Corporation at Nasik and Dewas had been kept on 24×7 working to meet the 14.1.9 The Corporation has paid final Dividend @ 5% requirement of Bank Notes. The production of Banknotes of the Net-worth of the Corporation for the year 2016-17 increased two fold. The process of raw material aggregating to `227.64 crores plus applicable Dividend procurement was streamlined and the delivery of printed Distribution Tax to the Government of India. Further, the Bank Notes was expedited to various RBI Centres with Corporation has also bought back 11,82,49,000 Equity the help of Indian Air Force Aircrafts and Air Cargo. Shares of face value of `10/- each at the book value of `38.50 per share from Government of India being 10% 14.1.5 The Corporation has produced 8785 million of the paid-up equity share capital and free reserves of pieces of the Bank Notes and supplied 9265 Million pieces the Corporation as on 31st March 2017 aggregating to of Bank Notes to RBI during the year 2016-17. This is `4,55,25,86,500/- in accordance with the guidelines on 22.86% higher than the production of 7150 million pieces Capital Restructuring of CPSEs issued by DIPAM. of the Bank Notes during the last year i.e. 2015-16. Production of the Bank Notes per employee has 14.1.10 The Corporation has been granted the ‘Very increased to 2.48 million pieces in 2016-17 as against Good’ and ‘Good’ ratings by the Department of Public 1.93 million pieces achieved during the previous year. Enterprises (DPE) for its MoU evaluation for the year 2015-16 and 2016-17 respectively. 14.1.6 The Corporation has produced 9681 million pieces of the Circulating Coins and supplied 9691 million 14.1.11 Continuing its momentum of modernization, the pieces of the Circulating Coins during the year 2016-17. Corporation has taken many modernization and capacity This is 4.61% higher than the production of 9254 million augmentation initiatives during the year 2016-17. CNP, 47Annual Report 2017-2018 Nashik has installed Deep pile delivery system on Six and expertise along with development of their soft skill Numerota machines. One number of Cutlink machine and group dynamics is a thrust area for the Corporation. each at CNP, Nashik and BNP, Dewas has been installed. The Industrial Relations remained peaceful and cordial One number of Computerized Random Numbering (CRN) during the year 2016-17 in all the units of SPMCIL. system on one Super Numerota machine and One number Electronic Numbering Control (ENC) system has 14.1.14 Indigenization: One new Security Paper line been installed on Old Numeropak machine at CNP, of 6000 MT capacity at SPM, Hoshangabad was started Nashik. Automatic label applicator on finishing machines in May, 2015. Since there were issues in Security Paper at BNP, Dewas and CNP, Nashik has been installed. BNP, manufactured through the new paper line, the production Dewas has completed the installation, commissioning, of Security Paper was stopped for about six months for administration & network training of CToP system attending process lapses through OEM. The Company has (Computer to Offset Plate making system) within a short setup a 50:50 Joint Venture in October, 2010 with Bhartiya time which helped a lot during remonetization period. IGM, Reserve Bank Note Mudran Pvt. Ltd. (BRBNMPL) in the Hyderabad has upgraded two nos. of MRH 150 Coining name of Bank Note Paper Mill India Private Limited Presses. The installation of vacuum furnace has been (BNPMIPL) to implement a Green-Field project of a bank done at the Mints of the Company. IGM, Kolkata has done note paper mill with capacity of 12000 MT per annum to up-gradation of Bosch Packaging Line in examination/ bring two state of the art technology paper lines of capacity packaging section. Hobbing cum Medal Press has been of 6000 MT per annum each. The commercial production added at IGM, Kolkata and IGM, Mumbai. IGM, Kolkata from both the lines has commenced. These projects shall has also installed gold and silver plating plant. The lead to indigenous production of major CWBN paper installation of electroplating plant has been done at IGM, requirement, import substitution thereby saving valuable Mumbai, IGM, Kolkata & IGM, Hyderabad. ISP, Nashik foreign exchange and further aiding India becoming self- has procured and installed a new high speed folding reliant in banknote paper production. machine for Passport booklets. The DPR for the project of installation and commissioning of two integrated New 14.2 Benefits of Demonetisation Paper Lines at Security Paper Mill, Hoshangabad with 14.2.1 Elimination of Fake Currency and Strike against the capacity of 12,000 ADTPA of CWBN paper has been Terrorist Activities submitted to Administrative Ministry for approval. ERP- SAP has been implemented across all Units of SPMCIL. 14.2.1.1 The FICNs were being used by the terrorists/ naxalites to fund their operations in the country. As a 14.1.12 The state-of-the-art Corporate R&D Centre has result of demonetization of SBNs, terrorist and naxalite been setup at CNP, Nashik to carry out research and financing stopped almost entirely. There has been almost development activities on currency, passport and other total stoppage of stone pelting and other terrorist security documents at par with international standards. Infrastructure such as counterfeit deterrence technology demonstration activities in J&K. No high quality FICN has laboratory, material characterization laboratory (optics, been found/ seized by intelligence operations since the spectroscopy & microscopy), chemical analysis exercise of demonetisation of Specified Bank Notes laboratory, pilot plant has been developed for in-house (SBNs). Further, it also adversely affected the hawala R&D activities. Ink Factory, Dewas has developed Marker operators and dabba trading. Ink Black (Import substitute) for Paper Machines Web 14.3 Action against Generation of Black Money through in-house research and supplying the same to SPM, Hoshangabad on regular basis. Ink Factory, Dewas 14.3.1 To unearth black money out of the SBNs has also developed through in-house research all the new deposited in the Banking system, the Income Tax inks for new design of `500/- banknote, new offset design Department launched ‘Operation Clean Money’ on 31st of `20/- and `50/- banknotes, LP fluorescent numbering January,2017 to “Create a tax compliant society through ink black for new design `500/- banknote and supplied a fair, transparent and non-intrusive tax administration the same to both the currency presses of the Corporation. where every Indian takes pride in paying taxes”. When New R&D setup has been created at ISP, Nashik and the accounts in which the SBNs were deposited were SPM, Hoshangabad. Latest testing equipment & seen, as many as 17.73 lakh accounts, prima facie, did machinery has been procured and installed successfully not appear to be in line with their tax profile, involving in the said R&D centers. 3.68 lakh crores. These account holders were contacted 14.1.13 The Manpower Strength in the Corporation has digitally to provide explanation of such deposits. come down to 10,354 as on 31.03.2017 which includes Responses from 11.18 lakh persons were received giving 359 executives, 1069 supervisors and 8926 workers information on 16.92 lakh accounts. 1 lakh high risk cases working in 9 Units and Corporate office in comparison to for enforcement actions have been identified based on previous year’s employee strength of 11,052. Training responses. 20,572 Income tax Returns have been and retraining of Employees to upgrade functional skill selected for scrutiny so far under CASS. Till 12th May 48Department of Economic Affairs I more than 9.72 lakh taxpayers submitted their response linked to 73.62 crore accounts in India. As a result, every providing information on 13.33 lakh accounts involving month now, about 7 crore successful payments are made cash deposits of around `2.89 lakh crore. Based on by the poor using their Aadhar identification. The continuous data analysis undertaken by ITD, high risk government now makes direct transfer of `74,000 crore cases were identified where enforcement action was to the financial accounts of 35 crore beneficiaries annually, initiated. A record number of 5.27 lakh responses were at more than `6,000 crore per month. Now with the BHIM received in the first 12 days of the e-verification process. App and the Unified Payments Interface (UPI), a secure and seamless digital payments infrastructure has been 14.4 Formalisation of Economy created so that all Indians, especially the poor can 14.4.1 Demonetization drive led to significant change become part of the digital mainstream. Digital payments of saving habits and formalization of the assets market. have substantially increased both in volume and value Considerably more funds came into the organized since demonetisation. Within reach of the country is what financial markets, whereas earlier households were might be called the 1 billion-1 billion -1 billion vision that parking much of their savings in unproductive physical is 1 billion unique Aadhar numbers linked to 1 billion bank assets. The gross financial saving in term of Deposits, accounts and 1 billion mobile phones. Once that happens Share and Debentures, Insurance funds and Provident and it would happen quite soon, all of India will become & Pension Funds increased from 9 to 13.3 per cent of part of financial and digital mainstream. GNDI (Gross National Disposable Income) in 2016-17 – an increase of about 48%. The Assets under 14.6 Introduction of New `200 Note: management by mutual funds (AUM) was `13.8 lakh 14.6.1 New `200 denomination banknotes have been crore in June 2016 which has substantially increased to `20 lakh crore at end of July 2017 – a substantial increase introduced in the Mahatma Gandhi (New) Series, bearing signature of Dr. Urjit R. Patel, Governor, Reserve Bank of 45%. The first year premium collected by Private of India. The new denomination has Motif of Sanchi insurance and LIC has been growing robust since Stupa on the reverse, depicting the country’s cultural November, 2016. The cumulative collections during November 2016 to January 2017 increased by 46% over heritage. The base colour of the note is Bright Yellow. the same period of the previous years, while from Nov- The `200 new denomination Note would facilitate 2016 to Jun-2017 it stabilized at 18%. By bringing informal exchange, particularly for the common man who deals money into the banking and formal system has increased with denominations at the lower end. liquidity in the economy. The Median base rate declined 14.6.2 Various features have been incorporated in the from 9.64% in October 2016 to 9.50% by June 2017. banknotes for facilitating recognition by visually impaired The Marginal Cost of Lending Rate declined from 9.3% people, that include Intaglio or raised printing of Mahatma in October 2016 to 8.5% in June 2017. This will give boost Gandhi portrait, Ashoka Pillar emblem, raised to investment which will further create more jobs and in Identification mark H with micro-text `200, four angular general bring more prosperity. bleed lines with two circles in between the lines both on 14.4.2 The increase in deposit with banks will cause the right and left sides. increase in the demand for loan in general and housing loans in particular. Further, the disincentive to hoard money 14.7 Introduction of `10 and `50 Notes in new in high denomination and the adverse effect on the black design: money will result in cleaning up the real estate sector. 14.7.1 `10 and `50 denominations new design 14.4.3 The cancellation of legal tender character of SBN banknotes in the Mahatma Gandhi (New) Series, bearing is expected to act as disincentive for hoarding of cash signature of Dr. Urjit R. Patel, Governor, Reserve Bank and resultant black money and thereby lowering the of India have been introduced. The new note of `10 has inflation level, excess deposit, and decrease in interest motif of Sun Temple, Konark on the reverse, depicting rate and increase in credit demand. the country’s cultural heritage. The base colour of the note is Chocolate Brown. The new `50 Note has motif 14.5 Digitisation of Hampi with Chariot on the reverse, depicting the 14.5.1 Another major benefit of demonetization is fillip country’s cultural heritage. The base colour of the note to non-cash modes of transactions, which facilitate both is Fluorescent Blue. money trail and generating credit history for better 14.7.2 During the year 2017-18, the following monetary regulation. commemorative coins have been issued: (i) 150th Birth Anniversary of Shrimad 14.5.2 Cancellation of legal tender character of SBN’s Rajchandra has led to a substantial progress in digital transactions in (ii) Nabakalebara Festival, 2015 terms of Real Time Gross Settlement (RTGS) and (iii) Birth Centenary of Dr. M.S. Subbulakshmi National Electronics Funds Transfer System (NEFT). About 52.4 crore unique Aadhar numbers have been (iv) Birth Centenary of Dr. M.G. Ramachandran 49Annual Report 2017-2018 15. Summary of Important Audit would have stood at 52.6 per cent of GDP in financial year 2015-16. (Paras 3.5.2 and 3.5.3) Observations in respect of Department of Economic Affairs Analysis of components of receipts and expenditure  Certain transactions and financial eventualities, viz. Report No. 32 of 2017 – Compliance of Fiscal misclassification of expenditure; short/non-transfer Responsibility and Budget Management Act, 2003 of levy/cess to earmarked funds; non-recognition of Laid in Parliament on 19th December, 2017 losses under NSSF in CFI; unpaid expenditure on What the Report covers The present report discusses subsidies; and short devolution out of net proceeds the compliance by the Union Government of the to States, were noticed which had affected or had provisions of FRBM Act, 2003 and the Rules made the bearing to affect the computation of prescribed thereunder for the financial year 2015-16. We have deficit indicators set out in the Act and the Rules made examined amendments made in the FRBM Act and Rules thereunder. (Para 4.3) and analysed the trends and targets of various fiscal  As a result of existence of varying practices, certain indicators as set out in the Act/Rules from time to time. expenditure of the Government was incorrectly classified as grants for creation of capital assets. Major observations (Paras 4.4 and 4.5) Important audit observations relating to compliance of the provisions of the Act and Rules made thereunder, Analysis of projections in fiscal policy statements and also on other related topics, are detailed below:  Projection for financial year 2015-16 included in Deviation in performance from the Act and Rules Medium Term Fiscal Policy Statement placed with the  For financial year 2015-16, in respect of effective Budget for 2013-14 in respect of gross tax revenue, outstanding liabilities, and disinvestment varied revenue deficit, revenue deficit and fiscal deficit the significantly from the actuals for the year 2015-16. annual reduction targets set out by the Government (Para 5.1) in the Budget were not in accordance with the provisions of the Act/Rule applicable.  Projection under various heads of expenditure for (Para 2.1) financial year 2015-16 included in Medium Term Expenditure Framework Statements placed in  Effective revenue deficit and fiscal deficit targets were December 2014 varied significantly with Revised deferred by the Government in Budget 2016-17 and Estimates of 2015-16. (Para 5.2, Annexure-5.1) 2017-18 without corresponding amendment in the Act. (Para 2.2) Disclosure and Transparency in fiscal operations  Variations were noticed in deficit figures depicted in Progress in achievement of FRBM targets Budget at a Glance and Annual Financial Statements/  For financial year 2015-16, Government was able to Union Government Finance Accounts.(Para 6.1.1) achieve the targets as set in Medium Term Fiscal  Variation was noticed in disclosure of actual Policy Statements in respect of effective revenue expenditure on grants for creation of capital assets deficit, revenue deficit and fiscal deficits. (Paras 3.1.3, 3.2.3 and 3.4.3) between Expenditure Budget/Budget at a Glance and Union Government Finance Accounts.  The budgeted figure of grants for creation of capital (Para 6.1.2) assets (`1,10,551 crore) for the financial year 2015-  Variation was noticed in disclosure of liability position 16 was modified in subsequent year’s Budget as shown through Receipt Budget and Union `1,32,472 crore (increased by `21,921 crore). Government Finance Accounts. (Para 6.1.3) Similarly the budgeted figure of effective revenue deficit was also revised from `2,83,921 crore to  Refunds of `1,29,482 crore (including interest on `2,68,000 crore (reduced by `15,921 crore). refunds of taxes) were made from gross direct tax (Para 3.4.2.1) collection in financial year 2015-16 but no corresponding disclosure was available in the  During the period 2011-12 to 2015-16, the outstanding Government accounts. (Para 6.2) liability in terms of GDP outstripped the targeted level as contained in the Medium Term Fiscal Policy  Disclosure statements mandated under the FRBM Statement. Further, due to understatement of Act and the Rules made thereunder placed before liabilities of `7,18,404 crore in the Public Account, the Parliament reflected inconsistencies relating to the total liabilities of the Union Government were disclosure of non-tax revenue and assets. contained at 47.3 per cent of GDP, which otherwise (Para 6.3) 50Department of Economic Affairs I Annexure-I SL. PROJECT DATE OF PROJECT LOAN AIIB REMARKS NO. POSING SIZE FINANCING FINANCING 1 Development of a 22.04.2016 USD 1410 USD 705 m USD 282 m The project is to be co- Satellite Port of million* financed with Asian JNPT at Vadhavan, (Rs. 9167 crore) Development Bank. The DahanuTaluka project is a Greenfield District Palghar, project and will take time Maharashtra to reach financing stage. It is proposed for financing in 2018/2019. DPR is under preparation. 2. Development of a 22.04.2016 USD 1000 USD 500 m USD 200 m The project is to be co- new Major Port at million* financed with Asian Colachel (Enayam) in (Rs. 6570 crore) Development Bank. The Tamil Nadu project is a Greenfield project and will take time to reach financing stage. It is proposed for financing in 2018/2019. DPR is under preparation. 3. Amravati Sustainable 22.08.2016 USD 715 m USD 500 m USD 200 m The project is to be Capital City co-financed with World Development Project Bank. 4. Up-gradation of Rural 05.09.2016 USD 500 m USD 345 m USD 140 m The project is to be co- Roads of Gravel financed with World Standards to BT Bank. Appraisal Mission Standards in Madhya has been undertaken. Pradesh 5. Rejuvenation and 22.09.2016 USD 413 m USD 290 m USD 145 m The project is being co- rehabilitation of financed along with irrigation network for World Bank. An sustainable develop- identification mission ment in Damodar Valley was undertaken in Command area and February, 2017. The management of flood in feasibility study is being lower Damodar sub- initiated by implementing basin of West agency. The project Bengal appraisal and approval is scheduled for 2018. 6 Andhra Pradesh 05.05.2017 USD 485 m** USD 340 m** USD 340 m** - Roads and Bridges (Rs. 3200 crore) (Rs.2240 crore) (Rs. 2240 crore) Reconstruction Project (APRBRP) 7 Andhra Pradesh 05.05.2017 USD 485 m** USD 340 m** USD 340 m** - Mandal Connectivity (Rs. 3200 crore) (Rs.2240 crore) (Rs. 2240 crore) and Rural Connectivity Improvement Project (APMCRCIP) 8 Andhra Pradesh 09.05.2017 USD555.67 m^ USD 388.96 m^ USD 388.96 m^ AIIB undertook mission Urban Water (Rs.3723 crore) (Rs. 2606 crore) (Rs.2606 crore) during October Supply &Septage 5-7, 2017. Management Improvement Project 9 Bangalore Metro 19.06.2017 USD4, 062.33 m* USD1, 107.69m* USD332.31 m* Project has been negotiated Project Phase 2. (Rs.26, 405.14 (Rs. 7200 crore) (Rs. 2160 crore) on 13.11.2017 and approved crore) [does not in Meeting of Board Of include domestic Directors of AIIB held on borrowings] 08.12.2017(co financed by European Investment Bank). 10 Mumbai Urban 18.07.2017 Estimated cost – USD 958 m USD 479 m Concept preparation Transport Project USD 1356m (Rs.6129 crore) (Rs.3064.5 crore) initiated; Target Board Phase-III (MUTP-III) (Rs.8679 crore) approval in late and completion 2018 or early 2019. cost- USD 1710 m (Rs.10,947crore) 51Annual Report 2017-2018 SL. PROJECT DATE OF PROJECT LOAN AIIB REMARKS NO. POSING SIZE FINANCING FINANCING 11 National Highways 15.09.2017 USD 1248m USD 500m USD 300m To be co-financed with the Interconnectivity World Bank. 12 Jharkhand Power 13.10.2017 USD 575m USD 404m USD 202m To be co-financed with the System Improvement World Bank. Project 13 Andhra Pradesh 17.10.2017 USD 692.30 m* USD 484.61 m* USD 484.61 m* - Rural Water Supply Project (APRWSP) 14 Andhra Pradesh Rural 17.10.2017 USD 651.38m USD 455.97m USD 455.97m Mission has been undertaken Road Connectivity to during 12-15 December, 2017. unconnected habitations of 250+ population (Project-I) TOTAL USD 14148.68 USD 7319.23 USD 4289.85 * Estimated @ Rs. 65 = 1USD ** Estimated @ Rs.66 = 1USD ^Estimated @ Rs.67 = 1USD # Multi-tranching loan 52Department of Economic Affairs I Annexure-I DEPARTMENT OF ECONOMIC AFFAIRS (MAIN) Representation of SCs, STs, and OBCs (As on 31/12/2017) Groups Number of Employees Number of appointments Made During the Previous Calendar Year 2017 By Direct Recruitment By Promotion By Other Methods Total SCs STs OBCs Total SCs STs OBCs Total SCs STs Total SCs STs OBCs 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Group A 159 26 3 14 - - - - - - - 6 - 1 - Group B 294 43 30 25 - - - - 2 - - 5 1 - 1 Group C 254 83 10 24 2 - - - - - - - - - (Excluding SafaiKarmachari) Group D (Excluding SafaiKarmachari) 10 10 - - - - - - - - - - - - - TOTAL 717 162 43 63 2 - - - 2 - - 11 1 1 1 Annexure-II DEPARTMENT OF ECONOMIC AFFAIRS (MAIN) Representation of Persons With Disabilities (PWD) (As on 31/12/2017) Groups Number of Employees Number of appointments Made During the Previous Calendar Year 2017 BY 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 159 - - 1 - - 1 - - - - - - - - - - - Group B 294 - 3 5 - - - - - - - - - - - - - - Group C 254 - - 3 - - - - - - - - - - - - - - (Excluding Safai- Karmachari) Group D 10 - - 1 - - - - - - - - - - - - - - (Excluding Safai- Karmachari) Total 717 - 3 10 - - 1 - - - - - - - - - - - 53Annual Report 2017-2018 Annexure-I NATIONAL SAVINGS INSTITUTE, NEW DELHI Representation of SCs, STs, and OBCs in respect of (As on 31/12/2017) Groups Number of Employees Number of appointments Made During the Previous Calendar Year 2016 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 7 2 1 1 - - - - - - - - - - Group B 17 2 - 3 4 1 - - - - - - - - Group C 45 13 6 12 - - - - - - - - - - Group D (Excluding Safai Karm- achari) - - - - - - - - - - - - - Group D (SafaiKarmachari) - - - - - - - - - - - - - - Total 69 17 7 16 4 1 - - - - - - - - Annexure-II NATIONAL SAVINGS INSTITUTE, NEW DELHI Representation of Persons With Disability (PWD) (As on 31/12/2017) Groups Number of Employees Number of appointments Made During the Previous Calendar Year BY 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 7 - - - - - - - - - - - - - - - - - Group B 17 - - - - - - - - - - - - - - - - - Group C 45 - - - - - - - - - - - - - - - - - Group D (Excluding Safai Karm- achari) - - - - - - - - - - - - - - - - - - Group D (Safai Karm- achari) - - - - - - - - - - - - - - - - - - Total 69 - - - - - - - - - - - - - - - - - 54Department of Economic Affairs I Annexure-I SECURITIES APPELLATE TRIBUNAL, MUMBAI MINISTRY OF FINANCE, DEPARTMENT OF ECONOMIC AFFAIRS Representation of SCs, STs, and OBCs (As on 31/12/2017) Groups Number of Employees Number of appointments Made During the Previous Calendar Year 2017 By Direct Recruitment By Promotion By Other Methods Total SCs STs OBCs Total SCs STs OBCs Total SCs STs Total SCs STs OBCs 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Group A 5 - - - - - - - - - - - - - - Group B 9 1 - - - - - - - - - - - - - Group C 13 2 - 4 - - - - - - - - - - - (Excluding SafaiKarmachari) Group D (Excluding SafaiKarmachari) 0 - - - - - - - - - - - - - - TOTAL 27 3 - 4 - - - - - - - - - - - Annexure-II SECURITIES APPELLATE TRIBUNAL, MUMBAI MINISTRY OF FINANCE, DEPARTMENT OF ECONOMIC AFFAIRS Representation of Persons With Disabilities (PWD) Groups Number of Employees Number of appointments Made During the Previous Calendar Year 2017 BY 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 Group A 5 - - - - - - - - - - - - - - - - - Group B 9 - - - - - - - - - - - - - - - - - Group C 13 - - - - - - - - - - - - - - - - - Group D (Excluding Safai Karm- achari) - - - - - - - - - - - - - - - - - - Group D (Safai Karm- achari) 0 - - - - - - - - - - - - - - - - - Total 27 - - - - - - - - - - - - - - - - - 55Annual Report 2017-2018 Annexure-I SECURITIES EXCHANGE BOARD OF INDIA Representation of SCs, STs, and OBCs Groups Number of Employees Number of appointments Made During the Previous Calendar Year 2017 By Direct Recruitment By Promotion By Other Methods* Total SCs STs OBCs Total SCs STs OBCs Total SCs STs Total SCs STs OBCs 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 OFFICERS 680 95 41 187 5 1 1 2 57 4 1 8 1 0 0 SECRETARIES 92 3 0 9 0 0 0 0 1 0 0 0 0 0 0 JUNIOR ASST. 2 0 0 1 0 0 0 0 0 0 0 0 0 0 0 MSNGR 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 TOTAL 776 99 41 197 5 1 1 2 58 4 1 8 1 0 0 Annexure-II SECURITIES EXCHANGE BOARD OF INDIA Representation of Persons With Disability Groups Number of Employees Number of appointments Made During the Previous Calendar Year 2017 BY 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 OFFICERS 680 9 5 11 0 0 0 9 0 1 0 0 0 0 57 0 0 1 SECRETA- RIES 92 1 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 JUNIOR ASST. 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 MSNGR 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 TOTAL 776 10 5 11 0 0 0 9 0 1 0 0 0 0 58 0 0 1 56Department of Economic Affairs I Annexure-I SECURITY PRINTING & MINTING CORPORATION OF INDIA LIMITED (SPMCIL) 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 358 56 18 60 3 0 0 0 57 9 5 0 0 0 Group B 1012 153 88 144 49 7 2 17 51 8 3 6 0 1 Group C 3906 723 422 526 35 8 3 12 343 79 31 2 0 0 Group D (Excluding SafaiKarmachari) 4498 940 299 486 0 0 0 0 210 42 13 3 0 1 Group D (SafaiKarmachari) 69 42 8 3 0 0 0 0 6 3 2 0 0 0 TOTAL 9843 1914 835 1219 87 15 5 29 667 141 54 11 0 2 Annexure-II SECURITY PRINTING & MINTING CORPORATION OF INDIA LTD., (SPMCIL) Representation of SCs, STs, and OBCs (Divyang) 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 358 0 0 3 0 0 0 0 0 0 0 0 0 0 11 0 0 0 Group B 1238 1 0 15 0 0 0 1 0 0 0 0 0 0 17 0 0 1 Group C 5364 17 24 96 3 3 3 9 1 1 0 0 0 0 205 0 0 2 Group D (Excluding Safai Karm- achari) 2858 15 50 85 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Group D (Safai Karm- achari) 25 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Total 9843 33 74 200 3 3 3 10 1 1 0 0 0 0 233 0 0 3 57Annual Report 2017-2018 58 SRIAFFA CIMONOCE FO TNEMRAPED EHT NI TRAHC NOITASINAGRO )AE( yraterceS hsahbuS .hS graG ardnahC .oN eleT 11629032 1005/0005 CI )AE(SS yttuK .M.M .rD cimonocE feihC .oN .leT rosivdA 31449032 dnivrA .rD 2105 CI nainamarbuS 01639032 .oN eleT 8005 CI ,p 4r a) a 4. 5F t oa 3m 1P Nr 02u PI 5 9K( . ly 0 S e C. a T 3rJ nD I2iV re 5e . 5e o 0r) 1m aI 9NM h 04a 5K( . 9S eS 0 l C. eJ 3. 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Establishment Division charges, rationalizing cesses, interest expenditure, administrative expenditure, public sector enterprises, 1.1 The Establishment Division works under the autonomous bodies, subsidies for LPG, kerosene, food Joint Secretary (Personnel) and is responsible for and fertilizer and better targeting through DBT. EMC has administration of various financial rules and regulations sought to identify areas where processes can be like General Financial Rules (GFRs), Delegation of streamlined for efficiency improvements and where Financial Power Rules (DFPRs) etc. including those digital technology capabilities can be leveraged to re- relating to personnel matters of Central Government engineer the delivery systems. Employees such as regulation of pay and allowances, policy matters on pension, and staffing of Government The recommendations of EMC were taken up establishments by creation and upgradation of posts, as with 20 Ministries/Departments, including Department of also cadre reviews. Expenditure for implementation. As recommended by the Commission, non-tax revenue portal has been set up 1.2 The Division also deals with proposals seeking for on line deposits of non tax receipts payable to the to alter service conditions and other benefits to Government of India. Government e-Market (GeM) Portal Government employees with significant recurring has been set up as an end-to-end procurement system financial implication. Broad instructions on Expenditure for purchase of common use goods and services by the Management, including economy measures and Government buyers. PFMS system has been configured measures for improving quality of expenditure such as to capture pre-authorisation process and revised General through Utilisation Certificates (UC) are issued by the Financial Rules (GFRs) 2017 has been issued. The Personnel Division. concerned Ministries/Departments have taken action to digitize Public Distribution System (PDS) beneficiaries, 1.3 This Division administers the General Financial neem coating of urea to check its diversion, finalization Rules and the Delegation of Financial Powers Rules of medium term debt management strategy, just in time including issue of clarifications/ amendments thereto, release of funds through PFMS to States, rationalization and coordinates with Financial Advisors of all Ministries/ of Centrally Sponsored schemes and Central Sector Departments of the Central Government. All legislative Schemes, rationalization of cess receipts, removal of proposals with general financial implications are distinction between plan and non-plan expenditure scrutinized in the Personnel Division. classification, upgradation of school database to track enrollment and attendance of children, automated 1.4 Service matters pertaining to the Indian Audit monitoring system for near real time monitoring of Mid- and Accounts Service(IA&AS), Indian Civil Accounts Day Meal (MDM) scheme, notification of free drug policy, Service (ICAS) and Indian Cost Accounts Service roadmap for improved coordination between (ICoAS) are dealt with by this Division Administrative Directorates of Health Services (DHS) and the National assistance to the Finance Minister’s Office is also Health Mission (NHM), exclusion of well-off consumers provided by this Division. from LPG subsidy and review of Autonomous Bodies under Central Government. 1.5 Expenditure Management Commission (EMC) was constituted on 04.09.2014 with a mandate to As recommended by EMC, a data base on recommend ways to increase efficiency of public Autonomous Bodies has been set up in the website of expenditure, to review major areas of Central Department of Expenditure and all Ministries/ Government expenditure and to suggest ways of creating Departments have so far uploaded data relating to 679 fiscal space required to meet development expenditure Autonomous Bodies. Statement on assistance given to needs, without compromising fiscal discipline. The autonomous bodies has been provided in Expenditure Commission submitted its Interim Report in January Profile 2017-18. Guidelines relating to setting up of new 2015, Part-I of the Final Report in September 2015, Part- autonomous organizations, review of user charges of II of the Final Report in December 2015 and Part-III of Autonomous Bodies, internal audit mechanism in the Final Report in March 2016. Autonomous Bodies and Memorandum of Understanding (MoU) between Autonomous Bodies and The areas covered by the Commission are fiscal their administrative Ministries/Departments have been management, defence expenditure, social sector issued. schemes of school education and health, streamlining administrative processes, public procurement, user NITI Aayog has been entrusted with the 59Annual Report 2017-2018 comprehensive review of all central Autonomous Bodies. The question of revision of key scales of NITI Aayog has set up a Committee for the purpose. academic staff of Universities and Colleges including The Committee has taken up review of Autonomous State Universities and Colleges under the purview of Bodies incorporated under Societies Registration Act UGC and Central Technical Institutions like IIMs and IITs (SRA), 1860 in consultation with the concerned based on the recommendations of the Pay Review Ministries/Departments and the Ministries/Departments Committee was considered and the same was agreed are taking necessary action for rationalization. to. It was also agreed to provide Central Assistance to State Government to the tune of 50% of additional cost. 1.6 The Division also handles the overall administration of the Department of Expenditure and also Orders on various allowances after 7th CPC controls the cadre for all Central Secretariat were issued were issued as follows: Service(CSS)/ Central Secretariat Stenographer Service (CSSS)/ Central Secretariat Clerical Service (CSCS)  Travelling Allowance upto the level of Section Officers/ Private Secretaries in  Cycle (maintenance) Allowance the Ministry of Finance, apart from coordinating  Parliament work as well as Right to Information Act (RTI) Conveyance allowance matters for the Ministry of Finance as a whole.  Dress Allowance  1.7 Seventh Pay Commission & Pay related House Rent Allowance issues:  Transport Allowance  The recommendations of the 7th Central Pay Tough Location Allowance Commission in respect of Central Government  Special Duty Allowance employees, Armed Forces personnel, Members of All  Island Special Duty Allowance India Services, etc. which were submitted to the Government on 19th November, 2015, were accepted  Hard Area Allowance by the Government in respect of matters pertaining to  Split Duty Allowance pay and pension in July, 2016. The decision of the  Government in regard to the recommendations Additional HRA pertaining to pay and pension entailed an additional  Project Allowance financial implication of Rs. 84,933 crores in the year 2016-17. So far as the issue of revision of pension of 1.8 Staff Inspection unit (SIU): pensioners, who retired before 1.1.2016 is concerned The Staff Inspection Unit (SIU) is functional since the 7th Central Pay Commission had recommended a 1964 with the objective to review the staffing of formula based on a number of increments drawn by an government establishments/ organizations through a employee in the pay scale at the time of retirement. This programme of inspections with a view to rationalizing of issue was examined by a Committee and based on the posts and also evolve performance standards and work recommendations of the Committee, the Government norms. SIU also looks into work simplification in decided in May, 2017 to modify the formula improving organizational effectiveness without sacrificing recommended by the 7th Pay Commission. The modified efficiency. The scientific and technical organizations are formula accepted by the Government is to revise the studied by SIU as a Core Member in the Committee pension in such cases based on the notional pay fixed constituted by the head of the respective organization. as per the pay fixation formula. The Financial Advisors are main links between the SIU The Government also took a decision in May, and the Ministries/Departments/Offices/Organizations. 2017 to modify the recommendations of the 7th Pay All requests for staffing studies by SIU are routed through Commission in respect of disability pension applicable the concerned FAs. The studies reports are issued after to Defence Forces personnel and decided to retain the discussion with the management of the organization percentage based disability pension. studied and are treated as mandatory to be implemented by the concerned organization. During the year, SIU has The decisions of the Government on the issued Study Reports of North Eastern Region Farm recommendations of the 7th Central Pay Commission Machinery Training and Testing Institute (NERFMT & TI), benefited over 1 crore Central Government employees, Biswanath Chariali, Assam Ministry of Agriculture and including Armed Forces personnel and Members of All Farmers Welfare) and Ali Yavar Jung National Institute India Services, comprising approximately 53 lakh of Hearing Handicapped, AYJNHH (renamed as Ali Yavar pensioners including Armed Forces personnel. Jung National Institute of Speech and Hearing Disabilities 60Department of Expenditure II 9 Divyangjan), Mumbai under Ministry of Social Justice necessitated revision of the existing GFRs to keep them and Empowerment. in tune with the changing business environment and to make them facilitating efficiency and transparency in 1.9 Pay Research Unit (PRU):- The Pay Research Government financial systems. The objective was to Unit was established in 1968 and is mainly responsible make the GFRs facilitate efficiency rather than create for collection, compilation and analysis of data on actual impediments in smooth and timely implementations while expenditure incurred on pay and various types of following principles of accountability and procedures of allowances as well as data pertaining to the strength of financial discipline and administrative due diligence. the Central Government Civilian Employees and Employees of Union Territory Administration. This unit Towards preparation of GFR 2017, this Ministry brings out an annual publication titled "Annual Report set up a Task Force which submitted a draft. The draft on Pay and Allowances of Central Government was commented upon by all stake holders including Civilian Employees". The brochure provides statistical Ministries/ Departments, State Governments, CGA and information regarding expenditure incurred by the office of C&AG. Duly taking into consideration the inputs different Ministries/ Departments of the Central received from all stake holders, the GFR 2017 was Government on pay & various types of allowances such finalized. as Dearness Allowance, House Rent Allowance, Transport Allowance, Overtime Allowance, While the basic framework, definitions etc. of Compensatory Allowance etc. in respect of its regular GFRs have been retained, 35 new Rules have been employees. It also provides information on Ministry-wise/ added, 32 Rules were modified and 2 Rules deleted. Department-wise and Group-wise number of sanctioned Delegation of powers has been increased under 10 posts and number of incumbents in position. The unit Rules. New rules on non-tax revenues, user charges, e- brought out the Annual Report on Pay and Allowances receipts portal have been added in addition to the manner of Central Government Civilian Employees for the year in which Autonomous Bodies are run. The new GFRs 2016-17. 2017 not only address all the recent policy changes but also aim at promoting efficiency, simplicity and 1.10 The Right to Information Act, 2005 : The RTI transparency in Government financial system. With the is implemented in its true spirit and the information coming into force of the new GFRs 2017, it is expected required to be disclosed under the Act has been uploaded that this will enable an improved, efficient and effective on the website of the Department. The Central Public framework of fiscal management while providing the Information Officers (CPIOs) ensure timely supply of necessary flexibility to facilitate the timely delivery of information to applicants and prompt action is taken on services. appeals by Appellate Authorities. The quarterly returns 2. Public Finance-States Division are submitted to the Central Information Commission by the RTI Cell. Suo-motto disclosure has been made mandatory as per orders of the Department of Personnel 2.1 Special Assistance: Budgetary allocation of & Training. Rs.11,000 crore has been provided under the head 'Special Assistance to the States' in the Union Budget, 1.11 Revision of General Financial Rules 2017-18 (BE) under Demand No. 40 of Department of Expenditure. Out of this, Rs.2614 crore has been The General Financial Rules (GFRs) 2005 have released during 2017-18 (till December, 2017) to the been revised and GFRs 2017 were released. GFRs are States. It includes, Rs.2064 crore released under PM's a compilation of rules and orders to be followed by all Package for Bihar-2015, Rs.450 crore for development offices of Government of India while dealing with matters of 9 backward districts of the State of Telangana in terms of financial nature. GFRs were first issued in 1947 and of AP-Reorganisation Act, 2014 and Rs.100 crore for were subsequently modified in 1963 and 2005. Fisheries Sector of Tamil Nadu. Besides this, Rs.4,000 crore has been placed at the disposal of Ministry of In the last few years, Government has made Drinking Water and Sanitation (MoDW&S) to bridge the many innovative changes in the way it conducts its resource gap for 2017-18 under National Rural Drinking business. Reforms in Government budgeting like Water Programme (NRDWP) and Swachh Bharat removal of Non-Plan/ Plan expenditure, focusing on Mission -Gramin (SBM-G). outcomes through an improved Outcome Budget Document are needed to be reflected in the GFRs. 2.2 Additional Central Assistance for Externally Increased focus on Public Finance Management System Aided Projects: Additional Central Assistance for (PFMS), Direct Benefit Transfer (DBT) scheme, Externally-Aided Projects (EAPs) is passed on to the introduction of Central Public Procurement Portal, General Category States on back to back basis on the Government e-Marketplace (GeM) etc. have also same terms and conditions on which these loans are 61Annual Report 2017-2018 received by the Central Government from donor 2.4 Fiscal Performance of States: The Fourteenth agencies. However, in case of Northern Eastern and Finance Commission (FFC) for the award period 2015- Himalayan States, special dispensation has been made 20 has made far-reaching changes to strengthen fiscal whereby they receive the assistance for externally aided federalism in the country. Consequently, States have projects in grant: loan ratio of 90:10. Based on the obtained larger fund transfers as well as greater recommendations of Office of Controller of Aid, Account autonomy to utilise funds as per their needs. Total and Audit, an amount of Rs.18972 crore was released transfers to States have been enhanced from Rs. 8.3 to the State Governments during 2017-18 (till December, lakh crore in 2015-16 to Rs. 9.8 lakh crore in 2016-17 2017) as against Revised Estimates (2017-18) of (RE) and further to Rs. 10.8 lakh crore in 2017-18 (BE). Rs.20,500 crore. FFC has worked out a revised fiscal roadmap 2.3 Finance Commission Grants to States: The for the States to have zero revenue deficits and the fiscal States are also supported through Finance Commission deficit within 3% of Gross State Domestic Product Grants as per the recommendations of Finance (GSDP). Additional borrowing options to the States upto Commissions. The Fourteenth Finance Commission 0.5% of GSDP, over and above normal 3% limit have (FFC) report covering the five year period commencing been allowed subject to States maintain their Debt to 1st April, 2015 together with the Explanatory GSDP ratio within 25% and Interest Payment to Revenue Memorandum as to the action taken on the Receipts ratio within 10% and also to have zero revenue recommendations of the Finance Commission was laid deficits in the preceding year . on the Table of the both Houses of the Parliament on 24.2.2015. The year 2017-18 is the Third year of the Aggregate fiscal position of the States is as award period of FFC. follows: Item 2015-16 2016-17 2017-18 FFC while making substantial increase in share (FA) (BE) (BE) of the States in the divisible pool of Union taxes from As % of GDP 32% to 42%, has recommended total grants-in-aid of Rs.5.38 lakh crore for the period 2015-20 to cover Revenue Deficit* 0.04 0.23 -0.04 Revenue Deficit of States; local body Grants (both to rural and urban local bodies); and Grants for State's Fiscal Deficit (excluding Disaster Response Fund (SDRF). Of which, Grant of UDAY borrowings during Rs. 1,94,821 crore is to meet Revenue deficit for eleven 2015-16 and 2016-17)# 2.3 2.8 2.7 States comprising Andhra Pradesh, Assam, Himachal Pradesh, Jammu & Kashmir, Kerala, Manipur, Outstanding Debt and Meghalaya, Mizoram, Nagaland, Tripura and West Other Liabilities 23.2 24.2 24.3 Bengal, Grant of Rs.2,87,436 crore for Rural local bodies and Urban local bodies together as Basic Grant *(-) sign indicates revenue surplus. (Rs.2,49,978 crore) and Performance Grant (Rs.37,458 # Fiscal deficit has been adjusted according to the crore) for all the States. permission given for raising UDAY bonds/as given in Finance Accounts for 2015-16 and State Budgets for In aggregate, Rs.61,219 crore has been 2016-17 (RE). recommended as corpus of State Disaster Response Fund (SDRF) for all States for the award period with Union Government's share of 75%. 2.5 Borrowings: The methodology for determining annual borrowing ceilings of States during the period Following the recommendations of FFC duly 2015-20 has been devised in line with the accepted by the Union Government, as against recommendations of Fourteenth Finance Commission provisions (BE-2017-18) of Rs.101490.17 crore, an (14th FC). The borrowing limits of States are worked out amount of Rs.68537.14 crore in aggregate was released by Ministry of Finance (MoF) in accordance with the under the heads of Post Devolution Revenue Deficit prescribed fiscal reform path for each State. For the year Grants (Rs.26864.25 crore), Local Body grants 2016-17, the States were permitted to raise aggregate (Rs.34391.13 crore) and Centre's share in State Disaster borrowings to the tune of Rs. 4,96,197 crore as against Response Fund (Rs.7281.76 crore) till 28.12.2017. gross borrowings of Rs.5,41,445 crore (Net borrowing Further, in order to undertake post disaster relief and ceiling including additional borrowings of Rs.4,41,622 immediate restoration measures by the States, Rs. crore). Annual borrowing limits for the States including 2082.85 crore from National Disaster Response Fund additional borrowings recommended by FFC have been (NDRF) during the 2017-18 (till 28.12.2017) have been raised from Rs.4.42 lakh crore in 2016-17 to Rs. 4.99 provided to States in the wake of Natural Calamities. lakh crore in 2017-18 (till December 2017). 62Department of Expenditure II Further, the borrowings raised by the State (PFMS) in order to have end to end digitized information Governments to take over liabilities of the Power on all central expenditures encompassing CSSs, CSs, Distribution Companies (DISCOMs) under UDAY (Ujwal subsidies and other expenditure. DISCOM Assurance Yojna) have been exempted from the fiscal deficit targets during 2015-16 and 2016-17. 3.6 It maintains the Swachh Bharat Kosh (SBK) to This Ministry has issued consent of Rs. 2.35 lakh crore attract Corporate Social Responsibility (CSR) funds from (including FRP 2012 of Rs. 0.08 lakh crore) under Article corporate sector and contributions from individuals and 293 (3) of Constitution of India to fifteen States during philanthropists for achieving the objective of Clean India 2015-16 and 2016-17 for raising Non-SLR bonds and/ (Swachh Bharat) by the year 2019. or consideration of the borrowings made by the State under earlier scheme (FRP-2012) beyond FRBM limits. 3.7 The division is responsible for preparation of outcome budgets for all Central Ministries/Departments in consultation with the NITI Aayog. This output-outcome 3. Public Finance Central Division framework shall be for all CSSs and CSs dealing with identified measurable outcomes in the relevant medium 3.1 Functions of Public Finance Central Division: term framework and physical and financial outputs are This Division is primarily engaged with all issues relating targeted on a year to year basis. A consolidated Outcome to the Central Plan of the Government of India. This Budget 2017-18 was presented in the Parliament as a Division is handled in two units; (i) Public Finance part of the Budget Documents of 2017-18 (Central-I) and (ii) Public Finance (Central-II). 3.8 During the period from 1st January, 2017 to 30th 3.2 This division is entrusted with the appraisal and November, 2017 the Expenditure Finance Committee approval of all public funded schemes and projects of (EFC) chaired by Secretary (Expenditure) considered the Central Ministries/ PSUs. In respect of development and recommended 79 investment proposals/schemes schemes and projects, the focus has been on improving of various Ministries/Departments costing Rs. the quality of public expenditure though better scheme/ 8,80,816.50 crore. project formulation, emphasis on outputs, deliverables, impact assessment and convergence approach. A 3.9 Also, during the period, Public Investment Board continuous endeavour is made to rationalize the (PIB) chaired by Secretary(Expenditure) considered and Centrally Sponsored Schemes (CSSs) and Central recommended 18 proposals involving an amount of Rs. Sector Schemes (CSs) for optimal and focused use of 4,18,686.34 Crore as per the following: public resources. S. Ministry/ No. of Projects Project Cost 3.3 Public Finance (Central) division deals with the No. Department recommended (Rs. In Crore) financial restructuring of Central PSUs on the for approval recommendations of the Bureau for Restructuring of Public Sector Enterprises (BRPSE).It is also engaged 1 Civil Aviation 1 479.70 in working out modalities for financial assistance to 2. Industrial Policy & CPSEs, quantification of their Internal and Extra Promotion 1 1500 Budgetary Resource (IEBR) generation for preparation 3 Power 4 8280.38 of budget, finalizing modernization of plants and 4 Petroleum & machinery to ensure more efficiency in production. Natural Gas 1 2932.99 Review of Capex and IEBR of CPSEs is also done 5 Road, Transport & periodically. Highways 6 397304.84 6 Shipping 3 7043.43 3.4 Various issues relating to Food, Fertilizers and 7 Urban Development 2 1145 Petroleum subsidy, including their quantification and Total 18 4,18,686.34 extension of assistance to the stake holders are also dealt within this Division. This division is actively involved along with the concerned Department/Ministry, in shaping 3.10 In order to speed up the appraisal process, an subsidy policy of the Government as to ensure effective online portal for uploading EFC/PIB/SFC/DIB proposals, targeting coupled with minimum burden on the marking proposals to relevant Ministries, receiving Government. comments, fixing dates for the meetings and despatching minutes after approval has been functional since August, 3.5 The PFC division also deals with various issues 2017. This portal has processed 323 EFC/PIB/SFC/DIB of Direct Benefit Transfer (DBT) in coordination with the proposals till 15-01-2018 and ensured speedy disposal. DBT Mission, aadhaar seeding of beneficiaries data base and use of the Public Financial Management System 3.11 In February 2017, instructions regarding 63Annual Report 2017-2018 continuation of ongoing schemes beyond 12th Five Year being used at present by various Ministries/ Plan were issued. Departments, CPSEs and autonomous/ statutory bodies. e-Publishing of tender enquiries, corrigenda thereto and details 4. Public Procurement Division of contracts awarded thereon, on the Portal, has been made mandatory in a 4.1 A Public Procurement Cell (PPC) was set up in phased manner w.e.f. 1st January 2012. this Department in June, 2011 to take follow up action on the Report of the Committee on Public Procurement ii. Further, it has also been decided to (CoPP) and for related matters such as drafting of rules implement e-Procurement in Ministries/ and setting up of a Central Public Procurement Portal. Departments of the Central Government The Cell was gradually strengthened and a Division and instructions have also been issued to called Procurement Policy Division (PPD) was created. all Ministries/Departments to commence e- procurement in respect of all procurement 4.2 Functions of PPD: with estimated value of Rs. 2 lakh or more Subsequently, the scope of work in PPD was in a phased manner. Use of e-procurement enlarged. The Division now deals with Public has enhanced transparency and Procurement legislation and rules, notifications, orders accountability and made procurement there under; Policies relating to Public Procurement more efficient. This also helps in monitoring including administration of General Financial Rules 2017 delays and reducing the procurement on procurement of goods and services and contract cycle. management; policies relating to mandatory or preferential procurement;Matters relating to iii. Currently, approximately 20000 tenders standardization of procurement related documents;All are floated per month using facility of matters related to Central Public Procurement Portal set CPPP. This translates to around 16.5 lakhs up for publishing information relating to Public corores worth procurement per annum Procurement;Matters relating to electronic through CPPPP only. Apart from it, many procurement;Professional standards to be achieved by procurement organizations like Railways, officials dealing with procurement and suitable training PSUs like ONGC, BHEL etc. have their and certification requirements for the same and Interface own e-procurement portals. with International bodies on matters relating to Public Procurement. 4.5: Capacity Building: 4.3 Procurement Manuals: It is imperative that the executives/officers engaged in public procurement process have through Manuals on Policies and Procedures for Purchas knowledge of all the relevant rules, regulation and of Goods, and Procurement of Consultancy & Other procedures of public procurement. One week training Services were issued in 2017. These Manuals are programme on Public Procurement and one week training prepared in conformity with the General Financial Rules, programme on Advance Public Procurement are being 2017 and contained board generic Guidelines. To suit conducted through National Financial Management their local/specialized needs, Ministries / Departments (NIFM) with a view to educate and familiarize the can supplement these manuals by issuing Detailed concerned executives/ officers with all the relevant rules, operating Instructions; Checklists and customized regulations and procedures of public procurement. Around formats to serve as practical instructions. 2000 officers are being trained every year. 4.4 Central Public Procurement Portal & e- 5. Official Language Procurement: i. Pursuant to the recommendations of the 5.1 Hindi Section of the Department of Expenditure Committee on Public Procurement is responsible for implementation of the provisions made (CoPP), a Central Public Procurement under Official Language Act, 1963 and Official Language Portal (CPP Portal) has been set up for Rules, 1976 as amended from time to time. It is also providing comprehensive information and responsible for coordinating follow-up action on the data relating to public procurement and is suggestions/directions given by Kendriya Hindi Samiti, accessible at www. eprocure.gov.in It is Committee of Parliament on Official Language, Hindi 64Department of Expenditure II Advisory Committee and Central Official Language 5.7 Replies of letters received from members of Implementation Committee. Other responsibilities of the Parliament and other VIPs were promptly sent and follow- section include implementation of various incentive up action ensured. During January to November, 2017, schemes to enhance use of Hindi in official work, 03 application received under RTI Act, 2005 were dealt facilitation in nomination of officers/employees for Hindi well in time. language training, Hindi stenography/typing training and organization of Hindi fortnight/day. In addition to these, 5.8 During the year 2017 "Hindi Fortnight" was efforts for achieving annual targets set by Department organized in the Department from 01-15 September, of Official Language with regard to usage of Hindi in 2017. During "Hindi Fortnight" various competitions were official work are made in association with the sections/ organized which included Hindi Essay Writing, Noting- divisions/offices in the Department. Drafting, Official Language and General knowledge, Hindi Stenography, Hindi Typing, Shabda Saamarthya, 5.2 Officers/staff of the Department are nominated Knowledge of Departmental Glossary, Extempore for Hindi Language, Hindi Stenography/typing training. Speech in Hindi, Hindi Dictation and Sulekh. In addition Hindi Section is facilitating Administration Division for to these, a campaign was launched for undertaking more these training programs. During the year 2017, 3 officials and more work in Hindi (minimum 2000 words) during were nominated for Hindi Typing training and 8 officials the period from September 01 to September 30, 2017. were nominated for hindi Stenography training. As many as 259 officers and employees took part in these competitions/campaign enthusiastically. 5.3 To increase original correspondence with other Offices/individuals in Hindi, circulars were issued to 5.9 Hindi translation of the documents falling under sections/divisions/ offices from time to time. As per section 3(3) of Official Language Act, 1963, replies to quarterly progress report for the quarter ended on the applications/appeals received under RTI Act, 2005 September 30, 2017, original correspondence in Hindi along with Brochure on Pay and Allowances by Pay and with Region "A", "B" and "C" is 72.74%, 64.92% and Research Unit of the Department; General Financial 34.19% respectively while original Hindi correspondence Rules, 2017 was carried out. Quality Hindi and English during the quarter ended on September 30, 2016, stood translation, as required, of the documents including those at 74.75%, 59.59% and 32.51% respectively. received from the Office of the Finance Minister/MOS (Finance) was also rendered. 5.4 Regular Quarterly meetings of the Departmental Official Language Implementation Committee were held. These were held on May 18, 2017, August 02, 2017 and 6. Integrated Finance Unit (IFU) November 29, 2017. Discussions were held on quarterly progress reports received from various sections/ 6.1 The Integrated Finance Unit works under Joint divisions/offices of the Department and where Secretary & Financial Adviser (Finance) and deals with shortcomings found, it was advised to rectify/improve the expenditure and Budget related proposals under usage of Hindi in official work. Grant No.30 - Department of Expenditure which includes (i) Secretariat General Services covering the 5.5 In order to overcome practical difficulties faced establishment budget for the Department of Expenditure, in doing Official work in Hindi and to increase use of Controller General of Accounts, Central Pension Hindi, a workshop was organized on May 3, 2017. Accounting Office, Finance Commission Division, Staff Officials of the Department were apprised of the Official Inspection Unit, Cost Accounts Branch and Chief Language Policy of the Union and were also imparted Controller of Accounts ; (ii) Other Administrative Services training on how to work in Hindi on computers. 26 officers/ covering the budget for Institute of Government Accounts officials participated in each of these workshops. The and Finance, National Institute for Financial workshops were found very useful by the employees. Management, Contribution to International Body (AGAOA) and the budget relating to payment of service 5.6 Quarterly Progress Reports regarding charges to the Central recordkeeping Agency for the New progressive use of Hindi were regularly received from Pension Scheme; and (iii) Other General Economic sections/offices of the department. A detailed review of Services covering the budget for Public Financial progress reports (Part-I & II) in respect of the quarter Management System (PFMS). ending 31.03.2017 was done keeping in view the targets prescribed in the Annual Program and review reports 6.2 This Unit also monitors the expenditure under were sent to CGA, CPAO, INGAF and NIFM for follow Grant No.39 - Pension; and Grant No.36 - Indian Audit up and necessary action. & Accounts Department. 65Annual Report 2017-2018 The allocations under the respective Grants are as under:- (Rs. in crore) Budget Estimates 2017-18 Revised Estimates 2017-18 Grant No. Revenue Capital Total Revenue Capital Total 30-Deptt. of 480.00 0.00 480.00 304.49 0.00 304.49 Expenditure 36-Indian Audit & 4309.57 12.67 4332.24 4395.34 5.22 4400.56 Accounts Department 39-Pension 35170.00 0.00 35170.00 41170.00 4041.31 41170.00 6.3 The Integrated Finance Unit has expitiously 7.4 The major areas of professional functions of the examined and disposed the financial and expenditure office of the Chief Adviser Cost are Assisting Central proposal pertaining to the Department of Expenditure Government Ministries/ Departments/Organizations in including the proposals for appointment of consultants, solving complex Price/Cost related issues in fixing fair deputation abroad of officers, grants-in-aid to National prices for various services/products and rendering advice Institute of Financial Management etc duly observing to various Ministries/Departments on cost matters; austerity instructions issued by the Govt. from time to Examination/ Verification of claims between Government time. Departments / Public Sector undertakings and suppliers arising out of purchase contracts;Determining prices of 6.4 The expenditure trend of Grant No. 30, 36 and products and services supplied to Government to enable 39 have consistently been monitored and strict control Government; Departments to negotiate prices with the has been exercised over the Govt. expenditure. A report supplying organizations; Conducting studies for of the review is regularly submitted to the Secretary determining cost/fair prices and making (Expenditure) on monthly basis. recommendations for fair prices/rates for products and services and also to determine reasonableness of prices 7. Chief Advisor Cost charged, duty structure, etc; Functioning as Chairman/ Members of various Committees constituted by 7.1 The Office of Chief Adviser Cost (CAC) is one Government/ different Departments related to cost/ of the divisions functioning in the Department of finance and pricing matters; Conducting cost and Expenditure, Ministry of Finance. This office advises the performance audit of industrial undertaking; Subsidy Ministries and Government Undertakings on cost determination and verification of claims under Market accounts matters and undertakes cost investigation work Intervention Schemes (MIS) and Price Support Schemes on their behalf. It is a professional agency staffed by (PSS) for sharing of losses by State and Central Cost Accountants/Chartered Accountants. Government; Developing Cost Accounting System for departmental undertakings/Autonomous bodies and 7.2 The Office of Chief Adviser Cost is dealing with Conducting Time and Cost Overruns of major projects. matters relating to costing and pricing, studies for determining fair prices, studies on user charges, cost- 7.5 During the period January to December 2017, benefit analysis of projects, studies on cost reduction, 63 studies/ reports were completed by the Office of Chief cost efficiency, profitability analysis and application of Adviser Cost. The studies completed during the year modern management tools devising cost and varied widely in nature and may be broadly categorized commercial financial accounting for Ministries/ under the following heads: Departments of Government of India. 7.5.1 System Study: Fixation of Common Hourly 7.3 The Office of Chief Adviser Cost is also cadre Rates and Overhead percentages in respect of controlling office for the Indian Cost Accounts Service Government of India Presses at Mysore, Temple Street (ICoAS) and looks after recruitment, transfer/posting and Kolkata, Mayapuri&Minto Road-Delhi, Koratty-Kerala , timely promotions of ICoAS Officers. It also looks after Rashtrapati Bhawan, Coimbatore and Nasik for various training requirements of the officers for continuous up- years. gradation of their knowledge and skills, in addition to rendering professional guidance to the ICoAS officers 7.5.2 Fair selling price of products/service where working in different participating organizations. Government/ Public Sector Undertaking is the 66Department of Expenditure II Producer/ Service provider as well as the user: 7.6 Major Committees Represented Fixation of fair price of DDT 50% supplied by HIL to NVBDCP for the year 2015-16 and provisional price for Officers of Chief Adviser Cost Office owing to the year 2016-17; Cost of production & Selling Price for their expertise in costing/finance/commercial accounting items of Postal Stationery produced & supplied by have also served as Chairman/Members on major multi- Security Printing Press,Nahsikand Hyderabad to disciplinary Inter-Ministerial/ Expert Committees such as Department of Posts for the year 2014-15;Fixation of National Pharmaceuticals Pricing Authority ( NPPA); Rates of Compensation for nuclear grade ammonium Rate Structure Committee in the Ministry of Information diuranates upplied by Indian Rare Earths Limited to and Broadcasting to review the DAVP advertisement Bhabha Atomic Research Centre for the year 2013-14& rates; Committee on "Modernization of Costing System 2014-15; Fixation of Fair Selling Price of the year 2016- in India Post" in the Department of Post, Ministry of 17 in respect of Tear Gas Gun and Multi Barrel Launcher Communications; Advisory Committee for consideration manufactured by CENWOSTO, BSF, Tekanpur Gwalior; of techno economic viability of major/ medium, flood Fixation of terminaling charges to be paid by Oil control and multipurpose projects in the Ministry of Water Marketing Companies to SALPG Pvt. Ltd for LPG import Resources and Ganga Rejuvenations; M/o New & facility at Vishakhapatnam for the year 2010-11 to 2015- Renewable Energy- Revision of benchmark cost and inclusion of new products for CFA under Off-Grid 16; Fixation of Fair Selling Price of the year 2016-17& 2017-18 in respect of Tear Smoke Munitions (TSMs) &Decentralized Solar Applications Programme for 2017- 18; Standing Cost Committee of Ministry of Road manufactured by Tear Smoke Unit (TSU) BSF, Tekanpur Transport & Highways; Committee of Ministry of Home Gwalior and Determination of compensation payable for Affairs for fixation of Deployment charges for Central supplying Uranium Concentrate to Uranium Corporation Police Forces/ Rapid Action Force of CRPF; M/o Water of India Ltd for the year 2014-15 & 2015-16. Resources, RD&GR -Special Committee for Interlinking 7.5.3 Fixation of service charges for the services of Rivers; M/o Agriculture and FW- Committee on Price rendered by a Govt. Department/Agency on behalf Support Scheme; Steering Committee of DoPT- Revision of the other: Vetting of claims under Market Intervention of cost of CIC's new building; Standing Committee of D/ Scheme (MIS) for Procurement of Grapes in Mizoram o Legal Affairs, M/o Law and Justice- Relating to for the 2016 season. Electronic Voting Machines; Standing Committee Meeting of Ministry of Home Affairs, Department of 7.5.4 Determination of subsidy: Vetting of claims of Border Management relating to construction of 27 roads NAFED for reimbursement of losses and recovery of along Indo-China Boarder and Revised Cost Gains under Price Support Scheme and Market Committees: In pursuance of MoF, DoE Office Intervention Scheme for various crops/commodities; Memorandum No.24 (35) PF-II/2012 dated 5th August, Vetting of subsidy claim submitted by Metals and 2016 representing in Committees constituted for Minerals Trading Corporation of India Ltd (MMTC) in Revision of Cost Estimates in various Ministries/ respect of sale of pulses under 20% reimbursement Departments. scheme of GoI; Vetting of working of Office of Registrar General, India(ORGI) on the claim of M/s TCIL for 8. National Institute of Financial conducting SRS base line survey for the year 2014 and Payment of Subsidy to Northern Railway Catering Unit Management (NIFM) functioning in Prime Minister Office and Parliament House Complex for the year 2015-16. 8.1 The National Institute of Financial Management (NIFM) was set up in 1993 on the basis of a proposal 7.5.5 User Charges: Review of User Charges of made by Ministry of Finance, which was approved by National Test House; Fee and User Charges in respect the Union Cabinet. The Union Cabinet envisaged that of Geological Survey of India, Kolkata and Revision of NIFM would begin as a training institution for officers Storage Charges payable by FCI to CWC for the year recruited by theUnion Public Service Commission 2014-15& 2015-16. (UPSC) through the annual Civil Service Examinations and allocated to the various services responsible for 7.5.6 Balance Sheet on accrual accounting managing senior and top management posts dealing with principles in case of Departmental manufacturing accounts and finance in the Government of India. NIFM units: Balance Sheet and Income & Expenditure Account was to develop as a Centre of Excellence in the areas of Tear Smoke Unit, Border Security Force (BSF), of Financial Management and related disciplines, "not Tekanpur (Gwalior) for the year 2016-17. only in India but also in Asia". In order to ensure that NIFM enjoys a greater degree of flexibility and autonomy 7.5.7 Other studies: Report on Valuation of than the departmental academies that existed at that Compensation for Mine Infrastructure of 3 Coal Blocks. time for officers training, it was decided that the 67Annual Report 2017-2018 Institute would be a legal entity known as 'Society'. Such 8.5 NIFM has established collaborations with societies are legally independent entities authorized to several National and International Institutions. The frame their own rules and regulations. This structure Institute has implemented e-office, bio-metric makes available greater autonomy in both academic and attendance, CCTV, Security Surveillance and Video administration matters to the institute, facilitating quick Conferencing Systems and tele lectures system, Swachh decision making in response to changing perceptions of Bharat Abhiyan, procurement through GeM and Unnat desired goals and objectives. Bharat Abhiyan. It is a matter of great pride that the NIFM has by now emerged as a "Centre of Excellence" in 8.2 Despite the legally autonomous character of the training, education, research and consultancy in the area Institute, having the Finance Minister of Government of of Financial Management both within and outside India. India as the President of Society ensure a very close linkage with Government. For administrative purposes, there is a Governing Board chaired by the Secretary 9. Controller General of Accounts (Expenditure). The Director appointed by the Appointments Committee of the Union Cabinet is 9.1 The Controller General of Accounts (CGA), in responsible for the administration and academic the Department of Expenditure, Ministry of Finance, is programmes of the Institute. It will thus be seen that the the Principal Accounting Adviser to Government of India Institute has close links and direct access to Government and is responsible for establishing and maintaining a of India. The Institute recruits its Faculty either by technically sound Management Accounting System. deputation from civil services or by selection from the best in the academic field. The Institute therefore has a 9.2 The Office of CGA prepares monthly and annual distinct advantage of a mix of faculty from academic as analysis of expenditure, revenues, borrowings and well as Government sector. The Institute adheres to various fiscal indicators for the Union Government. norms prescribed by the All India Council for Technical Under Article 150 of the Constitution, the Annual Education (AICTE) with respect of faculty qualifications Appropriation Accounts (Civil) and Union Finance & strength. Accounts are submitted to Parliament on the advice of Comptroller and Auditor General of India. Along with 8.3 Currently, the Institute imparts Professional these documents, an M.I.S Report titled 'Accounts at a Training Course of twenty six weeks for newly recruited Glance' is prepared and circulated to Hon'ble Members probationers of six organized participating services; a of Parliament. one year Diploma Course in Government Financial Management. The Institute runs four long-term 9.3 Functions : Formulate policies relating to general programmes approved by AICTE - a two-years Post principles, form and procedure of accounting for the Graduate Diploma in Management (Financial Central and State Governments; Administer the process Management) programme for officers of the Central of payments, receipts and accounting in Central Civil Government, the State Governments, Public Sector Ministries / Departments; Prepare, consolidate and Undertakings and other organizations under submit the monthly and annual accounts of the Central Government; and a one-year Post Graduate Diploma in Government through a robust financial reporting system Management (Financial Markets) to produce competent aimed at effective implementation of the Government researchers, teachers and Consultants. In addition, NIFM fiscal policies; Coordinate and assist in the introduction also conducts a one year Weekend Post Graduate of Management Accounting Systems in Ministries / Executive Programme in Financial Markets; and various Departments with a view to optimizing the utilization of short term programme for Central Government, State Government resources through efficient cash Government, PSUs, and Autonomous Bodies. Officers management and an effective Financial Management from different foreign countries also participate in the Information System (FMIS); Administer banking said programmes. NIFM also provides consultancy arrangements for disbursements of Government services to various Departments and organizations of expenditures and collection of government receipts and the Government of India, State Government, PSUs, interact with the Central Bank for reconciliation of cash Autonomous Bodies, Universities and Foreign countries. balances of the Union Government and Establish a In 2017-18 (April 2017 to November 2017), NIFM trained sound Human Resource Management System for 3736 participants in 109 Programmes till November, recruitment, deployment and improve the career profile 2017. management of officers and staff, both at the supervisory level and at the operational level within the Indian Civil 8.4 The Institute executed consultancy projects for Accounts Service. various Ministries and Departments of Government of India. The Institute publishes two periodicals bi-annual 9.4 Financial Reporting - Monthly and Annual: The Journal and monthly Newsletter. office of the Controller General of Accounts is responsible 68Department of Expenditure II for Monthly Consolidation of the Union Government detailed statements in respect of these transactions, along Accounts, a detailed analysis of the monthly trends of with other related statements. Part II of the Finance receipts, payments, deficit and its sources of financing Accounts is further sub-divided into two sections `A' & are presented to the Union Finance Minister every month. `B'. While section 'A' comprises of detailed accounts and The documents has over a period of time evolved into statements relating to Receipts and Expenditure on an extremely useful tool for monitoring budgetary Revenue and Capital accounts, section 'B' has detailed compliance and a handy MIS reference for decision accounts and statements relating to Debt, Deposit, making. In consonance with the Government's policy Suspense & Remittances transactions and Contingency towards transparency in public functioning, an abstract Fund. The basic inputs for compilation of Finance of the Union Government accounts is also released every Accounts are as follows:- month on the Internet. The data can be accessed at the (1) Statement of Central Transactions; website http://www.cga.nic.in; With the advancement of (2) Journal Entries; technology this office has started providing flash figures of receipts, payments and deficit to Ministry of Finance (3) Prior Periods Adjustments; as a tool for quick management decision making. Daily (4) Proforma Adjustments; and flash figures are provided in the month of March, in order (5) Progressive figures up to the end of the to monitor various financial parameters and targets; In previous year. tune with the development in best practices, CGA's office also prepares Provisional Accounts of the Government While the first four inputs mentioned above are of India within two months of completion of the financial received from the various accounting authorities, year. The professionalism with which these accounts are progressive figures up to the end of previous year are prepared is evident from the high accuracy level attained available in the records of Finance Accounts Section. in the last few years as only marginal variations have The annual compilation "Accounts at a Glance" provides been observed between the Provisional Accounts and a macro level overview of the financial information like final audited Annual accounts; The Finance Accounts of estimates and actuals of receipts and expenditure, assets the Union Government is submitted to Parliament under and liabilities, savings and reserves, investments, the provision of Article 151 of the Constitution of India. disinvestments, debt and deficits of the Union Government, in reader friendly format with concise The Finance Accounts of the Union Government analysis and graphical representation, at one place. It presents the accounts of receipts and disbursements is prepared on the basis of audited information contained for the purpose of the Union Government together with in Finance Accounts and Appropriation Accounts. The the financial results disclosed by the revenue and capital Union Government's Finance and Appropriation accounts, the accounts of the public debt and the Accounts for 2016-17 alongwith the Audit report of the liabilities and assets are worked out from the balances Comptroller & Auditor General of India were presented recorded in the accounts.The Finance Accounts of the in Parliament on 19.12.2017. The Annual Accounts of Central Government comprises of the accounts of the the Union Government have been tabled in Parliament Central Government as a whole and includes in the same calendar year and this would enable transactions of Civil Ministries/ Departments, Ministries improved data availability for budget exercise of of Defence and Railways and the Departments of Posts 2018-19. & Telecommunication. It presents the accounts of receipts and outflows of the Central Government for the 9.5 Banking Arrangements and Reconciliation year together with the financial results disclosed by different accounts and other data coming under The O/o CGA undertakes an exercise aimed at examination. These accounts include the Revenue and reconciliation of Reserve Bank Deposit and Public Sector Capital Account, Public Debt account and other liabilities Banks Suspense, Authorization and Change of and assets worked out from the balances in the accounts. Accredited Banks for handling Government transactions It is supplemented by the accounts separately presented i.e. for Civil and Non-Civil Ministries/Departments. in the form of Appropriation Accounts for Grants and Standing Committee Meetings, APEX Committee charged Appropriations. The Finance Accounts is an Meetings and Private Sector Banks Meetings are Auditor's presentation of the general accounts of the periodically conducted to review the handling of Government to Parliament. The Finance Accounts Government transactions by Banks. comprises of two Parts-Part I and Part II. Part I presents the summarized statements in respect of Revenue, During the year 2017-18, Office of the Controller Capital, Debt, Deposit, Suspense and Remittances General of Accounts has approved the use of Unified transactions and Contingency Fund, while Part II has Payment Interface (UPI) and Bharat Interface of Money 69Annual Report 2017-2018 (BHIM) for collection of Government Revenue. Guidelines information on its ultimate utilization. In order to abide by have been issued for use of UPI and BHIM for collection of the directions to implement Just-in-time releases and Government Revenue to promote Digital India initiatives. monitor the end usage of funds, an action plan for universal roll-out of PFMS for Central Government 9.6 Public Financial Management System schemes has been approved which inter alia includes (PFMS): The Public Financial Management System mandatory registration of all implementing Agencies on (PFMS) is a web-based online software application, PFMS and mandatory use of Expenditure Advance and developed and implemented by the O/o CGA with Transfer (EAT) module of PFMS by all IAs. technical support of NIC. The primary objective of PFMS is to facilitate a sound Public Financial Management 9.7 Achievements: PFMS is being implemented at System for Government of India (GoI) by establishing the Central Government level for all Plan Scheme an efficient fund flow system as well as a Payment cum releases from Civil Ministries / Departments of the accounting network. It provides various stakeholders with Central Govt. The Implementing Agencies are using the a real time, reliable and meaningful Management PFMS application for both transfer of funds to Agencies Information System and an effective Decision Support below and for e-payment to beneficiaries by direct credit System (DSS), as part of the Digital India initiative of to their accounts either in bank branches or in post GoI. PFMS was initially started in 2009 as a Central offices. So far 22 lakhs (approx.) implementing agencies Sector Scheme of Planning Commission with the are registered on PFMS (till 30th November, 2017).The objective of tracking funds released under all Plan total number of bank accounts of beneficiaries registered schemes of GoI and real time reporting of expenditure in PFMS is 35.91 Crores (till 30th November, 2017). Total at all levels of Programme implementation. Central DBT payments have been made for 38.46 crores Subsequently, in 2013, the scope was enlarged to cover transactions amounting Rs. 90690.83 Crores for 71 direct payment to beneficiaries under both Plan and Non- schemes till 30th November 2017 in 2017-18.Total State Plan Schemes. The latest enhancement in the DBT payments have been made for 3.78 crores functionalities of PFMS commenced in late 2014, transactions amounting Rs. 6564.22 crores for 109 wherein it has been envisaged that digitization of schemes till 30 November 2017 in 2017-18.Total UT DBT accounts shall be achieved through PFMS and the payments have been made for 2.06 lakhs transactions additional functionalities would be built into PFMS in amounting Rs. 101.47 Crores for 24 schemes till 30 different stages. The enhanced application would cater November 2017in 2017-18. Pan-India roll out of to all Plan and Non Plan payments of GoI, all Tax and MNREGS payments for Bank Account holders started Non-Tax Receipts and also functions such as a from 1st April, 2015 and 34.12 crores credits have been comprehensive HRMIS and self-contained Pension as done for Rs. 43261.04 crores through PFMS up to 30th well as GPF modules. It is expected that in the coming November, 2017 in 2017-18. Pan-India roll out of Indira years, the various existing standalone systems currently Awas Yojana (IAY) payments for Bank Account holders catering to these functions shall be integrated into PFMS. started from July, 2015 and 1.08 Crores credits have The enhanced application is envisaged to cater to all been done for Rs. 41724.35 crore through PFMS up to Plan and Non plan payments to GOI, ALL Tax and Non 31st March, 2016. E-IGAA i.e. state government Tax receipts and also functions such as a comprehensive payments through RBI advices have been started in all HRMIS and self-contained pension as well GPF ministries except M/o Finance. NTRP i.e Non Tax modules. Futuristically, all the existing standalone Receipts Portal has been started from 16th Feb., 2015 systems currently catering to various functions in GOI and this is a great step towards Hon'ble PM's Digital will be subsumed in PFMS.The biggest strength of PFMS India Initiative. It facilitates online receipt of Non Tax is its integration with the banking network in the country. Receipts for GoI Departments/Ministries. 1.10 lakhs As a result, PFMS has the unique capability to push credits have been received for Rs. 22300.10 crores up online payments to almost any beneficiary/vendor having to 30.11.2017 in 2017-18. One step Government e- account in any bank across the country. At present, marked place (GeM) which facilitates online PFMS interface is completed with the Core Banking procurements of common use Goods and Services System (CBS) of all Public Sector Banks (21), Regional required by various Govt. Departments/organizations/ Rural Banks (54), major private sector banks (16), PSUs is integrated with PFMS for facilitating the e- Reserve Bank of India, India post and Cooperative Banks payments of bills received online through GeM portal by (91). Government has emphasized the need for the respective Pay and Accounts Offices. PFMS treasury improved financial management in implementation of integration is currently operational in 31 states and 7 Central government Schemes so as to facilitate Just-in- UT's(gaps in data exchange). time releases and monitor the usage of funds including 70Department of Expenditure II 9.8 Technical advice on Accounting matters: 'List of Major and Minor Heads of Account of Union and O/o the Controller General of Accounts is the repository States (LMMHA)', which contains the classification of of technical information on Government accounts and account heads upto Minor Head level (and also some is consulted widely by the Central Civil Ministries, Non Sub/Detailed Heads under some of them) in Government Civil Ministries and State Governments on various Accounts. Any amendment in this LMMHA is carried out budgeting, accounting and financial issues for core on the advice of C&AG in consultation with Budget technical advice and guidance. With its technical Division of Department of Economic Affairs, M/o Finance. competence, this section has been assisting these Ministries/Departments may open Sub-Heads and Ministries and Governments in formulating sound Detailed Heads as required by them in consultation with accounting policies and procedures over the years within the Budget Division of the Ministry of Finance. Their the realm of Central Government Account (Receipts & Principal Accounts Offices may open Sub/Detailed Heads Payments) Rules, 1983, Pension Rules, Treasury Rules, required under the Minor Heads falling within the Public Government Accounting Rules and Manuals or detailed Account of India subject to the above stipulations. procedural guidelines based on such rules. Technical The Object Heads have been prescribed under Accounts Section has also been providing reasonable Government of India's Orders below Rule 8 of Delegation assurance to the stakeholders on a variety of accounting of Financial Power Rules, 1978. The power to amend or issues within the purview of rules and regulations to modify these object heads and to open new Object ensure a systematic accounting and financial reporting. Heads rest with Department of Expenditure of Ministry One of the area where work has started has been of Finance on the advice of the Comptroller and Auditor compiling the Fixed Assets Register by Ministry/ General of India. However, during the year the Object Department of Government of India based on the Heads were reviewed and Department of Expenditure guidelines issued by TA section. This would eventually in consultation with CGA office sent the proposal to lead to office wise consolidated Fixed Assets Register C&AG and Budget Division of DEA for their comments. by Ministry/ Department. GST could be introduced in July The classification system also applies to the State with TA section proving accounting procedure for GST, Governments, with the exception that they are given the IGST and Compensation Cess provided to the office of flexibility to open their own heads below the third tier in CBEC and opening of new Heads of Account. The the six tier hierarchy as per their respective needs.The Technical Accounts Section administers the Central following developments relating to accounting Government Account (Receipts & Payments) Rules, classification took place in O/o CGA: 1983 in exercise of the powers conferred by Clause (1) of Article 283 of the Constitution of India regulating the 1. New head of Accounts for classification of custody of the Consolidated Fund of India, the Goods and Services Tax (CGST, IGST, Contingency Fund of India and the Public Account. These SGST, UTGST and GST Compensation Rules also regulate the withdrawal of money from such Cess) were opened. funds and any other matter connected therewith 2. New Minor Heads for funds like 'Bharat The Technical Accounts Section also administers Infrastructure Kosh', 'GST Compensation the Civil Accounts Manual which is the repository of Cess Fund' were opened. detailed procedural guidelines based on Central Government Account (Receipts & payments) Rules, 3. New Minor Heads for classification of 1983, Government Accounting Rules, 1990 and Pension expenditure on 'Election', 'Civil Aviation Rules etc. The Manual has been amended from time to Security', 'Subsidy for Special Operations', time by issuance of correction slips to incorporate the 'Fishermen Welfare', 'Interest payment to changed provisions of various Rules. However, a New Development Bank', 'International complete revision of Civil Accounts Manual would be Electronic Money Order' were opened. undertaken after revision of Central Government Account (Receipts & payments) Rules, 1983.The List of Major 4. New Minor Heads for classification of and Minor Heads of Accounts is updated timely by the Receipts like 'Receipts for classification of Codes/ TA Section to cater to the requirements of the penalties under IRDA', 'Loans from New Central Ministries and the State Governments with new Development Bank', 'Premium & Interest on plans and schemes launched and policies amended.For Market Loans', 'Interest on Loans to the first time ever Refunds were paid to exporters through Government Servants' were opened during PFMS for CGST Refund and also IGST Refund. Also the period. special cases of Refund of State Levies to Exporters of Textiles were also paid through PFMS as a result of 9.9 Information Technology Division intervention of O/o CGA for Rs. 1,554 Crores.In terms of Rule 26 of GAR, 1990 CGA office administered the The IT division of O/o CGA has been involved in 71Annual Report 2017-2018 development and rollout of various modules of payment 9.13 Non-Tax Receipts Portal (NTRP) and accounting functions on Public Financial  NTRP is a one-stop window to citizens/ Management System (PFMS) during 2017-18. Current corporates/Institutions/other users for status of roll-out of this module is as follows: making online deposits of Non-Tax receipts 9.10 Pay and Accounts Offices (PAO) Module (NTR) which are payable to the Government of India (GoI).  PAO module covers payment and  160 PAOs of 41 ministries are on-board. As accounting of all PAO bills. on 5th Jan 2018, 155295 transactions  476 expenditure (PAOs) are on-board out amounting to Rs. 30,320 Crores was of 520 i.e. 92% of total PAOs. The 38 PAOs collected through NTRP. of Indian Audit and Accounts department will  Target is to on-board all remaining PAOs be on-boarded with effect from 1st April by 31st Mar 2018. 2018. Two PAOs of Intelligence Bureau (IB) and one PAO of Supreme Court have 9.14 Pension Module sought exemption due to security reasons. One PAO in Department of telecom is  Complete online processing of pension pending due to connectivity issues. Two disbursal through integration of Bhavishya PAOs of Ministry of Finance (Internal debt (Department of Pension) and PARAS and DFS) shall be on-boarded within this software of Central Pension Accounting financial year. Organisation (CPAO).  121 Revenue PAOs of CBEC and CBDT (for  The module has been implemented accounting of tax receipts and refunds) will successfully on pilot basis in PAO, NIC and be covered through integration route during PAO, CGA from Oct 2017 and Nov 2017 2018-19. respectively. Phased manner implementation is planned from Feb 2018.  Ministries of Defence, Post, Railways, Government of NCT, UT Andaman and  Typical cases of voluntary retirement, family Nicobar will be taken up next financial year. pension and Revision of pension is planned to be developed and tested by 31st Mar 9.11 Employees Information System (EIS) module 2018.  For processing of salary bills of all Drawing 9.15 Online General Provident Fund (GPF) Module and Disbursing Offices (DDOs).  GPF module covers all the functionalities  1644 DDOs out of total 11793 are on-board, of GPF like GPF advance, withdrawal, final which is 14%. The target is to on-board all payment, interest calculation etc. the remaining DDOs by 31st Mar 2018.  The module is implemented successfully in  EIS module is not required to be PAO, CGA. Phased implementation is implemented in revenue DDOs of CBEC, planned from Feb 2018. CBDT and passport Sevakendras of MEA. 9.16 Annual Accounts  Functionality for online creation of Subscribers Contribution File and uploading  The Monthly Accounts consolidation is of Subscribers Contribution Details on under development, and the process flow NSDL through integration is being of Appropriation Accounts and Finance developed. Accounts is under finalisation. 9.12 CDDO Module 9.17 Integration with Standalone IT applications  CDDO module covers payment and  Integration with the following standalone accounting function of CDDO bills. application is already achieved on the basic  459 CDDOs out of 1908 (24%) is on-board. premise of the sanction generated through the standalone application being captured  The target is on-board all the remaining at the dealing hand level of PAO module of CDDOs by 31st Mar 2018. PFMS. 72Department of Expenditure II  Government e-Marketplace (GeM) and to promote professional integrity through a dedicated workforce committed to service ethos.  PRAHARI of Boarder Security Force (BSF) As per the provisions of the Chapter VII of the  SELO of Central Reserve Police Force Inspection Code, Internal Audit Division (IAD) set up in (CRPF) the office of Controller General of Accounts provides  E-Wisdom of Lok Sabha guidance and support to Internal Audit Wings of Central Civil Ministries to maintain the requisite technical  CFAS of UT Chandigarh Standards of accounting in the Departmentalized  ICEGATE of CBEC Accounting Offices. This Division is structured in three sections i.e. i) Centre of Excellence ii) Planning &  Department of Atomic Energy Coordination and iii) Inspection Wing, meant to upgrade the knowledge, adequate planning and execution of the  Department of Space programs respectively. The organization is regularly 9.18 Internal Auditing reviewing the performance of the internal audit units of the line Ministries / Departments. The annual Review on The scheme of Departmentalization of Union the performance of Internal Audit Wings of Central Civil Government accounts provides for setting up of an Ministries / Departments depicts the information on efficient internal audit organization to ensure accuracy different short comings in the form of observations. The in accounts and efficiency in the operation of the annual performance reports of different Ministries / accounts set up. The vision of the O/o Controller General Departments are analyzed and summarized by the of Accounts is to strengthen governance through Internal audit division for the purpose of brevity and ease excellence in public financial management with a mission of presentation. The outcome of Internal audit through to administer an effective, credible and responsive recoveries effected in pursuance to the observations of system for budgeting, payment and accounting, to the Internal Audit is also included to reflect the impact of provide a world class, robust government - wide Internal Audit. The annual review also provides the details integrated financial information system, develop new of units audited and outstanding internal audit paras on paradigms of internal audit for improved transparency the end of the financial year. The summarized information and accountability, leverage information and regarding outstanding audit paras and units audited is communication technology to achieve intended goals as under: 9.19 Outstanding Internal Audit Paras Financial year Opening balance Paras raised Paras dropped Closing during the year during the year balance 2016-17 124789 18862 22698 120953 (as on 31.03.12017) 9.20 Monitoring cell Notes duly vetted by the Audit on excess expenditure and savings of Rs.100 crores  The Monitoring Cell under the Office of and above, appearing in the Annual Controller General of Accounts is Appropriation Accounts. responsible for:-  Chasing up matters with various Ministries/  Coordination and monitoring the progress Departments of the Government of India to of submission of corrective/remedial action ensure that, the recommendations made in taken notes (ATNs) on the PAC Reports are finalized well within time recommendations contained in Public given by the Lok Sabha Secretariat. Accounts Committee's (PAC) reports.  Bringing to the notice of various Ministries/  Coordination and monitoring the Departments the observations made by the submission of corrective/remedial Action PAC in its reports regarding the delay either Taken Notes on various paras contained in in sending the Action Taken Notes or in their C&AG Reports (Civil, Defence Services, being vetted by the Audit. Railways and other Autonomous Bodies). 9.21 Web Based Audit Para Monitoring System  Coordination, collection and timely (APMS) submission to the Public Accounts Committee of the relevant Explanatory On the recommendations of the Public Accounts 73Annual Report 2017-2018 Committee (PAC), Audit Para Monitoring System (APMS)  The Committee of Secretaries (CoS) has been implemented for computerized monitoring of chaired by the Cabinet Secretary in their the pendency of Action Taken Notes (ATNs) of C&AG meeting held on 21st July 2017 Paras at various stages. The application facilitates the recommended for initiation of a special drive submission/vetting of ATNs by their uploading on the for clearance of 100% of the pending ATNs portal at every stage. As a result of regular training to as on 30.06.2017 by 30.11.2017. Advisories the officials, now all Ministries/Departments are on board in this regard have been issued to all the APMS portal. In view of this, it has now been decided Ministries/Departments. to dispense with the requirement of submission of hard copies of ATNs to the Lok Sabha Secretariat (PAC 9.23 Institute of Government Accounts and Branch). Finance Another centralized computerized online The Institute of Government Accounts & Finance monitoring system to check the status of the preparation (INGAF) is the training arm of the Controller General of and submission of the Explanatory Notes at every stage by various Ministries/ Departments has been developed Accounts, Government of India. Initially known as the & operationalized from 2015-16 onwards in consultation Staff Training Institute, it was set up in February, 1992 to with the Office of Comptroller and Auditor General of train personnel in specific areas of accounting, India in pursuance to the recommendations contained administrative matters and financial management. In the in Para-8 of the 92nd Report of Public Accounts years following its inception, the Institute has evolved to Committee (15th Lok Sabha). Physical submission of become a premier training centre in the spheres of explanatory notes has been discontinued w.e.f. 17th May, Government Accounting and Public Financial 2017. Management. In addition, the Institute has Regional Training Centres (RTCs) at Chennai, Kolkata, Aizawl and Recently, in compliance to the recommendations Mumbai. made by the Public Accounts Committee (PAC), vide Para No. 6 of their 66th Report (16th Lok Sabha), the 9.24 Aims and Objectives Monitoring Cell, Office of the Controller General of Accounts has developed the PAC Module in the existing 1. To organize and conduct Induction training Audit Para Monitoring System (APMS) for computerized courses for Indian Civil Accounts Service monitoring of the settlement of PAC paragraphs. This officers, newly promoted Assistant Accounts module was rolled out w.e.f. 24.11.2017. All the users Officers and newly recruited Accountants. have been imparted training for operating PAC module. As on date 330 PAC paragraphs are still pending against 2. In-service and refresher training courses for various Ministries/Departments. Group 'A' and Group 'B' officers of the Indian Civil Accounts service and cadre, and other 9.22 Position of ATNs on C&AG Audit paras middle level officers of Government of India and Position of ATNs in respect of summary of audit State Governments. observations as per prescribed format 3. Conducting Orientation training programmes for (Annexure-III) at the end of December, 2017 is employees promoted to Higher Government as under:- Accounting Posts. No. of Paras/PA reports on which ATNs 4. Specialized courses on Government Accounting have been submitted to PAC after vetting Systems, Budgetary Process, Public by Audit 2879 Expenditure Management Computerized Details of the Paras/PA reports on which Financial Management Information System, ATNs are pending Internal Audit & Control Processes, Cash No. of ATNs not sent by the Ministry even Management, Personnel Management and for the first time 247 Management of Public Sector Enterprises for in- No. of Draft ATNs uploaded by Ministries/ service officers, officials of autonomous bodies Departments 45 and Foreign Governments on sponsorship basis. No. of ATNs sent but returned with observations and Audit is awaiting their 5. To act as a think tank of the Civil Accounting resubmission by the Ministry 231 Organization in India, regarding training No. of ATNs resubmitted by Ministries/ needs, review and updating of prescribed Departments to Audit for vetting 102 procedures and codes, etc. 74Department of Expenditure II 6. To promote professionalism and efficiency in the Ministry of Finance, the Internal Audit Wing Public Financial Management. also undertakes the audit of all DDOs, attached and subordinate offices including Banks 7. In-service training programmes, such as handling Government Schemes such as Public Executive Development Programmes and Provident Fund, Special Deposit Schemes; and Management Development Programmes, are Senior Citizen Savings Scheme. There are about also conducted for practicing financial managers 140 DDOs within the jurisdiction of internal audit. to provide exposure to innovations in the field and to augment knowledge and skills. VI. Providing support staff to Controller of Aid Accounts and Audit (CAAA) VII. Pension authorization under the Pension Rules 10. Chief Controller of Accounts to the officials retiring on superannuation, seeking voluntary retirement and to the families 10.1 The Chief Controller of Accounts (CCA) is in of deceased employees/pensioners. overall charge of the payment and accounting set up of the Ministry, supported by three Controllers of Accounts, VIII. Pension payment to foreign pensioners residing one Deputy Controllers of Accounts, 2 Assistant in India on behalf of Sri Lanka, Singapore, UK Controller of Accounts, 36 Senior Accounts Officers and and Myanmar. approximately 300 other staff members at various levels. IX. Accounting and monitoring of Loans advanced 10.2 Function of the CCA organisation to foreign countries. X. Accounting of total receipts and payments in the I. Budget related works for five Grants of entire central Government under the CGEGIS Department of Economic Affairs, Department of (Central Government Employees Group Financial Services, Department of Expenditure, Insurance Scheme) and calculation & Department of Revenue and Department of accounting of interest liability of GOI under both Investment and Public Asset Management are the savings fund and Insurance fund integrated with O/o CCA. components of this scheme. II. CCA oversees the payments, accounting and XI. Oversee the settlement of C&AG audit Para. internal audit functions of five Departments in Ministry of Finance viz., Department of Economic XII. Responsible for transfer of funds to and from Affairs, Department of Expenditure, Department CFI to Public Accounts. There are 14 such Funds of Revenue, Department of Investment and in the Department of Economic Affairs, 2 in Public Asset Management and Department of Department of Revenue, and one each in Financial Services. Department of Expenditure and Department of Investment and Public Asset Management. III. Another important function of the CCA is financial reporting to Chief Accounting Authority (i.e. the XIII. Formulation of detailed Accounting procedures Secretary of the respective Department) and to in respect of the Funds maintained under Public the Controller General of Accounts. The monthly Account of India. accounts and annual accounts of five XIV. Settlement of the cases relating to combined Departments which comprise 8 Demands/ pension, pro-rata pension, leave encashment, Appropriation of the Ministry of Finance are sent leave salary and pension contributions, revision to the office of the Controller General of Accounts of pre-2016 pension cases etc. of the absorbed for consolidation into the accounts of employees of SPMCIL, after the corporatization Government of India. of Mints and Presses, in coordination with the IV. The Scheme of Departmentalization of Accounts Corporate office of SPMCIL, field units and the envisaged a system of management accounts. administrative division in the Ministry. CCA prepares monthly and quarterly reviews of 10.3 Highlights of important functions receipt and expenditure for the information of the Secretaries of the Departments. The 10.3.1 Internal debt accounting and reporting: summary statements are also uploaded on the Ministry's official website. a. Issue of New Loans Bringing into account all V. Internal Audit is the responsibility of the CCA. In transactions connected with the issue of New 75Annual Report 2017-2018 Loans on the basis of detailed information supplied Statement received from PDO, Mumbai and by the Reserve Bank of India. DGBA, Central Office, Mumbai. b. Accounting of the discharged loans which inter- m. Calculation of Average Rate of Interest alia involves the reconciliation of loan balances chargeable on the Capital Outlay of the Central as in the books of this office with those of the Government. Reserve Bank of India and to prepare a 10.3.2 Monitoring system for transfer of funds from Statement (14A) & further submitted to Finance the Ministry of Finance to state governments Account Section, CGA Office. Accounting of Buyback of Government Securities raised by a. Under the system of Public Financial Government of India. Management System (PFMS), (earlier known as c. Compilation of Consolidated Abstract of Rupee CPSMS) under the aegis of CGA, scheme wise Loans (Transaction connected with the loans plan funds released to the states are visible on dealt with in Internal Debt & Account Section are the PFMS portal. Under this system, the also brought to account through this abstract. sanctions are received from PF I Division on the "OCEAN" portal. Those sanctions are accepted d. Accounting of Securities, shares etc., purchased and settled on the OCEAN portal from where or otherwise acquisition held in the Cash the data get transmitted to Public Financial Balances Interest or dividend thereon. Management system (PFMS) Portal. e. Watching the timely payment of principal and b. The sanctions (in hard copies) are received from payment of interest in respect of all loans various departments including Public Finance mentioned here. State I (PFS-I) Division. The sanctions are processed in the loan Grant Investment (LGI) f. Accounting of all securities issued to software. The Inter Government Advices (IGA) International Financial Institution like generated and faxed to RBI, Nagpur in respect International Monetary Fund, International Bank of 29 States. IGA advice in respect of State for Reconstruction and Development etc. Government of Sikkim and Delhi are sent to RBI, g. Accounting of Special Government of India Delhi by special messenger. Securities issued against investment made by c. The data become visible on PFMS portal National Small Saving Fund (NSSF). showing figures of sanctions settled and the h. Accounting of Special Govt. of India Securities/ COMPACT figures. Grants-in-aid amounting to Bonds issued to Nationalized Banks Special Rs. 89978.18/- crore to state government and Government of India Bonds issued to Oil Rs. 3.72/- crore to autonomous body (NIPFM) companies, FCI, Fertilizer Companies and were released up to 30.11.2017. Special Securities issue against Securitization d. During the Financial Year 2017-18 (up to of balances under Postal life Insurance which 30.11.2017) Rs. 12589.66/- crore worth loans are kept under Public Account. (Block loans & Back to Back Loans) were i. Accounting of different Saving Schemes of released to state govt against the budget Government of India. provision of Rs 18,500/- crore. j. Preparation of the Quarterly and Annual e. The time gap between the processing of Statement of Internal Debt balances for sanctions to the job of e-Lekha for PFMS portal submission to the Finance Accounts Section of has been reduced to one day and thus it has the Controller General of Accounts. brought up the work closer to the real time basis. k. Watching the timely payment of Principal and f. In the case of any default made by State payment of interest in respect of all Securities, Government in making repayment of Principal Loans, Special Securities, Compensation & and Interest, the Consolidated Fund of State Other Bonds etc. and further reconciliation with maintained by RBI is debited on the advice of Quarterly Statement received from DGBA. this office. Central office, Mumbai. g. At present, O/o CCA is in the process of l. Reconciliation of all Treasury Bills & Cash implements PFMS for all Centrally Sponsored Management Bills with Monthly and Quarterly Schemes of M/o Finance. 76Department of Expenditure II 10.3.3 Details of loans Advanced to States during 2017-18 (Up-to November 2017) (Rs. in Crore) S. No. Name of States Opening Total Loan Principal Interest Closing Balance as given repaid upto upto Balance upto on upto Nov. November November, November, 31.03.2017 2017 2017 2017 2017 (3+4-5) 1 2 3 4 5 6 7 1 Andhra Pradesh 9304.64 899.27 307.07 166.18 9896.84 2 Arunachal Pradesh 190.38 14.48 8.85 175.90 3 Assam 1235.85 56.27 82.90 60.09 1209.22 4 Bihar 9583.70 1105.99 276.14 153.63 10413.55 5 Chhattisgarh 2056.02 380.62 96.48 69.06 2340.16 6 Goa 1076.51 47.72 15.01 10.26 1109.22 7 Gujarat 6543.79 66.30 392.08 241.68 6218.01 8 Haryana 2141.93 0.00 73.69 47.63 2068.25 9 Himachal Pradesh 1072.07 66.60 47.00 51.74 1091.67 10 Jammu & Kashmir 1111.98 31.60 69.57 52.84 1074.01 11 Jharkhand 2151.17 212.63 82.30 56.96 2281.50 12 Karnataka 13766.43 1403.68 405.55 315.42 14764.56 13 Kerala 7594.86 299.47 203.27 142.00 7691.06 14 Madhya Pradesh 13879.71 1539.73 360.86 279.05 15058.58 15 Maharashtra 7826.61 140.39 311.81 215.43 7655.19 16 Manipur 355.47 3.76 25.55 15.65 333.68 17 Meghalaya 177.63 4.66 11.28 8.42 171.01 18 Mizoram 220.45 6.30 12.87 10.86 213.88 19 Nagaland 135.59 0.33 11.56 6.35 124.36 20 Orissa 7433.07 609.56 285.62 148.64 7757.00 21 Punjab 3862.99 390.66 106.64 63.77 4147.02 22 Rajasthan 11095.72 1166.88 300.81 207.54 11961.79 23 Sikkim 103.99 2.08 5.07 4.98 101.00 24 Telangana 8061.20 498.01 219.46 118.76 8339.76 25 Tamil Nadu 14269.98 1854.26 251.60 170.90 15872.63 26 Tripura 225.12 1.27 16.97 10.76 209.42 27 Uttarakhand 649.80 77.52 23.57 33.58 703.75 28 Uttar Pradesh 13164.01 892.21 804.00 475.92 13252.22 29 West Bengal 12990.29 831.89 400.94 377.22 13421.23 TOTAL 152280.96 12589.66 5214.16 3524.19 159656.45 77Annual Report 2017-2018 10.3.4 Details of Grants in Aid to States released by 17 Meghalaya 407.20 Department of Expenditure 18 Mizoram 1767.60 19 Nagaland 2689.66 during 2017-18 (Up-to November 2017) (Rs. in Crore) 20 Orissa 1970.01 21 Punjab 310.09 S. No. Name of States Total Grant 22 Rajasthan 2629.37 23 Sikkim 62.10 1 Andhra Pradesh 4124.13 24 Telangana 761.70 2 Arunachal Pradesh 83.74 25 Tamil Nadu 1893.06 3 Assam 1741.22 26 Tripura 796.05 4 Bihar 4527.92 27 Uttarakhand 1075.23 5 Chhattisgarh 1222.90 28 Uttar Pradesh 3132.63 6 Goa 35.16 29 West Bengal 3590.42 7 Gujarat 1737.62 8 Haryana 615.58 TOTAL 65479.18 9 Himachal Pradesh 6648.42 Grants in Aid to States/UTs by Department of Revenue 10 Jammu & Kashmir 8183.71 11 Jharkhand 792.85 (Compensation to State Government for Revenue Rs.24499.00 (crore) 12 Karnataka 3529.74 13 Kerala 2314.57 Loss due to phasing out the Goods & Services Tax (GST) 14 Madhya Pradesh 3105.42 15 Maharashtra 4140.61 Total Grant in aid released to state Rs. 89978.18 (crore) 16 Manipur 1590.50 10.3.5 Balance under important component of internal Debt (Rs. in crore) S. Name of Scheme Balance Net Closing Net Addition In N. Upto Addition In B a l a n c e A s 2017-2018 31.03.2016 2016-2017 On (upto Nov' 31.03.2017 2017) 1 2 3 4 5 6 1 Market Loan 4300102 349385 4649487 298406 2 Special Securities issued to International 106726 2013 108739 -6247 Institutions 3 Compensation and Other Bonds 11114 9210 20324 15512 4 14 day Treasury Bills 121127 35443 156570 -43811 5 91 day Treasury Bills 132854 -26014 106840 119438 6 182 day Treasury Bills 77807 7629 85436 6613 7 364 day Treasury Bills 154033 -11508 142525 -1536 8 Special Securities issued against National Small 313856 67435 381291 18602 Saving Fund 9 Marketable Securities issued in conversion of 64818 0 64818 -5000 Special Securities 10 Special Security issued against PLI Fund 20894 0 20894 0 11 Collection of fund under PPF – 1968 Scheme 315150 51945 367095 15819 (collection through bank only) 12 Balances under Senior Citizen Saving Scheme 18594 13231 31825 12252 2004 (collection through bank only) 13 Balances under Special Deposit Superannuation 103244 -333 102911 -117 and Gratuity Fund - 1975 14 Sukanya Samriddhi Account 992 2475 3467 1871 TOTAL 5741311 500911 6242222 431802 78Department of Expenditure II 10.3.6 Internal Audit at receiving Branch of the Bank to the date of settlement with RBI (CAS) Nagpur. a. The Revised Charter of Financial Advisors released by the Ministry of Finance envisages the Roles 10.3.7 Achievements and Responsibilities of the Chief Controller of 1) Enrolment of N.S.I. and Indian Economic Service Accounts. Accordingly, Internal Audit functions into Employee Information System (EIS). under the control and supervision of the CCA would 2) During 2017-18 TD&C, SPREAD & TI Program move beyond the existing system of compliance/ an amount of Rs. 24.13 crore was recovered in regulatory audit and would focus on the Audit of the financial year and efforts are being made to all DDOs attached and subordinate offices recover the balance amount from ICICI bank for including Banks handling Government Schemes the scheme closed in the year 2010. such as Public Provident Fund, Special Deposit Scheme and Senior Citizen Deposit Scheme. This 3) Recovery of outstanding Penal Interest from involves appraisal, monitoring and evaluation of Banks individual scheme, assessment of adequacy and Audit of the banks handling PPF-1968 & SCSS- effectiveness of internal controls in general, and 2004 scheme is conducted by Office of CCA (Finance) soundness of financial systems and reliability of to check whether all banks are depositing the collections financial and accounting reports in particular. pertaining to PPF & SCSS Schemes in CAS, Nagpur Identification and monitoring of risk factors within prescribed time limit. If banks are not following (including those contained in the Outcome the time limit, penalty is levied on them as per Ministry Budget). During the year 2017-18 (up-to November of Finance, Budget Division O.M. No. F.17/1/2008-NS-II 2017), Audits of 18 units (appx) were conducted. dated 15.05.2008 that states "In case of delays beyond b. The penal interest is levied on all remittances, the permissible period (I.e. within 3 days including which are not credited to Government Account holidays for private sector banks and excluding holidays at Central Accounts Section RBI, Nagpur within for public sector banks), the penalty payable by the prescribed time limits i.e. T+3 days accredited banks on such delayed remittances shall be (excluding holiday) for public sector banks and the applicable rate of interest payable to the depositor T+3 days (including holidays for private banks). plus 0.5% in case of delays upto 30 days and plus 1% in Banks are liable to pay penal interest for the case of delays beyond 30 days." entire period commencing from the date of receipt Details of Delayed Penal Interest of all the banks upto 2017-18 (30th November, 2017) (Amount in Rs.) Details of Delayed Penal Interest of all the banks upto 2017-18 (30th November, 2017) (Amount in Rs.) PPF SCSS Total Outstanding as on 31.03.2016 17,49,24,580 13,45,34,395 30,94,58,975 Levied during 2016-17 2,08,18,544 24,32,074 2,32,50,617 Recovered during 2016-17 16,70,01,248 10,69,43,245 27,39,44,493 Contested and dropped during 2016-17 2,08,05,978 4,81,791 2,12,87,769 Total outstanding as on 31.03.2017 79,35,897 2,95,41,433 3,74,77,330 Levied during 2017-18 (upto 30th November 2017) 1,59,192 22,479 1,81,671 Total outstanding as on (30th November 2017) 80,95,089 2,95,63,912 3,76,59,001 Recovered during 2017-18 (upto 30th November 2017) 19,59,613 14,15,741 33,75,354 Grand Total outstanding upto 30th November 2017 61,35,476 2,81,48,171 3,42,83,647 Total outstanding penal interest against all the banks as A total of 18,313 branches of Public Sector on 31.03.2016 under both the schemes amounted to commercial banks were authorized to make Rs. 30,94,58,975/- (Thirty Crore Ninety Four Lakh Fifty collections for PPF & SCSS schemes on Eight Thousand Nine Hundred Seventy Five Rupees 31.03.2015. This figure does not include the Only) which has been brought down to Rs.3,42,83,647/ branches of SBI as all branches of SBI are - (Three Crore Forty Two lakh Eighty Three Thousand allowed to make collections towards these schemes. Efforts were made to increase the Six Hundred Forty Seven Rupees only) as on number of bank branches which could 30.11.2017. participate in these schemes and another 11,094 4) Authorization of additional bank branches for have been granted permission to participate in participation in PPF & SCSS Schemes these two schemes as on 30.11.2017. This 79Annual Report 2017-2018 brings the total number of Public Sector bank recordkeeping as the bills are in digital format. branches (excluding SBI) participating in these 9) The entire pension cases of this department are schemes to 29,407 branches. being processed through the "Bhavishya Portal" 5) Recovery of Unspent Amounts given to resulting which the fast processing of the Commercial Banks for various Schemes of pension related work. The check points in the Ministry of Finance "Bhavishya Portal" ensure the procedural The Ministry of Finance operates several accuracy of the pension cases. Pension cases schemes for industrial development, interest of Pre-2016 are being revised through subsidies for target groups etc. through both electronically on the E-portal eppo.nic.in/ Public as well as Private sector financial revision. institution. At times the unspent amount remains 10) Some other important achievements are listed with these institutions for years together. During below: the FY 2016-17 the following amounts were a. All work related to feeding the budget , recovered from the banks: supplementary , re-appropriation and  An unspent amount of Rs. 30,89,93,561/- surrender orders for each grant alongwith was recovered from the Canara Bank in the mapping of heads to each scheme had FY 2016-17 in addition to Rs. 873/- crore been successfully done in 2016-17. recovered from Canara Bank in 2015-16 out b. Successful implementation of new scheme of Rs. 2600/- crore released for New central of Gold Bonds and Gold Monetization Scheme of Interest Subsidy Scheme. scheme.  An amount of Rs. 255.37/- crore was c. Disposal of 5 ATNs pertaining to 2015 and recovered from ICICI Bank under 2016. Technology Development & Commercialization Program, Sponsored 11. Central Pension Accounting research & Development (SPREAD) Office Program & Technology, Institutions-Reflows 11.1 The Central Pension Accounting Office (CPAO) Program. These programs were was established w.e.f. 1st January, 1990 for Payment discontinued some years back but the and Accounting of Central (Civil) Pensioners and Pension money remained with ICICI. to Freedom Fighters etc. CPAO is a subordinate office 6) During the financial year 2016-17, PAO (DIPAM) under the O/o Controller General of Accounts, had been awarded "Best PAO" in the accounting Department of Expenditure, M/o Finance. It has been cadre of Controller General of Accounts, Ministry of Finance. Enrolment of PAO (DIPAM) and SO entrusted with the responsibility of administering the (Cash) DIPAM into EIS. "Scheme of payment of pension to Central Government 7) All of the Pay and Accounts offices of the Ministry (Civil) Pensioners through Authorized Banks". Its core have implemented Public Financial functions are: Management System. All payments are being  Issue of Special Seal Authorities (SSAs) made through PFMS. Use of cheques as the authorizing payment of pension in fresh as mode of payment is considerably eliminated. E- well as revision of pension cases to the payments are made to concerned parties and CPPCs(Central Pension Processing now maximum payments are being made Centers) of pension disbursing Banks; electronically. The implementation of PFMS  Preparation of Budget for the Pension Grant coupled with extensive training to the concerned and accounting thereof; officials and peer to peer knowledge sharing has  Audit of CPPCs of pension disbursing resulted in less adaptation time, more Banks; organisational efficiency, less response time in  Maintenance of Data Bank of Central Civil payments, improved record keeping/tracking Pensioners containing all details indicated through digital logs and more transparency. in the PPOs and Revision Authorities; 8) This Department has moved to Government e-  Handle the grievances of Central Civil Market Place for nearly all of the procurements. Pensioners; and Officials were provided training on GeM and the  As an interim arrangement, payment of procurements are being made through GeM. provisional pension to the pensioners/family This remarkably changed the procurement pensioners covered under New Pension process for good. Now, the procurements are Scheme as per orders of Ministry of more streamlined, efficient and transparent. This Finance; and considerably reduced the hurdles in the  Co-ordination with Ministries/Departments, procurement process, providing the purchasing Ministry of Finance and Deptt. of Pension department with more choices and better & Pensioners' Welfare on all matters related 80Department of Expenditure II to Pension Payments, Accounting & (iii) Grievances Redressal Management Budgeting. Software: - A software for Grievance handling where grievances received from pensioners are 11.2 Significant developments /policy decisions taken registered and processed in an organized during the year including initiatives for improving delivery manner. of public services (iv) e-scroll software : This software has been  Hon'ble Union Minister for Finance & development for payment and receipt scrolls Corporate Affairs, Shri Arun Jaitley launched from CPPC and 'put through statement' from 'Web Responsive Pensioners' Service' of Reserve Bank of India for speedy accounting CPAO on 14th Sep, 2016. This IT initiative and reconciliation at CPAO. of Central Pension Accounting Office (CPAO) (v) e-PPO: This system has been developed for provides various services including Pension sending online digitally signed revision & Payment Information, Online Pension authorities from CPAO to CPPCs of banks for Process Tracking, online Grievance arranging payment to the pensioners. At Registration & Tracking to the pensioners present, under this project, digitally signed and also provides dashboards for Ministries/ revision authorities are being sent to all CPPCs Departments and Banks strengthening their from CPAO. pension processing and Grievance redressal (vi) Bar-coding software: Bar - coding module is monitoring system. Till 31st Dec, 2017, 3,584 incorporated in PARAS with the help of postal grievances by banks and 937 grievances by Department for speedy transmission of pension Ministries/Departments have been disposed papers to CPPCs and tracking of dispatch status off through WRPS. of pension cases.  Under retiring employee module of WRPS, (vii) e-Revision Utility: CPAO has developed new facility of uploading of details of retiring e-Revision utility for the revision of 7th CPC employees has been provided for the pension cases. This utility has facility of receiving monitoring of timely processing of pension online revision authorities from PAOs to CPAO cases. Till 31st Dec, 2017, details of 54,735 under the digital signatures of PAOs. employees have been uploaded by (viii) "Web Responsive Pensioners' Service": Ministries/ Departments under this module. CPAO has developed a mobile responsive  The WRPS is an important Digital India facility for pensioners with comprehensive initiative for improving transparency, information. This service was launched by accountability and responsiveness. Hon'ble Union Minister of Finance Sh. Arun Jaitely on 14/09/2016. Now pensioners can avail 11.3 e-Governance Initiatives of CPAO following services by registering on CPAO CPAO is a fully computerized office. A wide range website through PPO number and date of birth of softwares/packages have been developed/ & date of retirement/date of death: Pensioner implemented in this office for streamlining pension Profile; Digital Record of Pension & Revision disbursement, accounting and grievance redressal which Orders; Download Facility of Pension/Revision includes:- Orders Sent To Banks; Pension Processing (i) Pension Authorization, Retrieval & Status Tracking and Monthly Details of Pension Accounting System (PARAS):- All the pension Payment. processing activities from receipt to dispatch are (ix) SMS Facility: To track pension process status managed through PARAS. The web interface of at CPAO and at the stage of grievance PARAS provides the related information to registration & disposal. pensioners; PAOs/Ministries & Banks. About (x) Link to Jeevan Pramaan, Bhavishya and 12lakhs central civil pension cases have been CPENGRAM Portals: Link to Jeevan Pramaan processed by CPAO through this software Portal has been provided on CPAO website to thereby creating digital database of these enable pensioners to use facility of Digital Life pensioners. Various MIS reports are also Certificate. For retiring employees, a link has generated by this software for the monitoring been established with Bhavishya Portal of purposes. DP&PW to enable them to track status of their (ii) Database Management Software: - Software pension cases even before the case reaches for comparison of bank's database with CPAO's CPAO. A link to CPENGRAMS (Centralized database of pensioners has been developed and Pension Grievance Redress and Monitoring exception reports are generated by it to clean System) has also been provided so as to enable up the database and establish a completely pensioners to lodge and track their grievances matching database at both the ends. on CPENGRAMS. 81Annual Report 2017-2018 82Department of Expenditure II 83Annual Report 2017-2018 84 ERUTIDNEPXE FO TNEMTRAPED FO TRAHC LANOITASINAGRO )erutidnepxE( yraterceS ahJ nayaraN yajA irhS yraterceS lanoitiddA lareneG rellortnoC rosivdA feihC )erutidnepxE( stnuoccA fo )tsoC( saD ramuK domarP irhS aluznaiL ynohtnA irhS ihteS anurA .sM yraterceS tnioJ yraterceS tnioJ yraterceS tnioJ yraterceS tnioJ yraterceS tnioJ resivdA laicnaniF & )etatS-ecnaniF nalP( ecnaniF nalP( ecnaniF nalP( )lennosreP( purawS areeM .sM najnaR veejaR irhS )II-lartneC )I-lartneC egroeG einnA .sM namarajaR .K irhS tnacaV wehtaMDepartment of Revenue III Chapter - III Department of Revenue 1. Organisation and Functions xvii. Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974; 1.1 The Department of Revenue functions under the overall direction and control of the Secretary (Revenue). xviii. Prevention of Money Laundering Act, 2002; and It exercises control in respect of matters relating to all xix. Foreign Exchange Management Act, 1999. the Direct and Indirect Union Taxes through two statutory Boards namely, the Central Board of Direct Taxes (CBDT) xx. Union Territory Goods & Services Tax Act, 2017 and the Central Board of Excise and Customs (CBEC). xxi. Goods & Services Tax (compensation to States) Each Board is headed by a Chairman who is also ex- Act, 2017 officio Special Secretary to the Government of India. Matters relating to the levy and collection of all Direct xxii. Central Goods & Services Tax Act, 2017 taxes are looked after by the CBDT whereas those relating to levy and collection of Goods and Service Taxes (GST), xxiii. State Goods & Services Tax Act, 2017 Customs and Central Excise duties, Service Tax and other xxiv. Integrated Goods & Services Tax Act, 2017 Indirect taxes fall within the purview of the CBEC. The two Boards were constituted under the Central Board of 1.3 The Department looks after the matters relating to Revenue Act, 1963. Each Board have sanctioned the above-mentioned Acts through the following attached/ strength of 6 (six) members. subordinate offices: 1. 2 The Department of Revenue administers the i. Commissionerates/Directorates under Central following Acts: Board of Excise and Customs; i. Income Tax Act, 1961; ii. Commissionerates/Directorates under Central Board of Direct Taxes; ii. Wealth Tax Act, 1957; iii. Central Economic Intelligence Bureau; iii. Expenditure Tax Act, 1987; iv. Directorate of Enforcement; iv. Benami Transactions (Prohibition) Act, 1988; v. Central Bureau of Narcotics; v. Chapter-VII of Finance (No.2) Act, 2004 (Relating to Levy of Securities Transactions Tax) vi. Chief Controller of Factories; vi. Chapter VII of Finance Act 2005 (Relating to vii. Appellate Tribunal under SAFEMA; Banking Cash Transaction Tax) viii. Income Tax Settlement Commission; vii. Chapter V of Finance Act, 1994 (relating to ix. Customs and Central Excise Settlement Service Tax) Commission; viii. Central Excise Act, 1944 and related matters; x. Customs, Excise and Service Tax Appellate ix. Customs Act, 1962 and related matters; Tribunal; x. Central Sales Tax Act, 1956; xi. Authority for Advance Rulings for Income Tax; xi. Custom Tariff Act, 1975 xii. National Committee for Promotion of Social and Economic Welfare; xii. Central Excise Tariff Act 1985 xiii. Authority for Advance Rulings for Customs and xiii. Narcotic Drugs and Psychotropic Substances Central Excise; Act, 1985; xiv. Competent Authorities appointed under xiv. Prevention of Illicit Traffic in Narcotic Drugs and Smugglers and Foreign Exchange Manipulators Psychotropic Substances Act, 1988; (Forfeiture of Property) Act, 1976 & Narcotic xv. Smugglers and Foreign Exchange Manipulators Drugs and Psychotropic Substances Act, 1985; (Forfeiture of Property) Act, 1976; xv. Financial Intelligence Unit, India (FIU-IND); xvi. Indian Stamp Act, 1899 (to the extent falling within xvi. Income Tax Ombudsman; jurisdiction of the Union); 85Annual Report 2017-2018 xvii. Adjudicating Authority under Prevention of Money xix. Revision Application Unit. Laundering Act. 1.4 A comparison of the collection of Direct and xviii. Indirect Tax Ombudsman. Indirect taxes for the period 2016-17 (April to December) and 2017-18 (April to December) is as follow: (Rs. in crore) Sl. Amount collected Nature of Taxes No. 2016-17 (April- 2017-18 ( upto %age of growth December, 2016) December, 2017) over last year 1. Corporate Income Tax 320223 376010 17.42% 2. Personal Income Tax 222382 261676 17.67% (excluding STT & WT) 3. Other Taxes (STT & WT) 6028 7940 31.71% 4. 279020 203212 -27.2% Central Excise* 5. 167294 109795 -34.4% Customs 6. 183265 80348 -56.2% Service Tax 7. Goods and Services Tax - 540327 (from July to January, 2018) (* Exclusive of cesses not administered by Department of Revenue) Table Data Source: CGA/ Pr. CCA, CBDT& CBEC respectively. STT - Security Transaction Tax WT - Wealth Tax 1.5 An Organisation Chart of Department of Revenue (FOP) A and NDPSA is given at Annexure-IV. d. Chief Controller of Factories 2. Revenue Headquarters Administration e. Central Bureau of Narcotics 2.1 The Department of Revenue looks after matters relating to all administration work pertaining to the f. Customs, Excise and Service Tax Appellate Department, coordination between the two Boards (CBEC Tribunal (CESTAT) and CBDT), the administration of the Indian Stamp Act g. Appellate Tribunal under SAFEMA 1899 (to the extent falling within the jurisdiction of the Union), the Central Sales Tax Act 1956, Goods and h. Customs and Central Excise Settlement Service Tax (GST) the Narcotic Drugs and Psychotropic Commission (CCESC) Substances Act 1985 (NDPSA), the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) i. Income Tax Settlement Commission (ITSC) Act 1976 (SAFEM (FOP) A), the Foreign Exchange j. Authority for Advance Ruling for Customs and Management Act 1999 (FEMA) and the Conservation of Central Excise Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA), the Prevention of Money k. Authority for Advance Rulings (AAR) for Income Laundering Act, 2002 (PMLA) and matters relating to the Tax following attached/ subordinate offices of the l. National Committee for Promotion of Social and Department: Economic Welfare (NCPSEW) a. Enforcement Directorate m. Financial Intelligence Unit, India (FIU-IND) b. Central Economic Intelligence Bureau (CEIB) n. Income Tax Ombudsman c. Competent Authorities appointed under SAFEM o. Indirect Tax Ombudsman 86Department of Revenue III p. Adjudicating Authority under Prevention of Money administration in the organisations under the Department Laundering Act of Revenue. The Unit continued to liaise with the Department of AR&PG and SIU, Department of 2.2 The following items of works are also undertaken Expenditure on the following: - by the Headquarters: (i) Compilation and consolidation of orders/ I. Appointment of – instructions;  Chairman and Members of CBEC and CBDT (ii) Review of rules & regulations and Manuals;  Chairman, Vice Presidents and Members of (iii) Review of periodical reports and returns; CESTAT (iv) Monitoring the progress of disposal of VIP and  Chairmen, Vice Chairmen and Members of other pending cases; CCESC and ITSC 2.3.2 In addition to the above, the Induction Material  Chairmen, Vice-Chairman and Members of AARs of the Department has been updated regularly. The progress of disposal of pending VIP/MP references in for Customs / Central Excise and 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 circulated to MOS (Revenue) and senior officers of the  Competent Authorities (SAFEM (FOP) A and Department every fortnight. This has reduced the NDPSA) pendency of VIP cases.  Director (FIU-IND) 2.4 Economic Security (ES) Cell  Income Tax Ombudsman 2.4.1 Economic Security Cell is dealing with the administration and implementation of the Prevention of  Indirect Tax Ombudsman Money Laundering Act, 2002. Based on PMLA, Economic Security Cell is also looking after framing / amendment  Chairperson and Member of Adjudicating of PMLA Rules on matters relating to Know Your Authority set up under PMLA Customer (KYC norms, setting up of special Courts under  Chairman and members of “Appellate Tribunal” PMLA, Section 66 of PMLA – authorities to whom information to be disseminated etc. from time to time. established under SAFEMA (FoP) Act, 1976. The ES Cell handles all issues related to Financial Action  Appointment of CVO, CBDT/ CBEC. Task Force (FATF). II. Setting up of Commissions/Committees under 2.4.2 Prevention of Money Laundering Act (PMLA) was the Department enacted on 17th January, 2003 and brought into force on 1st July 2005. The object of this Act is to prevent money III. Foreign training and assignment of officers of the laundering and to provide for confiscation of property Department derived from, or involved in, money – laundering and for matters connected therewith or incidental thereto. Two IV. Processing of the cases of deputation of IRS/ main objectives of the Act are: ICCES officers to Central Government under Central Staffing Scheme or any Board/PSU etc.  Criminalize money laundering and provide for attachment, seizure and confiscation of property V. Issue of sanction for payment of annual involved in money laundering [Implemented by contribution to the Customs Cooperation Enforcement Directorate]; and Council, Brussels (Belgium) and other international agencies.  Prescribe obligations on banks, financial Institutions and intermediaries relating to KYC, 2.3 Internal Work Study Unit (IWSU) record keeping and furnishing reports 2.3.1 Being the Nodal Agency for dissemination of [Implemented by Financial Intelligence Unit (FIU- Government guidelines for bringing about improvement IND)]. and efficiency, cleanliness and for effecting cost economy 2.4.3 PMLA was amended in 2005, 2009, 2012, 2015 in the administration, the Internal Work Study Unit (IWSU) and 2016 to overcome the deficiencies and to meet the of the Department of Revenue, during the year 2017-18, international standards on Anti-Money Laundering as continued its efforts to improve the quality of 87Annual Report 2017-2018 prescribed by Financial Action Task Force (FATF). with first proviso to sub-section (ii) of Section 35B of the Central Excise Act, 1944 gave review and revisionary 2.4.4 Financial Action Task Force (FATF) powers to Central Government to revise the orders 2.4.4.1 The Financial Action Task Force (FATF) is an passed by the Commissioner of Central Excise (appeals). inter-governmental body which sets standards, and 2.5.1.2 On the Service Tax side the two provisos inserted develops and promotes policies to combat money in sub-section (1) of Section 86 of the Finance Act 1994 laundering and terrorist financing. vide Section 117 of the Finance Act 2015 (with effect from 2.4.4.2 The forty Recommendations of FATF provide a 14.5.2015) stipulate that where an order, relating to a complete set of counter-measures against money service which is exported, has been passed under section laundering, counter financing of terrorism and its proliferation 85 and the matter relating to grant of rebate of service tax covering the criminal justice system and law enforcement, as input service, or rebate of duty paid on inputs, used in the financial system and its regulation, and international co- providing such service, such order shall be dealt with in operation. These Recommendations have been accordance with the provisions of section 35EE of the recognized, endorsed, or adopted by many international Central Excise Act 1944. All appeals in such matters bodies as the international standards for combating money pending before the Appellate Tribunal shall also be laundering and terrorist financing. India became the member transferred and dealt with in accordance with the provisions of Financial Action Task Force (FATF) in June 2010. of Section 35 EE of the Central Excise Act 1944. 2.5 Revision Application Unit 2.5.1.3 The Revision Applications filed either by parties or department against the orders of Commissioner 2.5.1 Formation, function and working of the (Appeals) are considered and decided by Additional Revision Application Unit Secretary (RA). The Central Government is the highest authority in such revision and review matters and orders 2.5.1.1 The mandate of the Revision Application Unit is thus passed by the Additional Secretary (RA) are final. to dispense justice. Under the scheme operative till Petitioners, aggrieved with the revision order passed by 10.10.1982, the appeal against the orders of the Additional Secretary (RA) may take re-course to writ Commissioners (then called Collectors), of Customs & petitions under Article 226 of Constitution of India. Central Excise lay with the Central Board of Excise & Customs. As far as the appeals against the orders passed 2.5.1.4 The Revision Application Unit is directly by the authorities below the rank of the Collectors (now responsible to Secretary (Revenue). called Commissioners), were concerned, the same were 2.5.2 Jurisdiction to be filed before the appellate Collectors of Customs & Central Excise. Erstwhile Section 131 of the Customs 2.5.2.1 Customs jurisdiction - Section 129 DD read Act, 1962 and Section 36 of the Central Excise & Salt with proviso to Section 129 A (1) of Customs Act, 1962 Act, 1944, empowered the Central Government to revise empowered the Central Government to revise or review the orders passed by the CBEC and appellate Collectors the appellate orders passed by Commissioner of Customs in exercise of their appellate jurisdiction. At the (Appeals) if such order related to:- Government level, while Secretary (Revenue) or Special Secretary disposed of the Revision Applications against (a) Any goods imported or exported as baggage; orders passed by the CBEC, and the Addl. Secretary or (b) Any goods loaded in a conveyance for importation Joint Secretary disposed of the applications against the into India, but which are not unloaded at their place orders passed by the appellate Collectors of Customs & of destination in India, or so much of the quantity Central Excise and executive Collectors of Customs and of such goods as has not been unloaded at any Central Excise. The Finance (No. 2) Act, 1980 sought to such destination if goods unloaded at such introduce a new system by establishing appellate Tribunal. destination are short of the quantity required to The appellate jurisdiction of CBEC and Revisionary be unloaded at the destination; jurisdiction of the Central Government were abolished with effect from 11.10.1982, except a few residual (c) Payment of drawback as provided in Chapter X transitional provisions and the Customs, Excise and Gold and the rules made there under. Appellate Tribunal (now CESTAT) was set up with effect from 11.10.1982. The Finance Act, 1984, revived the 2.5.2.2 Central Excise jurisdiction - Section 35 EE read Revisionary powers of the Central Government in with proviso to Section 35 B (1) of Central Excise Act, specified type of cases. On the Customs side, Section 1944 empowered the Central Government to revise or 129 DD read with proviso to Section 129(A) of the Act, review the appellate orders passed by Commissioner of empowered Central Government to revise the appellate Central Excise (Appeals) if such order related to:- orders passed by the Commissioner of Customs (a) A case of loss of goods, where the loss occurs (Appeals). On Central Excise side, Section 35EE read in transit from a factory to a warehouse or to 88Department of Revenue III another factory, or from one warehouse to 2.5.4 Latest Developments another or during the course of processing of the The Revision Application unit was earlier headed goods in a warehouse or in storage, whether in by a Commissioner and ex-officio Joint Secretary. The a factory or in a warehouse; working of this set-up was stayed by an order of Punjab (b) A rebate of duty of excise on goods exported to & Haryana High Court, upheld by the Apex Court also, any country or territory outside India or on whereby it was directed that an officer of a higher rank excisable materials used in the manufacture of than the Joint Secretary be posted here as the orders of goods which are exported to any country or Commissioner (Appeals) are being revised and an officer territory outside India; of the same rank cannot revise these orders. Subsequently, an officer of the rank of Principal (c) Goods exported outside India (except to Nepal Commissioner and ex-officio Additional Secretary was or Bhutan) without payment of duty. posted in Aug, 2017 and an additional office of Additional 2.5.2.3 Service Tax jurisdiction – The provisions of Secretary (R.A.) was created at Mumbai to reduce the Section 35EE of the Central Excise Act 1944, which dealt pending cases which got piled up during the period of with revision by the Central Government, have been made stay. The office at Delhi caters to Northern and Eastern applicable to Chapter-V of the Finance Act, 1944 dealing regions while the Mumbai Unit takes up the cases with Service Tax. In the Finance Act 2015, the Section pertaining to Southern and Western regions. 86 has been amended to prescribe that the remedy 2.5.5 Performance against the order passed by Commissioner (Appeals) in a matter involving rebate of Service Tax, shall lie in terms Since the joining of Additional Secretary in Aug, 2017 the of Section 35EE of the Central Excise Act 1944. In such work in the unit has picked up very fast and in three cases against the order passed by the Commissioner months i.e. from Aug, 2017 to November, 2017, 347 (Appeals), revision application is required to be filed Revision Applications have been disposed of by Delhi before AS (RA). unit alone. 2.5.2.4 IATT jurisdiction - Rule 13 of Inland Air Travel 3. Narcotics Control (NC) Division Tax (IATT) Rules, 1989 empowered the Central Government to revise or review the appellate orders The Narcotics control Division administers the passed by Commissioner of Customs & Central Excise Narcotic Drugs and Psychotropic Substances Act,1985 (Appeals) if such order related to payment of IATT. (61 of 1985), which prohibits, except for medical and scientific purposes, the manufacture, production, 2.5.2.5 FTT jurisdiction - Rule 15 of Foreign Travel Tax possession, sale, purchase, transport, warehouse, use, (FTT) Rules, 1979 empowered the Central Government consumption, import inter-State, export inter-State, import to revise or review the appellate orders passed by into India, export from India or transshipment of narcotic Commissioner of Customs & Central Excise (Appeals) if drugs and psychotropic substances. The policy of the such order related to Payment of Foreign Travel Tax. Governments has thus been to promote use of Narcotic Drugs and Psychotropic Substances for medical and 2.5.3 Process scientific purposes while preventing their diversion from The Revision Application Unit receives the licit sources, and prohibiting illicit traffic and abuse. The revision application in prescribed form EA-8/CA-8 filed Narcotic Drugs and Psychotropic Substances Act divide by department as well as parties. The stipulated time for the powers and responsibility of regulation of licit activities. filing such applications is 90 days from the date of Section 9 of the Act has listed various activities which communication of order-in-appeal. The delay up to 90 the Central Government can, by rules, regulate while days can be condoned by Central Government in Section 10 lists various activities which deserving cases. The Revision Application Unit on receipt the State Governments can, by rules, regulate. of revision applications issues the acknowledgement to Accordingly, Narcotic Drugs and Psychotropic the applicant along with deficiency memo if any deficiency Substances Rules, 1985 have been framed by the Central is found. Simultaneously, a check-list in prescribed format Government, which regulates cultivation of opium, is also prepared. Notice is issued to respondent party manufacture, import/export of narcotic drugs and for filing counter reply. Thereafter, personal hearing is psychotropic substances. Further to prevent diversion of fixed / held in cases, in the order of seniority. Out of turn precursor chemicals, of wide industrial use, for illicit hearings are allowed only in deserving cases involving manufacturing of, narcotic Drugs and psychotropic substantial revenue, recurring issue resulting into Substances, the Narcotic Drugs and Psychotropic multiplicity of cases, interest liability, the issue is no longer Substances (Regulations of Controlled Substances) res integra, passenger is going abroad and in cases of order, 2013 has been framed under Section 9A of the financial hardship. After completion of hearing, final NDPS Act. revision order is issued by Additional Secretary (RA). 89Annual Report 2017-2018 3.1 Functions/ Working of the Central Narcotic Drugs. Bureau of Narcotics (CBN) v. Performing the functions of Competent National Authority (CNA) for issue of Export Authorizations 3.1.1 Organizational set up and Import Certificate for Export/ Import of The Narcotics Commissioner heads the Central Bureau Narcotic Drugs & Psychotropic Substances and of Narcotics (CBN) with headquarters at Gwalior. The issue of ‘No Objection Certificate’ for import/ Narcotics Commissioner exercises control and export of precursor chemicals under the 1961, supervision over opium poppy cultivation, which is 1971 and 1988 UN Conventions dealing with presently undertaken in select notified areas of the three narcotic drugs, psychotropic substances and states of Madhya Pradesh, Uttar Pradesh & Rajasthan. chemicals/substances used for manufacture of In addition to the work relating to licensing of opium poppy these drugs. cultivation, measurement and test measurement of fields vi. 1988 Convention requires CNA of the countries and procurement of opium, the CBN also undertakes to take all possible measures to prevent diversion preventive checks and exercises vigil to prevent diversion from international trade of precursor chemicals of opium into illicit channels as well as enforcement of used in illicit manufacture of narcotic drugs and Narcotic Drugs & Psychotropic Substances Act, 1985. psychotropic substances in close cooperation 3.1.2 Responsibilities and Duties with INCB and competent authorities of concerned countries. The broad outline of the functions and responsibilities of CBN are as under: vii. Liaison with the International Narcotics Control Board, United Nations Drug Control Programme i. Performing the function of the National Opium as well as with the Competent Authorities of other Agency for India under Single Convention on foreign countries on issues related to international Narcotic Drugs 1961 to exercise supervision over trade in narcotic drugs, psychotropic substances licit cultivation of opium poppy in the country in and precursor chemicals. terms of Section 5(2) of the NDPS Act. viii. Co-ordination with other Enforcement Agencies ii. Survey, detection and eradication of illicit such as Narcotics Control Bureau, Directorate cultivation of opium poppy throughout the country. of Revenue Intelligence, Central Excise, iii. Enforcement of provisions of the NDPS Act 1985 Customs, State Police, State Excise and various to suppress illicit traffic in Narcotic Drugs, other enforcement agencies . Psychotropic Substances and notified Precursor 3.1.3 Achievements: - Chemicals including search, seizure, arrest, investigation and prosecution of drug offenders The performance/achievement with respect to tracing and freezing of illegally acquired issuance of NOCs issued by Central Bureau of Narcotics properties of drug traffickers derived from illicit during the year 2017-18 and for the period from 1.4.17 to drug trafficking for forfeiture and confiscation. 31.12.2017 alongwith projection for the period from 01.01.2018 to 31.03.2018 for the export/import of iv. Issue of licences for manufacture of synthetic Precursor Chemicals is as under :- Number of NOC issued Actual data for Projection for 01.04.2017 to 01.01.18 to 31.12.2017 31.3.18 For export of Controlled Substance 1058 350 For import of Controlled Substance 423 140 No. of Pre-export Notifications issued 922 310 Number of Stop Shipments of Controlled Substances 8 - International Narcotics Control Board (INCB) has of precursors chemicals suspected to be diverted from developed online PEN system to make exchange of the licit channels during the year under report. information between the competent National Authorities. The performance/achievement with respect to CBN had issued 922 PEN’s (01-4-2017 to 31-12-2017) issuance of Export authorization and Import Certificate to the competent authority of various importing countries, issued by Central Bureau of Narcotics during the previous for verifying the legitimacy of the transactions. On the and current financial year for the export/import of narcotic initiative, taken by the CBN, through online PEN system, drugs /psychotropic substances is as under:- CBN has identified and stopped suspicious transactions 90Department of Revenue III Psychotropic Substances Narcotic Drugs Particular 2017-18 (up to From 01.01.2018 to 2017-18 (up to From 31.12. 2017) 31.03.2018 31.12. 2017) 01.01.2018 to (Projected) 31.03.2018 (Projected) No. of Export 2109 700 270 90 Authorization Issued No. of Import 309 100 123 40 Certificate issued Number of Manufacturing license, issued/ renewed, for manufacture of synthetic narcotic drugs and number of Registrations for import of poppy seeds issued, are as under :- No. of Registration certificates No. of Manufacturing license Quota Allocation issued issued for import of Poppy Seeds issued in calendar year 2017 in calendar year 2017 calendar year 2017 37 22 451 During the period from January 2018 to March, 2018 the projected figure is as under:- No. of Registration certificates for No. of Manufacturing license Quota Allocation import of Poppy Seeds (projected) (projected) (projected) 15 20 135 As per Rule 67 E of NDPS Rule 1985, CBN The Government of India has decided to develop a web issues allocation of narcotic drugs, during the year 2017, based online application for registration of manufacturers mainly allocation was issued for Codeine Phosphate to and dealers of narcotic drugs with the Central Bureau of 127 companies for quantity of 44874 kgs, whereas 61 Narcotics (CBN) and submission of data on manufacture, companies were issued allocation for 5852 kgs of utilization, stock trade and consumption of Narcotic Drugs medicinal opium. in the country. The objective of the online application is to collect required data on manufacture and consumption The Government of India has developed web- of narcotic drugs for generation of Form “C” in respect of based software for online registration of manufacturers India for submission to the International Narcotics Control and wholesalers of psychotropic substances, for both bulk Board (INCB), Vienna. This office has taken up the matter drugs and preparations, with the Central Bureau of with National Informatics Centre (NIC), New Delhi. Narcotics (CBN), under the guidance of the National However, development of web based online application Informatics Centre, New Delhi. The system has been for registration of manufacturers and dealers of narcotic made functional to facilitate submission of data on drugs with the Central Bureau of Narcotics (CBN) are manufacture, utilization, stock, import, export, sale still under process. purchase and consumption of psychotropic substances in the country. 3.1.4 Enforcement of NDPS Act, 1985- The data collected through the system, will The Central Bureau of Narcotics undertakes action to facilitate generation of periodical, statistical report on prevent the illicit trafficking of Narcotic Drugs and psychotropic substances like form ’P’ form ‘A/P, form ‘B/ Psychotropic Substances. It also undertakes P’ besides other MIS report for monitoring the investigations and prosecution of drug related offences, manufacture and consumption of psychotropic tracing and freezing of illegally acquired property of drug substances in the country. traffickers, derived from illicit drug trafficking, for forfeiture and confiscation. 91Annual Report 2017-2018 During the calendar year 2017, several seizures, Number of persons convicted/ acquitted in CBN under NDPS Act, were affected by Central Bureau of cases, decided by various Courts, during the financial Narcotics and details thereof is enclose as Annexure-A. year 2017-18 (up-to-30.11.2016) are as under- Financial year Total no. of Total no. of Total no. of Conviction persons who were persons persons rate (%) facing convicted acquitted prosecution 2017-18 578+2 20 12 60% Number of cases, decided by various Courts, during the financial year 2017-18 (up-to 31.12.2017) are as under- Financial year Total no. of Total no. of Total no. of cases Conviction rate cases decided cases in which in which accused (%) conviction was were acquitted obtained 2017-18 24 17 7 70.83% During the calendar year 2017 (up-to e-governance, are noted for compliance and necessary 31.12.2017), the CBN has completed disposal of seized action. Use of CCTV’s Camera’s at Settlement and drugs of 238 NDPS cases. The drugs disposed during Weighment centers was also successfully carried out. the period includes opium, Heroin, Poppy Husk, Illicit Payment to cultivators was made through e-payment. opium plant, Morphine, Charas, Alprazolam, Acetic During the period under report, the cultivation Anhydride, Ammonium Chloride, opium solution and data of farmers from the year 1998-99 to 2016-17 was opium makh etc. The details of drugs disposed during uploaded on the CBN website to facilitate farmers to the period is enclosed herewith as Annexure- B. check their data and in case of discrepancy report the 3.1.5 Activities undertaken for Disability Sector, same to the department for rectification. SCs, & STs and Other weaker Sections of the Society. Computers have been provided, almost, in each As per Ministry’s instructions, reservation for SC/ ST and section and have been inter-connected through Network. Physically Handicapped are being maintained in the All urgent reports or replies to the references received Central Bureau of Narcotics. During the period, Deputy from the Ministry are being forwarded to the Ministry of Narcotics Commissioner, Kota was appointed as a Finance, New Delhi and other offices through e-mail, as Liaison Officer to look after the interest, representation far as possible. and welfare of ST/ SC and Physically Handicapped The Central Bureau of Narcotics web site has employees. Deputy Narcotics Commissioner, Gwalior been updated and all the application forms for issue of was appointed as a Liaison Officer to look after the export/ import authorization for export/ import of interest, representation and welfare of OBC employees. Psychotropic substances/ Precursor chemicals and 3.1.6 Gender Issues/ Empowerment of Women: Controlled substances can be downloaded from the CBN website: www.cbn.nic.in. A Complaint Committee has been set up in the Headquarters of Madhya Pradesh, Rajasthan, Uttar 3.1.8 Other highlights of performance and Pradesh Unit and Headquarters office, Gwalior to look achievements during the year 2017-18. after the complaints of the working women’s in respect Durig the crop year 2016-17, a quantity of of any type of harassment of women at work place. No 556.072 Metric Tons of opium at 70º consistence was representation or complaint has been received from any procured. The average yield at 70º consistence on basis employee regarding discrimination on ground of sex. of provisional results received from Madhya Pradesh, 3.1.7 e-Governance Activities. Rajasthan and Uttar Pradesh for the crop year 2016-17 was 64.06, 64.27 & 46.02 respectively. The All India As regards, e-Governance activities, it is stated average yield during 2016-17 was 64.10 kgs./hectare at that various instructions of the Government, on issue of 92Department of Revenue III 70º consistency. The figures are for crop year 2016-17 The Doctors advised the patients on proper diet as the crop cycle for the cultivation of opium is October and other aspects of leading a healthy life. to September next year. Settlement/ Licensing operation iv. Poster painting & Quiz competition:- An open for crop year 2017-18 has been completed during the poster painting & quiz competition was held at month of December, 2017 and consequently 57373 the office premises on 27-6-2017 & 28-06-2017 cultivators and Area 5739.32 hectares were settled. respectively. The theme of the competition was Since crop year 2012-13, a new procedure for payment “NASHA EK ABHISHAP”. A large number of has been adopted. There was high risk in drawing big persons including young boys and girls amount from Banks, carrying it to weighment centres, participated in the competition and placed their disbursing it to concerned cultivators/ Lambardar’s and thoughts on the canvas. Entries received were carrying it to villages by cultivators from weighment scrutinized by an Expert Panel and rewards were centres in late evening. Banking infrastructure has been distributed to the winners of the Poster painting improved in opium growing areas and it is developing competition. Similar programmers including day by day. Considering all these factors, cost of opium/ Nukkad Natak at Gwalior & Kota, Essay Writing commission is being paid through e-payment directly in competition, Quiz competition, Slogan and Bank accounts of cultivators during weighment operation. Debate Competitions were organized at Unit After receipt of computed challans from Govt. Opium Headquarters, Kota, Lucknow and Neemuch. Factories, final payment to cultivators is being done without waiting for Settlement Operation. 3.2. Government Opium and Alkaolids Works World Drug Day, 2017 by Central Bureau of Narcotics: (GOAW) On the International day against drug abuse and trafficking, Central Bureau of Narcotics organized a series 3.2.1 Chief Controller of Factories (CCF) of events from 26th June, 2017 to 28th June, 2017. The following events were organized: The Government Opium & Alkaloid Works (GOAW) is engaged in the processing of raw opium for i. Motor Cycle Rally: - A Road show/ Motor Cycle export and manufacturing opiate alkaloids through its two Rally of around 100 volunteers was organized Factories viz Govt. Opium & Alkaloid Works (GOAW) at on 26th June, 2017. The staff members Ghazipur (U.P.) and Neemuch (M.P.). The Products distributed attractive stickers on drug abuse to manufactured at GOAWs are mainly used by the Taxi drivers, Auto-rickshaw drivers and pharmaceutical industry of India for Preparation of cough General Public throughout the day with a view to syrup, pain relievers and tablets for terminally ill cancer raise awareness among general public. Stickers and HIV patients. The GOAW are administered by a High were also pasted and attractive banners were Powered Body called the “Committee of Management” displayed at prominent places of the city. constituted and notified by the Government of India in 1970. The Additional Secretary (Revenue), Department ii. Signature Campaign: - For raising awareness of of Revenue, Ministry of Finance is the Chairman of the the masses regarding the growing menace of Committee of Management. An officer of the rank of drug abuse, a Signature Campaign was Commissioner/Joint Secretary is the Chief Controller of organized at Deen Dayal City Mall, Gwalior on Factories who heads the Organization and each of the 26th June, 2017. The Signature Campaign two factories at Neemuch and Ghazipur are managed by attracted an overwhelming response from the a General Manager of the rank of Additional general public. The general public was invited to Commissioner/Director. The Chief Controller of Factories give their messages on the menace of drug office is located at New Delhi. Each of the factories abuse. The campaign was an unprecedented comprises two units – the Opium Factory and Alkaloid success. Works. The Opium Factories undertake the work of iii. Health Check-up camps: - On 27-6-2017, free receipt of opium from the fields, its storage and Health Check-up camp by the doctors of Birla processing for exports and domestic consumption. The Institute of Medical Research Centre, & Ratan Alkaloid Works are engaged in processing raw opium Jyoti Netralaya, Gwalior was organized at the into alkaloids of pharmacopeial grades to meet the Office premises. The health check-up covered domestic demand of the pharmaceutical industry. The the following areas: GOAWs have employed a total work force of about 650 people at its opium and alkaloid plants. The work force  Blood Pressure; comprises of officials and staff drawn from the Central  Sugar testing; Board of Excise and Customs, Central Bureau of Narcotics, Central Revenues Control Laboratory, apart  Eyes check-up from personnel selected by the Union Public Services 93Annual Report 2017-2018 Commission directly. The security aspects of these Force (CISF), a paramilitary force of the Ministry of Home factories are looked after by Central Industrial Security Affairs. The overall performance / achievements of GOAF for the financial year 2017-18 are as follows : I. PERFORMANCE OF GOAW FOR THE FINANCIAL YEAR 2017 -18 (Provisional) Sl. Particulars Unit Actual Production Estimated production No April to November, from Dec.-17 to 2017 March-2018 A PRODUCTION 1 Drying of opium for KG. NIL NIL Export at 90°C 2 a) Morphine Sulphate KG. 409 NIL b) Codeine Phosphate (C.P.) KG. 3046 7147 c) Pure Thebaine KG. 10 74 d) Noscapine BP KG. 70 270 e) Pholcodine KG. NIL 140 f) IMO Powder KG. 3800 3200 g) IMO Cake KG. 941 4059 3. C.P. Import for Domestic Market KG. 8000 7000 Sl. Particulars Actual Sales Estimated sales from Dec.-17 to No. April to Nov-2017 March-18 Quantity Amount Quantity Amount ( in Kg.) (Rs. in Crore) ( in Kg.) (Rs. in Crore) B SALES 1 Export of opium at 90°C 569 0.27 42000 17.98 2 a) Codeine Sulphate ---- ---- 62 0.55 b) Morphine Sulphate 231 0.87 316 1.41 c) Codeine Phosphate 13338 56.68 15916 74.98 (Ind. & Imp) d) Dionine 10 0.12 20 0.24 e) Pure Thebaine 550 2.08 260 0.98 f) Noscapine BP 1354 4.85 102 0.43 g) Pholcodine 30 0.17 24 0.16 h) IMO Powder 1921 1.86 4834 5.10 (Dom. Sales+Export) i) IMO Cake 2397 2.27 581 0.54 (Domestic Sales+Export) Total 2 (a to i) 19831 68.90 22115 84.39 Grand Total (1+2) 20400 69.17 64115 102.37 C. (a) COUNTRY WISE EXPORT OF OPIUM AT 90°C (excluding IMO Powder & Cake) FOR THE FINANCIAL YEAR 2017-18 (UPTO NOVEMBER, 2017) (Quantity in Kgs) Unit USA Japan Total 1 Ghazipur ---- ---- ---- 2 Neemuch 569 ---- 569 Total 569 ---- 569 94Department of Revenue III (b) ESTIMATED COUNTRY WISE EXPORT OF OPIUM AT 90°C (excluding IMO Powder & Cake) FOR THE FINANCIAL YEAR 2017-18 (FROM DEC-17 TO MAR, 2018) (Quantity in Kgs) Unit France Japan Iran Total 1 Ghazipur ---- 36000 ---- 36000 2 Neemuch 1000 ---- 5000 6000 Total 1000 36000 5000 42000 D. (a) REVENUE RECEIPTS (ON REALISATION BASIS) FOR THE FINANCIAL YEAR 2017-18 (upto November, 2017) (Rs. in crore) Opium Factory Alkaloid Works Total 1 Ghazipur ---- 36.04 36.04 2 Neemuch 0.38 32.86 33.24 Total 0.38 68.90 69.28 (b) REVENUE RECEIPTS (ON ESTIMATED BASIS) FOR THE FINANCIAL YEAR 2017-18 (from December-17 to March-2018) (Rs. in crore) Opium Factory Alkaloid Works Total 1 Ghazipur 15.17 34.47 49.64 2 Neemuch 2.81 49.92 52.73 Total 17.98 84.39 102.37 II. ACHIEVEMENT OF CCF ORGANISATION UP TO THE MONTH OF NOVEMBER 2017 WITH COMPARATIVE DATA OF PREVIOUS YEAR i.e. 2016 FOR THE SIMILAR PERIOD: Provisional Sl. Actual Production % age increase over No. Particulars Unit April to November previous year 2016-17 2017-18 (*) A. PRODUCTION 1 Drying of opium for KG. 10571 ---- 0 Export at 90°C 2 Manufacture of Drugs : a) Morphine Sulphate KG. 196 409 109 % b) Codeine Phosphate KG. 3567 3046 - 15 % c) Pure Thebaine KG. 0 10 100% d) Noscapine BP KG. 1293 70 -95 % e) Pholcodine KG. 55 ---- -100% f) IMO Powder KG. 4400 3800 -14 % g) IMO Cake KG. 1047 941 -10 % h) Papavarine S.R. KG. 596 ---- -100% Total (2) KG. 11154 8276 -26 % 3. Import of Codeine Phosphate For Domestic Market KG. 0 8000 - (*) Both factories remained closed from April, 2017 to July, 2017 for up-gradation work. 95Annual Report 2017-2018 B. SALES Provisional Sl. 2016-17 2017-18 No. Particulars April to November April to November Qty. (Rs. in Qty. (Rs. in (Kgs.) Crore) (Kgs) Crore) (1) (2) (3) (4) (5) (6) 1 Export of opium on accrual basis 67500 32.35 569 0.27 2 Domestic Sale of Drugs : (on actual basis) a) Morphine Sulphate 240 0.90 231 0.87 b) Codeine Phosphate 14609 62.09 13338 56.68 (Indigenous & Imported) c) Dionine 0 0 10 0.12 d) Pure Thebaine 346 1.31 550 2.08 e) Noscapine BP 856 3.06 1354 4.85 f) Papavarine S.R. 255 0.05 ---- ---- g) Pholcodine 67 0.38 30 0.17 h) IMO Powder 7189 7.44 1921 1.86 (Domestic sale + Export) i) IMO Cake 2118 2.12 2397 2.27 (Domestic sale + Export) Total (2) 25680 77.35 19831 68.90 Grand Total (1+2) 93180 109.70 20400 69.17 C. COMPARATIVE COUNTRY WISE EXPORT OF OPIUM AT 90°C (upto November of each financial year) (Qty. in Kgs. at 90ºC) Unit USA FRANCE JAPAN IRAN TOTAL 2016-17 Ghazipur ---- 2500 60000 ---- 62500 Neemuch ---- ---- ---- 5000 5000 Total ---- 2500 60000 5000 67500 2017-18 Ghazipur ---- ---- ---- ---- ---- Neemuch 569 ---- ---- ---- 569 Total 569 ---- ---- ---- 569 D. COMPARATIVE REVENUE RECEIPTS ON REALISATION BASIS (upto November of each financial year) (Rs. in Crores) (Provisional) Opium Alkaloid Total Unit Factories Works 2016-17 Ghazipur 24.38 45.23 69.61 Neemuch 0.02 44.09 44.11 Total 24.40 89.32 113.72 2017-18 Ghazipur ---- 36.04 36.04 Neemuch 0.38 32.86 33.24 Total 0.38 68.90 69.28 96Department of Revenue III 3.2.2 Development of North Eastern Region: The 3.2.5 Gender Budgeting/Empowerment of Women: CCF organization including GOAWs are located in Uttar Equal opportunity / status is enjoyed by women in CCF Pradesh, Madhya Pradesh and Delhi only and therefore, organization. In case of gender bias / harassment there is nothing to specify with regard to work done on reported if any, it is ensured that appropriate action is the development of North Eastern region and Sikkim taken against the erring official. Internal Complaint Project Schemes. Committee has already been formed at GOAW, Neemuch & Ghazipur for the purpose of dealing the complaints 3.2.3 E-Governance Activities: The Organization of received regarding sexual harassment at workplace. At Chief Controller of Factories has launched its own website the Headquarter Office, as there only two women which contains complete information about the employees, the Complaint Committee cannot be formed. organization, its activities, contact details, etc. All tenders Therefore, it has been suggested that complaint of the for procurement of material and services are timely loaded Headquarter may be dealt by Complaint Committee of in the website for information and participation of the the Ministry for dealing with the complaints received manufacturers / suppliers. The organization has also regarding sexual harassment at workplace. arranged to display various information pertaining to production of drugs, sale of drugs, etc. through internet. 3.2.6 Activities Undertaken for Disability Sector & Placing of various other information of the concerned SCs/STs & Other Weaker Sections of Society: The authorities have also been taken up. The organization CCF organization is strictly adhering to the prescribed purchase goods & services through GeM. rules and regulations for the welfare and development of disabled, SCs, STs and other weaker sections. With an 3.2.4 Grievances Redressal Machinery: Public objective to initiate prompt action on grievances of such Grievances in the CCF’s Organization are dealt with sections, a committee has been formed with members promptly. The labour grievances are also dealt with drawn from such sections. Roster registers for this expeditiously and the relations between the Management purpose are also being maintained. & workers during this period was harmonious and cordial. ANNEXURE-A Seizures effected by CBN during the year 2017 Type of Drugs/Substances 2017 Opium Quantity(In Kgs.) 33.837 Cases 14 P.A. ( Persons Accused) 14 (inc 1-Fe) Morphine Quantity (In Kgs.) - Cases - P.A. - Heroin Quantity (In Kgs. ) 1.125 Cases 3 P.A. 4 Ganja Quantity (In Kgs. ) - Cases - P.A. - Charas Quantity (In Kgs. ) 613.25 Cases 8 P.A. 22 (incl 1-Fe & 1-Fo) Poppy Straw/Husk Quantity (In Kgs. ) 9154.32 Cases 12 P.A. 17 (incl 3-f) 97Annual Report 2017-2018 Buprenorphine Quantity (In Kgs. ) - Cases 1 P.A. - No. of injection 50 Pentazocin Quantity (In Kgs. ) 4010 inj Cases 1 P.A. 1 Codeine Phosphate Cough Quantity (In Kgs. ) 76200 bottles Syrup (100 ml each) Cases 1 P.A. 1 (Phensedyl) Alrazolam Tab Quantity (In Kgs. ) 23810 tab Cases 1 P.A. 1 Mephedrone Quantity (In Kgs. ) 5.200 Cases 1 P.A. 1 Destruction of Illicit Poppy Cultivation by CBN during the year 2017 Illicit Poppy Cultn. Area (In Sqm)/Plant 105 Sq M (in Poppy Cultn. Area) Cases 1 P.A. 1 Illicit Poppy Cultn. Area (in Hect) Arunachal Pradesh 465 Uttarakhand 668 Total 1133.0105 Cannabis Kullu(H.P.) 11 P.A.- Persons Accused ANNEXURE-B Disposal of drugs carried out during the period from 01.01..2017 to 31.12.2017 Sr.No. Name of Drug Quantity disposed(in kgs) No. of cases 1 Opium 649.376 148 2 Heroin 51.922 49 3 Ganja 31.54 7 4 Poppy Husk 13151.5 17 5 Morphine 5.9015 8 6 Charas 17.1 3 7 Alprazolam 5.5 2 8 Suspect Powder 2.9 1 9 Acetic Anhydride 9.5 1 10 Ammonium Chloride 0 0 11 Opium Solution 20.75 Litre 0 12 Opium Makh 0 0 13 Illicit Opium Plant 171 Plants 2 Total 13925.2395 kgs, 20.75 litre 238 and 171 plants 98Department of Revenue III 4. State Taxes 4.3 Goods and Services Tax Settlement of Funds Rules, 2017: There are two State Sections in the Department of Revenue: The Goods and Services Tax Settlement of Funds Rules, 2017 have also been notified on 27th July, a) State Taxes-I 2017, which, layout the procedure to be followed for the b) State Taxes-II settlement of funds between the Centre and the States on account of cross-utilisation of input tax credit between State Taxes - I Section IGST and SGST / UTGST, and apportionment of IGST. A State Taxes -I Section of the Department of total amount of Rs. 96,917.31 crores has been settled Revenue deals with legislative work relating to Central from IGST between July to December, 2017 and Acts having significant interface with the States like the distributed among Centre and States/ UTs. This included Indian Stamp Act, 1899 and the Constitution (One Rs. 60191.40 crores IGST amount released to States/ Hundred and First Amendment) Act, 2016 for UTs (SGST/UTGST) and Rs. 36,725.91 crores to Centre implementation of Goods and Services Tax (GST) as well (CGST). as administrative and budgetary matters in respect to 4.4 Special Purpose Vehicle for Goods & Goods and Services Tax Network (GSTN)- Special Services Tax Network (GSTN): Purpose Vehicle incorporated for providing IT platform for the GST. Apart from the above, Union Territory Goods A robust computerized environment of tax and Services Tax (UTGST) Act, 2017 and GST Settlement administration is essential for smooth functioning of GST. of Funds Rules, 2017 are other subject matters of the Accordingly, in pursuance of the Cabinet decision, a Section. Brief description of the same are as under. Special Purpose Vehicle (SPV) for GST Network, a not- 4.1 Goods and Services Tax (GST): for-profit, non-Government Company under section 8 of the new Companies Act, 2013 (Section 25 of the erstwhile The introduction of Goods and Services Tax Companies Act, 1956) with 49 percent equity held by (GST) regime in the country was a very significant step Government and 51 % held by non-Government in the field of indirect tax reforms in India. By institutions, has been set up by the Government on 28th amalgamating a large number of Central and State taxes March, 2013 in order to provide IT infrastructure and into a single tax, the aim was to mitigate cascading or services to the Central and State Governments, tax double taxation in a major way and pave the way for a payers and other stakeholders for implementation of the common national market. Before implementation of the Goods and Services Tax (GST). GST regime in the country, the issue was deliberated in 4.5 Indian Stamp Act, 1899: detail by the Empowered Committee of State Finance Ministers, Select Committee of Rajya Sabha and 4.5.1. The Indian Stamp Act, 1899 (2 of 1899) is a fiscal Parliamentary Standing Committee on Finance. After statute laying down the law relating to tax levied in the detailed and prolonged deliberation, the Constitution (One form of stamps on instruments recording transactions. Hundred and First Amendment) Act, after ratification by Briefly, the scheme relating to stamp duties, provided for 50% of the States, was assented by the President on 8th in the Constitution is as follows: - September, 2016. Thereafter, Central Goods and Services Tax (CGST) Act, Integrated Goods and Services i. Under Article 246, stamp duties on documents Tax (IGST) Act, Union Territory Goods and Services Tax specified in Entry 91 of the Union List in Schedule (UTGST) Act, and Goods and Services Tax VII of the Constitution (viz. bills of exchange, (Compensation to States) Act were enacted in order to cheques, promissory notes, bills of lading, letters successful roll out of the GST regime in the country from of credit, policies of insurance, transfer of shares, 1st July, 2017. debentures, proxies and receipts) are levied by the Union but under Article 268, each State, in 4.2 Union Territories Goods and Services which they are levied, collects and retains the Tax (UTGST): proceeds (except in the case of Union Territories in which case the proceeds form part of the Like State Goods and Services Tax (SGST) Act, which is Consolidated Fund of India). At present duty is enacted by the respective States/ UTs with legislature to levied on all these documents except cheques. levy and collect on all transactions within the respective State/ UT, Union Territories Goods and Services Tax ii. Stamp duties on documents other than those (UTGST) Act, 2017 is enacted to levy and collect GST mentioned above are levied and collected by the specifically in the Union Territories without legislature i.e. States by virtue of the Entry 63 in the State List Andaman and Nicobar Islands, Lakshadweep, Dadra and in the 7th Schedule of the Constitution. Nagar Haveli, Daman and Diu and Chandigarh. 99Annual Report 2017-2018 iii. Provisions other than those relating to rates of Central Government to impose tax on inter-State duty fall within the legislative power of both the sale of goods. Further, Article 269 (3) empowers Union and the States under Entry 44 of the the Parliament to formulate principles for Concurrent List in the Schedule-VII of the determining when a sale or purchase of goods Constitution. takes place in the course of inter-State trade of commerce. Similarly, Article 286 (2) of 4.5.2. The rates of stamp duty in respect of Debenture Constitution empowers the Parliament to and Promissory Notes have been rationalized by the formulate principles for determining when the Central Government in September, 2008. A sale or purchase of goods takes place outside a comprehensive Review of Indian Stamp Act, 1899 is State or in the course of imports into or exports presently underway. from India. Besides, Article 286(3) of Constitution 4.6 Highlights of the performance and authorizes the Parliament to place restrictions on the levy of tax by the States on sale or achievements during the year: purchase of goods, declared by the Parliament Central Goods and Services Tax (CGST) Act, by law to be goods of special importance in the Integrated Goods and Services Tax (IGST) Act, Union inter-State trade or commerce. Territory Goods and Services Tax (UTGST) Act, and b) The Central Sales Tax Act, 1956 imposes the Goods and Services Tax (Compensation to States) Act tax on inter-state sale of goods and formulates were passed by the Parliament on 5th April, 2017 and the principles and imposes restrictions as per the since been notified on 12th April, 2017. Goods and powers conferred by the Constitution. The Services Tax Settlement of Funds Rules, 2017 have also Government of India has also framed the Central been notified on 27thJuly, 2017. Sales Tax (Registration and Turnover) State Taxes –II Section Rules,1957 in exercise of powers conferred by section 13(1) of the Central Sales Tax Act, 1956. State Taxes-II Section of the Department of Though the Central Sales Tax Act 1956 is a Revenue handles legislative work relating to Central Acts Central Act, the States collect and appropriate having significant interface with the States like the Central the proceeds of Central Sales Tax as per Article Sales Tax Act, 1956, the Goods and Services Tax 269 of the Constitution of India. (Compensation to States) Act, 2017. Facilitation in respect of State level Value Added Tax (VALUE ADDED TAX) in c) The Central Sales Tax however, being an origin- the form of assistance for computerization of State Value based non-rebatable tax, is inconsistent with the Added Tax system. proposed destination based Goods & Services Tax (GST). Central Sales Tax rate had been 4.7 State Value Added Tax (VAT) reduced from 4% to 3% w.e.f. 01.04.2007 and from 3% to 2% w.e.f. 1st June, 2008. Under Entry 54 of List II (State List) of the Seventh Schedule of the Constitution of India, “tax on sale or d) A package of compensation to the States for purchase of goods within a State” is a State subject. revenue loss on account of phasing out of the Introduction of State Value Added Tax (VAT) to replace Central Sales Tax had been agreed to. The States the earlier Sales Tax systems of the States has been one have been compensated through a combination of the important tax reform measures taken on indirect of revenue enhancing measures and budgetary tax side. VAT has been introduced by all the States/UTs, support. As measures for enhancing revenue and except the UTs of Andaman & Nicobar Islands and thereby compensating the States for Central Lakshadweep. Sales Tax/VAT being a State subject, the Sales Tax revenue loss, the facility of interstate Central Government played the role of a facilitator for purchases by Government Departments at successful implementation of VAT. As a part of our concessional Central Sales Tax rate against endeavor to support institutional capacity building and Form-D was withdrawn w.e.f. 01.04.2007. Also, their up-gradation into national level institutes of public enabling provisions has been made for States to finance and policy, two institutes namely, Centre for levy Value Added Tax on Tobacco and Tobacco Taxation Studies, Kerala and Centre for Studies in Social Products without losing any part of the devolution Sciences, Kolkata have been provided Rs. 22.00 crore of Central taxes to the States. For the residual and Rs. 14.00 crore respectively till date. During the FY losses thereafter, the Central Government has 2014-15, the financial assistant of Rs. 4.00 crore has been released Rs. 26406.99 crores to States provided to Centre for Taxation Studies, Kerala. compensation for the loss due to reduction of rate of Central Sales Tax for the claims years 4.8 Central Sales Tax (CST) 2007-08, 2008-09, 2009-10. a) Entry 92A of List-I (Union List) empowers the e) Since the GST could not be introduced w.e.f. 1st 100Department of Revenue III April, 2010, States demanded that CST Cabinet in its meeting held on 17th March 2015, compensation for the financial year 2010-11 decided for payment of 100% CST should also be paid to them. Hence pending compensation, for the year 2010-11, 75% CST finalization of CST compensation guidelines for compensation for year 2011-12 and 50% CST financial year 2010-11, while paying the amount compensation for 2012-13 to be worked out as for financial year 2010-11, the effect of increase per 22nd August 2008 guidelines. of VAT from 4 to 5 on the revenues of the States/ h) Accordingly, Rs. 10724.08 crore has been UTs was taken into account, thereby reducing released to States/ UTs in March 2015 towards the ‘admissible claims’ of the States/ UTs to that balance CST compensation for year 2010-11 and extent. Initially, States were paid 50% of the as such total amount of Rs. 17118.93 crore amount of compensation payable for 2010-11 (including earlier release of Rs. 6393.94 crore) after deducting the likely gain to States because has been released to the States/ UTs towards of increase in VAT rate from 4% to 5% from the CST compensation for 2010-11 and Rs. amount otherwise payable as per 22nd August, 16315.25 crore towards CST compensation for 2008 guidelines, as approved by the Cabinet in the year 2011-12 has been released to all States their meeting held on 10th February, 2011. / UTs in Financial year 2015-16. CST Thereafter, remaining 50% amount of CST compensation for the states/UT’s for 2012-13 is compensation for 2010-11 was also paid to the proposed to be released in two installments in States with the approval of Prime Minister. Financial year 2016-17. Provision of Rs. Accordingly Rs. 6393.94 crore released to the 10469.48 crore has been made in BE 2016-17 States/ UTs towards CST compensation for 2010- for payment of CST compensation to the States/ 11. UT’s for the year 2012-13. Out of which first f) However, States/ UTs had been demanding that installment of Rs. 5854.73 crore has been paid CST compensation should be paid to the States to the States/ UTs in July 2016 towards CST without considering the increase in revenues of compensation for 2012-13. Balance amount of the States due to increase in VAT rate from 4% Rs. 5854.69 crore CST compensation for year to 5%. They had also been demanding that CST 2012-13 to all the States/ UTs was proposed to compensation be paid to them for the financial be released as second installment in the end of years 2011-12 and 2012-13 as well since GST FY 2016-17. However, required Budget provision has still not been introduced in the country. In of additional fund of Rs. 1284.94 crore in this their meeting held on 28-29 January, 2013 at regard has not been provided under Head 3601 Bhubaneshwar, the Empowered Committee of in last batch of supplementary for FY 2016-17. State Finance Ministers (EC) made the following Therefore, it was decided with approval of recommendations: Hon’ble FM to release balance CST compensation to all the States on pro-rata basis  CST compensation should be worked out as per budget availability under head 3601 & as per 22nd August, 2008 guidelines for the 3602 (i.e. 74.74% amount balance CST financial years 2010-11, 2011-12 and 2012- compensation to States and full CST 13. compensation to UTs for year 2012-13). Accordingly, second installement of Rs 4469.75  CST compensation for the financial years crore was released to all the States/ UTs in March, 2010-11, 2011-12 and 2012-13 should be 2017. The balance amount of Rs. 1284.94 crore paid in the following manner: as CST compensation for year 2012-13 to the i. 2010-11: 100% compensation worked out all the States and Rs 99 crore to Goa for balance as per 2008 guidelines CST compensation 2007-08 - 2009-10 is now proposed to be released in FY 2017-18 for which ii. 2011-12: 75% compensation worked out as budget provisions are being made. This would per 2008 guidelines be final CST Compensation to States/UT’s as per aforesaid Cabinet decision dated 17.03.2015 and iii. 2012-3: 50% compensation worked out as commitment given by FM to States/ UTs. per 2008 guidelines 4.9 GST Compensation g) Pending implementation of GST, Central Government has further agreed in-principle to The Goods and Service Tax (Compensation to release of CST Compensation for the year 2010- States) Bill, 2017 was passed by Lok Sabha on 29th March 11, 2011-12 and 2012-13 as per Empowered 2017 to provide for compensation to the States for the loss Committee recommendations. The Union of revenue arising on account of implementation of the goods 101Annual Report 2017-2018 and services tax in pursuance of the provision of the Appellate Tribunal for forfeited property (ATFP) Constitution (One Hundred and First Amendment) Act, 2016. constituted under Narcotics Drugs and Psychotropic Accordingly, GST compensation Act, 2017 has been enacted Substances Act, 1985 (NDPS) are merged with Appellate Tribunal for forfeited property constituted under SAFEMA which provides detailed mechanism for compensation to (FOP) Act, 1976. The merged tribunal now is called the States for loss on account of implementation of GST. Appellate Tribunal. Rs. 28398 crore has been released to the States/ UTs towards GST compensation for July – December, 2017 on 6.2 Vide Finance Act, 2017 the Appellate Tribunal bimonthly basis on account of Loss of Revenue due to constituted under Foreign Exchange Management Act, implementation of GST in conuntry w.e.f. 1.7.2017. 1999 (FEMA) is merged with Appellate Tribunal constituted under SAFEM (FOP), Act, 1976. 5. Adjudicating Authority under 6.3 Details are given at point number 7. Prevention of Money Laundering Act, 2002 7. The Appellate Tribunal Under Safema 5.1 The Prevention of Money Laundering Act 7.1 The Appellate Tribunal constituted under the (PMLA), 2002 was enacted by the Parliament to prevent Smugglers and Foreign Exchange Manipulators money laundering and connected activities , confiscation (Forfeiture of Property) Act, 1976 (SAFEMA). It started of proceeds of crime and setting up of agencies and functioning w.e.f. 03.01.1977. It hears the appeals files mechanism for coordinating measures for combating against the orders of Competent Authority under SAFEM/ money laundering. NDPS Acts, Adjudicating Authority under PMLA, FEMA and Prohibition of Benami Property Transactions Act 5.2 The Director, Directorate of Enforcement has been 1998. designated as the Director for exercising powers under the PMLA, 2002 and is authorised to provisionally attach 7.2 The Appellate Tribunal is located at New Delhi. the property allegedly involved in money laundering. The It consists of a Chairman (who is, or has been or is Adjudicating Authority is empowered to confirm/ relief the qualified to be a Judge of the Supreme Court or High provisional Attachment after hearing the aggrieved parties Court) and four Members. The other four members are appointed from among the officers of the Central to ensure that property is not disposed off during the Government who are not below the level of Joint Secretary pendency of trial for scheduled offences of money to the Government of India. laundering or proceeds of crime money laundered. 7.3 During the period 01.01.2017 to 20.12.2017 in 5.3 The Adjudicating Authority consists of a chairperson total 737 Appeals (567 in PMLA, 36 in NDPSA, 38 in and two Members. The post of Chairperson & Member are SAFEMA, 92 in FEMA and 4 in PBPT) were filed and in tenure post after retirement from erstwhile job. The addition 2108 Miscellaneous petitions (1192 in PMLA, 62 Adjudicating Authority received 171 numbers of Provisional in NDPSA, 17 in SAFEMA, 98 in FEMA and 2 in PBPT) Attachments and 171 numbers of Original Complaints during were filed during the said period. Total 173 appeals (103 the year. In addition, 85 numbers Original application and in PMLA and 14 in NDPSA, 43 in SAFEMA and 13 in 8 MA (Misc. Application) for retention of seized documents FEMA) were disposed during the said period. from Directorate of Enforcement was received during the 8. Set up for Forfeiture of Illegally year. Final orders have been pronounced in 106 cases Acquired Property except 39 cases where the Hon’ble courts granted stay in respect of Provisional attachment orders / Original 8.1 The Smugglers and Foreign Exchange applications furnished by Directorate of Enforcement. Manipulators (Forfeiture of Property Act, 1976 (SAFEM(FOP)A), provides for forfeiture of illegally 5.4 The staff posted in the Authority is on deputation acquired property of the persons convicted under the Sea basis and all the posts are ex cadre. No Appointment Customs Act, 1878, the Customs Act, 1962 and the made during the previous calendar year either by Direct Foreign Exchange Regulation Act, 1947 and Foreign recruitment / promotion. Exchange Regulation Act, 1974 and the persons detained under the Conservation of Foreign Exchange and 5.5. All the post are ex- cadre post and the information Prevention of Smuggling Activities Act, 1974. The regarding Annexure-I and II made be treated as nil. At Narcotics Drugs and Psychotropic Substances Act, 1985 present one Chairman, Two members and on (NDPSA) provides for tracing, freezing, seizure and Administrative Officer and one Assistant is in position and forfeiture of illegally acquired property of the persons all the remaining post six numbers are lying vacant. convicted under that Act or any corresponding law of any 6. Appellate Tribunal under Department foreign country, and those who are detained under the of Revenue Prevention or Illicit Traffic in Narcotic Drugs and Psychotropic Substances Act, 1988 and Jammu and 6.1 With the passage of Finance Bill 2016 w.e.f 1st Kashmir Prevention of Illicit Traffic in Narcotic Drugs and June, 2016 the Appellate Tribunal constituted under Psychotropic Substances Act, 1988. Prevention of Money Laundering Act (PMLA) and 102Department of Revenue III 8.2 SAFEM(FOP) Act and NDPS Acts provide for are appointed from among the officers of the Central appointment of Competent Authorities for carrying out Government who are not below the level of Joint Secretary forfeiture of illegally acquired properties. At present, the to the Government of India. Offices of Competent Authorities are located at Kolkata, 8.3 The details regarding the number of reports Chennai, Delhi, Mumbai and one unit is at Ahmedabad. received by the Competent Authorities from enforcement SAFEM(FOP)A envisages establishment of an appellate agencies, the number of show cause notices issued and forum, namely the Appellate Tribunal to hear the appeals the value of the property involved therein, the number of filed against the orders of Competent Authority under orders of forfeiture passed and the value of the property SAFEMA/NDPSA Acts. The Appellate Tribunal is located involved therein, and the value of sale proceeds of the at New Delhi. It consists of a Chairman who is, or has property disposed of, year-wise, from 2000-01 to 2017- been or is qualified to be a Judge of the Supreme Court 2018 are given in Annexure ‘A’. or High Court and four Members. The other four members Annexure ‘A’ FORFEITURE OF ILLEGALLY ACQUIRED PROPERTY UNDER NDPSA AND SAFEM(FOP)A BY COMPETENT AUTHORITIES Financial Year Number of Number of Notices for Number of Forfeiture Value of sale reports received Forfeiture issued and Orders issued and proceeds of from value of Property value of Property Property Enforcement involved. involved. disposed off Agencies (in Rs. lakhs) Number Value (in Number Value (in Rs. Lakhs) Rs. Lakhs) 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 2012-2013 40 13 3091.48 10 101.10 Rs.1294.28 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 92 22 1553.81 12 308.93 11.52 2016-2017 45 22 1232.95 19 2.35 778.44 and $443783.19 2017-2018 40 7 77.92 3 39.47 1641.45 (Jan-Dec 2017) 103Annual Report 2017-2018 9. Central Board of Excise & Customs Commissionerates (headed by Principal Commissioner/Commissioner):Chandigarh, Shimla, 9.1 Organization and Functions Jalandhar, Ludhiana, J & K, Delhi East, Delhi South, Delhi North, Delhi West, Gurugram, Faridabad, Rohtak, Central Board of Excise & Customs (CBEC) Panchkula, Lucknow, Allahabad, Kanpur, Agra, Varanasi, deals with the task of formulation of policy concerning Meerut, Noida, Gautam Buddh Nagar, Ghazaiabad, levy and collection of GST. Customs and Central Excise Dehradun, Hyderabad, Secunderabad, Medchal, duties, prevention of smuggling and evasion of duties Rangareddy, Vizag, Tirupati, Guntur, Bengaluru East, and all administrative matters relating to Customs. Central Bengaluru West, Bengaluru North West, Bengaluru North, Excise & GST formations. The Board discharges various Bengaluru South, Mysuru, Mangalore, Belgavi, Kochi, tasks assigned to it with the help of its field formations Calicut, Thiruvananthapuram, Chennai North, Chennai namely the Zones of Customs and GST& Cx, South, Chenna Outer, Coimbatore, Salem, Trichy, Commissionerates of Customs and GST& Cx and the Madurai, Pondicherry, Patna I, Patna II, Ranchi, Directorates. It also ensures that taxes on foreign & inland Jamshedpur, Kolkata North, Kolkata South, Howrah, travel are administrated as per the law and the collection Haldia, Bolpur, Siliguri, Bhubaneswar, Rourkela, Jaipur, agencies deposit the taxes collected to the public Jodhpur, Alwar, Udaipur, Ahmedabad South, Ahmedabad exchequer promptly. North, Gandhinagar, Rajkot, Bhavnagar, Kutch, Vadodara I, Vadodara II, Surat, Daman, Mumbai South, Mumbai 9.1.1 Zones of GST, Customs and Customs Central, Mumbai East, Mumbai West, Bhiwandi, Palghar, (Preventive) Navi Mumbai, Thane, Thane Rural, Belapur, Raigarh, The details about various field formations are Pune I (North), Pune II (South), Kolhapur, Goa, Indore, furnished below:- Bhopal, Jabalpur, Ujjain, Raipur, Nagpur I, Nagpur II, Nashik, Aurangabad, Guwahati, Itanagar, Imphal, Field Formations: Shillong, Aizawl, Kohima, Agartala, Dibrugarh. Sl. No. Formations No. of formations Customs Formations: 1 GST Zones 21 There are Eleven (11) Customs Zones and Sixty One (61) Customs/ Customs (Preventive) Commissionerates. 2 GST Commissionerates 107 They have been assigned the following functions:- 3 GST Audit Commissionerates 48 (a) Implementation of the provisions of the Customs 4 GST Appeal Commissionerate 49 Act, 1962 and allied acts, which includes levy and collection of customs duties and enforcement 5 Customs (Zones) 11 functions in their earmarked jurisdictions. 6 Commissionerates(Customs) 61 (b) Surveillance of coastal and land borders to prevent smuggling activities. Marine and 7 Customs Appeal Commissionerates 9 telecommunications wings are available with the 8 Directorates Gen./ Directorates/ Board to assist these Commissionerates in their anti-smuggling work and surveillance of sensitive Other formations 22 coastline. (i) Central Goods& Service Tax Formations: Following are the details of Zones and Commissionerates: There are 21 integrated Central Goods & Service Tax Zones, 107 Central GST Taxpayer Service Customs Zones (headed by Principal Chief Commissionerates. Besides there are 49 Appeals and Commissioner): Mumbai-I 48 Audit Commissionerates. There are 768 GST Divisions Customs Zones (headed by Chief Commissioner): and 3969 GST Ranges. Delhi, Mumbai-II, Mumbai-III, Kolkata, Chennai, GST Zones (headed by Principal Chief Bangalore, Delhi Customs (P), Patna Customs (P), Commissioner): Tiruchirapalli Customs (P), Cochin Customs (P), Chennai, Delhi, Bengaluru, Lucknow, Mumbai, Kolkata, Ahmedabad. Ahmedabad Customs Commissionerate (headed by Principal GST Zones (headed by Chief Commissioners): Commissioner/ Commissioner): Bhopal, Bhubaneshwar, Chandigarh, Guwahati, ACC (Import)Delhi, ICD Tughlakabad Delhi, Mumbai Hyderabad, Jaipur, Meerut, Nagpur, Panchkula, Pune, General, NhavaSheva-I, NhavaSheva-II, Mumbai Airport, Ranchi, , Thiruvananthapuram, Vadodara and Mumbai ACC Import, Mumbai Preventive, Kolkata Port, VishakhapatnamGST. Kolkata Airport & ACC, Chennai-I Airport, Chennai-III, 104Department of Revenue III Chennai VII ACC, Bangalore Airport & ACC, Ahmedabad, Commissioners in CBEC (Board Office): Mundra, Hyderabad, NOIDA, Vishakhapatnam, Delhi There are 6 Commissioners of Central Excise General, Delhi Airport, Delhi ACC Export, ICD &Customs in Central Board of Excise & Customs, who Tughlakabad Export, ICD Patpadganj & other ICDs, assist the Board in various policy matters. Commissioners Mumbai Import-I, Mumbai-Import-II, Mumbai Export-I, in the CBEC are assisted by 6 Additional/ Joint Mumbai Export-II, NhavaSheva-III, NhavaSheva-IV, Commissioners. NhavaSheva-V, NhavaSheva General, Mumbai Airport Special Cargo, Mumbai ACC Export, Mumbai ACC Attached/ Subordinate Offices (Directorates General General, West Bengal Customs (P), Chennai-II, Chennai- / Directorates): IV, Chennai-VI, Chennai VIII General, Bangalore City, Mangalore, Delhi Customs (P), Amritsar Customs (P), The functional requirement of the Department needs Jodhpur Customs (P), Ludhiana, Patna Customs (P), strengthening of Directorates, which have pan-India Lucknow Customs (P), Tiruchirapalli Customs (P), jurisdiction and assist CBEC in policy formulation and Tuticorin, Cochin, Cochin Customs (P), Jamnagar carry out specific assigned functions. Customs (P), Kandla, Shillong Customs (P), In the performance of administrative and executive Bhubaneshwar Customs (P), Vijaywada Customs (P), functions, the following attached / subordinate offices Pune, Goa, Nagpur and Indore. (Directorate/ Directorate General) assist the Board in the Strengthening of Audit Set-up in Goods and Service reorganized set up:- Tax Zones: (A) Directorate of GST Intelligence In the present non-intrusive indirect taxes (B) Directorate General of Revenue Intelligence administration, it is necessary to strengthen audit set-up in the Department in order to plug revenue leakages. (C) Directorate General of Performance Accordingly, 48 dedicated Audit Commissionerates, which Management are responsible for conducting Central Excise and Goods & Service Tax Audit as well as Post-Clearance Audit in (D) Directorate General of Human Resource Customs, are functioning. Development Central Excise & Goods & Service Tax Audit (E) National Academy of Customs, Indirect Taxes Commissionerates (headed by Commissioner): and Narcotics Chennai-I, Chennai-II, Delhi-I, Delhi-II, (F) Directorate General of Vigilance Panchkula, Gurugram, Hyderabad-I, Hyderabad-II, (G) Directorate General of Systems & Data Lucknow, Kanpur, Kolkata-I, Kolkata-II, Durgapur, Management Vadodara, Surat, Ahmedabad, Rajkot , Bengaluru-I, Bengaluru-II, Bhopal Indore, Raipur, Bhubaneshwar, (H) Directorate General of Audit Chandigarh, Jammu, Ludhiana, Kochi, Coimbatore, Jaipur, Jodhpur, Mysuru, Belgavi, Meerut, Noida, (I) Directorate General of Safeguards Dehradun, Mumbai-I, Mumbai-II, Mumbai-III, Thane, (J) Directorate General of Export Promotion Raigad, Nagpur, Nasik, Pune-I, Pune-II, Patna, Ranchi, Shillong, Guntur , (K) Directorate General of Goods and Service Tax Appellate Machinery: (L) Directorate General of Valuation Presently, there are 58 Commissioners of Goods (M) Directorate General of Tax Payer Services & Service Tax and Customs (Appeals). The Commissioner (Appeals) work under the supervision of (N) Directorate of Logistics the Zonal Principal Chief Commissioners/ Chief (O) Directorate of Legal Affairs Commissioners. The appellate machinery comprising the Commissioners (Appeals) deals with appeals against (P) Central Revenues Control Laboratory the orders passed by the officers lower in rank than (Q) Directorate General Analytics and Risk Commissioner of Customs and Central Excise under the Management Customs Act, 1962, the Central Excise Act, 1944 and Goods & Service Tax Act. Orders of the Commissioner (R) Directorate of International Customs of Customs and Central Excise can be appealed against before the Customs, Excise and Service Tax Appellate The functions of the Directorates, the Office of Tribunals (CESTAT). CESTAT also hears appeals against the Chief Departmental Representative and the Central the orders of Commissioner (Appeals). Revenues Control Laboratory, under the Central Board 105Annual Report 2017-2018 of Excise and Customs, in brief are as follows:- (ii) To suggest measures for improvement in efficiency and rectification of important defects A. Directorate General of Goods & Service Tax in it through inspection and by laying down Intelligence procedures for smooth functioning. (a) To collect, collate and disseminate intelligence (iii) To carry out inspection to determine whether the relating to evasion of Central Excise Duty and working of the field formations is as per Customs Goods & Service Tax; and Goods and Service Tax procedures and to (b) To study the price structure, marking patterns make recommendations in respect to the and classification of commodities vulnerable to procedural flaws, if any noticed. evasion of Central Excise and GST duties; (iv) To suggest measures for improvement in (c) To coordinate action with other Departments, functioning of the field formations. such as, Income Tax etc. in cases involving (v) To monitor performance of the field formations evasion of Central Exciseand GST duties; in key result areas through monthly performance (d) To investigate cases of evasion of Central excise report compilation in Customs, Goods and duties & GST having inter-Commissionerate Service Tax. ramification; and (vi) To process rebate claims in terms of Board’s (e) To advise the Board and the Commissionerates notification or a treaty on the modus operandi of evasion of Central (vii) To function as the nodal office for implementation Excise duties and Goods & Service Tax and of the Rajbhasha (Official Language) Policy of suggest appropriate remedial measures, Government in the field formations. procedures and practices in order to plug any loopholes. (viii) To function as the Programme Manager to implement Authorized Economic Operator B. Directorate General of Revenue Intelligence (AEO)Programme. (a) To study and disseminate intelligence about (ix) Undertake functions and responsibilities of smuggling; erstwhile Chief Commissioner Tax Arrears (b) To identify the organized gangs of smugglers and Recovery, viz., review the position of Arrears of areas vulnerable to smuggling, targeting of Revenue of Central Excise and Customs and intelligence against them and their finalize and implement the strategy for realization immobilization; of arrears with the objective of meeting the targets. (c) To maintain liaison with the intelligence and enforcement agencies in India and abroad for D. Directorate General of Human Resource collection of intelligence and in-depth Development investigation of important cases having inter- I. HRM Wing: Commissionerate and international ramification; (a) Cadre Management Division: (d) To alert field formations for interception of suspects and contraband goods, assessment of a) To devise and design CBEC’s Human Resource current and likely trends in smuggling; Management plans in congruence with the goals and vision of the department; (e) To advise the Ministry in all matters pertaining to anti-smuggling measures and in formulating or b) To analyze and propose changes in the amending laws, procedures and practices in Recruitment Rules; order to plug any loopholes; and, c) To prepare a charter of duties for various posts (f) To attend to such other matters as may be and periodically review the charter; entrusted to the Directorate by the Ministry or d) To provide support to CBEC in drawing its annual the Board for action/ investigation. recruitment plan (ARP) or direct recruitment; C. Directorate General of Performance Management e) To support CBEC in framing and implementation (i) To study the working of the Customs and Goods of its recruitment policy; & Service Tax Departmental Machinery f) To design HR policies, processes and systems, throughout the country. including proposals where posts are diverted 106Department of Revenue III temporarily from one functional area to another; and create a training needs inventory; g) To maintain and update the Human Resource b) To disseminate information regarding HRD Information System (HRIS) for recommending issues among officers and staff; officers/staff for training, placement, skill up- c) To coordinate in-service training programmes in gradation and succession planning; consultation with DG, NACEN for officers and h) To provide data support to CBEC for placement staff of the department at various service intervals and transfer of officers as part of the annual (e.g. 6-9 years of service, 10-16, 17-19 and 20- general transfer (AGT) and otherwise; 30 years of service) in consultation with training institutions within and outside the country; i) To receive feedback on the Transfer Policy and relay the same to CBEC for further action; d) To assist the Ministry in development of viable models of ‘Training Needs Analysis’, ‘Designs for j) To provide support to CBEC in its Cadre Review Training’ etc, and nominate of officers for training and Restructuring exercise for the department based on Training Needs Analysis in consultation in the context of changing economic scenario and with DG, NACIN; needs; e) To recommend officers for foreign training in k) To assist the CBEC in preparing for periodic those areas which are outside training interaction with associations of officers/staff; programmes being conducted at present by l) To develop a Manual and other reference NACIN; literature on Human Resource Management f) To provide support to CBEC in the management (HRM)/Administration related matters; and of organizational relations including vertical m) To provide support to the CBEC in bringing about relationship (within hierarchy), gender relations uniformity/ homogeneity in the administrative and prevention of discrimination and harassment practices followed by field formations across the on the basis of sex; country. g) To manage changes for working of field (b) Performance Management Division: formations under CBEC; a) To develop an effective Management Information h) To form a Strategic Vision Group through System (MIS) and Performance Management inclusion of retired officers and outside experts System (PMS) for capturing and assessing on the subject; individual performances; i) To forecast future developments and suggest b) To develop performance indicators for the changes in the organization, personnel organization at the group and individual levels management and procedure to be able to based on objective goal setting, taking into respond to them; and account manpower and infrastructural limitations; j) To assist the Ministry in processing the requests c) To design a scientific appraisal system and a of the officers and staff for training programmes scheme for performance measurement, etc.; under the Domestic Funding Scheme of the Government of India. d) To coordinate receipt of Annual Performance Appraisal Reports (APAR); II. Infrastructure & Welfare Wing: e) To link rewards with performance and design an (d) Infrastructure Division: appropriate reward policy; a) To function as ‘nodal authority’ for examination f) To liaison with “external consultants” for and processing of all infrastructure proposals developing a suitable system to track, support received directly by the Division from field and monitor individual performance and maintain formations and forward them alongwith accountability, and recommendations to the CBEC/Ministry for further action; g) To review formats for annual performance appraisal (APAR) for all cadres and suggest b) To consider all issues pertaining to approval and sanction for infrastructural proposals including meaningful changes to it from time to time; those for purchase and disposal of land, (c) Capacity Building and Strategic Vision Division: purchase and disposal of buildings, hiring of accommodation and continuation of hiring of a) To identify training needs for officers at all levels 107Annual Report 2017-2018 already hired space, construction of office and b) To examine the Budget proposals received from residential buildings, repair/ maintenance/ various constituent formations /units under the renovation/ modifications/replacement/ Grant; alternations in the department’s buildings, residential complexes etc., c) To consolidate the position at each stage of the Budget exercise i.e. Budget Estimates (BE), c) To account and document the assets of CBEC Revised Estimates (RE) and Final Requirement through the creation, maintenance and regular (FR) and submit the same to FA (Finance) for updation of an Asset Register; further action; d) To consolidate and project budgetary requirement d) To allocate object head wise approved provisions for ready built office space and residential to respective Budget controlling authorities; accommodation for departmental staff to CBEC; e) To prepare the Statement of Budget Estimates e) To ensure conformity of infrastructure proposals, (SBEs) for inclusion in the relevant Budget (whether in process or sanctioned) with policy documents; guidelines and administrative instructions pertaining to their sanction; f) To monitor the progress in Expenditure vis-à-vis Sanctioned Grant and submit the Monthly and f) To secure as a link between the CBEC and its Quarterly Expenditure Review to FA (Finance) field formations by communicating the for further action; observations/queries/ approvals/sanctions of the Ministry on the submitted proposals to the field g) To propose Re-appropriation orders, surrender formations. of savings etc. to FA (Finance) for concurrence/ (e) Welfare Division: approval of the competent authority; a) To identify and recommend welfare measures to h) To finalize the Appropriation Accounts in the CBEC; consultation with Principal CCA, CBEC and submit to FA (Finance) for concurrence; b) To process proposals received from field formations for sanction of funds by the Governing i) To take necessary action in respect of the Body of the Welfare Fund; examination by the Standing Committee on Finance on Detailed Demand for Grants; c) To coordinate with the Directorate of Logistics and Principal CCA’s office for accounting of funds j) To take action in respect of Audit references in to be allocated between the Welfare Fund and Expenditure matters, for example Action Taken the Special Equipment Fund; Notes on Audit Paras /PAC Paras etc. d) To manage superannuation of employees k) Any other matter related to the above. especially regarding their psychological, emotional and financial aspects (by arranging E. National Academy of Customs, Indirect Taxes training through NACIN and/ or outside experts and Narcotics to psychologically prepare the employees on the (a) To impart training to Direct Recruits Officer verge of superannuation for life after retirement Trainees and to arrange refresher courses for from service and proper management of retirement benefits); departmental officers: e) To prepare and maintain an inventory of (b) To assist in formulation of training policies and specialization areas and skills of retiring officers, to implement the policies approved by the Board and advise them about exploring ministries and by devising schemes and syllabi of studies for public sector undertakings, connected to their training of direct recruits and departmental respective fields of knowledge and experience; and officers; and, f) To disseminate information concerning welfare (c) To arrange study tours of Customs and excise schemes/ measures being promoted/ officers from neighbouring countries under United implemented by the CBEC among officers and Nations Development Programme. staff. F. Directorate General of Vigilance III. Expenditure Management Cell: (a) To monitor the vigilance cases against the officers a) To issue the Budget Circular as prescribed by of Customs and Central Excise formations; the Budget Division, Department of Economic Affairs; (b) To maintain proper surveillance on the officials 108Department of Revenue III of doubtful integrity; and, (i) To implement EA-2000 audits and related projects like risk management, CAAP audits etc. (c) To maintain close liaison with the Central Bureau of Investigation, Directorate General of Revenue I. Directorate General of Safeguards Intelligence and vigilance and anti-corruption in (a) To investigate the existence of serious injury or order to ensure that the programmes on vigilance threat of serious injury to the domestic industry and anti-corruption are implemented in all as a consequence of increased imports of an Commissionerates of customs, central excise article into India; and narcotics formations. (b) To identify the article liable for safeguard duty; G. Directorate General of Systems and Data Management (c) To submit the findings, provisional or otherwise, to the Central Government regarding ‘serious (a) Directorate of Systems injury’ OR ‘threat of serious injury’ to the domestic To look after all aspects of the implantation of industry consequent upon increased imports of customs, central excise and service tax computerization an article from the specified country. projects including acquisition of hardware, development (d) To recommend the following; and maintenance of software, training of personnel and monitoring of expenditure budget on computerization at (i) The amount of duty which, if levied, would be the central and field levels. adequate to remove the ‘injury’ or ‘threat of injury’ to the domestic industry; (b) Directorate of Data management (ii) The duration of levy of safeguard duty and where (i) To collect and consolidate data and statistics the period so recommended is more than a year, pertaining to realization of revenue from indirect to recommend progressive liberalization taxes and advise the Ministry and the Board in adequate to facilitate positive adjustment; and, forecasting budget estimates; and (e) To review the need for continuance of safeguard (ii) To collect statistics for compilation of statistical duty. bulletins and statistical yearbook in respect of revenue, arrears, seizures, court cases etc. J. Directorate General of Export Promotion pertaining to indirect taxes. (a) To interact with the Export Promotion Councils H. Directorate General of Audit for various categories of export to sort out the difficulties being faced by the genuine exporters; (a) To provide direction for evolution and improvement of audit techniques and (b) To function in close liaison with allied agencies procedures; concerned with the exports to ensure that genuine exporters get the full advantages of the (b) To ensure effective and efficient implementation export schemes without any difficulties; of new audit system by periodic reviews; (c) To monitor the performance of the field (c) To coordinate with the external agencies as well formations through monthly and quarterly returns, as other formations within the Department; like duty foregone statements, drawback (d) To suggest measures to improve tax compliance; payment statements and quarterly drawback payment statements and to compare and compile (e) To gauge the level of audit standards and the same to enable the Ministry to review the assesses satisfaction; policy; (f) To evolve the policy for development of a sound (d) To carry out the appraisal studies to examine the database as well as enhancing the skills of the efficacy of the existing legal provisions/ rules and auditors with a view to making the audit effective procedures and suggest to the Ministry about the and meaningful; changes to be made, if any; (g) To aid and advise the Board in policy formulation (e) To conduct post-audit of the Brand Rate fixed by and to guide and prove functional directions in the concerned commissioners and carry out planning, coordination and supervision of audits physical verification of selected cases at local levels; independently or with the help of the central (h) To collate and disseminate the relevant excise formations; information; and, (f) To conduct post audit of the select cases of duty 109Annual Report 2017-2018 free imports allowed under various Export continuing basis to all customs formations for Promotion Schemes in the customs and central online viewing as a means of assistance for day excise formations; and, to day assessments with a view to detecting and preventing under valuation as also for enabling (g) To work in close coordination with the Board with assessments to be finalized speedily; the Customs-IV Section and FTT Section of the Board’s office that deals with 100% EOUs/EPZ (d) To monitor valuation practices at various customs Units/SEZ Units and various Technology parks formations and bring to the notice of the Board and the schemes relating to the export of gems the significant and emerging pricing patterns and and jewellery. to suggest corrective policy or other measures, where needed; K. Directorate General of Goods and Service Tax (e) To maintain liaison with the Valuation Directorates (a) Capacity Building– Developing training modules of other customs administrations and customs including e-training modules; training of officers officers posted abroad; of CBEC: other Central Government agencies and State GST officers. co-ordination with NACIN (f) To study international price trends of sensitive and State GST training centers; vetting of training commodities and pricing patterns of transnational material developed by NACIN and coordination corporations (e.g. transfer pricing) and Indian with DG NACIN for imparting training related to ventures with foreign collaborations and help GST. evolve a system to combat planned under valuation as well as valuation frauds; and, (b) Research and Analysis– Research and analysis of (a) Subjects relevant to GST; (b) Best practices (g) To carry out inspection of the field formations to in global environment; (c) Database and issues determine whether the valuation norms as relating to collection of CGST. IGST and SGST. evolved by the Directorate of Valuation are uniformly applied across the country. (c) Assist the Policy Wing of GST of CBEC. M. Directorate General of Tax Payer Services (d) To act as a Think Tank and an intermediary between the CBEC and field formations –  Taxpayer Services, Stakeholder Consultation Examining the issues relating to GST on the basis & Grievance Redressal: of inputs received from trade. professionals and i Laying down service standards and monitoring, other stake holders and forwarding the evaluating & reviewing the same from time to suggestions to GST policy wing of CBEC; time to assess their effectiveness and Coordinating with other Ministries of Center and efficiency, various state bodies for organization of outreach programmes and training sessions. ii Monitoring and reviewing Citizen’s Charter and ‘Sevottam’ Programme at regular intervals and (e) Coordinating with various Directorates of CBEC suggest improvements. where required Central Government Ministries / Departments and State/UT Government Ministries/ iii Conducting customer satisfaction surveys, Departments connected to GST- Examining the independent third party audit and impact analysis issues relating to GST on the basis of inputs so as to monitor the quality and efficiency of tax received from Directorates of CBEC and other administration, stakeholders and officers and forwarding the suggestions to GST policy wing of CBEC; iv Assisting the CBEC in enhancing customer coordination with State/UT GST policy wing. understanding and maximizing voluntary compliance L. Directorate General of Valuation v Monitoring the functioning of PTFCs, RACs and (a) To assist and advise the Board in the Open House Meetings so as to share good implementation and monitoring of the working of practices across Zones; the WTO Agreement on Customs Valuation; vi Monitoring of e-Helplines set up by Customs, (b) To build a comprehensive valuation database for Central Excise and Service Tax Zones; internationally traded goods using past precedents, published price information or prices vii Monitoring the implementation of directions and obtained from other authentic sources; awards given by Ombudsman to make this initiative more effective (c) To disseminate the price information on a viii Monitoring the “Tax Payer Service Centers” in 110Department of Revenue III the Commissionerates and Custom Houses and progress in cases of adjudications, prosecutions analyzing the activities through periodic activity and rewards to informers and officers in various reports sent by the Commissionerates and Commissionerates and to watch the progress in Custom Houses and take appropriate steps for disposal of confiscated goods involved in improvement in quality and timely delivery of prosecution cases; services and (c) To plan and assess the need for staff training, ix Acting as a “Single Window Help Desk” for equipments, vehicles, vessels, communications interface between taxpayers and field formations or other resources required for anti smuggling through a dedicated web based service portal In work in various Commissionerates and to consultation with DGS&DM evaluate their operational efficiency; and,  Publicity & Public Relations: (d) To deal with the matters concerning acquisition, procurement, purchase, repair and reallocation i. Providing taxpayer information, taxpayer of such equipment. education and taxpayer assistance and designing and executing outreach programmes in O. Directorate of Legal Affairs coordination with NACEN, DG GST; (a) To function as the nodal agency to monitor the ii. Ownership, Content Management & updating legal and judicial work of the Board; information on CBEC website through content (b) To create a data bank of all the cases decided owners; by the various benches of the Tribunal and iii. Finalising an appropriate channel strategy to monitor cases effectively in order to ensure that ensure that the service delivery is effective and the field formations recommend filing of appeals is accessible to all only in deserving cases and not on the issues already decided by the Supreme Court or High iv. Educating the tax payers as regards their rights Courts and accepted by the department; and obligations in the matter of tax compliance (c) To ensure that all orders of the Tribunal are v. Compiling and issuing hand outs, Guidance examined by the field formations and timely Notes, brochures, leaflets , FAQs etc. on various proposal for filing appeal are sent to the Board subjects viz. baggage allowance, refund, wherever necessary and the report about drawback, rebate, Project imports, SSI acceptance of an order is sent to the Chief exemptions, CENVAT scheme, appellate Commissioner. remedies including alternate channels like AAR and Settlement Commission for the benefit of (d) To intimate the field formations about important taxpayers decisions of the various High Courts, which are finally accepted by the Department, and about vi. Organising interactive sessions with trade and the important decisions of the Supreme Court industry and based on the feedback received so that unnecessary litigation work on the issues suggest changes in tax laws and procedures to already settled is not created by the field the CBEC formations; vii. Issuing internal communication aimed at (e) To create a database pertaining to the cases attitudinal refinement of officials from that of pending in various High Courts. The appellant/ regulators to facilitators and service providers respondent Commissioners will assist the Directorate in creating and updating the database viii. Monitoring and executing the stakeholder consultation process for changes in policy and pertaining to the High Court cases; procedures; and (f) To prepare panels of standing counsels/ panel ix. Creating, putting in place and executing an counsels for various High Courts on the basis of feedback received from the field formations. appropriate media policy including social media However, the role of the Directorate is restricted N. Directorate of Logistics to making recommendations only and the final decision regarding approval of the panel / (a) To inspect, assess and evaluate the effectiveness appointment of the Standing Counsels rests with of the staff deployed on anti-smuggling duties in the Ministry; and the Commissionerates and in vulnerable areas; (g) To keep an approved panel of eminent lawyers (b) To monitor, coordinate and evaluation the well versed with customs and central excise laws 111Annual Report 2017-2018 as well as administration, who may not be on the Centre for Customs and (iv) National Targeting Centre. regular panel of the government but may be While the Wings mentioned at (i) and (ii) are associated engaged by the department for handling with Goods and Service Tax, the Wings mentioned at (iii) important cases. and (iv) are predominantly Customs oriented but will provide assistance to GST formations also. P. Central Revenues Chemical Laboratory R. Directorate of International Customs To analyze samples of goods, and to render The purpose of DIC is to assist the CBEC to technical advice to the Board and its field formations, in achieve the objectives stated in the Mission Statement. regard to the nature, characteristics and composition for Hence there is no change in purpose when 15 posts various goods. associated with field formations of GST (erstwhile Central Q. Directorate General Analytics and Risk Excise and Service Tax) were reallocated to DIC. Management 9.2 The revenue collections from indirect The DGARM has four Wings viz. (i) Centre for taxes since 2013-14 are tabulated below: Business Intelligence and Analytics (ii) Risk Management Centre for Goods and Service Tax (iii) Risk Management Year-w ise T rends of In direct Tax Revenue Collection (Rs. In Crore) M A JO R S l. N o . 2 0 13 -1 4 2 0 14 -1 5 2 0 1 5-16 2 0 16 -1 7 201 7 -1 8 H EA D C U S T O M S B E 18 7 30 8 20 1 81 9 2 0 83 3 6 230000 245000 R E 17 5 05 6 18 8 71 3 2 0 95 0 0 217000 135242 A ctuals 17 2 08 5 18 8 01 6 2 1 03 3 8 225370 % achievem ent o f B E 91.9 93.2 101.0 98.0 % achievem ent o f R E 98.3 99.6 100.4 103.9 U N IO N EX C IS E B E 19 7 55 4 20 7 11 0 2 2 98 0 9 318669.5 406900 R E 17 9 53 7 18 5 48 0 2 8 41 4 2 387368.58 276995 A ctuals 17 0 19 7 18 8 78 7 2 8 71 4 9 381756 % achievem ent o f B E 86.2 91.2 125.0 119.8 % achievem ent o f R E 94.8 101.8 101.1 98.6 S ER V IC E TA X B E 18 0 14 1 21 5 97 3 2 0 97 7 4 231000 275000 R E 16 4 92 7 16 8 13 2 2 1 00 0 0 247500 79507 A ctuals 15 4 77 8 16 7 96 9 2 1 13 9 6 79507 % achievem ent o f B E 85.9 77.8 100.8 34.4 % achievem ent o f R E 93.8 99.9 100.7 32.1 G S T B E 0.0 0.0 0.0 0.0 0 R E 0.0 0.0 0.0 0.0 444631 A ctuals % achievem ent o f B E 0.0 0.0 0.0 0.0 0 % achievem ent o f R E 0.0 0.0 0.0 0.0 0 IN D IR E C T TA X TO TA L B E 565003.0 624902.0 647919.0 779669.5 926900.0 R E 519520.0 542325.0 703642.0 851868.6 936375.0 A ctuals 497060.0 544772.0 708883.0 686633.0 0.0 % achievem ent o f B E 88.0 87.2 109.4 88.1 % achievem ent o f R E 95.7 100.5 100.7 80.6 112Department of Revenue III 9.2.1 Budgetary Changes and Policy Initiatives: Major Achievements of CBEC during 2 017 9.2.1.1 Customs duty changes to incentivize ‘MAKE IN INDIA’ 1. Basic Customs Duty was reduced on the following inputs, raw materials: Description of goods ( Inputs/raw material) From(%) To (%) Liquefied natural gas (LNG) 5 2.5 o-Xylene 2.5 Nil Vegetable tanning extracts, namely Wattle extract and 7.5 2.5 Myrobalan fruit extract Nickel 2.5 Nil Medium Quality Terephthalic Acid (MTA) & Qualified 7.5 5 Terephthalic Acid (QTA), so that they attract the same basic customs duty as that on Purified Terephthalic Acid (PTA) Hot Rolled Coils [7208], when imported for 12.5 10 manufacture of welded tubes and pipes falling under heading 7305 and 7306. 2-Ethyl Anthraquinone for manufacture of hydrogen 7.5 2.5 peroxide Vinyl Polyethylene Glycol (VPEG) for manufacture of 10 7.5 Poly Carboxylate Ether Inputs or raw materials for manufacture of following electronic 10-7.5 Nil goods:- a) specified printers (8443 32 90); b) ink cartridges (8443 99 51, 8443 99 52); c) ink spray nozzle (8443 99 53); d) cellular mobile phones (8517 12 10, 8517 12 90); e) base stations (8517 61 00). Solar tempered glass for the manufacture of solar 5 Nil cells/panels/modules Resin and catalyst for manufacture of cast 7.5 5 components for Wind Operated Energy Generators [WOEG] Clay 2 Powder (Alumax) for manufacture of ceramic 7.5 5 substrate for catalytic convertors All parts for manufacture of LED lights or fixtures, 10-7.5 5 including LED lamps All inputs for the manufacture of LED Driver and 10-7.5 5 MCPCB for LED lights or fixtures, including LED lamps 113Annual Report 2017-2018 21.. Basic Customs Duty was increased on the following goods ( manufactured indigenously in significant quantity) Description of goods From%) To (%) Ad-valorem Component on 298 items of fabrics on 10 20 manmade fibres co-polymer coated MS steel tape / stainless steel tape Nil 10 for manufacture of specified telecommunication grade optical fibre cables Nil 10 a) specified printers (8443 32 90); b) ink cartridges (8443 99 51, 8443 99 52); c) ink spray nozzle (8443 99 53); d) cellular mobile phones (8517 12 10, 8517 12 90); e) base stations (8517 61 00); and f) parts of cellular mobile phones (8517 70 90). Nil 10 Following parts of cellular mobile phones (i) Microphone Rubber Case and Sensor Rubber Case / Sealing Gasket including sealing gaskets / cases from Rubbers like SBR, EPDM, CR, CS, Silicone and all other individual rubbers or combination / combination of rubbers falling under tariff item 4016 99 90 ; (ii) Screw falling under tariff item 7318 15 00; (iii) SIM socket / Other Mechanical items of Metal falling under tariff item 7326 90 99] for manufacture of cellular mobile phones. 10 20 a) Microwave Ovens b) Televisions c) Light-emitting diode (LED) lamps d) Lamps and lighting fittings including searchlights and spotlights and parts thereof, not elsewhere specified or included; illuminated signs, illuminated name-plates and the like, having a permanently fixed light source, and parts thereof not elsewhere specified or included (i) Cellular Mobile phones 10 15 (ii) Video recording or reproducing apparatus, whether or not incorporating a video tuner (iii) Electricity meters (iv) Television cameras, digital cameras and video camera recorders LCD, LED or OLED panels for manufacture of Television Nil 7.5 RO membrane element for household type filters 7.5 10 Cashew nut, roasted, salted or roasted and salted 30 45 114Department of Revenue III 31.. Export duty of 15% was imposed on other aluminium ores, including laterite. 42.. Basic customs duty was increased on following goods to protect the interest of farmers and local producers of agricultural products: Description of goods From%) To (%) 15 30 Crude palm oil of edible grade 25 40 Refined palm oil of edible grade 12.5 25 Crude sunflower oil 20 35 Refined sunflower oil of edible grade 17.5 30 Crude soya bean oil 20 35 Refined soya bean oil 12.5 25 Crude rapeseed oil including canola oil (Low erucic acid rapeseed oil), mustard oil and colza oil 20 35 Refined rapeseed oil including canola Oil (Low erucic acid rapeseed oil), mustard oil, and colza oil In a historic tax reform, the Goods and Services Tax was (iv) GST has aided in widening of the tax base, e.g., rolled out on 1st July, 2017. It brought a new era of indirect entire textile chain has now been brought under taxation with the motto of “One Tax, One Market, One tax net. Further, a segment of land and real estate Nation”. It subsumed almost all major indirect taxes like transactions has been brought into the tax net Central Excise Duty, Service Tax, VAT, CST, “works contracts”, referring to housing that is Entertainment tax, Octroi, Luxury tax, a large number of being built. This in turn would allow for greater cesses/surcharges and various other state and central transparency and formalization of cement, steel, levies on goods and services. The certain significant and other sales, which tended to be outside the implication of GST regime are: tax net. The formalization will occur because builders will need documentation of these input (i) Uniform taxation of goods and services across purchases to claim tax credit. all states. All business process have been made common, including the IT processes relating to (v) There are early signs of tax base expansion. registration, return, payment and refund of taxes. Between June & July 2017, 6.6 lakh new agents This has paved the way for making the whole previously outside the tax net have sought GST nation a common market. registration. This is expected to rise consistently as the incentives for formalization increase. (ii) The pre-GST regime suffered from cascading of Preliminary estimates point to potentially large taxes in which VAT and other states levies were increases in the tax base as a consequence. being imposed on value inclusive of central taxes. GST removed such cascading of taxes. (vi) Another benefit will be the impact of GST would be in formalization of economy and consequently (iii) Tax neutrality for business as the scope of Input the information flow that would eventually Tax Credit has been widened considerably. It augment direct tax collections. In the past, Centre has also ensured that integrity of tax chain is had little data on small manufacturers and maintained throughout the supply chain upto consumption (because the excise was imposed the stage of consumption. In the erstwhile at the manufacturing stage), while states had little regime, no credit of certain indirect taxes, such data on the activities of local firms outside their as SAD on imports paid by a traders or the borders. Under the GST, there will be seamless CST was available. flow and availability of a common set of data to 115Annual Report 2017-2018 both the Centre and states, making direct tax exempted from obtaining registration even if they collections more effective. are making inter-State taxable supplies of services. This measure is expected to (vii) The longer-term benefits include the GST’s significantly reduce the compliance cost of small impact on financial inclusion. Small businesses service providers. can build up a real time track record of tax payments digitally, and this can be check-posts ii. Small and medium businesses with annual while others are in process of eliminating them. aggregate turnover up to Rs. 1.5 crores would If this trend continues, the reduction in transport be required to file quarterly return ( monthly for costs, fuel use, and corruption could be other taxpayers) significant. iii. The reverse charge mechanism under sub- (viii) GST makes the supply chain and logistics section (4) of section 9 of the CGST Act, 2017 efficient. With introduction of GST, the check and under sub-section (4) of section 5 of the IGST posts in the states have been removed as the Act, 2017 has been suspended till 31.03.2018. whole nation has no same tax and compliance iv. The requirement to pay GST on advances structure. There is ample evidence to suggest received was proving to be burdensome for small that logistical costs within India are high. For dealers and manufacturers. In order to mitigate example, one study suggests that trucks in India their inconvenience on this account, it was been drive just one-third of the daily distance of trucks decided that taxpayers having annual aggregate in the US (280 km vs 800 km). This raises direct turnover up to Rs. 1.5 crores shall not be required costs (especially in terms of time to delivery), to pay GST at the time of receipt of advances on indirect costs (firms keeping larger inventory), account of supply of goods. and location choices (locating closer to suppliers/ customers instead of the best place to produce). 9.3.2 Rationalization of GST rate structure Further, only about 40 per cent of total travel time for goods is spent driving; while one quarter is taken up by check points and other official stoppages. After implementation of GST regime, rates have Eliminating check point delays could keep trucks been rationalizes significantly to address the concerns moving almost 6 hours more per day, equivalent of trade and consumers. Major decisions on rate to additional 164 kms per day – pulling India rationalization were taken by the GSTSC Council in its above global average and to the level of Brazil. meeting on the 10 November, 2017 ( detailed below): (ix) Overall, logistics costs (broadly defined, and (i) 28% to 18% including firms’ estimates of lost sales) are 3-4 times the international benchmarks. Studies The list of 28% GST rated goods was pruned show that inter-state trade costs exceed intra- substantially, from 228 tariff headings [about 18.5% of state trade costs by a factor of 7-16, thus pointing total tariff headings at 4-digit] to only 50 tariff headings to clear existence of border barriers to inter-state including 4 headings which have been partially reduced movement of goods1. The passage of the GST to 18% [about 4% of total tariff headings at 4-digit] with will dramatically reduce these costs and give a the major items where reductions were made being:- boost to inter-state trade in the country.  Wire, cables, insulated conductors, electrical 9.3 Facilitation Measures taken in GST insulators, electrical plugs, switches, sockets, fuses, relays, electrical connectors 9.3.1 Ease of doing Business for Small  Electrical boards, panels, consoles, cabinets etc Traders for electric control or distribution GST has significantly raised turnover thresholds  Particle/fibre boards and ply wood. Article of of Rs 20 lakh for an entity to be taxable in GST. Further, the threshold for composition has been increased in wood, wooden frame, paving block general to Rs. 1 crore ( Rs 75 lakh for special category  Furniture, mattress, bedding and similar states except Jammu & Kashmir and Uttarakhand). furnishing Certain other measures taken to encourage the MSME sector are as foll0ws:  Trunk, suitcase, vanity cases, brief cases, i. Service providers whose annual aggregate travelling bags and other hand bags, cases turnover is less than Rs. 20 lacs (Rs. 10 lacs in  Detergents, washing and cleaning preparations special category states except J & K) have been 116Department of Revenue III  Liquid or cream for washing the skin forestry, harvesting or threshing machinery  Shampoos; Hair cream, Hair dyes (natural,  Specified parts of sewing machine herbal or synthetic) and similar other goods;  Spectacles frames henna powder or paste, not mixed with any other ingredient;  Furniture wholly made of bamboo or cane  Pre-shave, shaving or after-shave preparations, b) 18% to 5% personal deodorants, bath preparations, perfumery, cosmetic or toilet preparations, room  Puffed rice chikki, peanut chikki, sesame chikki, deodorisers revdi, tilrevdi, khaza, kazuali, groundnut sweets gatta, kuliya  Perfumes and toilet waters  Flour of potatoes put up in unit container bearing  Beauty or make-up preparations a brand name  Fans, pumps, compressors  Chutney powder  Lamp and light fitting  Fly ash  Primary cell and primary batteries  Sulphur recovered in refining of crude  Sanitary ware and parts thereof of all kind  Fly ash aggregate with 90% or more fly ash content  Articles of plastic, floor covering, baths, shower, sinks, washbasins, seats, sanitary ware of plastic (c) 12% to 5%  Slabs of marbles and granite  Desiccated coconut  Goods of marble and granite such as tiles  Narrow woven fabric including cotton newar [with no refund of unutilised input tax credit]  Ceramic tiles of all kinds  Idli, dosa batter  Chocolates, Chewing gum / bubble gum  Finished leather, chamois and composition (ii) Further, GST rates on a number of goods were leather rationalised, so as to rationalise the rate structure with a view to minimise classification disputes, on the following  Coir cordage and ropes, jute twine, coir products goods:-  Fishing net and fishing hooks a) 18% to 12%  Worn clothing  Condensed milk  Fly ash brick  Refined sugar and sugar cubes (d) 5% to nil  Pasta  Guar meal  Curry paste, mayonnaise and salad dressings, mixed condiments and mixed seasoning  Hop cone (other than grounded, powdered or in pellet form)  Diabetic food  Certain dried vegetables such as sweet potatoes,  Medicinal grade oxygen maniac  Printing ink  Unworked coconut shell  Hand bags and shopping bags of jute and cotton  Fish frozen or dried (not put up in unit container bearing a brand name)  Hats (knitted or crocheted)  Khandsari sugar  Parts of specified agricultural, horticultural, 117Annual Report 2017-2018 (iii) Other significant rationalisation measures B. supplied by way of construction, erection, relating to GST rates taken after rollout of GST commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration  Reduction of GST rate on Dhoop batti,dhoop, of, - sambhrani and other similar items from 12% to 5% (a) a road, bridge, tunnel, or terminal for road transportation for use by general public;  Reduction of GST rate on Khadi fabric, sold (b) a pollution control or effluent treatment plant, through Khadi and Village Industries except located as a part of a factory; or Commission’s outlets and other similar items from 5% to Nil (c) a structure meant for funeral, burial or cremation of deceased  Reduction of GST rate on handicrafts from 28% to 12% C. supplied by way of construction, erection, commissioning, or installation of original works  Reduction of GST rate on synthetic yarns from pertaining to, - 18% to 12% (a) railways, excluding monorail and metro;  Reduction of GST rate on plastic, glass, paper (b) post-harvest storage infrastructure for agricultural or rubber scrap from 18% to 5% produce including a cold storage for such  Reduction of GST rate on E-waste from 18% to purposes; or 5% (c) mechanised food grain handling system, 9.3.3 Rationalization of GST Rates of Services machinery or equipment for units processing agricultural produce as food stuff excluding 9.3.3.1 GST Rates reduced from 18% to 12% alcoholic beverages. for D. and associated services, in respect of offshore works contract relating to oil and gas exploration 1. The Composite supply of works contract services : and production (E&P) in the offshore area beyond A. supplied to the Central Government, State 12 nautical miles from the nearest point of the Government, Union territory, a local authority, a appropriate base line. Governmental Authority or a Government Entity 2. Services by way of job work in relation to – by way of construction, erection, commissioning, installation, completion, fitting out, repair, 1. manufacture of umbrella maintenance, renovation, or alteration of, 2. printing of all goods falling under Chapter 48 or (a) a historical monument, archaeological site or 49, which attract CGST @ 6% remains of national importance, archaeological excavation, or antiquity specified under the 3. Transport of passengers by any motor vehicle Ancient Monuments and Archaeological Sites designed to carry passengers where the cost of and Remains Act, 1958 (24 of 1958); fuel is included in the consideration charged from the service recipient. (b) canal, dam or other irrigation works; 4. Renting of any motor vehicle designed to carry (c) pipeline, conduit or plant for (i) water supply (ii) passengers where the cost of fuel is included in water treatment, or (iii) sewerage treatment or the consideration charged from the service disposal. recipient. (d) a civil structure or any other original works meant 5. Transportation of natural gas through pipeline. predominantly for use other than for commerce, industry, or any other business or profession; 6. Services by goods transport agency (GTA) in relation to transportation of goods[those GTAs (e) a structure meant predominantly for use as (i) opting for forward charge]. an educational, (ii) a clinical, or(iii) an art or cultural establishment; or 9.3.3.2 GST Rates reduced from effective rate of 12% to 8% for (f) involving predominantly earth work (that is, constituting more than 75per cent. of the value 1. The Composite supply of works contract services of the works contract) involving transfer of property in land or undivided 118Department of Revenue III share of land, – 50 to 63 in the First Schedule to the CTA A. supplied by way of construction, erection, 2. All products falling under Chapter 71 in the First commissioning, installation, completion, fitting out, Schedule to the CTA repair, maintenance, renovation, or alteration of, - 3. Printing of all goods falling under Chapter 48 or (a) a civil structure or any other original works 49, which attract CGST @ 2.5% or Nil pertaining to a scheme under Jawaharlal Nehru 4. All food and food products falling under Chapters National Urban Renewal Mission or Rajiv Awaas 1 to 22 in the First Schedule to the CTA Yojana; 5. All products falling under Chapter 23 in the First (b) a civil structure or any other original works Schedule to the CTA, except dog and cat food pertaining to the “In-situ rehabilitation of existing put up for retail sale falling under tariff item slum dwellers using land as a resource through 23091000 of the said Chapter private participation” under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana, 6. Manufacture of clay bricks falling under tariff item only for existing slum dwellers; 69010010 in the First Schedule to the CTA (c) a civil structure or any other original works 7. Manufacture of handicraft goods pertaining to the “Beneficiary led individual house construction / enhancement” under the Housing 9.3.3.4 Reduction of GST Rates from 18% for All (Urban) Mission/Pradhan Mantri Awas with ITC to 5% without ITC Yojana; 1. Supply of services by a restaurant not located in B. supplied by way of construction, erection, the premises of a hotel having unit of commissioning, or installation of original works accommodation with declared tariff above Rs pertaining to, - 7500. (a) a single residential unit otherwise than as a part 2. Transportation of natural gas through pipeline of a residential complex; 9.3.3.5 ITC in the same line of business allowed to – (b) low-cost houses up to a carpet area of 60 square metres per house in a housing project approved 1. Transport of passengers by any motor vehicle by competent authority empowered under the designed to carry passengers where the cost of ‘Scheme of Affordable Housing in Partnership’ fuel is included in the consideration charged from framed by the Ministry of Housing and Urban the service recipient. Poverty Alleviation, Government of India; 2. Renting of any motor vehicle designed to carry (c) low cost houses up to a carpet area of 60 square passengers where the cost of fuel is included in metres per house in a housing project approved the consideration charged from the service by the competent authority under- (1) the recipient. “Affordable Housing in Partnership” component 9.3.3.6 Other rationalization of GST Rates of the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana; (2) any housing scheme of a GST rate on Leasing of motor vehicles purchased State Government; and leased prior to 1st July 2017 reduced to 65 C. to the Central Government, State Government, per cent. of the rate of central tax as applicable Union Territory, a local authority, a Governmental on supply of like goods involving transfer of title in goods. Authority or a Government Entity by way of construction, erection, commissioning, installation, 9.3.3.7 Exemption from levy of GST completion, fitting out, repair, maintenance, renovation, or alteration of, - 1. Services provided by and to Fédération Internationale de Football Association (FIFA) and its (a) a residential complex predominantly meant for self- subsidiaries directly or indirectly related to any of the use or the use of their employees or other persons events under FIFA U-17 World Cup 2017 to be hosted in specified in paragraph 3 of the Schedule III of the India. Central Goods and Services Tax Act, 2017. 2. Supply of services associated with transit cargo 9.3.3.3 Reduction of GST Rates from 18% to 5% to Nepal and Bhutan (landlocked countries). on services by way of job work in relation to– 3. Supply of service by a Government Entity to 1. Textiles and textile products falling under Chapter 119Annual Report 2017-2018 Central Government, State Government, Union territory, holders. The concerns raised by the stakeholders were local authority or any person specified by Central related to business processes (relating to migration. Government, State Government, Union territory or local registration. return filing and refunds on the portal). GST authority against consideration received from Central rates. difficulties faced by MSME sector in compliance. Government, State Government, Union territory or local cash flow issues of exporter on account of delayed in authority, in the form of grants. getting refunds on exports. The GST Council had several meetings in quick successions post GST implementation 4. Service provided by Fair Price Shops to Central and it took specific measures to address all the concerns Government, State Government or Union territory by way in a short span of time. To address the IT issues. a GOM of sale of food grains, kerosene, sugar, edible oil, etc. (Group of Ministers) has been constituted which since then under Public Distribution System against consideration has taken a number of measures. Another GOM looked in the form of commission or margin. into the issue of MSME and made specific far reaching 5. Services provided by a goods transport agency recommendation. A Committee on exports was constituted to an unregistered person, including an unregistered to address the concerns of exporters. Further. the GST casual taxable person, other than the following recipients, Council also recommended significant rationalization in namely: - rates. Besides. extensive exercises have been undertaken for streamlining the tax administration. ensuring that (a) any factory registered under or governed by the taxpayer has single interface (with either Central or State Factories Act, 1948(63 of 1948); or tax authority). Further. various Committees of officers examined the issues relating to law and processes and (b) any Society registered under the Societies sectoral issues like handicrafts. A number of procedure Registration Act, 1860 (21 of 1860) or under any changes have been made to simplify the process. Also other law for the time being in force in any part of extensive exercises were taken for taxpayer education and India; or facilitation by way of knowledge sharing. dissemination of (c) any Co-operative Society established by or under information and replies to frequently asked questions. All any law for the time being in force; or these efforts have smoothened the GST implementation to a large extent and lot of work is going on in the (d) anybody corporate established, by or under any background for further simplification. law for the time being in force; or 9.4.2 Genesis: (e) any partnership firm whether registered or not under any law including association of persons; The idea of moving towards the GST was first mooted by the then Union Finance Minister in his Budget for 2006- (f) any casual taxable person registered under the 07. Initially, it was proposed that GST would be introduced Central Goods and Services Tax Act or the from 1stApril, 2010. The Empowered Committee of State Integrated Goods and Services Tax Act or the Finance Ministers (EC) which had formulated the design State Goods and Services Tax Act or the Union of State VAT was requested to come up with a roadmap Territory Goods and Services Tax Act. and structure for the GST. Joint Working Groups of 6. Service by way of access to a road or a bridge officials having representatives of the States as well as on payment of annuity. the Centre were set up to examine various aspects of the GST and draw up reports specifically on exemptions 7. Services by way of admission to a protected and thresholds, taxation of services and taxation of inter- monument so declared under the Ancient Monuments State supplies. Based on discussions within the EC and and Archaeological Sites and Remains Act 1958 (24 of between the EC and the Central Government, the EC 1958) or any of the State Acts, for the time being in force. released its First Discussion Paper (FDP) on GST in 8. Services by way of right to admission to the November, 2009. This spelled out the features of the events organised under FIFA U-17 World Cup 2017. proposed GST and has formed the basis for discussion between the Centre and the States. 9.4 Goods and Services Tax 9.4.3 GST and Centre-State Financial 9.4.1 Introduction Relations: GST is mammoth change in the indirect tax regime. Before the enactment of the Constitution (One Considering the magnitude of change. it implementation Hundred and First Amendment) Act, 2016, fiscal powers has been smooth. Needless to say that any change of this between the Centre and the States were clearly magnitude will have teething problems in the initial phase demarcated in the Constitution with almost no overlap of implementation. However. GSTC Council has taken all between the respective domains. The Centre had powers possible measure to address the concerns of stake to levy tax on the manufacture of goods (except alcoholic 120Department of Revenue III liquor for human consumption, opium, narcotics etc.) weighted votes cast. Centre and minimum of 20 States while the States had powers to levy tax on sale of goods. would be required for majority because Centre would have In case of inter-State sales, the Centre had power to levy one-third weightage of the total votes cast and all the a tax (Central Sales Tax) but the tax was collected and States taken together would have two-third of weightage retained entirely by the originating States. As for services, of the total votes cast. it was the Centre alone that was empowered to levy The Constitution Amendment Bill was passed by service tax. Since the States were not empowered to levy the Lok Sabha in May, 2015. The Bill was referred to the any tax on the sale or purchase of goods in the course of Select Committee of Rajya Sabha on 12.05.2015. The their importation into or exportation from India, the Centre Select Committee submitted its Report on the Bill on levied and collected this tax as additional duties of 22.07.2015. The Bill with certain amendments was finally customs, which was in addition to the Basic Customs passed in the Rajya Sabha and thereafter by Lok Sabha Duty. This additional duty of customs (commonly known in August, 2016. Further the bill was ratified by required as CVD and SAD) counter balanced excise duties, sales number of States and received assent of the President tax, State VAT and other taxes levied on the like domestic on 8th September, 2016 and has since been enacted as products. Introduction of GST required amendments in Constitution (101stAmendment) Act, 2016 w.e.f. 16th the Constitution so as to concurrently empower the Centre September, 2016. and the States to levy and collect the GST. 9.4.5 Goods and Services Tax Council The assignment of concurrent jurisdiction to the Centre and the States for the levy of GST required a (GSTC): unique institutional mechanism that would ensure that The GSTC has been notified with effect from 12th decisions about the structure, design and operation of September, 2016. GSTC is being assisted by a GST are taken jointly. For it to be effective, such a Secretariat. Twenty four meetings of the GSTC have been mechanism also needed to have Constitutionnel force. held so far. The following major decisions have been 9.4.4 Constitution (One Hundred and First) taken by the GSTC: Amendment Act, 2016: (i) The threshold exemption limit would be Rs. 20 lakh. For special category States (except J&K) To address all these and other issues, the enumerated in article 279A of the Constitution, Constitution (122nd Amendment) Bill was introduced in the threshold exemption limit has been fixed at Rs. 16th Lok Sabha on 19.12.2014. The Bill provides for a 10 lakh. levy of GST on supply of all goods or services except for Alcohol for human consumption. The tax shall be levied (ii) Composition threshold shall be Rs. 1 crore. As as Dual GST separately but concurrently by the Union decided in the 23rd meeting of the GSTC, this (central tax - CGST) and the States (including Union limit shall be raised to Rs. 1.5 crore after Territories with legislatures) (State tax - SGST) / Union necessary amendments in the Act. Composition territories without legislatures (Union territory tax- scheme shall not be available to inter-State UTGST). The Parliament would have exclusive power to suppliers, service providers (except restaurant levy GST (integrated tax - IGST) on inter-State trade or service) and specified category of manufacturers. commerce (including imports) in goods or services. The For special category States (except J&K and Central Government will have the power to levy excise Uttarakhand) enumerated in article 279A of the duty in addition to the GST on tobacco and tobacco Constitution, threshold exemption limit has been products. The tax on supply of five specified petroleum fixed at Rs. 75 lakh. products namely crude, high speed diesel, petrol, ATF and natural gas would be levied from a later date on the (iii) Existing tax incentive schemes of Central or State recommendation of GST Council. governments may be continued by respective government by way of reimbursement through A Goods and Services Tax Council (GSTC) was budgetary route. The schemes, in the present constituted comprising the Union Finance Minister, the form, would not continue in GST. Further, 50% Minister of State (Revenue) and the State Finance exemption of the CGST portion will be provided Ministers to recommend on the GST rate, exemption and to CSD (Defence Canteens). thresholds, taxes to be subsumed and other features. This mechanism would ensure some degree of (iv) There would be four tax rates namely 5%, 12%, harmonization on different aspects of GST between the 18% and 28%. The tax rates for different goods Centre and the States as well as across States. One half and services have been finalized and notified. of the total number of members of GSTC would form Besides, some goods and services would be quorum in meetings of GSTC. Decision in GSTC would under the list of exempt items. The list of be taken by a majority of not less than three-fourth of exempted services has been finalized which is 121Annual Report 2017-2018 same as the services exempted under existing (xii) The reverse charge mechanism under sub- service tax law, except services supplied by section (4) of section 9 of the CGST Act, 2017 Goods and Services Tax Network which is the and under sub-section (4) of section 5 of the IGST addition to the list of exempted services under Act, 2017 has been suspended till 31.03.2018. service tax. Rate for precious metals is an (xiii) There shall be no requirement on payment of tax exception to ‘four-tax slab-rule’ and the same has on advance received for supply of goods by all been fixed at 3%. In addition unworked taxpayers. diamonds, precious stones, etc. attracts a rate of 0.25%. A cess over the peak rate of 28% on (xiv) Supplies from GTA to unregistered persons has certain specified luxury and demerit goods, like been exempted from tax. tobacco and tobacco products, pan masala, aerated waters, motor vehicles, would be (xv) Registration and operationalization of TDS/TCS imposed for a period of five years to compensate provisions has been postponed till 31.03.2018. States for any revenue loss on account of (xvi) The e-way bill system shall be introduced nation- implementation of GST. The list of goods and wide for all inter-state supplies with effect from services in case of which reverse charge would 01.02.2018. As regards intra-state supplies, be applicable has also been finalized. option has been given to States to choose any (v) The five laws namely CGST Law, UTGST Law, date on or before 01.06.2018. IGST Law, SGST Law and GST Compensation (xvii) E-Wallet Scheme shall be introduced for Law have been recommended. exporters from 01.04.2018 and till then relief for (vi) In order to ensure single interface, all exporters shall be given in form of broadly administrative control over 90% of taxpayers existing practice. having turnover below Rs. 1.5 crore would vest (xviii) All taxpayers are required to file return FORM with State tax administration and over 10% with GSTR-3B& pay tax on monthly basis. the Central tax administration. Further all administrative control over taxpayers having (xix) Taxpayers with turnover upto Rs. 1.5 Cr are turnover above Rs. 1.5 crore shall be divided required to file information in FORM GSTR-1 on equally in the ratio of 50% each for the Central quarterly basis. Other taxpayers would have to and State tax administration. file FORM GSTR-1 on a monthly basis. (vii) Powers under the IGST Act shall also be cross- (xx) Time period for filing FORM GSTR-2 and FORM empowered on the same basis as under CGST GSTR-3 for the months of July, 2017 to March and SGST Acts with few exceptions. 2018 would be worked out by a Committee of Officers. (viii) Power to collect GST in territorial waters shall be delegated by Central Government to the (xxi) Late fee for delayed filing of return in FORM States. GSTR-3B for themonths of July, 2017 toSeptember, 2017 has been waived. The (ix) Formula and mechanism for GST Compensation amount of late fee already paid but subsequently Cess has been finalized. waived off shall be re-credited to the Electronic (x) Eighteen rules on composition, registration, input Cash Ledger of registered person under “Tax” tax credit, invoice, determination of value of head instead of “Fee” head. supply, accounts and records, returns, payment, (xxii) From October 2017 onwards, the amount of late refund, assessment and audit, advance ruling, fee payable by a registered person is as follows: appeals and revision, transitional provisions, anti- profiteering, E-way Bill, inspection, search and o whose tax liability for that month was ‘NIL’ will seizure, demands and recovery and offences and be Rs. 20/- per day instead of Rs. 200/- per day; penalties have been recommended and notified. o whose tax liability for that month was not ‘NIL’ (xi) The following classes of taxpayers shall be will be Rs. 50/- per day instead of Rs. 200/- per exempted from obtaining registration: day. o Suppliers of services, having turnover upto Rs. (xxiii) Facility has been introduced for manual filing of 20 lakhs, making inter State supplies; refund application. o Suppliers of services, having turnover upto Rs. (xxiv) Facility shall be introduced for manual filing of 20 lakhs, making supplies through e-commerce application for advance ruling. platforms. 122Department of Revenue III (xxv) Supply of services to Nepal and Bhutan shall be and the States under the aegis of the GSTC. exempted from GST if payment not received in (viii) GST would replace the following taxes currently foreign convertible currency – such suppliers levied and collected by the Centre: shall be eligible for input tax credit. a) Central Excise Duty; (xxvi) Centralized UIN shall be issued to every Foreign Diplomatic Mission / UN Organization by the b) Duties of Excise (Medicinal and Toilet Central Government. Preparations); (xxvii) www.gst.gov.in, managed by GSTN, shall be the c) Additional Duties of Excise (Goods of Special Common Goods and Services Tax Electronic Importance); Portal. d) Additional Duties of Excise (Textiles and Textile (xxviii) Rate of interest on delayed payments and Products); delayed refund has been recommended and notified. e) Additional Duties of Customs (commonly known as CVD); (xxix) The GST Council has recommended the rules for National Anti-Profiteering Authority. The f) Special Additional Duty of Customs (SAD); National Anti-Profiteering Authority has been g) Service Tax; constituted having Chairman and four technical Members. h) Cesses and surcharges insofar as they relate to supply of goods or services. 9.4.6 Salient Features of GST: (ix) State taxes that would be subsumed within the The salient features of GST are as under: GST are: (i) GST would be applicable on “supply” of goods a) State VAT; or services as against the present concept of tax on manufacture of goods or on sale of goods or b) Central Sales Tax; on provision of services. c) Purchase Tax; (ii) GST would be based on the principle of d) Luxury Tax; destination based consumption taxation as against the present principle of origin-based e) Entry Tax (All forms); taxation. f) Entertainment Tax (except those levied by the (iii) It would be a dual GST with the Centre and the local bodies); States simultaneously levying it on a common g) Taxes on advertisements; base. The GST to be levied by the Centre would be called Central GST (central tax- CGST) and h) Taxes on lotteries, betting and gambling; that to be levied by the States [including Union territories with legislature] would be called State i) State cesses and surcharges insofar as they GST (state tax- SGST). Union territories without relate to supply of goods or services. legislature would levy Union territory GST (union (x) GST would apply to all goods and services except territory tax- UTGST). Alcohol for human consumption. (iv) An Integrated GST (integrated tax- IGST) would (xi) GST on five specified petroleum products (Crude, be levied on inter-State supply (including stock Petrol, Diesel, ATF & Natural gas) would be transfers) of goods or services. This would be applicable from a date to be recommended by collected by the Centre so that the credit chain is the GSTC. not disrupted. (xii) Tobacco and tobacco products would be subject (v) Import of goods would be treated as inter-State to GST. In addition, the Centre would continue to supplies and would be subject to IGST in addition levy Central Excise duty. to the applicable customs duties. (xiii) A common threshold exemption would apply to (vi) Import of services would be treated as inter-State both CGST and SGST. Taxpayers with an annual supplies and would be subject to IGST. turnover of Rs. 20 lakh (Rs. 10 lakh for special (vii) CGST, SGST /UTGST & IGST would be levied category States (except J&K) as specified in at rates to be mutually agreed upon by the Centre article 279A of the Constitution) would be exempt 123Annual Report 2017-2018 from GST. A composition scheme (i.e. to pay tax any supply of goods or services or both used or at a flat rate without credits) would be available intended to be used in the course or furtherance to small taxpayers (including to manufacturers of business. other than specified category of manufacturers (xix) Electronic filing of returns by different class of and service providers) having an annual turnover persons at different cut-off dates. of up to Rs. 1 crore (Rs. 75 lakh for special category States (except J&K and Uttarakhand) (xx) Various modes of payment of tax available to the enumerated in article 279A of the Constitution). taxpayer including internet banking, debit/ credit As decided in the 23rd meeting of the GSTC, this card and National Electronic Funds Transfer limit shall be raised to Rs. 1.5 crore after (NEFT) / Real Time Gross Settlement (RTGS). necessary amendments in the Act. The threshold exemption and compounding scheme would be (xxi) Obligation on certain persons including optional. government departments, local authorities and government agencies, who are recipients of (xiv) The list of exempted goods and services would supply, to deduct tax at the rate of 1% from the be kept to a minimum and it would be harmonized payment made or credited to the supplier where for the Centre and the States as well as across total value of supply, under a contract, exceeds States as far as possible. two lakh and fifty thousand rupees. The provision for TDS has not been operationalized yet. (xv) All Exports and supplies to SEZs and SEZ units would be zero-rated. (xxii) Refund of tax to be sought by taxpayer or by any other person who has borne the incidence of tax (xvi) Credit of CGST paid on inputs may be used only within two years from the relevant date. for paying CGST on the output and the credit of SGST/UTGST paid on inputs may be used only (xxiii) Obligation on electronic commerce operators to for paying SGST/UTGST. In other words, the two collect ‘tax at source’, at such rate not exceeding streams of input tax credit (ITC) cannot be cross two per cent. (2%) of net value of taxable utilized, except in specified circumstances of supplies, out of payments to suppliers supplying inter-State supplies for payment of IGST. The goods or services through their portals. The credit would be permitted to be utilized in the provision for TCS has not been operationalized following manner: yet. a) ITC of CGST allowed for payment of CGST & (xxiv) System of self-assessment of the taxes payable IGST in that order; by the registered person. b) ITC of SGST allowed for payment of SGST & (xxv) Audit of registered persons to be conducted in IGST in that order; order to verify compliance with the provisions of Act. c) ITC of UTGST allowed for payment of UTGST & IGST in that order; (xxvi) Limitation period for raising demand is three (3) years from the due date of filing of annual return d) ITC of IGST allowed for payment of IGST, CGST or from the date of erroneous refund for raising & SGST/UTGST in that order. demand for short-payment or non-payment of tax ITC of CGST cannot be used for payment of SGST/ or erroneous refund and its adjudication in normal UTGST and vice versa. cases. (xvii) Accounts would be settled periodically between (xxvii) Limitation period for raising demand is five (5) the Centre and the State to ensure that the credit years from the due date of filing of annual return of SGST used for payment of IGST is transferred or from the date of erroneous refund for raising by the originating State to the Centre. Similarly demand for short-payment or non-payment of tax the IGST used for payment of SGST would be or erroneous refund and its adjudication in case transferred by Centre to the destination State. of fraud, suppression or wilful mis-statement. Further the SGST portion of IGST collected on (xxviii) Arrears of tax to be recovered using various B2C supplies would also be transferred by Centre modes including detaining and sale of goods, to the destination State. The transfer of funds movable and immovable property of defaulting would be carried out on the basis of information taxable person. contained in the returns filed by the taxpayers. (xxix) Goods and Services Tax Appellate Tribunal would (xviii) Input Tax Credit (ITC) to be broad based by be constituted by the Central Government for making it available in respect of taxes paid on 124Department of Revenue III hearing appeals against the orders passed by come down which is expected to reduce prices the Appellate Authority or the Revisional Authority. and lower prices mean more consumption, which States would adopt the provisions relating to in turn means more production thereby helping Tribunal in respective SGST Act. in the growth of the industries. This will create India as a “Manufacturing hub”. (xxx) Provision for penalties for contravention of the provision of the proposed legislation has been (B) Ease of Doing Business: made. (i) Simpler tax regime with fewer exemptions; (xxxi) Advance Ruling Authority would be constituted (ii) Reduction in multiplicity of taxes that are at by States in order to enable the taxpayer to seek present governing our indirect tax system leading a binding clarity on taxation matters from the to simplification and uniformity; department. Centre would adopt such authority under CGST Act. (iii) Reduction in compliance costs - No multiple record keeping for a variety of taxes- so lesser (xxxii) An anti-profiteering clause has been provided in investment of resources and manpower in order to ensure that business passes on the maintaining records; benefit of reduced tax incidence on goods or services or both to the consumers. (iv) Simplified and automated procedures for various processes such as registration, returns, refunds, (xxxiii) Elaborate transitional provisions have been tax payments, etc; provided for smooth transition of existing taxpayers to GST regime. (v) All interaction to be through the common GSTN portal- so less public interface between the 9.4.7 Benefits of GST: taxpayer and the tax administration; (A) Make in India: (vi) Will improve environment of compliance as all (i) Will help to create a unified common national returns to be filed online, input credits to be market for India, giving a boost to Foreign verified online, encouraging more paper trail of investment and “Make in India” campaign; transactions; (ii) Will prevent cascading of taxes as Input Tax (vii) Common procedures for registration of Credit will be available across goods and services taxpayers, refund of taxes, uniform formats of at every stage of supply; tax return, common tax base, common system of classification of goods and services will lend (iii) Harmonization of laws, procedures and rates of greater certainty to taxation system; tax; (viii) Timelines to be provided for important activities (iv) It will boost export and manufacturing activity, like obtaining registration, refunds, etc; generate more employment and thus increase GDP with gainful employment leading to (C) Benefit to Consumers: substantive economic growth; (i) Final price of goods is expected to be lower due (v) Ultimately it will help in poverty eradication by to seamless flow of input tax credit between the generating more employment and more financial manufacturer, retailer and supplier of services; resources; (ii) It is expected that a relatively large segment of (vi) More efficient neutralization of taxes especially small retailers will be either exempted from tax for exports thereby making our products more or will suffer very low tax rates under a competitive in the international market and give compounding scheme- purchases from such boost to Indian Exports; entities will cost less for the consumers; (vii) Improve the overall investment climate in the (iii) Average tax burden on companies is likely to country which will naturally benefit the come down which is expected to reduce prices development in the states; and lower prices mean more consumption. (viii) Uniform SGST and IGST rates will reduce the 9.4.8 Goods and Services Tax Network: incentive for evasion by eliminating rate arbitrage Goods and Services Tax Network (GSTN) has between neighbouring States and that between been set up by the Government as a private company intra and inter-State sales; under erstwhile Section 25 of the Companies Act, 1956. (ix) Average tax burden on companies is likely to 125Annual Report 2017-2018 GSTN would provide three front end services to the existing IT infrastructure of CBEC has been suitably taxpayers namely registration, payment and return. scaled up to handle such large volumes of data. Based Besides providing these services to the taxpayers, GSTN on the legal provisions and procedure for GST, the content would be developing back-end IT modules for 28 States of work-flow software such as ACES (Automated Central who have opted for the same. The migration of existing Excise & Service Tax) would require re-engineering. The taxpayers has already started from November, 2016. The name of IT project of CBEC under GST is ‘SAKSHAM’ Revenue department of both Centre and States are involving a total project value of Rs. 2,256 crores. pursuing the presently registered taxpayers to complete It was also felt that the organizational structure the necessary formalities on the IT system operated by and deployment of human resources needed a review GSTN for successful migration. for smooth and effective implementation of GST. A GSTN has selected 73 IT, ITeS and financial technology Working Group has after extensive deliberations and companies and 1 Commissioner of Commercial Taxes studies, submitted its Report which has been approved (CCT, Karnataka), to be called GST Suvidha Providers by the Government and has since been implemented. (GSPs).GSPs would develop applications to be used by Augmentation of human resources would be taxpayers for interacting with the GSTN. necessary to handle large taxpayers’ base in GST 9.4.9 Other Legislative Requirements: scattered across the length and breadth of the country. Capacity building, particularly in the field of Accountancy Four Laws namely CGST Act, UTGST Act, IGST and Information Technology for the departmental officers Act and GST (Compensation to States) Act have been has to be taken up in a big way. A massive four-tier training passed by the Parliament and since been notified on 12th programme has been conducted under the leadership of April, 2017. All the other States (except J&K) and Union NACIN. This training project is aimed at imparting training territories with legislature have passed their respective on GST law and procedures to more than 60,000 officers SGST Acts. The economic integration of India was of CBEC and Commercial Tax officers of State completed on 8th August 2017 when the State of J&K also Governments. Officers of the office of CAG are also passed the SGST Act and the Central Government also participating and getting trained in this training subsequently extended the CGST Act to J&K. programme. More than 52000 officers (including around On 22nd June 2017, the first Notification was 20000 officers from States) have already been trained. issued for GST and notified certain sections under CGST. Out of these 7000 officers have attended refresher- Since then, 76 notifications under CGST Act have been training course also. issued notifying sections, notifying rules, amendment to It is expected that a momentous reform like GST rules and for waiver of penalty, etc. Twelve, eighteen and is popularized and familiarized to the trade and industry one notifications have also been issued under IGST Act, who are the vital stakeholders in successful UTGST Act and GST (Compensation to States) Act implementation of this reform. respectively. Further 47, 50, 47 and 7 rate related notifications each have been issued under the CGST Act, CBEC would be responsible for administration IGST Act, UTGST Act and GST (Compensation to States) of the CGST and IGST law. In addition, excise duty regime Act respectively. Similar notifications have been issued would continue to be administered by the CBEC for levy by all the States under the respective SGST Act. and collection of central excise duty on five specified petroleum products as well as on tobacco products. CBEC Apart from the notifications, 28 circulars and 11 would also continue to handle the work relating to levy orders have also been issued by CBEC on various and collection of customs duties. subjects like proper officers, ease of exports, and extension of last dates for filling up various forms, etc. Director General of Safeguards, CBEC has been mandated to conduct detailed enquiry on anti-profiteering 9.4.10 Role of CBEC: cases and should give his recommendation for CBEC is playing an active role in the drafting of consideration of the National Anti-profiteering Authority. GST law and procedures, particularly the CGST and IGST CBEC has been instrumental in handholding the law, which will be exclusive domain of the Centre. This implementation of GST. It had set up the Feedback and apart, the CBEC has prepared itself for meeting the Action Room which monitored the GST implementation implementation challenges, which are quite formidable. challenges faced by the taxpayer and act as an active The number of taxpayers has gone up significantly. The interface between the taxpayer and the Government. 126Department of Revenue III EXPERIENCE OF REGISTRATION &RETURN FILING: Registration &Returns Snapshot As on As on S.No. Details 31-Jul-17 21-Dec-17 ' 1 No. of transited (migrated) taxpayers 71,28,581 70,90,030 I 2 Of which, yet to be migrated 27,35,378 6,76,926 3 No. of completely migrated taxpayers (1-2) 43,93,203 64,13,104 4 Total No of new applications received for registration 13,51,336 39,59,173 5 No.of applications approved 10,56,973 34,22,609 6 No.of applications rejected 23,375 4,11,149 7 No.of applications which are still in process 2,70,988 1,25,415 8 Total No. of taxpayers; new + migrated (3 + 5) 54,50,176 98,35,713 9 No.of taxpayers who have opted for composition scheme 5,22,438 16,61,494 10 No.of 3 (B) returns filed for July, 2017 #N/A 59,90,466 11 No of 3(B) returns filed for August, 2017 #N/A 61,64,384 12 No of 3(B) returns filed for September, 2017 #N/A 61,69,743 13 No of 3(B) returns filed for October, 2017 #N/A 58,06,372 14 No of 3(B) returns filed for November, 2017 #N/A 51,19,965 15 No.of GSTR 1 returns filed for July, 2017 #N/A 49,61,980 16 No.of GSTR 1 returns filed for August, 2017 #N/A 1,25,172 17 No.of GSTR 1 returns filed for September, 2017 #N/A 1,88,243 18 No. of GSTR 1 returns filed for October, 2017 #N/A 24,381 19 No.of GSTR 1 returns filed for November, 2017 #N/A 6,954 20 No.of GSTR 2 returns filed for July, 2017 #N/A 25,72,552 21 No.of GSTR 4 return filed for quarter July-Sep, 2017 #N/A 3,40,592 9.4.11 Frequently Asked Questions released (SWIFT) has been extended to exporters. This has by CBEC enabled exporters to file a common electronic Declaration on the ICEGATE portal covering requirements of all To guide taxpayers in relation to GST matters. Partner Government Agencies (PGAs) including Food CBEC has issued a range of frequently asked questions Safety and Standards Authority of India (FSSAI), Plant on 11 sectors and other topics related to GST law Quarantine. Animal Quarantine, Drug Controller, Wild Life procedures, tax rates, specific industry or sector. The Control Bureau and Textile Committee. The Benefits of information is available on CBEC GST portal http://cbec- Single Window Scheme include: gst.gov.inunder Services section as well as on a. Reduced cost of doing business www.cbec.gov.in . b. Enhances transparency 9.5 Customs 9.5.1 Reform measures undertaken for speedy c. Integration of regulatory requirements at one common platform reduces duplicity and cost of clearance of Cargo and facilitating the trade compliance (i) SWIFT extended to exporters d. Optimal utilization of manpower. Single Window Interface for Facilitating Trade 127Annual Report 2017-2018 (ii) Revamped AEO programme imports. Importers who are manufacturers or service providers registered under GST with Central Board of Excise and Customs (CBEC) annual turnover above Rs. 1 cr. in the previous has merged the two facilitation schemes year are required to give surety for amount of regarding identification of trusted traders. The duty foregone and if unable to provide the surety Authorized Economic Operator(AEO) an a bank guarantee/ cash security equivalent to international programme and the Accredited not more than 5% of duty forgone is required to Client Programme(ACP) domestic programme be furnished. For other importers the Bank has been merged into a combined three tier AEO guarantee/ cash security will not be more than programme to further provide facilitation/ benefits 25% of the duty foregone amount. In exceptional to the exporters /importers for efficient custom cases where the Assistant Commissioner or clearance based on their compliance Deputy Commissioner has reasons to demand history.Tier1 compliant traders are those who a higher quantum of Bank Guarantee or cash comply with the land laws Tier 2 compliant traders security such cases will be referred to the are those whose security processes are Jurisdictional Commissioner who may order trustworthy with regard to movement of goods higher quantum within a limit of 100% of total and supply chain. If they are compliant. trade with duty foregone after recording reasons in writing. other recognized countries is offered to them The exemptions and relaxations are available to additionally. Tier 3 compliant traders are those importers against whom no prosecution has been to whom the Government provides additional launched or initiated under any Act administered benefits.Few of the major benefits include: by the Central Board of Excise and Customs or a. Self-certified copies of FTA/ PTA origin related State Goods and Service Tax Act or Integrated or any other certificates required for clearance Goods and Service Tax Act or Union Territory would be accepted Goods and Service Tax Act during the previous three financial years. b. Paperless declarations with no supporting documents (v) Launch of IDPMS c. Facility of Deferred payment of Import Duty has The Import Data Processing and Management been introduced and importers certified under System (IDPMS) has also been launched to AEO Programme (Tier-Two) and (Tier-Three) facilitate efficient data processing for payment respectively are eligible for availing the benefit of imports and effective monitoring. of this provision. This has helped in the reduction (vi) Mandatory filing of Bill of Entry within 24 of border compliance time. hours (iii) Phasing out of physical/ manual submission With the aim to reduce the dwell time. Indian of documents. Customs has made it mandatory to file a Bill of Indian Customs has done away with routine print- Entry before the end of the next day (excluding outs of several documents related to customs holidays) on which the vessel or aircraft carrying clearance including GAR7 Forms/ TR6 Challans, the goods arrives at a customs station at which TP copy, Exchange Control Copy of Bill of Entry goods are to be cleared for home consumption and Shipping Bill and Export Promotion copy of or warehousing. A late charge for delayed filing Shipping Bill, GAR 7 forms/TR 6 Challans are of bill of entry has also been prescribed. The proof of payment in bank. Bank payment and importers now have to make payment of duty in import declaration are electronically integrated. the same day in case of self-assessed bill of entry Therefore there is no need for physical copy. and in case of re-assessment or provisional assessment the importers have one day after the (iv) Exemption or relaxation for furnishing bill of entry is returned. security/surety along with Bond. (vii) Introduction of Facility of Deferred payment To further simplify the business procedures and of Import Duty reduce burden of compliance cost the norms for taking security / surety along with the Bond has Introduction of Facility of Deferred payment of been eased. Departments of Central Import Duty has been introduced and importers Government, State Government or Union certified under AEO Programme-Tier Two and Territory, PSUs or autonomous institute under the Tier Three respectively are eligible for availing aforesaid governments and Authorized Economic the benefit of this provision. This has helped in Operators are not required to furnish Bank the reduction of border compliance time. Guarantee/ cash security or surety on their 128Department of Revenue III (viii) Exemption from collection of Merchant Overtime 29/06/2017, issued to amend the Notification No. Fee (MoT) Charges at Container Freight Stations 131/2016-Cus (N.T.) dated 31/10/2016, to allow (CFS) and/or Ports. Previously if the shipment the extant Duty Drawback Scheme to continue had to go beyond normal working hours i.e. for a period of three months from 1.7.2017 to midnight 1a.m. or 2a.m.the custom facilities were 30.9.2017 in order to ensure smooth transition available on payment of charges. This was known to GST regime and certain changes were made as MoT. in AIRs of Duty Drawback based on prevailing prices of inputs and export goods, budgetary (ix) Dispensing of Mate receipt changes, representations received and for Manual issuance of mate receipt for removing anomalies. For ease of the trade and containerized cargo has been dispensed with. the field formations Circular No. 22/2017-Cus Mate receipt was a physical copy given to dated 30.06.2017, issued highlighting some of customs or brokers stating that the container has the important changes. been received by the shipping line and has been (d) Circular No. 24/2017-Customs dated 30/06/2017, put on board the ship. The requirement of this issued to allocate work relating to Duty Drawback has been abolished because the Export General for supplies made by DTA units to Special Manifest is filed electronically i.e. it provides Economic Zones where the SEZ unit issues a information of every container on board the ship. disclaimer to DTA unit and DTA unit claims the This information is now communicated Drawback. to Customs formations in whose electronically to the customs. jurisdiction the DTA unit falls. 9.6 Drawback (e) Circular No. 34/2017-Customs dated 09.08.2017, regarding continuation of pre-GST rates of 9.6.1 The major work done in Drawback during the Rebates of State Levies (RoSL) for transition period 01.01.2017 to 31.12 2017 is as under. period of three months i.e. 01.07.2017 to 9.6.1.1 Issues raised in representations and feedback 30.09.2017 for export of garments and textile received from trade relating to All Industry Rates of Duty made-up articles was issued for ease of trade Drawback that were made effective from 15.11.2016 were and field formations. redressed on priority by certain amendments to the All 9.6.1.3 Port transition period. Notification No. 88/2017- Industry Rates were made (effective from 15.01.2017 vide Customs (N.T.) dated 21.09.2017, was issued to notify Notification no. 03/2017-Customs (NT) and dated the Customs and Central Excise Duties Drawback Rules, 12.01.2017. Circular No. 02/2017-Customs dated 2017 incorporating changes in duty drawback scheme 13.01.2017 issued explaining the amendments in required in the GST regime. Further, to provide and Notification No. 131/2016-Customs (N.T.) dated maintain competiveness of export goods in the 31.10.2016 regarding AIRs of Duty Drawback. international market in the GST regime. All Industry Rates 9.6.1.2 In view of implementation of GST following (AIR) of Duty Drawback were revised w.e.f. 01.10.2017 changes were made in duty drawback- vide notification no. 89/2017-Customs (NT) dated 21.9.2017, taking into account certain average (a) Vide Notification no. 58/2017-Cus dated 29.6.2017, parameters including prevailing prices of inputs. input the work related to fixation of Brand rate of drawback output norms. share of imports in input consumption. was transferred from Central Excise formations to incidence of Customs and remnant Central Excise duties Customs formations having jurisdiction over place paid in manufacturing and processing of export goods, of export. Circular No. 23/2017-Customs dated value of export goods etc. For ease of the trade and the 30.6.2017, was also issued to guide field formations field formations, Circular No. 38/2017-Cus dated and stake holders in this regard. 22.09.2017, issued highlighting some of the important changes in the AIR of Duty Drawback Schedule. (b) In respect of re-export of imported goods. Notification No. 57/2017-Customs (N.T.) dated 9.6.1.4 Circular No. 05/2017-Customs dated 28.02.2017, ,9/06/2017, to amend Re-export of Imported issued for exempting AEO certificates holders from drawal Goods (Drawback of Customs Duties) Rules, of samples for the purpose of grant of drawback. Circular 1995 was issued to provide that drawback under No. 18/2017-Customs dated 29.05.2017 issued Section 74 shall include Integrated Tax and exempting AEO certificate holder (Tier-I) from drawal of Compensation Cess paid on imported goods samples for the purpose of grant of drawback. upon re-export under Section 74 of the Customs Act. 1962. 9.6.1.5 Circular No. 06/2017-Customs dated 28.02.2017, providing acceptance of e-BRC of DGFT towards proof (c) Notification No. 59/2017-Customs (N.T.) dated of realization of sale proceed for exports with LEO dates 129Annual Report 2017-2018 12.08.2012, onwards till 31.03.2014 under drawback issued was to do away with the monetary limits with scheme issued. respect of drawing of samples for the purpose of grant of drawback. in order to further facilitate trade and enhance 9.6.1.6 Notification No. 08/2017-Customs Dated the ease of doing business. The export shipment shall 23.03.2017, issued to include Seaport located at Hazira now be subjected to risk based criteria provided in Risk (Surat) Port in the list of specified Seaports for import Management System of CBEC. and export under export promotion schemes. 9.6.1.12 Circular No. 49/2017-Customs dated 9.6.1.7 Circular No. 10/2017-Customs dated 30.03.2017, 12.12.2017, issued to clarify that CVD leviable under providing for manner of examination of carpets for Section 9 of the CTA. 1975 is available as brand rate of composition price determination etc. for export of Carpet duty drawback and also u/s Section 74 of the CA. 1962 under duty drawback was issued. as duty drawback. 9.6.1.8 Circular No. 16/2017-Customs dated 02.05.2017, 9.6.1.13 Information relating to legislative and was issued providing for issuance of simple notice by other developments of the Division are being regularly filed formations to call EODC/proof of fulfilment of EO uploaded of the web-site of CBEC incompliance of instead of a Show Cause Notice in EPCG and Advance provisions of the Right to information Act. Authorization cases. 9.6.1.14 Efforts are being made to introduce e- 9.6.1.9 Notification no. 22/2017-Customs dated file system to the extent possible. 31.05.2017, was issued to amend Notification No. 73/ 2006-Customs dated 10.07.2006, which exempts import 9.7 Anti-Smuggling Performance against duty credit certificate issued under Target Plus Scheme for implementation of Hon’ble Supreme Court 9.7.1 The Anti-Smuggling Unit assists the Central Judgement dated 27.10.2015, in CA No. 554 of 2006 filled Board of Excise & Customs (CBEC) in the formulation of DGFT v/s Kanak Export. Circular No. 19/2017-Customs the policy and provisions of logistics for effective dated 31.05.2017, also issued for guidance of the trade implementation of anti-smuggling measures through the and the field formations. Directorate of Revenue Intelligence (DRI), Directorate of Logistics (DoL) and other Customs Field Formations. The 9.6.1.10 Notification No. 79/2017-Customs dated Anti-Smuggling Unit coordinates with other Ministries, 13.10.2017 was issued to amend various AA/EPCG National Security Council Secretariat (NSCS), Central notifications to extend exemption from Integrated duty/ Economic Intelligence Bureau (CEIB), Economic Compensation Cess and Countervailing duty as per Intelligence Council (EIC) and National Committee on import of goods under the AA/EPCG Scheme for period Strengthening Maritime and Coastal Security (NCSMCS) upto 31.3.2018. etc. on issues relating to economic, marine, coastal and national security. 9.6.1.11Circular No. 47/2017-Customs dated 27.11.2017, 9.7.2 Anti-Smuggling performance (up to November. 2017) F.Y.2017-18 (up to November. 2017) Seizures No. of cases Value effected (Rs. In Crores) Outright 23206 1711.58 Smuggling Cases Commercial 993 1686.29 Fraud Cases No. of cases Duty involved (Rs. In Crores) Duty Evasion 2024 1056.12 Cases No. of cases Duty (in Crores) Amount 1130 624.67 Recovered 130Department of Revenue III 9.7.3 Measures for strengthening (i) X-Ray Baggage Inspection Systems (XBIS) enforcement capabilities:- have been installed at Airports, Inland Container Depots (ICD), Land Customs Stations As border control agencies, field formations of (LCS) and Foreign Post Offices (FPO). CBEC keep constant vigil on the illicit imports through (ii) 90 Videoscopes have been procured for ports, airports, Land Customs Stations (LCS), Inland various locations. Container Depots (ICDs), Foreign Post Office (FPOs) and Courier Terminals. Each Customs Commissionerate is 9.7.5 Projects are under implementation. having intelligence and investigation units for checking smuggling and other commercial frauds. Besides the (i) Drive-through Container Scanners (Road) at an Directorate General of Revenue Intelligence having pan estimated cost of Rs125 crores at JNPT, Mundra India presence are the specialized agencies under CBEC and Cochin ports. involved in anti-smuggling and anti-evasion activities. (ii) Mail Inspection Systems at an estimated cost of CBEC has put in place non-intrusive methods of Rs. 8 Crore. to be installed at 12 Foreign Post examination and checking by installing X-Ray Baggage Offices. Inspection Systems, Container Scanners and Pallet (iii) Radionuclide Identification Devices (RID) and Scanners to check smuggling by concealment besides Personal Radiation Detectors (PRD) to protect deploying marine vessels for patrolling. Frontline officers from hazardous radioactive Indian Customs has participated in various global substances. multilateral enforcement operations from time to time (iv) Laboratory equipments for upgradation of seven organized by World Customs Organization (WCO is an CRCL laboratories and 2 laboratories of Govt. intergovernmental organization comprising of customs Opium and Alkaloid Works at an estimated administration of 180 countries comprising 98% of world expenditure of Rs. 29.88 crores. trade. (v) 82 new X-Ray Baggage Inspection Systems had 9.7.4 Anti-Smuggling Equipments procured been installed to replace the old during 2017-18. machines and to take care of additional requirements. 9.8 ANTI EVAISION PERFORMANCE Central Excise: (Rs in Crores) Year No. of Cases Amount Involved Recovery during the period 2014-15 2123 4434.80 546.15 2015-16 2366 5296.83 803.77 2016-17 2127 5772.96 794.67 2017-18 (upto Dec, 2017) 614 7241.75 286.28 SERVICE TAX (Rs in Crores) Items of work F.Y 2015-16 F.Y 2016-17 F.Y 2017-18 (upto Dec) Amount Amount No. of No. of Amount of Tax No. of cases of Tax of Tax cases cases Evasion Evasion Evasion Detection 7521 18969.23 8085 17845.66 2938 9659.61 Realisation 9072 4657.95 9616 5313.29 2815 1566.54 GST July 2017 to November 2017 Detection Recovery No. of Cases Amount (Rs In Cr.) No. of Cases Amount (Rs In Crores) 16 5.70 10 3.08 131Annual Report 2017-2018 9.9. Performance Highlights and 9.9.2 Monitoring of Key Areas of Performance: Acheivement of Directorate General of To monitor the performance of the Zones in key areas, Performance Management (DGPM) DGPM has been communicating with the Zonal Chief Commissioners exhorting them to supervise the areas 9.9.1 Analysis of Part V of Monthly where their Zones are lagging in performance viz. Central Performance Report (MPR) : Excise/ Customs/ Service Tax, As per the Board’s instructions issued under F. 9.9.3 Inspection of field formations: No. 296/236/2014-CX,9 (Pt-II) dated 17.09.2015 and The DGPM is tasked with inspection of field Member’s DOF No, 296/236/2014-CX,9 dated 24.2.2014, Commissionerate to ensure that the field offices are the Directorate General of Performance Management working as per Board’s policy guidelines, This is ensured (DGPM) is the Functional Owner of the reports prescribed through a periodic review of Commissionerate records, under Part V of the MIS Monthly Performance Report making an assessment of how the formation is performing (MPR) of Customs, Central Excise & Service Tax, The and issuing inspection note highlighting the specific monthly reports in Part V in the three streams of Central shortcomings with observed trends, if any, A copy of the Excise, Customs & Service Tax are downloaded from inspection report is also sent to the zonal Chief MIS web-based utility, compiled and analyzed, Commissioner, The field Commissionerate is required to send its compliance to ensure that the shortcomings are The Monthly Performance Report for Central removed in a time bound manner. Excise covers Key Areas viz, Adjudication, Call Book, Provisional Assessments, Refund-Rebate & Bank Board has revised the norms of frequency for Guarantee, Monthly Performance Report for Customs inspection of field formation Central Excise, Customs and covers all the Key Areas in Customs viz, Adjudication, Call Service Tax vide BMB No, 32/ 2010 dated 12,5,10, As Book, Provisional Assessments, Refund Bank Guarantee, per the new norms, DGPM is to inspect the monitoring of Bonds, Drawback, Monitoring of fulfilment of Commissionerate headquarter once in three years, Export Obligation-EPCG & AA/DFIA, Monthly Performance Additional inspections would be based on careful profiling Report for Service Tax covers all the Key Areas in Service of the risk parameters, Each Commissionerate shall be Tax viz, Adjudication Cases, Major Adjudication, Call Book, inspected each year by either DGPM or jurisdictional Chief Commissioners, For this DGPM shall form annual Provisional Assessments & Refunds, The reports are inspection plan allocating Commissionerates for compiled on the basis of the data of all the Zones and DG- inspection to DGCCI or Chief Commissioner, Accordingly CEI/DRI and every month a note containing our analysis an annual plan is prepared for the year, and comments on the performance of various Zones on the above mentioned Key Areas is sent to the Member (i) CGST: (Central Excise)/(Customs)/(Service Tax) & Commissioner As per approved Annual Action Plan for the year 2017- (Coordination), A copy is also marked to the Chairman, The 18, 51 CGST Commissionerates were scheduled for analysis indicates top 5 Zones showing highest pendency inspection by DGPM (HQ and its Regional Units), The in each of the Key Area, remaining 56 CGST formations were allocated to jurisdictional Chief Commissioners, Table showing Numbers of Inspection allotted and conducted: Formation Allotted(2017-18) Conducted (Upto Dec 2017) CGST HQ 9 7 NRU 9 7 SRU 9 6 ERU 9 3 CRU 6 4 WRU 9 5 Jurisdictional C,C, 56 18* Total CGST 107 50 *18 CGST Commissionerates have been inspected as per the information received from jurisdictional Chief Commissioners, 132Department of Revenue III (i) Customs Section: As per approved Annual Customs Action Plan for the year 2017-18, 23 Customs Commissionerates have been scheduled for inspection by Headquarters and its Regional Units, The remaining 39 Customs formations have been allocated to jurisdictional Chief Commissioners for inspection, Table showing Numbers of Inspection allotted and conducted: Formation Allotted (2017-18) Conducted (Upto December 2017) Customs Customs, HQ 10 07 NRU 02 01 ERU 03 03 CRU 02 02 SRU 02 01 WRU 04 04 Jurisdictional C,C 38 07* Total 61 25 *07 Customs Commissionerates have been scheduled to be completed as per the information received from jurisdictional Chief Commissioners. 9.9.4 Implementation of official language made, policy:  Periodic reports received from DGPM is required to function as the nodal agency Commissionerates and Directorates were of Central Board of Excise and Customs for implementing reviewed, consolidated and forwarded to Official various works relating to Hindi (Rajbhasha) in the field Language section of Department of Revenue, formations and to coordinate with Grih Mantralya  Quarterly Progress Report of DGPM was (Rajbhasha vibhag), These directions have been prepared and forwarded to Ministry, approved by the Chairman (CBEC),  Orders & Instructions received from Official In the financial Year 2017-18 (from 01.04.2017 to 31.12.2017) the following major work for promotion of Language section of Department of Revenue the Official Language was undertaken: - were circulated amongst field formations,  69 inspections of different field formations with  Eight Meetings of Hon’ble Parliamentary respect to implementation of Official Language Committee on Official Language were Policy during the year are proposed to be coordinated and attended, Full help was given in conducted, preparations of questionnaire,  Translation of various materials in Hindi along Implementation Plan for the Year 2017-18, with new website of DGPM ,  Official Language inspections of offices under  Hindi week was celebrated and various CBEC are proposed to be conducted as per the Annual Programme 2017-18 of Department of competitions were held, Official Language, Ministry of Home Affairs,  Workshops on Official Language Policy and  Participation in forthcoming meetings of Hon’ble Unicode were conducted in DGPM, Parliamentary Committee on Official Language,  Quarterly Official Language Implementation  Official Language implementation Committee Committee meetings were organized in DGPM, meetings proposed to be organized as per the  Incentive scheme regarding Official Language Annual Programme 2017-18 of Department of was implemented, Official Language,  Ministry’s requisition with regard to Official  Periodical review of quarterly Progress report on Language was fulfilled, Official Language received from Commissionerates and Directorates proposed to  Correspondences with diverse offices were be done, 133Annual Report 2017-2018  Apart from these, all type of works related to formations into 21 Zones, 107 Nodal agency of CBIC for Official Language Commissionerates, 48 Audits and 49 Appeal proposed to be performed, Commissionerates, the reorganization also created two Directorates viz, Directorate General 9.9.5 Process and Sanction refund to of Analytics and Risk Management and Government of Bhutan Directorate of International Customs while simultaneously strengthening Directorate Government of India has been annually paying General of GST Intelligence; National Academy refund of excise duties collected on goods exported from of Customs, Indirect Tax and Narcotics; India to Bhutan, On reference from MEA, exercise to work Directorate General of Taxpayer Service and out approximate refund amount is undertaken by DGPM, Directorate general of Systems and Data The documents regarding claim of refund from Bhutan Management. Induction of online filing of IPR are sent from MEA to the Board which in turn are sent to w.e.f. 01.01.2017 and Smart Performance DGPM, Appraisal Report Recording Online Window ‘SPARROW’ for online Writing of APAR for the Year (Jan - Dec) Amount of refund (in Rs.) Reporting year 10.04.2017 w.e.f. 01.04.2017. Amount claimed for the year 2015 Rs, 300,24,84,964  Judgement dated 10.04.2017 of Hon’ble Amount Finalized Rs, 291,69,23,214 Allahabad High Court paved the way for Regularization of Assistant Commissioner 1980- 9.9.6 Conduct of examination for issuance 96 batch which could be completed consequent of license to Customs Brokers (CB): to Allahabad High Court decision. Final Seniority List in grade of Assistant Commissioner (JTS) Customs Brokers examination at all India level up to 1996-97 issued on 27.09.2017. is being conducted by the DGPM in terms of Customs Brokers Licensing Regulations (CBLC), 2013 issued vide  DPCs have been held for promotion of officers notification no, 65/2013-Customs (N.T) dated 21.06.2013. as detailed below; The examination consists of two parts, written examination & oral examination, The written examination  DPC for Apex grade held, 3 officers promoted, is conducted on all India level, The successful candidates are called for oral examination, being held at 5 different  DPC for HAG+ grade held, 31 officers promoted, centres, The mark sheets are prepared at DGPM Hqrs, Delhi for both written and oral examination are sent to  DPC for HAG grade held, 25 officers promoted, the jurisdictional Commissionerates for declaration of  DPC for regular promotion to SAG held, 31 result at their end. officers assessed by DPC, In 2017, written examination under Customs  DPC for SAG held, 113 officers promoted, Brokers Licensing Regulation, 2013 was conducted on 20.01.2017 throughout India wherein 1180 candidates  2 DPC for JAG held, 179 officers promoted, appeared. The oral examination was conducted from 27th to 30th , June, 2017 wherein 447 candidates appeared.  1 DPC for STS grade held, 88 officers promoted, For CBLR, 2013 written examination is to be  JS Empanelment: Proposal of 1988, 1989 and conducted on 19.01.2018 advertisement was published 1990 batches have been submitted to in different Newspapers at all India level in the month of DOP&T. May, 2017. 9.10.2Major Achievements of HRM - II Wing 9.10 Directorate General (Human of DG (HRD) for the Year 2017 Resources Development) (a) Placement related Work: 9.10.1Major Achievements of HRM - I Wing of DGHRD for the Year 2017  Prepared data related to Transfer / Placement of IRS (C&CE) officers as and when called for by  Bringing into place the organizational structure Board, prior to the actual implementation of GST w.e.f. 01.07.2017 for smooth transition in the GST  1750 representations received from IRS (C&CE) regime gave CBEC the head start in GST officers for Posting / Transfer from 01.01.2017 implementation. This was done by the re- to 31.12.2017 were scrutinized for submission organising Central Excise and Service Tax to the Board, 134Department of Revenue III  Scrutinized and forwarded the representations representations received for correction in their received from field formations for deployment of HOP and in Civil List and publication of Civil List- Group A officers in Zones / Dtes to Board. Inputs 20 17 thereof, preparation of Compliance report / data to CBEC and other formations on various in respect of Board’s transfer orders of Group ‘A’ HR related issues of IRS (C&CE) officers, officers, compilation of officers’ list for whenever called for by the CBEC were provided Expenditure Observers, maintenance of promptly and meticulously, disposition List for every month of all Group-’ A’ officers, preparation of vacancy/Incumbency  Preparation of vacancy charts in various grades Position for all Group-’ A’ officers. for Placement of IRS (C&CE) officers, (c) 56 J related Work:  Based on above data, Board issued 76 Posting /  42 Group’ A’ officers were screened and reviewed Transfers Orders of 2111 IRS (C&CE) officers with respect to the provisions of 56 J, from 01.01.2017 to 31.12.2017. Apart from this, Board also issued 16 Orders (involving 27  Similarly, the figure stands to 835 Group ‘B’ officers) for posting of officers on deputation basis Officers and 403 Group ‘C’ Officers, to other organizations.  Bhavishya Software for Pensioners related Work:  Assisted Board in issuing order relating to Till now, total 1117 DDOs have been got nomination of chain / Link Officers in CC/DG registered under “Bhavishya” portal. Further, grade, letters to all the CCOs and the concerned ACs/  Work related to preparation of DUE LIST of DCs, in charge of “not registered” DDOs were issued, after finding their exact address/ officers who will be due for transfer during AGT- formation to which they belonged, 2018 as per extant Transfer Policy, is in progress which consists of manually checking of HOP of  Creation of NIC mail id of “Non registered” DDOs more than 4000 IRS (C&CE) officers, through Nodal Officer of DGHRD, who were  Compiled data in respect of pendency of Appeals finding difficulty in registering themselves at NIC mail, with Commissioner (Appeals) and Pending Adjudication cases of Commissioner’s  Sending mails to Bhavishya Software Team to competency. delete redundant/ “not in use” DDOs codes, Post (b) Data Bank related Work: GST w.e.f 01.07.2017, after the new ODO Codes were allocated to few new formations, all have  Updation & maintenance of HOPs of all the Group been updated in BHAVISHYA software, ‘A’ officers under CBEC, apart from the creation  Issuance of letters to all the CCOs regarding of new HOPs of newly appointed & promoted Group ‘A’ officers, issuing of PPOs to the retired employees on regular basis  Compilation of verified data of all those officers  Regular correspondence with the PAO office to whose verified data was not available and scrutiny and verification of approx. 1400 number provide list of redundant/ non-operative DDO of verified data received from field formations, codes.  Updation of lntellimate software and HOPs of all (d) Swachhta Action Plan related Work: Group’ A’ IRS (C&CE) officers as per various  Implementation of SAP is being closely monitored formation created post-GST cadre restructuring, by the office of the DGHRD and the photographs  Assistance to the committee formed for of the implementation of SAP have been uploaded on the portal examining the officers on unauthorized absence, www.swachhtaaactionpaln.com. Further, the  Compilation of Draft Civil List-2018 as on reports are being sought quarterly from all the 01.01.2018. Zones/Directorates under CBEC. They have sent Projects related to Swachhta Action Plan. Further,  Assistance to the committee formed for “Swachhata Pakhwada” from 16th January 2018 examining the representation of Dr. Lalaiah to 31st January 2018 was scheduled and action Dhandem for change in DOB. plan was circulated to all the field formations under CBEC, which was to be monitored by  Other major highlights include disposal of 135Annual Report 2017-2018 DGHRD, by way of seeking photographs and Havaldars (Report submitted in July, 2017) were reports, the compiled version of which, shall be actively taken up. monitored by DGHRD, by way of seeking 9.10.3Major Achievements of EMC Wing of photographs and reports, the compile version of which shall be sent to the Board, DGHRD for the Year 2017  Further, Swachhta Team of DGHRD has o The Expenditure Management Cell (EMC), inspected few Zones with respect to Swachhta DGHRD, is mandated to act as the Nodal and reports were submitted to concerned CCs. Authority in respect of all Budget matters for the Grant No. 35 - Indirect Taxes, (e) Allocation related Work: o Consequent to proper budget planning by EMC  Allocation of Stenographer Grade-II (446) in Wing of DGHRD, substantial CBEC through SSC Examination. Verification of additional Supplementary Demand (in the 1st and Options given by the candidates (Stenographer 2nd phases) of Rs. 1760.49 Grade-II (No. of Options 24) and checking the crore was secured to fulfil the urgent fund allocation of the candidates to the field formations requirement for setting up/hiring new offices selected through Examination for appointment created under GST, for payment of GSTN user to the grade of Stenographer-II, Option Sheets charges and development of software for GST, of all the candidates (446) selected through etc. Examination for CBEC were scanned and o Timely securing of funds in FY 2017-18 could converted in PDF form. enable purchase of 210 ready built  Collection of information regarding DR Quota flats at a cost of Rs. 207.00 crore at Khargar from Vacancies in the grade of Inspector (CE/PO/ CIDCO, Examiner)TA/Stenographer Grade-II/JHT/ o For the first time, an “EMC Manual” on budgeting Havaldar/MTS/Canteen Staff / Motor Driver/ and expenditure procedures Executive Assistant for the years 2016 and 2017. incorporating the updated GFRs2017, and f) Policy related work: relevant instructions by Deptt. of Expenditure has been drafted in DGHRD, It is  The office of DGHRD actively assisted the Board likely to be published within FY in various HR Policy related matters, 2017-18,  Comments were sent time to time to the Board o Since the previous 3 years, the trend of on all the 4 TARC Reports, apart from the expenditure is almost 100due to processing and replying of various VIP effective planning and close monitoring of references, expenditure trends. In 2016-17, it was 99.52% (out of Rs.5830.50 crore, the expenditure  Comments on various Representations of was Rs. 5802.43 crore) and the trend in FY 2017- different grades’ Staff Associations were also sent 18 vis-a-vis corresponding months of previous to the Board from time to time, FY is consistently ahead, This is exceptional as more  From 01.08.2017, a new system of Online often than not, the funds were uploading of Reports by field formations on surrendered hitherto and had been inviting DGHRD website has been started thus doing adverse audit objections away of sending Reports through Speed-post resulting in saving paper and timely report o As a Digital India initiative, EMC wing promoted collection. User ids and Passwords have been the usage of procurements circulated to field formations for login into the using e-procurement and Government e- system for the same. Marketplace (GeM). To generate awareness, trainings at several sites all over the  Preparation of various Reports of the Working country (Hyderabad, Pune, Delhi Customs, Groups as formed by the Board from time to time Amritsar, Chandigarh, Kolkata, Goa and Kochi) on various policy issues: have been conducted in FY 2017-18. A Standing Committee has been constituted to closely  Matters such as Re-engineering of the monitor the progress of procurements using functioning of all the Customs Preventive GeM. formations (Report submitted in March, 2017) and Various HR and promotion related issues of o For the first time, in 2017, norms for deploying 136Department of Revenue III 2198 operational vehicles in the prescribed by EMC wing. This will enable correct new reorganized GST formations have been fund provisioning in future. 9.10.4 Major Achievements of Infrastructure Division, DGHRD for the Year 2017 (i) Construction proposals sanctioned during F.Y. 2017-18 (as on date) S. Proposal in brief Amount (in Rs.) Date of A/A & No. E/S 1. Construction of Office-cum-Residential Building and 67,23,56,189/- 04.08.2017 Boundary Wall on 6 acres of land purchased from Jalandhar Improvement Trust at Surya Enclave, Jalandhar-Amritsar By Pass, G.T, Road, Jalandhar. 2. Construction of Office building for Central Excise 40,61,74,023/- 30.08.2017 Commissionerate and Customs Division, Bhavnagar 3. Construction of residential quarters, Guest 11,85,37,303/- 22.09.2017 House/Multipurpose Hall and Boundary wall at Land Customs Station Raxual. 4. Construction of multi-storied (G+ 18) new residential 348,77 ,24,000/- 13.10.2017 quarters in the campus of Chennai Revenue Quarters, Anna Nagar, Chennai after demolition of old quarters. 5. Construction of office building at Jamnagar. 43,66,56,000/- 13.12.2017 (ii) Land proposals sanctioned during F.Y. 2017-18(as on date) S. Proposal in brief Amount Date of A/A No. Sanctioned &E/S (In Rupees) 1. Acquisition of land at Rajnandgaon on outright 25/- 17.04.2017 purchase basis from Chhattisgarh Government for construction of residential &office building for C. Excise &CGST Range, Rajnandgaon - grant of post facto ala &e/s. 2 Transfer of Salt Department land of area 2023.43 Sq 14,01,000/- 18.05.2017 Mtr to the Central GST Department for construction of Commissionerate and Staff Quarters at Kakinada. 3 Payment of Total Station Survey charges to be 77,806/- 05.07.2017 conducted by CPWD for plot of land at Mulund Survey No. 389 Pt., CTS No.1069 Pt. belonging to CGST &Central Excise, Navi Mumbai Commissionerate 4 Administrative approval & Expenditure sanction for 34,74,119/- 30.08.2017 payment of Service Charges to M/sCIDCO in respect of plot no. 16, Sector- 7, Kharghar, Raigad, Maharashtra allotted to the Commissioner of Customs & Central Excise, Raigad 5 Purchase of land admeasuring 3.50 Acres from 14,16,50,900/- 05.09.2017 Government of Kerala for construction of RTI, Munnar (Kochi) 6 Administrative approval and Expenditure Sanction for 12,70,000/- 15.09.2017 payment of ground rent in respect of plot of land located at Retail Business Centre, Nangal Raya, New Delhi 7 Acquisition of Land for Jaigaon (LCS) (Passakha on 1,69,67,178/- 21.09.2017 Bhutan Side) 137Annual Report 2017-2018 ((iiii)) Ready Built Accommodation proposals during F.Y. 2017-18 (as on date) s. File No. Sanction order Zone Subject Amount Revalidation No. No. / Commiss (In ionerate Rupees) 1 917/04/RBF/CID RBFI03/2016- Customs Purchase of 210 164.02 15.05.2017 CO- 17-SANCTION Mumbai (150 MIG + 60 Crore Khargar/HRD- Dated HIG) Ready Built ID/2016 23.12.20 I 6 flats from CTDCO at Khargar Mumbai. 2 917 /03/RBF/HR RBF 102/2016- Central Purchase of 87,28,6 09.05.2017 D-ID/2013/Pt. 17-SANCTION Excise, ready built office 2,022/- Dated Guwahati accommodation 20.12.2016 (1,03,951 Sq. Ft.) from HOUSEFED, Assam at Fency Bazar, Kedar road, Guwahati. 9.10.5 Major Achievements of Welfare  Guest Houses: 3 requests / proposals from the field Division, 1& W Wing, DGHRD for the Year formations for setting up / refurbishing of the Guest Houses have been approved 2017 by the Governing Body of the Customs &Central  Cash Awards:377 Cash Awards to the Excise Welfare Fund in the year 2017-18 (till meritorious children of Departmental officials on Dec.2017) involving an amount of Rs. 28.80 Lakhs. the basis of their performance in the 10th / 12th  Canteens/ Kitchenettes/ Tiffin Rooms: 4 Board Examinations have been approved by the requests/proposals from the field formations for Governing Body of the Customs &Central Excise setting up / refurbishing of the Canteens / Welfare Fund in the year 2017-18 (till Dec.2017) Kitchenettes / Tiffin Rooms have been approved involving an amount of Rs.20.99 Lakhs. by the Governing Body of the Customs &Central  Scholarships:121 Scholarships were Excise Welfare Fund in the year 2017-18 (till Dec. 2017) involving an amount of Rs. 8.00 Lakhs. sanctioned to the children of Departmental officials for pursuing the undergraduate level  Financial assistance for the Subsidized professional courses by the Governing Body of transport facility for the Staff posted at JNCH, the Customs &Central Excise Welfare Fund Nhava Sheva, Raigarh: As reimbursement during the financial year 2017-18 (till Dec.2017) under the Scheme for partial funding of the involving an amount of Rs, 24.07 Lakhs. subsidized transport facility for the officers / staff  Medical:65 requests for medical expenses of the posted at JNCH, Nhava Sheva, Raigarh, an amount of Rs.24.01 Lakh was approved by the Departmental officials not reimbursed under CGHS / CS (MA) Rules have been sanctioned Governing Body of the Customs &Central Excise Welfare Fund in the year 2017-18 (till Dec,2017). by the Governing Body of the Customs &Central Excise Welfare Fund in the year 2017-18 (till Dec.  Financial assistance to sports persons: 2017) involving an amount of Rs. 30.75 Lakhs. Amounts of Rs.80,000/- and Rs. 1.75 Lakhs were  Ex-gratia: 72 requests of the widows/ dependents have been sanctioned by the Governing Body of of the deceased/ permanently disabled the Customs &Central Excise Welfare Fund to Shri Joseph Kuok, Asstt. Commissioner and Shri Departmental officials have been approved by the Governing Body of the Customs &Central Excise M. Yogendra, Suptt, for participation international sports competitions/ events in the year 2017 -18 Welfare Fund in the year 2017-18 (till Dec. 2017) involving an amount of Rs. 139.5 Lakhs. (till Dec. 2017), 138Department of Revenue III  Financial Assistance for organization of have been placed on GeM for various goods for Walkathon in Delhi:An amount of Rs. 75,000/- office items like vehicles, stationery, photocopy was sanctioned by the Governing Body of the paper, pen, pencil, punch, tag, register, file board, Customs &Central Excise Welfare Fund for note sheet, tape, highlighter, fax roll, toner, organization of Walkathon on 4.11.2017 during cartridge, computer, printers, UPS, pen drive, the Vigilance Awareness Week by Delhi Customs water purifier, drinking water cooler and antivirus Zone, software, 9.10.6New Initiatives /Schemes:  Further, EMC, DGHRD has been imparting on- site training for familiarization  A proposal for implementation of PFMS for C&CE with GeM and for hands-on training and on-the- Welfare Fund and delegation of powers in favour spot registration of participating trainee of the Zonal Chief Commissioners /Directors formations, General for grant of financial assistance under  Till date, fifteen (15) trainings have been six identified Welfare Schemes is under process in consultation with the Pr.CCA, CBEC, conducted all over India at NACEN Faridabad, Mumbai, Shillong, Vadodara,  A revised scheme for grant of Scholarships to Chennai, Bhubaneswar, Jaipur, the children of Departmental officials pursuing Hyderabad, Pune, Delhi, Amritsar, Chandigarh, professional undergraduate level degree courses Kolkata, Goa and Kochi, for the academic years 2014- 15, 2015-16 and  502 officers from 169 CBEC formations have 2016-17 and onwards is under process and is expected to be formulated with the approval of been imparted the hands on training for enabling the Governing Body of the Welfare Fund during procurement of goods and services in the the current financial year, formations of CBEC through GeM portal,  A revised scheme for grant of Cash Awards to  As on December, 2017, 89 CBEC formations the meritorious children of Departmental officials have been registered on the GeM portal for on the basis of their performance in the 10th/ l2th procurement of goods/services available on the Board Examinations for the academic years portal, 2015-16, 2016-17 and 2017-18 and onwards is 9.11.2 E-Procurement under process and is expected to be formulated with the approval of the Governing Body of the  In pursuance to the Department of Expenditure’s Welfare Fund during the current financial year, O.M. No. 10/3/2012-PPC dated 9.11 E-Governance activities 30.03.2012, vide which instructions were issued for the implementation of As a part of good governance through the use of comprehensive end-to-end e-Procurement in information technology, the following initiatives have been taken: respect of all procurements with estimated value of Rs. 2.00 Lakh or more, for 9.11.1 GeM (Government e-Marketplace) the Ministries / Departments of Central Government, their attached and  Government e-Marketplace (GeM), the subordinate offices, Central Public Sector integrated portal, was launched by DGS&D Enterprises (CPSEs) autonomous / statutory (under Department of Commerce) on 9th August, bodies, DGHRD entered into a contract with NIC 2016.It is an end-to-end procurement system for to use the e-procurement solution developed by procurement of goods and services by NIC accessible through Central Public Government buyers. GeM has been included in Procurement Portal (CPP Portal). GFR 2017 under Rule 149 and has become mandatory,  DGHRD, in coordination with NIC, has organized trainings on e-Procurement in  The introductory training to Government e- a phased manner to the officers of CBEC in Marketplace (GeM) was organised in August and pursuance of the instructions of September, 2016 and was attended by eleven Department of Expenditure’s O.M. No. 10/3/ (11) officers/staff of DGHRD, 2012-PPC dated 30.03.2012 for  A Nodal Officer Account has been created on implementation of comprehensive end-to-end e- Procurement. GeM Portal for procurement of goods and services, So far, in CBEC, 668 orders  Consequent to mapping of the organizational 139Annual Report 2017-2018 structure of CBEC on the CPP Trade (SWIFT) acts as the single point interface between Portal by NIC, Login IDs have been issued to importers on the one hand and Customs and six major 254 Sub-Nodal Officers from Participating Government Agencies (PGAs) on the other, different zones , SWIFT enables importers to file a common electronic ‘Integrated Declaration’ which compiles the information  NIC Resource person deputed in EMC, DGHRD requirements of Customs, FSSAI, Plant has enabled support in floating Quarantine,Animal Quarantine, Drug Controller, Wild Life of 120 numbers of Tenders on the CPP Portal, Control Bureau and Textile Committee and replaces nine 9.11.3 Directorate General (SYSTEMS) separate forms earlier required by these agencies, The Directorate General of Systems and Data In the GST regime, the front-end interface for Management performs the critical role of IT enabling all business processes such as registration, Return, the business processes that fall within the domain of Payments and Refunds is GSTN portal, Appropriate C,B,E,C, as well as work functions of the field formations, CBEC-GST Application is under development to manage From conceptualision, implementation, running, the back-end functionalities like receipt, storage, maintenance and upgradation of various IT applications processing of API data, presentation of data to the to procurement and maintenance of the IT hardware departmental user for decision taking, analysis and underpinning the applications, the Directorate performs reporting, The Registration Module to deal with new a vast gamut of roles to build, sustain and strengthen the applications and migrated registrants, amendment and invisible IT backbone of C,B,E,C’s domain functions, It cancellation processes is in place has in a large way enabled the transformation of CBEC and Returns, Payments, Refund modules are under into a tax administration which development, The Application also takes care of Tax delivers Citizen-centric services through “single window” Compliance Monitoring and Verification interface on an “anytime, anywhere” basis, ushered in System of Audit, Investigation, Dispute Resolution and transparency and accountability, reduced transaction Recovery by way of building appropriate front-end and costs, raised the ease of doing business etc, back-end modules independently, A GST mobile application has been launched which enables taxpayers 9.11.4 Customs to readily access a host of GST information, provide The Indian Customs EDI System (ICES) is an feedback and contact CBECs 24x7 helpdesk a CBEC EDI based workflow application which enables electronic Mitra” through a toll-free number or email, at the touch of (1) filing and processing of import and export declarations/ a button, manifests (2) system appraisal of select goods (3) 9.11.5 Central Excise messaging with banks for collection of duties and disbursal of duty drawback and (4) messaging with Automation of Central Excise &Service Tax custodians and other agencies concerned with cargo (ACES) ( now restricted to the goods which continue clearance, Operational at 215 locations, ICES cover more under Central Excise levy) is a comprehensive workflow than 98 of the country’s international trade consignment based application for ell processes related to Central wise and 90 value wise, With more than 200 crore hits Excise duties, such as registration, filing of returns and annually, the e-commerce web portal, Indian Customs refunds, payment of duty, dispute resolution etc, and also EDI Gateway (ICEGATE), is the single point of interaction enables online PAN and IEC verification, between ICES and partners in the Customs community 9.11.6 Enterprise Data Warehouse and provides such services as registration, e-filing, e- payment,document status and helpdesk as well as data C,B,E,C is one of the first government exchange between Customs and various regulatory and departments to have implemented an Enterprise Data licensing authorities, Facilitation of compliant trade (with Warehouse, a central repository of clean and consistent, concomitant reduction in transaction costs and cargo near real time data pertaining to the taxes/duties collected dwell time) and targeting of non-compliant or risky by CBEC, It employs best-in-class Business Intelligence transactions is achieved through the Risk Management tools for online analytical processing and data mining, System, The Single Window Interface for Facilitating and is today the primary source of data and reports 140Department of Revenue III required by C,B,E,C, other ministries and external of 2 months, taking the total number of Customs EDI agencies, sites to 215, This has ensured seamless flow of credit and refund of IGST for exports, 9.11.7 Advance Passenger Information System (APIS) A sound IT system is the backbone of an efficient GST and DG Systems, CBEC is making available On account of an increase in the number of required IT utilities to taxpayers to enhance the ease of passengers travelling on international flights, the doing business as well as achieve revenue collection challenges before the Air Customs to prevent smuggling targets; IGST averaging Rs,20,000 crore and of commodities such as gold, fake Indian currency notes, Compensation Cess of average Rs, 700 crore is being narcotic drugs &psychotropic substances etc, have collected each month on imports, increased in recent times, ‘Advance Passenger Information System’ (APIS) is an application that assists Another significant measure that DG, Systems, CBEC in profiling of international passengers, so that clearance has taken during the year is the operationalisation of an of bona-fide passengers is facilitated and suspects can application (Express Cargo Clearance System) that be identified for suitable action, The application has been enables faster clearance, better compliance, enhanced implemented at all major international airports in the data security and paperless processing of express cargo, country and has proved to be of immense help in detecting cases of smuggling, 9.11.9 Central Excise 9.11.8 Major achievements in 2017 a) With the implementation of OST, the new Central Excise Rules, 2017 and CENV AT Credit Rules In anticipation of the ushering in of the GST 2017 have been notified vide notification no, 19/ regime, DG Systems, CBEC significantly augmented and 2017-CX dated 30,06,2017 and 20/2017-CX upgraded the IT infrastructure (hardware, networks, dated 30,06,2017, connectivity etc,) at the central and local levels, and is implementing a new business application (CBEC-GST) b) After phasing out of excise exemption, w,e,f, that caters to the functionalities of receipt, storage and 01,07,17 for the units located in the processing of data to do with registration of taxpayers in Himalayan states, J&K and north eastern states, the GST regime, and subsequent activities such as filing new scheme of budgetary support for these of returns, payment of taxes etc, eligible units was drafted and forwarded to Deptt, ofIndustrial Policy & Promotion (DIPP) for issuing Post roll out of GST, the Central Tax authority notification, The scheme was notified on 5,10,17, viz, CBEC is facilitating taxpayers 24x7 in their transition to GST by through Help-Desks, mobile apps as well as Two circulars 1060/9/2017- CX and 1061110/ twitter, It is working closely with State GST administrations 2017-CX dated 27,11,17 and 30,11,17 in allocation of taxpayers amongst the two respectively were issued for implementation of administrations, This exercise is covering more than 65 scheme of budgetary support by the field lakhs existing taxpayers either of Central Excise, Service formation of CBEC, Tax or State VAT who have migrated to the GST regime 9.12 Litigation Managements and around 32 Lakhs persons who have taken new registration, To promote ‘Digital India’, different modes (i) Proposals received from field formations for filing of digital payments allow the taxpayer anywhere tax Special leave Petitions (SLPs) in Supreme Court payment facility and online invoices allow seamless against High Court orders in central indirect transfer of input credits between suppliers across India, taxation matters are examined critically at the higher level in the Board and opinion of the Ld, DG Systems, CBEC is especially geared to Law officer also taken through Ministry of Law & facilitate exporters by providing automated clearances Justice so that the SLPs are filed only in of export goods and timely grant of refunds, Thus, after deserving cases, introduction of GST, more than 50 Customs ports/airports, ICDs etc, have been brought online within a short period (ii) Department in consultation with Ministry of Law 141Annual Report 2017-2018 and Justice filed Transfer Customs Act, Central Excise act and Finance Act Petitions in Supreme Court, where petitions are and related work pending in various High Courts involving  Highlights of performance and achievement of identical issue so that Supreme Court is able to judicial cell include monitoring of Withdrawal of adjudicate the issue timely and appeals by field formations with regards to which conclusively, it is informed that as on 15,12,2017, the (iii) The Department has issued a number of Department was able to withdraw 6005 appeals instructions to guide and streamline the out of 6213 total appeals filed for withdrawal from CESTAT and High Court on the ground of low litigation in respect of GST related petitions in High Courts, monetary limits and identical cases decided by 9.12.1Engagement of Counsels: the Supreme Court as part of National Litigation Policy of reduction in litigation, Thus the success Legal Cell engages/appoints Senior Standing rate of 97% has been achieved in withdrawal of Counsels and Junior Standing departmental appeals as on 15/12/17, Counsels for conducting CBEC matters before various High Courts etc, Accordingly, a panel of 120 Sr/Jr,  The Department is also in advanced stages at Standing Counsels has been constituted on 5th October, the process of increasing monetary limits for filing 2017, Department also appoints retired officers of appeals in CESTAT/HC and Supreme Court (IRS;C&CE) as Special Counsels to conduct CBEC cases and introducing a monetary limit at the level of before CESTAT etc, Special Public Prosecutors (SPPs) Commissioner (Appeals) as part of National are also appointed by department for handling criminal Litigation Policy and the file has been sent to the matters at various Lower/Session/High Courts, CBEC has competent authority for approval, After this is issued instructions streamlining the procedure for implemented, more departmental cases would selection of SPPs, In exceptional cases Special Fee be withdrawn, Counsels are also appointed by CBEC with the  As part of the continuing drive to reduce litigation, concurrence of Ministry of Law, the pendency of legacy cases as on dated 9.12.2Functions of the formation include 30.06.2017, before the Commissioner (Appeals) following list of Subjects: was sought to be reduced by first legally empowering other Commissioner rank officers i. Examination of the proposal for filling CA before in a Zone to hear these appeals and then the Supreme Court against orders passed by the redistributing the cases among them. CESTAT, The jurisdictional Commissioners are required to first examine each order of the 9.13 Gender Issues/Empowerment of CESTAT and send CA proposal in deserving Women and girl child cases, A Committee has been constituted in each ii. Briefing the Advocates; handling appeals in Commissionerate/ Directorate on the recommendations Supreme Court as and when required, of Hon’ble Supreme Court and the National Commission for Women, to look after the complaints of women iii. Issue of implemental or other instructions, employees regarding sexual harassment. iv. Settlement of disputes between one Govt, The Directorate General of Human Resource department and another and one Govt, Development has also taken specific initiatives for welfare department and public sector undertaking, of women. v. Appointments of Committee of Chief The amount granted as ex-gratia financial Commissioner/ Commissioners for the purpose assistance to the widows/dependents of the Departmental of review of Order in Originals and Order in officials (in case of death during anti-evasion/anti- Appeals for Customs and Central Excise, smuggling/anti-narcotics operations or death in harness) vi. Legislative work relating to CESTAT under has been enhanced w.e.f 03.10.2012. During the 142Department of Revenue III financial year 2017-18, an amount of Rs.97,00,000/- was graduate professional courses. Under Scholarship sanctioned in 50 cases as ex-gratia financial assistance Scheme, the eligibility criterion has been relaxed for the to the widows of the deceased employees who died while children of Departmental officers/staff belonging to SCs/ in service. STs/OBCs categories, i.e they are eligible for grant of scholarship irrespective of ranks once they secure In Cash Award scheme, the eligibility criterion for admission on the basis of common entrance test. the girl child has been relaxed since the year 2007-08 wherein they require marks 5% lower than boys for grant Scholarships are also granted to the children of of Cash Awards. The amount of Cash Award granted to the Departmental officials where admissions have been girls is Rs.1,000/- more than the boys. During the financial secured by them on the basis of the percentage secured year 2017-18, out of total 377 Cash Awards granted, 214 in the 12th exams. The eligibility criterion has been relaxed Cash Awards involving an amount of Rs. 12,84,000/- were for the children belonging to the SC/ST/OBC categories, granted to the girl children. wherein the SC/ST category candidates require 10% lower, and that of OBC category 6% lower, than the Under the revised Scholarship Scheme, eligibility percentage required for general category for grant of criterion has been relaxed since the year 2006-07 for the scholarships. girl child in terms of the rank they obtain in the Entrance Test/Examination. During the current financial year 2017- During the financial year 2017-18, out of total 18, out of total of 121 Scholarships granted, 48 121 scholarships granted, 47 scholarships involving an scholarships involving an amount of Rs. 9,16,292/- were amount of Rs. 10,48,074/- have been granted to the granted to the girl children. children of Departmental officials belonging to SC/ST/ OBC categories. 9.14 Activities undertaken for Disability Sector, SCs & STs and other Weaker Section 9.15 Sevottam Implementation of Society As a part of the Central Government initiative to The policy of reservations for SCs/STs/OBCs and improve the quality of public services, the Central Board disabled persons in Government employment, in direct of Excise & Customs (CBEC) was identified as one of recruitment and promotion, has been followed in letter the organizations with large citizens’ interface to and spirit. The matters concerning representation of SCs/ implement the quality management system for public STs/OBCs and Persons with Disabilities in CBEC are services. This is based on Indian standard IS attended on priority and their grievances are redressed. 15700:2005, prepared by the Bureau of Indian Standards (BIS), under the name “SEVOTTAM”. Cash Award Scheme: the meritorious children of departmental officials are given Cash Awards on the The Citizens’ Charter, revised in terms of the basis of their performance in Board Examinations of class requirements of IS 15700:2005 (Quality Management 10th & 12th. Under that scheme, the eligibility criterion Systems – Requirements for Service Quality by Public has been relaxed for SC/ST/OBC categories. The Service Organizations) was prepared and issued on 1st eligibility criterion has been relaxed by 10% for SC/ST December, 2008 after approval of the Board. The service category and 6% for OBC category. organizations are also required to establish a documented procedure for complaints handling process. During the current financial year 2017-18, out of Improvements in the delivery infrastructure to meet 377 total Cash Awards granted, 149 Cash Awards promises made in Citizens Charter have been identified involving an amount of Rs. 8,24,000/- have been granted as sine qua non to sustain services. After detailed to the children of Department officials belonging to SC/ deliberations, CBEC has adopted the Centralized Public ST/OBC categories. Grievance Redress and Monitoring (CPGRAM) Systems Scholarship Scheme: A scholarship scheme is in in May, 2009. A Service Quality Manual (SQM) has operation in which scholarship to the children of officers/ already been circulated by CBEC for creating capability staffs of the Department are granted for pursuing under in all the field formations. 143Annual Report 2017-2018 10. Customs, Excise & Service Tax of the appeals has not been affected. A comparative statement showing the institution and disposal of appeals Appellate Tribunal (CESTAT) is given below : 10.1 Functions/ working of the Organisation (Nos.) 10.1.1. The Customs, Excise & Service Tax Appellate Year Institutions Disposal Appeals Stay Appeal Stat Tribunal (earlier Customs Excise & Gold (Control) From 18 756 35084 687 Appellate Tribunal) was created to provide an January, independent forum to hear the appeals against orders 2017 to and decisions passed by the Commissioners of Customs November, & Excise under the Customs Act, 1962, Central Excise 2017 Act, 1944 and Gold (Control) Act, 1968. The Gold (Control) Act, 1968 has now been repealed. Now, 10.2.2 Effective steps have been taken to dispose Service Tax appeals are filed before this Tribunal under appeals wherein high stakes are involved, by setting up Finance Act, 1994. The Tribunal is also having appellate of circuit benches at various centres thereby reducing jurisdiction in Anti dumping matters and the special the pendency of appeals. The new benches of the bench headed by the President, CESTAT, hears the Tribunal at Chandigarh, Allahabad and Hyderabad have appeals against the orders passed by the designated also become functional from October/ December 2015, authority in the Ministry of Commerce. The Head onwards, thereby the disposal rate can be increased and Quarter as well as the Principal Bench of the Tribunal is pendency of appeals are reduced considerably. situated at Delhi and other regional benches are situated at Mumbai, Kolkata, Chennai, Bangalore and 10.2.3 Speedy disposal of appeals is a major measure to Ahmedabad. In order to ensure the speedy disposal of curtail the pendency. Ever since new President Hon’ble Justice appeals and for the benefit of the litigants and t cater to Satish Chandra has taken charge, the disposal rate has shoot the needs of the industries of various regions, the up and early disposal of all pending appeals are expedited. Ministry of Finance, vide notification no. 7/2013 has notified the creation of additional three benches of 10.2.4 Regarding development of North Eastern Region, Customs Excise & Service Tax Appellate Tribunal at since Tribunal is a higher judicial appellate body to hear Chandigarh, Allahabad and Hyderabad and three the appeals in the matters of Customs, Excise, Service additional Benches each at Delhi Mumbai and Chennai. Tax and Anti-dumping and no bench of the Tribunal is The regional benches at Allahabad, Chandigarh and situated in the north-eastern regions, hence, on this point Hyderabad have s been set up and started functioning the Tribunal has no information. w.e.f. 1.10.2015, 1.12.2015 and 14.12.2015 respectively. 10.2.5 Facilities as stipulated by the Government of India 10.1.2 Each Bench consists of a Judicial Member and vide its Orders/circulars issued from time to time are being a Technical Member. To expedite the disposal of small extended to the disability sector & SCs/STs & other cases with financial stake involving upto Rs. 50,00,000/- weaker sections of the society. [Rs. Fifty lacs], wherein no question of rate of duty or valuation issue is involved, a single member bench is 10.2.6 As per the O.M. No.13018/4/2009-Estt.(L) dated also constituted. The Tribunal is the appellate authority 08/07/2009 of DOPT, all facilities are being extended to hearing appeals arising against the order of the female employees of this Tribunal. To redress the Commissioner of Customs, Excise, Service Tax and the grievances of women, a complaint committee under the order of the Commissioner (Appeals). An appeal against Chairmanship of Hon’ble Smt. Archana Wadhwa, the Tribunal’s order lies before the Hon’ble Supreme Court Member (J), CESTAT, has been constituted. in respect of issues such as Classification, valuation etc. 10.2.7 The website of the Tribunal was launched in August 10.1.3 As a result of an amendment by the Finance Act, 2003 and now the cause lists and orders of the Tribunal are 1995 the distinction between the special benches and other being displayed on it. Important judgments are being benches was done away with and now any bench of two or highlighted specially in separate ICON. Efforts are being more members is competent to hear all the matters which made to streamline all the benches of the Tribunal. As for were earlier being heard at Delhi except anti-dumping matters. developments which have taken place in the current financial 10.1.4 The Tribunal is headed by the Hon’ble President. year are like timely updation of judgements and cause list There are 16 posts of Members (Judicial) and 16 posts and other information on day to day basis. The same can of Members (Technical). be accessed by parties, advocates, litigants etc. on cestat.gov.in. Apart from this, the reply to the RTI applications 10.2 Highlights of the performance and are also being uploaded in the website. To put more achievements during the year. information in the website, this Tribunal has undertaken the 10.2.1 In spite of various constraints including several task in close coordination with NIC. Of late, the NIC has vacancies of Members and required staff, the disposal developed a new dynamic website for CESTAT which 144Department of Revenue III intends to proactively disclose all information including daily Customs & Central Excise Settlement Commission under updation of Court proceedings. Some of the areas which section 32 of the Central Excise Act, 1944 vide Notification No. are left for computerization in respect of this Tribunal will be 40/99-CX(NT) dated 09.06.99 and 41/99-CX(NT). The sorted out in near future. In line with the DOPT O.M. No. 1/ Commission consists of a Principal Bench presided over by 6/2011 dated 15.4.2013, steps have been taken to upload the Chairman at New Delhi and 3 Additional Benches at the information on the website of the Tribunal for the benefit Chennai, Mumbai and Kolkata presided over by Vice Chairman of the public. with 2 Members in each Bench. The Commission functions under the Department of Revenue in the Ministry of Finance. 10.2.8 The Tribunal is trying to strictly adhere to the FRBM Act and rules and limit its expenditures to the The Settlement Commission has been set up to expedite budget allocated for the Tribunal. However, due to recovery of Customs, Central Excise & Service Tax escalation in prices of various items/ services and revenue locked up in adjudication proceedings. It offers sanction of additional benches, the Tribunal had some a one time opportunity to tax payers to make a true and problem in restricting expenditures to the overall ceiling. full disclosure of their liabilities. Settlement Commission However, sincere efforts are being put forward to control has also been empowered to grant immunities from the budget for the coming year. penalty and from prosecution, thus offering an opportunity 11. Customs, Central Excise & Service to tax payers to settle the disputes expeditiously. Tax Settlement Commission 11.2 Highlights of the Performance and 11.1 Function & Working of the Organization. achievements of the Commission during the Year is given below: The Central Government have constituted the No. of applications received No. of applications disposed Duty Settled (Rs. in crores) from April, 2017 to from April, 2017 to from April, 2017 to November, 2017 November, 2017 November, 2017 350 105 346.5 11.3 Year-Wise Performance/achievements of the Settlement Commission:- Year No. of Applications Disposal Received No. of Applications No. of Application Duty settled Rejected Settled (Rs. in Crores) 1999-2000 3 1 - - 2000-01 327 28 146 21.28 2001-02 559 63 153 26.64 2002-03 656 105 365 187.51 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 1262 208 1154 654.31 2016-17 844 174 814 1037.13 2017-18 (upto November, 2017) 350 105 353 346.5 Total 19352 3026 16197 5638.66 145Annual Report 2017-2018 12. Authority for Advance Ruling (Central The Principal Chief Commissioners of Income Excise, Customs & service Tax) Tax numbering 18 stationed all over the country supervise collection of direct taxes and provide taxpayer services. 12.1 Vide Section 93 of the Finance Act, 2017 Directors General of Income Tax (Investigation) supervise amending Section 28F of the Customs Act, Authority for the investigation machinery, which is tasked with curbing Advance Ruling (Customs, Central Excise & Service Tax) tax evasion and unearthing unaccounted money. DGIT constituted vide section 28F of the Customs Act, 1962 (Intelligence and Criminal Investigation) supervises the has been merged with Authority for Advance Ruling intelligence gathering and investigation in tax related (Income Tax) constituted under section 245-O of the crimes. CCIT (Exemptions) supervises the work of Income Tax- Act, 1961 exemption and non-profit sector across the country and Principal CCIT (International Taxation) supervises the 12.2 Details are given at point number15. work in the field of International Tax and Transfer Pricing. Principal Chief Commissioners of Income Tax are assisted 13 Central Board of Direct Taxes by Chief Commissioners, Principal Commissioners and 13.1 Organization and Functionss Commissioners of Income Tax and Principal Directors General/Directors General of Income Tax are assisted The Central Board of Direct Taxes (CBDT), by Principal Directors/ Directors of Income Tax within their created by the Central Boards of Revenue Act 1963, is jurisdictions. Commissioners of Income Tax posted as the apex body entrusted with the responsibility of CIT (Appeals) perform appellate functions, adjudicating administering direct tax laws in India. The CBDT consists disputes between taxpayers and assessing officers. The of a Chairman and six Members, all in the apex scale of Income Tax department has its presence in 530 cities and pay and ex-officio Special Secretary to the Government. towns across India, having a tax base of around 8.32 crore It is the cadre controlling authority for the Income Tax at the beginning of AY 2017-18. Department. In its functioning, the CBDT is assisted by the following Directorates: With modern information technology as a key driver, the CBDT is implementing a comprehensive (i) Principal Directorate General of Income Tax computerization programme in the Income Tax (Administration & TPS) Department. The programme is aimed to establish a a) Directorate of Income Tax (PR & PP) taxpayer friendly regime, increase the tax-base, improve b) Directorate of Income Tax (Recovery & TDS) supervision and generate more revenue for the Government. The endeavour is to promote voluntary c) Directorate of Income Tax (Organization & compliance by taxpayers and create a non-intrusive and Management Services) non-adversarial tax administration. d) Directorate of Income Tax (TPS-I) The National Academy of Direct Taxes (NADT) e) Directorate of Income Tax (TPS-II) stationed at Nagpur along with Regional Training Institutes (ii) Principal Directorate General of Income Tax at different locations functions under overall supervision (Systems) of a Pr. Director General of Income Tax (Training) to cater (iii) Principal Directorate General of Income Tax to the training needs of officers and officials. (Logistics) The Principal Chief Controller of Accounts, CBDT a) Directorate of Income Tax (Infrastructure) with the assistance of Zonal Accounts Officers is b) Directorate of Income Tax (Expenditure responsible for accounting the revenue collections as well Budget) as expenditure incurred by the Income Tax Department. (iv) Principal Directorate General of Income Tax 13.2 Direct Taxes Collections: (HRD) 13.2.1 The Collections of direct taxes in the current year a) Directorate of Income Tax (Exam & Official are showing robust growth. In FY 2017-18 up to January Language) 2018, an amount of Rs.6.95 lakh crore (net of refunds) (v) Principal Directorate General of Income Tax has been collected, which is 19.3% higher than the (Legal & Research) amount collected during the corresponding period of last financial year. The growth rate under Corporate Income a) Directorate of Income Tax (Audit) Tax is 19.2% and that under Personal Income Tax is (vi) Principal Directorate General of Income Tax 18.6%. About 69% of the Revised Estimates for 2017-18 (Vigilance) (Rs.10.05 lakh crore) has been collected till January 2018. (vii) Directorate General of Income Tax (Risk Assessment) 13.2.2 The growth in collections under Personal Income (viii) Principal Directorate General of Income Tax Tax (PIT) has been particularly significant, which is (Training) indicative of salubrious effect of demonetization on the 146Department of Revenue III level of voluntary compliance by the non-corporate Direct Taxes Advisory Committee (CDTAC) at Delhi and taxpayers (individuals, small businesses, etc.). During the 64 Regional Direct Taxes Advisory Committees (RDTAC) period of April 2017 to January 2018, PIT Advance Tax exist at important stations. Representatives of Trade and has increased by 22.2.0% and PIT Self-Assessment Tax Professionals Associations are also nominated to these by 24.0% over the collections under these heads during Committees. The term of these Committees is two years corresponding period of last financial year. from the date of their constitution. 13.2.3 The number of taxpayers has also increased 13.5 Investigation Division significantly post demonetization. During the current During the current financial year, the Government financial year (up to 7.11.2017), 3.89 crore income-tax has taken several steps, by way of policy- level initiatives e-returns were filed as compared to 3.25 crore e-returns and more effective enforcement actions on the ground to filed during corresponding period of last financial year, tackle the issue of black money. These steps include which translates into a growth rate of 19.5%. There has legislative and administrative measures, creation of more also been a large increase in the number of new return advanced systems and processes with due focus on filers. Till January 2018, more than 70 lakh new income capacity building and greater use of information technology. tax returns have been filed. (i) Search and seizure and survey actions: 13.3 Rajaswa Gyan Sangam During F.Y. 2017-18 (upto November 2017), Annual Conference of Tax Administrators, 2017 search and seizure actions were carried out in was held at Vigyan Bhavan, New Delhi on 1st and 2nd over 360 groups. The actions in these cases led September, 2017. This was the first time that the Hon’ble to seizure of assets worth over Rs. 700 crores Prime Minister was addressing a joint conference of and an admission of undisclosed income of over CBDT and CBEC and the representatives of the State Rs. 10100 crores. Governments on GST. In order to fulfil the vision of “Sankalp se Siddhi Tak” by 2022, the Prime Minister Further, during F.Y. 2017-18 (upto October 2017), desired that comprehensive review of the entire system over 3100 surveys were conducted leading to and appropriate reforms be carried out simultaneously detection of undisclosed income of over Rs. 2400 at different stages of the business process. Systemic crores. deficiencies/ shortcomings should be identified and technology/ digital coding used for surveillance on each (ii) Prosecution & Compounding: Various stage of functional chain. To reduce human interface, new measures have been taken by the Income- tax online systems like e-assessments etc. should be put in Department (ITD) in the recent past to strengthen place. The functional areas like assessments and audits, the prosecution mechanism with a view to identify etc. should not be interdependent. He emphasised the the prosecutable cases at the earliest and pursue need for an Action Plan to liquidate appeals and the same with due seriousness. adjudications in mission mode. He advised a systemic approach to handle tax evasion issues by using During F.Y. 2016-17 over, 1250 prosecutions technology. He underlined the importance of data complaints were filed and 16 persons were collection & intelligence gathering, effective utilisation convicted. Whereas, during F.Y. 2017-18 (upto thereof and advised focussed, meaningful and October 2017), more than 880 prosecution demonstrative actions. He underlined the need for a complaints have been filed and 44 persons have strong eco-system to obviate the creation of benami been convicted during this period. properties, formation of shell companies and indulging in doubtful transactions. Further, during F.Y. 2017-8, (up to October 2017), more than 650 cases have been compounded. The Hon’ble Prime Minister wanted immediate action in the area of widening of Tax base. He added that It may be seen from the above that as part of in any economically advanced country, the direct tax enforcement measures, a large number of collections should be more than the indirect tax actions were undertaken resulting in detection collections. He desired that the department think about of undisclosed income, seizure of assets and bringing in a new Income tax law, if the need be, to enable launching of prosecutions. the country to widen & broaden its tax base. (iii) Action under the Black Money (Undisclosed 13.4 Direct Taxes Advisory Committees Foreign Income and Assets) and Impositions With a view to encouraging mutual understanding of Tax Act, 2015 (“ the BM Act”) – The BM Act between taxpayers and Income tax officials and to advise has come into force w.e.f 01.07.2015 to the Government on measures for removing the difficulties specifically and more effectively deal with the of general nature pertaining to Direct Taxes, a Central issue of black money stashed away abroad. With 147Annual Report 2017-2018 a view to have more expeditions and efficient Revelations on paradise papers were made in administrative framework for implementation of The Indian Express newspaper on 6/11/2017 and the BM Act and for achieving the intended subsequent days, based upon expose by ICIJ. objection of the separate law (BM Act) enacted ICIJ website indicated that the Paradise Papers to deal with undisclosed foreign assets cases, contain data on offshore entities spread across the CBDT has authorized DGIT(Inv. )./ ADIT(Inv.) various tax havens/foreign jurisdictions. The concerned for exercising the powers and Government Acted on the same day i.e. 6/11/ functions of AO under the BM Act vide notification 2014 to reconstitute the Multi Agency Group issued during May 2017. (MAG) comprising members of CBDT, ED, RBI & FIU with Chairman, CBDT as Convener to â Actions under the Benami Transactions coordinate and monitor expeditious investigation (Prohibitions) Act, 1988 : The amended Act in cases emanating out of Paradise Papers, in came into force w.e.f. 1st November 2016. addition to ongoing monitoring of investigations The income-tax Department (ITD) has set into Panama Paper Leaks. up 24 dedicated benami prohibition Units across India for taking effective action under (v) Action against shell companies: The Task Force (TF) on Shall companies was constituted the Act. Due to intensive efforts undertaken under the joint chairmanship of Revenue by the Department, at the end of December Secretary and Secretary , MCA in February, 2017 2017, provisional attachment has been to enable a whole of the government approach made in more than 900 cases of properties to wiping out shell companies indulging in illegal under the Benami Act. These include plots activates. TF has held 6 meeting so far. As of land, flats, shops, jewellery, vehicles, decided by the TF, ITD has completed sharing deposits in bank accounts, fixed deposits of particulars of shell companies identified during etc. The value of properties under its investigations with SFIO for preparing attachment is more than Rs. 3500 crore consolidated database. Data in respect of more including immovable properties of more than than 14000 such entities was shared with the Rs. 2900 crore. In five cases, the provisional attachments of benami SFIO. ITD is taking appropriate action on the basis of the first set of data received from banks properties, amounting to more than Rs.150 and shared by MCA. crore have been confirmed by the Adjudicating Authority. Further, linking of Aadhar with PAN has been made mandatory form July 2017. This significant (iv) Investigation in foreign in foreign assets measure is an important step as it would inter cases:- In HSBC bank accounts cases, as an alia reduce possibilities of fictitious / bogus/ outcome of investigation, undisclosed income of dummy persons being made directors of shell about Rs. 8448 crore has been brought to tax on companies. It would also enable more effective account of deposits made in unreported foreign enforcement actions. bank accounts. Further, concealments penalty of about Rs. 1290 crore has been levied in 164 Steps have been taken for integration of PAN and cases. So far, 199 prosecutions complaints in TAN with MCA Portal. E-PAN card for Company HSCB cases have been filed in 84 cases. In Applicants are issued with 1 day (95% within 4 international Consortium of investigative hrs) from March, 2017 onwards. Journalists (ICIJ) cases, sustained investigations (vi) Actions under Operation Clean Money: The conducted have led to detection of more than Rs. operation which was launched on 31/01/2017 has 11,010 crore of credits in the undisclosed foreign enabled greater categorization and risk accounts so far. 72 prosecution complaints in 31 assessment of data on cash deposits to launch such cases have already been filed before criminal more focused punitive actions in the near future. courts, Investigation in the cases revealed in “ It entails collection of relevant information on cash PANAMA PAPPERS LEAKS have let to initiation transactions, its collation and analysis, extensive of search and seizure action in 41 cases and use of information technology and data analytics survey action in 11 cases. In 15 cases, criminal tools for identification of high risk cases based prosecution complaints have been sanctioned. on approved criteria, expeditious verification of Investigations so far have detected undisclosed suspect cases and enforcement actions in credits of about Rs.901 crore. appropriate cases. Around 17 lakhs suspicious 148Department of Revenue III cases (No. of PANs) identified for further Act, 2016 by providing for new presumptive verification. Responses of nearly 11 lakh persons taxation regime in case of professionals to bring taken online. small tax payers and the unorganized sector within the tax fold by reducing the compliance burden of (vii) Other regulatory steps: Restriction on cash maintenance of books of accounts in case of small transaction of Rs. 2 lakh or more (Section 269ST business and professionals covered in the of IT Act), no deduction under section 80G if cash presumptive taxation regime thereby widening the donation exceeds Rs.2000 effective from tax base also. 01.04.2018, restriction on donations of Rs.2000/ - or more to political parties otherwise than by a (f) A new tax in the form of “Equalisation Levy” bank account or through electoral bonds, (inserted vide Chapter VIII to the Finance Act, widening of the scope of taxability of receipt of 2016) at the rate of 6% of the amount paid was the sum of money or the property by any person imposed on e-commerce transactions. The without consideration or for inadequate Central Government vide Notification. No 37 [SO consideration in excess of Rs. 50,000 and 1904(E)] dated 27th May, 2016 appointed 1st of deeming of fair market value as the full value of June, 2016 as the date from which the provisions consideration for computation of capital gains in of the said Chapter will come into force. The case of transfer of shares other than quoted revenue accrued for the Government exchequer shares (Section 50 of IT Act) have been taken. through the equalization levy amounts to Rs. Linking of Aadhar with PAN has been made 274.2 crore from 1st June, 2016 to the latest 21st mandatory for filing Income Tax Returns effective February 2017. 01.07.2017 and obtaining new PAN. (g) A new section 115BBDA was inserted in the 13.6 Widening of Tax Base Income-tax Act, 1961 (the Act) to provide for additional chargeability of tax on income 13.6.1 Widening/ Deepening of tax base and increasing exceeding Rs. 10 lakh by way of dividends @10% the tax-GDP ratio are priority areas of the Government. in the hands of shareholders being individuals/ In this direction, the following legislative steps Hindu Undivided Family (HUF)/ Firms. have been taken: (h) The Finance Act, 2016 amended the Act to (a) Vide Finance Act, 2012, TCS at the rate of 1% provide that the non-compete fee received/ was introduced on sale of minerals being Coal, receivable in relation to not carrying out any Lignite, and Iron ore for trading purpose. profession will be chargeable to tax as an income from business or profession. (b) Vide Finance Act, 2013, TDS was introduced at the rate of 1% on payment for acquisition of (i) Through the Finance Act, 2016 many incentives immovable property (other than rural agricultural (Profit linked Deductions/ weighted deduction) land) having value of Rs. 50 lakh or more. available under the Act were phased out which in turn shall enhance tax collection in future. (c) For expanding the ambit of the TDS provisions, the scope of TDS on interest on bank deposits (j) Through the Finance Act, 2017, the tax rate for was expanded vide Finance Act, 2015 by bringing the slab of income from Rs. 2.5 lakh to Rs. 5 the interest on recurring deposits within the ambit lakh was reduced from 10% to 5% in order to of TDS and also providing that for the purpose encourage voluntary compliance and promote of TDS, a bank having core banking solution shall people to file tax returns. aggregate the interest customer-wise at the bank (k) Through the Finance Act, 2017, a new section level to discourage the practice of splitting the 194-IB has been inserted in the Act to provide deposits among various branches of the bank to that individuals or HUF (other than those covered avoid TDS. under 44AB of the Act) responsible for paying to (d) The scope of TCS has been expanded vide a resident any income by way of rent exceeding Finance Act, 2016 by providing for TCS at the Rs. 50,000 for a month or part of month during rate of 1% on sale of motor vehicle of the value the previous year shall make TDS at the rate of exceeding Rs. 10 lakh. 5% of such income as income-tax thereon. (e) The scope of presumptive taxation for small (l) The scope of section 115BBDA of the Act was businesses has also been expanded vide Finance expanded through the Finance Act, 2017, so as 149Annual Report 2017-2018 to include all resident assessee except domestic 13.6.2 Besides the above, following proposals have company and certain funds, trusts, institutions etc. been made in Finance Bill, 2018 in order to widen/deepen within the ambit and impose tax at the rate of 10% the tax base and increase the direct tax-GDP ratio: on dividend income exceeding Rs. 10 lakhs (a) In order to use PAN as Unique Entity Number earned by such assessees. Various measures (UEN) for non-individual entities, it is proposed have also been taken to increase the number of that every person, not being an individual, which tax payers by not only bringing new tax payers enters into a financial transaction of an amount into the tax net, but also to encourage non-filers aggregating to Rs. 2.5 lakhs or more in a financial to file their tax returns. In order to achieve this, year, and the managing director, director, partner, information is being collected in a non-intrusive trustee, author, founder, karta, chief executive manner. The scope of information collection under officer, principal officer or office bearer or any the Statement of Financial Transactions (SFT) to person competent to act on behalf of such person be furnished under the amended rule 114E of the shall be required to apply for allotment of PAN. Income-tax Rules, 1962 (the Rules) has been (b) With a view to prevent abusive arrangements in widened. Keeping in view the economic order to escape liability of paying tax on framework of the country and policy intent to curb distributed profits, it is proposed to widen the generation and circulation of black money, the scope of the term ‘accumulated profits’ so as to threshold limit for reporting specified transactions provide that in the case of an amalgamated under rule 114E have also been rationalised. company, accumulated profits, whether quoting of Permanent Account Number (PAN) has capitalised or not, or losses as the case may be, been made mandatory for all transactions above shall be increased by the accumulated profits of Rs.2 Lakh and for specified transactions in respect the amalgamating company, whether capitalized of property, shares, bonds, insurance, foreign or not, on the date of amalgamation. travel, demat account etc. Moreover, non-intrusive (c) With a view to bringing clarity and certainty in data collection has also been introduced vide the taxation of deemed dividends, it is proposed insertion of section 139AA in the Act which to bring deemed dividends also under the scope mandates quoting of AADHAR – the unique of dividend distribution tax under section 115-O identity number – in the Return of Income and of the Act and to tax such deemed dividend at PAN application Form. Further, rule 114B of the the rate of 30% (without grossing up) in order to Rules has been amended to inter alia link specified prevent camouflaging dividend in various ways bank account of an account holder, maintained such as loans and advances. with a banking company or co-operative bank with (d) In order to minimize economic distortions and the PAN or Form No. 60, as the case may be. curb erosion of tax base, it is proposed to (m) Vide successive Finance Acts; filing of returns has withdraw the exemption under section 10(38) of been made mandatory for some of the entities the Act and to introduce a new section 112A in the Act to provide that long term capital gains taking tax exemption/deduction including, inter alia, arising from transfer of a long term capital asset Mutual Funds, Securitisation Trusts, Venture Capital being an equity share in a company or a unit of Companies/ Funds, trade unions/ associations, an equity oriented fund or a unit of a business infrastructure debt funds, etc. as referred to in trust shall be taxed at 10% of such capital gains Section 10 of the Act. Similarly, filing of returns has exceeding one lakh rupees. Foreign Institutional been made mandatory for a resident individual Investors (FIIs) will also be liable to tax on such having an asset or financial interest in an entity long term capital gains only in respect of amount located outside India, even if he or she may not be of such gains exceeding one lakh rupees. earning income chargeable to tax in India. (e) With a view to providing a level playing field (n) Important statutory provisions introduced in last between growth oriented funds and dividend few years also include reducing the time frame paying funds, in the wake of new capital gains for filing a revised return, introduction of tax regime for unit holders of equity oriented compulsory fee for delayed filing of income-tax funds, it is proposed to provide that where any return after the due date instead of earlier income is distributed by an equity-oriented Mutual provision of levying penalty at the discretion of Fund, the mutual fund shall be liable to pay the Assessing Officer, linkage of PAN with additional income tax at the rate of 10% on Aadhaar etc. income so distributed. 150Department of Revenue III (f) In order to check cash transactions by charitable information technology and data analytics tools or religious trusts or institutions and to reduce for identification of high risk cases, expeditious the generation and circulation of black money, it e-verification of suspect cases and enforcement is proposed to provide that for the purposes of actions in appropriate cases, which include determining the application of income under the searches, surveys, enquiries, assessment of provisions of section 10(23C) or section 11, the income, levy of taxes, penalties, etc. and filing of provisions of section 40(a)(ia) and section 40A(3) prosecution complaints in criminal courts, or (3A) of the Act shall, mutatis mutandis, apply wherever applicable. On the basis of data as they apply in computing the income analytics and information gathered during the first chargeable under the head “Profits and gains of phase of online verification under ‘Operation business or profession”. Clean Money‘, in cases where tax-payer had deposited substantial cash in bank account(s) (g) In line with the provisions of OECD’s Multilateral during the demonetization period (8th November, Instrument (MLI), it is proposed to widen the 2016 to 30th December, 2016) but did not file scope of ‘Permanent Establishment’ to provide Income-tax return for Assessment Year 2017- that “business connection” shall also include any 2018, further follow up action is being taken. business activities carried through a person who, acting on behalf of the non-resident, habitually • In the first batch, around 18 lakh persons have concludes contracts or habitually plays the been identified in whose case, cash transactions principal role leading to conclusion of contracts do not appear to be in line with the tax payer’s by the non-resident, subject to certain conditions profile. More than 20,500 I-T returns were specified in section 9 of the Act. selected for scrutiny in 2017 on the basis of cash deposits in their bank account during (h) In order to bring a large segment of compensation demonetization. The Department has also issued receipts in connection with business and more than 1.9 lakh notices to such persons in employment within the purview of taxation and whose bank accounts cash of amount exceeding thereby prevent base erosion and revenue loss, Rs.15 lakh was deposited during demonetization it is proposed to amend section 28 of the Act to but they have not filed any return of income. provide that any compensation received or receivable, whether revenue or capital, in • A detailed Instruction (3/2017 dated 21.02.2017) connection with the termination or the was issued to the field formations for electronic modification of the terms and conditions of any verification of cash deposited in bank accounts contract relating to its business shall be taxable during the demonetization phase. This measure as business income. has led to a significant increase in number of income-tax filers, post demonetization. 13.6.3 Other steps • For widening/deepening tax base and increase • The Income Tax Department has initiated Project Insight to strengthen the non–intrusive information the tax-GDP ratio, techniques like data mining driven approach for improving tax compliance and and data analytics are being used to monitor effective utilization of information in tax defaults in filing income-tax return by assessees administration. A new Compliance Management having potential tax liability under the Non-filers Monitoring System (NMS). The list of such cases Centralized Processing Centre (CMCPC) will also is generated on the basis of information available be setup as part of the Project for handling from various sources such as Statement of preliminary verification, campaign management, Financial Transaction (SFT) (High Value generation of bulk letters/notices and follow-up. Financial Transactions information report), TDS/ The new CPC will not only promote voluntary TCS Statements etc., The cases are thereafter compliance but also enable taxpayers to resolve pushed to the concerned Assessing Officer after simple compliance related issues online without prioritization for further necessary action as per visiting the Income tax office. provisions of Income-tax Act. • The Income Tax Department has also set a target • The Income Tax Department Launched of adding 1.25 crore new return filers during F.Y. ‘Operation Clean Money’ on 31st January 2017 2017-18. Till January 2018, more than 70 lakh for collection, collation and analysis of information new ITR filers have already been added and on cash transactions, extensive use of further efforts are underway. 151Annual Report 2017-2018 13.7 Judicial Work for various benefits subject to fulfilment of certain conditions. Under this Scheme 8,653 orders have been Judicial Division of CBDT is handling work passed resulting in a collection of total tax of Rs. 631 relating to litigation of Income Tax Department by Crore (approx.) monitoring the disposal of appeals by CsIT (Appeals), appointment of Standing Counsel, Special Counsel and 13.7.2 Processing of Special Leave Petitions (SLP) Special Public Prosecutors to represent the Department proposals before judicial fora with a view to ensure that the litigation The Directorate of Income-tax (Legal & of the Income Tax Department is minimized and effectively Research) has been notified as an attached office of the handled. CBDT mainly to render technical assistance to the CBDT 13.7.1 Direct Tax Dispute Resolution Scheme, 2016 for examining proposals for filing Special Leave Petitions in the Supreme Court against the adverse judgments of To reduce tax payer grievance and uncertainty High Courts that are not acceptable. A Chart indicating caused due to long pending litigation before the the number of SLP Proposals received / processed and Commissioner of Income Tax (Appeals), the Direct Tax cases where out of such proposals SLPs were not filed, Dispute Resolution Scheme, 2016 (DTDRS) was year-wise is submitted as under: introduced by Finance Act 2016. The scheme provided Year No. of SLP proposals received Proposals Not Approved 2011 2288 852 2012 1576 496 2013 1875 704 2014 1519 748 2015 1730 795 2016 1642 892 2017 2289 435 The data of pendency of appeals and amount locked in various years before various fora is as given under: PENDENCY OF APPEALS AND TAX EFFECT LOCKED UP FOR THE LAST THREE YEARS AND FOR THE CURRENT F.Y. F.Y. CIT (A) ITAT HC SC Cases Amt. Cases Amt. Cases Amt. Cases Amt. (Rs. Crore) (Rs. Crore) (Rs. Crore) (Rs. Crore) 2014-15 2,32,126 3,83,797 Data not available 34,281 37,683 5,661 4,654 2015-16 2,58,898 5,16,250 91,971 135,983 32,138 1,61,417 5,399 7,091 2016-17 2,90,227 6,11,227 92,388 143,770 38,481 2,87,817 6,357 8,047 2017-18 2,62,617 4,74,762 94,481 1,66,016 38,864 3,15,107 5,876 9,877 Note: â The figures for pendency of appeals and tax effect locked is as per data provided by R&S Wing for CIT(A), HC and SC. â The figures of pendency for ITAT are based upon the flash figures of ITAT Registry, Mumbai. However, the tax effect locked before ITAT is as per data provided by R&S Wing. â For the Year 2017-18 the data w.r.t. CIT (A) is up to 31.11.2017 and for the other appellate fora i.e., ITAT, HC& SC is for the quarter ending June 2017. 152Department of Revenue III 13.7.3 Measures initiated to reduce litigation before Each CIT (A) shall dispose of a minimum the appellate forums: number of 500 appeals or earn 700 units during the year, which must include disposal in ratios a. The Income Tax Department has initiated several as below: measures for reducing litigation with the Tax-payer. One of such measures is the creation of a platform • Disposal of at least 30% of appeals that in the form of Central Technical Committee (CTC) involve demand of Rs.10 lakhs and above, to formulate Departmental view on contentious and 100% of appeals pending as on issues. The CTC examines contentious issues 01.04.2017 that involve demand of Rs.50 and suggests issue of circulars or amendments crore and above. in the Act. From August 2012 to December 2017, 30 circulars clarifying the Departmental view on • Disposal of at least 70% of appeals that contentious issues have been issued by the CBDT involve demand of less than Rs.10 lakhs on the basis of inputs provided by the CTC. Further, upto December 2017, 27 references have e. The monetary limits for filing appeals has been been submitted to the TPL Division of CBDT, enhanced with retrospective effect and with the suggesting amendments. Also, the Department directions to withdraw appeals covered by the is taking steps to identify issues, which have been new monetary limit. accepted by the Department, to give wide publicity of these issues so as to increase awareness f. Extensive workshops by the Directorate of amongst the officers of Department, as well as Income Tax (L&R) have been held at various the Tax-payers, which will reduce litigation. field stations and Training Institutes to sensitise/train officers about improving quality b. Further, standard procedures for applying of litigation. provisions u/s 14A and 68 of the Income Tax Act which were generating substantial litigation have g. Field formations have been directed to move been issued. The standard procedure for applications for early hearings, in consultation recording satisfaction u/s 147 has also been with the Counsel, in cases which were pending issued. It is expected that these will go a long before various appellate forums. Instructions way in minimizing litigation. have been issued that Departmental c. Two broad categories of appeals pending before Representatives before ITAT should desist from CIT (A) are those having tax effect locked in taking adjournments, particularly in cases where appeals below and above Rs.10 lakh. 66% of demand has been stayed. It has also been the appeals in numbers where tax effect is below directed that proper representation must be Rs. 10 lakh account for only 1.6% of tax effect, ensured before ITAT. whereas 34% of the high demand appeals involving tax effect of more than 10 lakh account h. To expedite the process of dispute resolution at for 98.4% of the total tax effect locked in all the level of ITAT, vide Finance Act, 2016, the appeals before CIT (A). Taking cognizance of provision of sub-section (3) of section 255 of the the high tax effect locked in appeals, the Board Act has been amended w.e.f. 1st June, 2016, had issued directions last year for disposal of increasing the income limit for SMC Bench from appeals having tax effect of more than Rs.100 15 lakh to 50 lakh. crore. This resulted in disputed demands of Rs.1.92 lakh crore being unlocked in 362 i. Department has introduced a new functionality appeals. This Financial Year also the CsIT(A) of CIT(A) on the Income Tax Business Application have been directed to dispose of all appeals (ITBA) platform for e-filing of the appeals before involving tax effect of above 50 cr. which are CIT (A). The same ensures transparency and pending on 31.03.2017 latest by 31.3.2018. It is ease of doing business. About 85% of the 1.42 expected that this measure will reduce that tax lakh appeals filed in FY 2016-17 were e-filed on effect locked in pending appeals substantially. ITBA. Further, 31,825 appeals have been filed in FY 2017-18 till Dec 2017. Filing of appeals d. In order to increase disposal by CIT(A) the target for disposal has been increased and the following and their disposal of the same is recorded on target has been given in the Central Action Plan ITBA. ITBA has enabled generation of MIS for for FY 2017-18: effective monitoring of appeals. 153Annual Report 2017-2018 j. The Central Board of Direct Taxes has taken up (ii) The data of the number of Counsel appointed an initiative to create an electronic database year-wise for the recent years is provided below. containing all appeals and decisions of the ITATs, High Courts and the Supreme Court of India, in Category of F.Y. F.Y. F.Y. 2017-18 Direct Tax matters. This project is titled as Counsel 2015-16 2016-17 (till date) “National Judicial Reference System”(NJRS) and Standing Counsel 63 13 55 is a repository of appeals and judgments. It will Special Public 9 10 53 help in identifying issues, that have already Prosecutors attained finality avoiding litigation on settled Special Counsel 14 13 21 issues, bunching of similar cases, prioritization of important cases, capacity building and in tax 13.8 TPL Division policy analysis. Upto the month of December,  Tax policies are formulated in order to mobilize 2017, 9,654 officers of the Department have financial resources for the nation, achieve already registered for use of the NJRS. 1,74,063 sustained growth of the economy, ensure macro- Direct Tax Appeal Documents, have been economic stability and promote social welfare by scanned for the NJRS Project. Further, 2,24,266 providing fiscal incentives for investments in the judgments and data of 6,52,681 appeals have social sector. The underlying theme of the tax also been made available in the NJRS. The data proposals for the Budget 2017-18 is stimulating of the Supreme Court of India, 14 High Courts growth, relief to middle class, affordable housing, and 27 ITATs has already been integrated in the curbing black money, promoting digital economy, NJRS. Further, 157 Circulars and 717 transparency of political funding and notifications issued by CBDT have been made simplification of tax administration. available in the NJRS.  The notable legislative measures taken through k. Legal and Research Tracking System (LRTS), Finance Act, 2017 include reduction in tax rates tracks SLP proposals from inception to filing. It for individuals in the income slab of Rs. 2.5 lakh has contributed in a major way in reducing delay to Rs. 5 lakh, relaxation in tax concessions to in filing appeals before the Supreme Court. A Start-ups, relaxation in presumptive taxation database of note sheets of past decisions is scheme to promote digital payments, removal of available for uniform decision making in filing complexities in chargeability of tax in the case of SLPs and bunching appeals entity wise and Joint Development Agreements and relaxation issue-wise. in period of holding for computation of long term l. Vide Instruction No.7/2017, earlier instructions capital gains in order to give a boost to the relating to the guidelines and procedures for housing sector, Capital Gains exemption to land attending to Revenue Audit objections have been transfer under land pooling scheme notified revised. As a step towards reducing litigation, under the provisions of Andhra Pradesh Capital mandatory remedial action in cases where audit Region Development Authority Act, 2014. Further, objection has not been found acceptable has measures taken in the direction of improving been done away with. delivery of public services include introduction of 1-page ITR-1 return form for taxpayers having 13.7.4 Matters relating to appointment of Standing income up to Rs. 50 Lakh from salary and one Counsel, Special Public Prosecutors and house property, PAN-Aaadhar linking to eliminate Special Counsel. bogus and multiple PANs and allotment of PAN (i) Instruction No. 6/2016 and Instruction No. 7/ and TAN through a common application form. 2016. These instructions, both issued on 13.9 FT&TR Division 7.9.2016, have provided for revised guidelines for engaging the Special Public Prosecutors and 13.9.1 Negotiation of Tax Treaties Standing Counsel, respectively, to effectively The Foreign Tax and Tax Research (FT&TR) represent the Income Tax Department before Division negotiates and finalizes the Double Taxation various Courts. The Instructions have also Avoidance Agreements (DTAAs) which are entered into increased the rates of fee payable to the counsel, for twin purpose of (a) allocation of taxation rights between thereby ensuring quality representation before the Contracting States with a view to avoid double taxation the courts. and (b) prevention of fiscal evasion through exchange of 154Department of Revenue III information, assistance in collection of taxes etc. As on • Third Protocol amending the Agreement between 31.12.2017, 94 DTAAs are in force. India and Singapore signed on 30th December, 2016 has entered into force on 27th February, In old DTAAs (before 2009), there were generally 2017. no provisions for exchange of banking information. Further, the information could be exchanged only if it was • The Protocol amending the Agreement between relevant for application of DTAA and not for enforcement the Government of the Republic of India and the of domestic laws. In addition, under the old DTAAs, the Government of the Socialist Republic of Vietnam information received could generally not be used for non- for the avoidance of double taxation and the tax purposes even after the consent of the supplying prevention of fiscal evasion with respect to taxes State. Accordingly, from 2009 onwards, a number of tax on income signed on 03.09.2016 has entered into treaties were modified through amending Protocols. force on 21st February, 2017. During the year 2017: • Protocol for amending the Convention between • The Protocol amending the Double Taxation Avoidance Convention (DTAC) between India the Republic of India and the Republic of Austria and Brazil signed on 15.10.2013 has entered into for the Avoidance of Double Taxation and the force on 06.08.2017. Prevention of Fiscal Evasion with respect to Taxes on Income which was signed at Vienna • The Third Protocol Amending the Convention on 8th November, 1999 has been signed on between New Zealand and India signed on 06.02.2017 26.10.2016 has entered into force on 07.09.2017. • Protocol amending the Agreement and the • Revised Agreement between the Government of Protocol between the Government of the the Republic of India and the Republic of Kenya Republic of India and the Government of the for avoidance of double taxation and prevention Kingdom of Belgium for the Avoidance of Double of fiscal evasion with respect to taxes on income Taxation and the Prevention of Fiscal Evasion which was signed on 11.07.2016 has entered into with respect to Taxes on Income has been signed force on 30.08.2017 on 09.03.2017 • With countries/jurisdictions with which it is felt • Agreement between the Government of the that there is no need for allocation of taxation Republic of India and the Government of the rights for avoidance of double taxation, such as Republic of Cyprus for the avoidance of double offshore jurisdictions, the FT&TR Division taxation and the prevention of fiscal evasion with negotiates and enters into Tax Information respect to taxes on income has been notified in Exchange Agreements (TIEAs) containing Gazette of India on 10.01.2017 provisions for exchange of information. As on • Protocol amending the Convention between the 30.12.2017, 19 TIEAs are in force. Govt. of the Republic of India and the Govt. of • India has also joined the Multilateral Convention the Portuguese Republic for the Avoidance of on Mutual Administrative Assistance in Tax Double Taxation and the Prevention of Fiscal Matters (Multilateral Convention) which came into Evasion with respect to Taxes on income has force for India on 01.06.2012 and which provides been signed on 24.06.2017 a wide range of administrative assistance in tax • Protocol amending the Convention between India matters, including exchange of information, assistance in collection of taxes, tax examination and Slovenia for the Avoidance of Double abroad, joint audit etc. India has been actively Taxation and the Prevention of Fiscal Evasion pursuing with other countries to join this with respect to Taxes on income which was Convention. As on 30.11.2017, 116 countries/ signed at Ljubljana on January 13, 2003 has been jurisdictions have signed/joined the Multilateral notified on 27.10.2017 Convention and it has come into force for 99 • The Protocol amending the Agreement between countries/jurisdictions as on 15.12.2017. India and Kazakhstan was signed on 6th January, • The SAARC Countries have signed agreement 2017. on Mutual Administrative Assistance in tax • The Protocol amending the Agreement between matters on 13.11.2005 which came into effect India and Kuwait was signed on 15th January, for India from 01.04.2011. It provides wide range 2017. of administrative assistance. 155Annual Report 2017-2018 • In the modified/renegotiated DTAAs as also in However, foreign governments, particularly the new DTAAs/TIEAs entered after 2009 and offshore financial centres, are most unlikely to also under the Multilateral Convention and provide information on the basis of just letters or SAARC Multilateral Agreement, the banking on a plea regarding their moral obligations to information and information for domestic tax prevent tax evasion. Among other factors, parting purposes can also be exchanged. Further, with information without a legal basis may be generally the information received may be used challenged in their own Courts and may be against for non-tax purposes if such use is permitted their own public policy or public opinion of their under the laws of both the supplying and receiving citizens. Such information about money and assets State and with the consent of the supplying State. hidden abroad and about undisclosed transactions entered into overseas, can be obtained only through 13.9.2 Multilateral Convention to Implement Tax “legal instruments” or treaties entered between Treaty Related Measures to Prevent Base India and those countries. Erosion and Profit Shifting: (ii) The “legal instruments” through which • The Hon’ble Finance Minister Sh. Arun Jaitley information can be efficiently obtained for the signed the Multilateral Convention to Implement purposes of investigation under Indian tax laws Tax Treaty Related Measures to Prevent Base are the DTAAs, TIEAs, Multilateral Convention Erosion and Profit Shifting at Paris on 07/06/2017 and SAARC Multilateral Agreement, which create on behalf of India. More than 65 countries, a legal obligation on a bilateral basis to provide including India, signed the Convention in Paris information. These agreements have, over the on 07/06/2017. years, taken the shape of instruments of co- • The Multilateral Convention is an outcome of the operation between the countries party to the OECD / G20 Project to tackle Base Erosion and agreements, for sharing of tax revenues and Profit Shifting (the “BEPS Project”) i.e., tax elimination of double taxation; for the prevention planning strategies that exploit gaps and of fiscal evasion, tax avoidance and fraud, mismatches in tax rules to artificially shift profits primarily through exchange of information in to low or no-tax locations where there is little or relation to the taxpayers concerned; and for no economic activity, resulting in little or no overall assistance in collection of taxes. corporate tax being paid. The BEPS Project (iii) The Government of India can obtain information identified 15 actions to address base erosion and which is “foreseeably relevant” for administration profit shifting (BEPS) in a comprehensive and enforcement of domestic laws concerning manner. taxes from 151 countries/jurisdiction under • India was part of the Ad hoc Group of more than DTAAs/TIEAs/Multilateral Convention/SAARC 100 countries and jurisdictions from G20, OECD, Multilateral Agreement. With some countries/ BEPS associates and other interested countries, jurisdictions, there can be more than one which worked on an equal footing on the agreement e.g. DTAA as well as Multilateral finalization of the text of the Multilateral Convention, under which information can be Convention, starting May 2015. received. Table at Annexure-1 lists the countries/ jurisdictions and the current status of tax treaty • The Convention will modify India’s treaties in with that country/jurisdiction. order to curb revenue loss through treaty abuse and base erosion and profit shifting strategies (iv) Information received under the tax treaties shall by ensuring that profits are taxed where be disclosed only to persons or authorities substantive economic activities generating the concerned with tax purposes and they may use profits are carried out and where value is created. the information only for such purposes. They may, however, disclose the information in public 13.9.3 Role of Tax Treaties in Prevention of Fiscal court proceedings or in judicial decisions, which Evasion and Tackling of the Menace of Black may for instance be in the form of filing a Money complaint or prosecution in a competent court. (i) Effective investigation of tax evasion and The information so disclosed becomes public and avoidance, including unearthing of unaccounted may be used by other law enforcement agencies money stashed abroad, is possible only if there dealing with corruption, money laundering, is access to information from foreign countries. terrorist financing etc. 156Department of Revenue III (v) The following additional steps have been taken and skills to make appropriate requests/ by the Government in recent past for effectively enquiries under the prevailing tax-treaties of utilizing the above mechanism of Exchange of India, to address the issue of offshore-based Information: tax evasion and Black Money stashed abroad. a) In November 2016, India and Switzerland had signed ‘Joint Declaration’ for the f) Steps are also being taken to ensure that implementation of Automatic Exchange of the information received from our treaty Information (AEOI) between the two partners are effectively utilized to combat tax countries. Further, after completion of evasion and avoidance. domestic procedures in Switzerland, a g) Efforts are also being made to complete mutual agreement was signed on 21st investigations quickly and file complaints/ December, 2017 to enable Switzerland to prosecutions in appropriate cases exchange data with respect to calendar year expeditiously. 2018. As a result, it will now be possible for India to receive from September, 2019 (vi) Under tax treaties, the Contracting States may onwards, the financial information of also provide information to their treaty partners accounts held by Indian residents in with a view to prevent fiscal evasion even if no Switzerland for 2018 and subsequent years, specific reference is received in this regard under on an automatic basis. “spontaneous exchange of information”. As of now, number of information received under this b) Bilateral meeting was held with the British route is not many and efforts are being made at Virgin Islands in the month of July, 2017 bilateral level to improve cooperation in this wherein detailed discussion was held on the regard. pendency of requests for information. This has resulted in better responsiveness from (vii) Under most of the DTAAs and Multilateral the BVI. Convention, Automatic Exchange of Information (AEOI), which is systematic and periodic c) Meetings were held with other tax authorities transmission of “bulk” taxpayer information by on side lines of other international meetings the source country to the residence country, is such as those with the tax authorities of also possible. India is receiving information from France, UK, Switzerland, Norway, etc. These some countries under AEOI. However, the bilateral meetings will help us in making information received under the AEOI mostly targeted and specific requests for relates to interest, dividend, salary, pension etc. information and to understand the problems, and further is not in a standard format and thus if any, which prevent them in providing the are not very effective in prevention of offshore information, and how the same can be tax evasion. The global standard on AEOI has, addressed. therefore, been developed under guidance and d) The Central Action Plan issued by the CBDT leadership of G20 countries which has made a in June 2017, read with Manual on Exchange sea change in our ability to address offshore of Information, explains the process and tax evasion. emphasizes the need to make exchange of (viii) In many Indian DTAAs, there is provision for information references seeking information assistance in collection of taxes under which the under the tax treaties. The Central Action Contracting States are obliged to collect tax dues Plan 2017 also mandates that every Pr. CIT from assets located in their country. The provision charge will organize training and for assistance in collection of taxes is also sensitization programme for making proper present in some TIEAs. Assistance in Collection references under tax treaties. of taxes is also possible under the Multilateral e) Regular trainings programs have also been Convention if the signatory country has not given held at places like Mumbai, Delhi etc. to a reservation and also under the SAARC equip the officers with requisite knowledge Multilateral Agreement. 157Annual Report 2017-2018 (iv) The other form of administrative assistance information in the domestic and cross-border possible under tax treaties are tax examination context.” abroad, simultaneous examination, joint audit, India has consistently stated that all the service of notices, etc. which are presently not committed jurisdictions should strictly adhere to the being used much. implementation of AEOI as per the timelines committed 13.9.4 Tax Issues in G20 to G-20 (i.e. September 2017, 2018) and the Global Forum should evolve mechanisms to effectively monitor India is a leading contributor to the discourse on and review the same and report to the G20 Finance international tax issues at G-20 in all its meetings at the Ministers and Leaders the progress including in respect level of Leaders (represented by Hon’ble PM of India), of AEOI relationships activated between interested Finance Ministers, Central Bank Governors and Deputies. appropriate partners. Timely implementation of the AEOI The International Tax Issues features prominently in the Standard by the commitment i.e. first exchange by 2017 G20 Agenda and primarily consist of Base Erosion and or 2018 is particularly important as any delay in actual Profit Shifting (BEPS) and Automatic Exchange of implementation of AEOI may give an opportunity to the Information (AEOI). The paragraph on tax issues in the tax evaders to close their financial accounts in other recent communique of the G-20 Leaders at the Hamburg, jurisdictions whereby the committed jurisdictions would Germany in July, 2017 states as follows: fail to receive the information about their residents “We will continue our work for a globally fair and rendering the commitment ineffective. The possible modern international tax system and welcome defensive measures against jurisdictions that do not international cooperation on pro-growth tax exchange information under CRS within the committed timelines need to be finalized quickly. Further, the policies. We remain committed to the objective criteria for identifying non-cooperative implementation of the Base Erosion and Profit jurisdictions for defensive measures should also be Shifting (BEPS) package and encourage all updated in view of the progress made. relevant jurisdictions to join the Inclusive Framework. We look forward to the first automatic 13.9.5 G20/OECD Project on Base Erosion and exchange of financial account information under Project Shifting (BEPS) the Common Reporting Standard (CRS) in Base Erosion and Profit Shifting (BEPS) refers September 2017. We call on all relevant to strategies adopted by taxpayers having cross-border jurisdictions to begin exchanges by September operations to exploit gaps and mismatches in tax rules 2018 at the latest. We commend the recent of different jurisdictions which enable them to shift profits progress made by jurisdictions to meet a outside the jurisdiction where the economic activities satisfactory level of implementation of the agreed giving rise to profits are performed and where value is international standards on tax transparency and created. BEPS has been a cause of concern for look forward to an updated list by the OECD by developing and emerging economies for long as it erodes our next Summit reflecting further progress made their tax base depriving them of much needed resources towards implementation. Defensive measures for developmental activities. It is also unfair to general will be considered against listed jurisdictions. We taxpaying public and further provides an unfair competitive continue to support assistance to developing advantage to Multinational Enterprises (MNEs) vis-à-vis countries in building their tax capacity. We are domestic companies having no opportunities for the also working on enhancing tax certainty and with BEPS strategies. the OECD on the tax challenges raised by digitalization of the economy. As an important tool At the request of G20 Finance Ministers, in July in our fight against corruption, tax evasion, 2013 the OECD, working with G20 countries, launched terrorist financing and money laundering, we will an Action Plan on BEPS, identifying 15 specific actions advance the effective implementation of the needed in order to equip governments with the domestic international standards on transparency and and international instruments to address this challenge. beneficial ownership of legal persons and legal The Action Plan provides for 15 actions to be undertaken arrangements, including the availability of to put an end to double non-taxation and ensure that 158Department of Revenue III profits are taxed where the economic activities that The actions outlined in the plan and expected outcome generate them are carried out and where value is created. are summarized below: Action Expected Output 1. Address the Tax Challenges of the Digital Report identifying key issues raised by the digital economy Economy and possible actions to address them 2. Neutralise the effects of hybrid mismatch Changes to the Model Tax Convention arrangements Recommendations regarding the design of domestic rules 3. Strengthen CFC rules Recommendations regarding the design of domestic rules 4. Limit Base Erosion via Interest Recommendations regarding the design of domestic rules Deductions and other financial payments Changes to the Transfer Pricing Guidelines 5. Counter harmful tax practices more Finalise review of member country regimes effectively, taking into account Strategy to expand participation to non-OECD members transparency and substance Revision of existing criteria Changes to the Model Tax Convention 6. Prevent Treaty Abuse Recommendations regarding the design of domestic rules 7. Prevent the artificial avoidance of PE Changes to the Model Tax Convention status Changes to the Transfer Pricing Guidelines and possibly 8. Assure that Transfer Pricing Outcomes to the Model Tax Convention are in Line with Value Creation / Changes to the Transfer Pricing Guidelines and possibly Intangibles to the Model Tax Convention 9. Assure that Transfer Pricing Outcomes Changes to the Transfer Pricing Guidelines and possibly are in Line with Value Creation / Risks to the Model Tax Convention and Capital 10. Assure that Transfer Pricing Outcomes Changes to the Transfer Pricing Guidelines and possibly are in Line with Value Creation / Other to the Model Tax Convention High-risk transactions 11. Establish methodologies to collect and Recommendations regarding data to be collected and analyse data on BEPS methodologies to analyse them 12. Require taxpayers to disclose their Recommendations regarding the design of domestic rules aggressive tax planning arrangements 13. Re-examine Transfer Pricing Changes to Transfer Pricing Guidelines and Documentation Recommendations regarding the design of domestic rules 14. Make dispute resolution mechanisms Changes to the Model Tax Convention more effective Report identifying relevant public international law issues 15. Develop a Multilateral Instrument Develop a multilateral instrument The G20 countries entrusted the work of (Argentina, Brazil, China, India, Russia, Saudi Arabia and development of recommendations on these 15-point South Africa) would participate in the “Project on BEPS” Action Plan to the OECD. During the G20 meeting, India on an equal footing. The OECD agreed to modify its rules for associating non-OECD G20 countries on an equal and some other non-OECD G20 countries raised an issue footing and a formal letter requesting the non-OECD G20 that the base erosion and profit shifting is a global concern countries to become an Associate was made. It was also and accordingly the recommendations should be decided that the other developing and low-income developed through global consensus and not by the countries will also be associated with the work on BEPS OECD countries only. After detailed negotiations in G20, and their inputs will be taken while developing the it was agreed that all the eight non-OECD G20 countries recommendations. 159Annual Report 2017-2018 India accepted the offer to become an agreed upon, and have been made public on 5th October, “Associate” in the BEPS Project through our acceptance 2015, and the same was presented to G20 Finance letter dated 31st July, 2013. The other seven non-OECD Ministers during the meeting in Lima, Peru on 8th October, G20 countries also accepted the offer. In accordance with 2015 and were endorsed by the G20 Leaders at Antalya, the OECD Council’s resolution, the eight “Associates” are Turkey in November, 2015. participating on an equal footing with OECD countries, The recommendations made under the BEPS including participation in its Bureau in the Committee Project will be implemented through domestic legislations overseeing the project in the discussions and in the and treaty provisions in a coordinated manner, and will decision-making process. As per this resolution, the be supported by targeted monitoring and strengthened Associates “would be expected to associate themselves transparency. These measures include the following: in the outcome of the project or of the discussions unless they state otherwise”. (a) Adoption of minimum standards to tackle issues The CFA has a Bureau consisting of 12 members. in cases where no action by some countries The Bureau oversees the progress of the Project and would have created negative spill overs (inclusive participate in the decision-making process. Since in the adverse competitiveness impacts) on other BEPS Project, 8 non-OECD G20 countries are countries such as consistent implementation in participating on an equal footing, it was decided to expand the areas of treaty shopping, country by country the Bureau to “Bureau Plus” for BEPS Project and it was reporting, fighting harmful tax practices and also decided to include 3 out of 8 non-OECD G20 improving dispute resolution. countries in the Bureau Plus through a process of elections by these 8 countries. Accordingly, India, Brazil, (b) Agreement on common approaches for changing China and South Africa now represent the eight non- domestic legislation relating to neutralizing hybrid OECD G20 countries in the Bureau Plus. mismatches and limiting interest deductibility. The Indian delegates participated in the meetings (c) Providing guidance based on best practices for of the Focus Group, Working Parties and CFA on an equal countries which seek to strengthen their domestic footing in finalizing these deliverables with the twin purpose legislation relating to mandatory disclosure by of (a) collaborating with other countries in development of taxpayers of aggressive or abusive transactions, recommendations to prevent base erosion and profit arrangements, or structures, and the building shifting and (b) safeguarding the interests of developing countries in development of new standards. blocks of effective Controlled Foreign Company (CFC) rules. Developing countries and other non-OECD/non- G20 economies have been extensively consulted through (d) Development and analysis of options to tackle the numerous regional and global fora meetings and their problems posed by digital economy including input has been fed into the work. Business digital presence test, introduction of a withholding representatives, trade unions, civil society organizations tax and equalization levy in addition to identification and academics have also been very involved in the of implementation mechanism to facilitate VAT process through opportunities to comment on discussion collection in the country where the consumer is drafts and their comments were discussed through located which is particularly relevant for online consultation meetings and webcasts. ordering and delivery of goods and services. The first set of seven deliverables described in (e) Launch of an innovative mechanism to update the Action Plan was presented to G20 Finance Ministers the global network of more than 3 500 bilateral in September 2014 and to Leaders in November, 2014. These include recommendations for realigning taxation tax treaties. 90 countries had joined an ad hoc and relevant substance to restore the intended benefits group to draft a multilateral instrument which has of international standards both in the area of bilateral tax been finalized and adopted in November 2016. treaties by preventing treaty abuse and in the area of This will implement the treaty-related BEPS transfer pricing to assure that transfer pricing outcomes measures and facilitate the modification of are in line with value creation in the area of intangibles bilateral tax treaties in a synchronized and and ensuring better transparency for tax administrations efficient manner, without the need to invest and better consistency of requirements for taxpayers resources to bilaterally renegotiate each treaty. through improved transfer pricing documentation and a template for country-by-country reporting. Implementation of BEPS Recommendations After an elaborate exercise and discussions in Countries are sovereign and it is therefore up to Focus Groups, Working Parties and the Committee of them to implement the changes but it is expected that Fiscal Affairs, a holistic package of measures have been they will implement their commitments in the case of the 160Department of Revenue III standards, and that they will seek consistency and meeting, the G20 Finance Ministers, noting that the first convergence when deciding upon the implementation of meeting on inclusive framework was to be held in June the other measures. G20 and OECD countries continued 2016, encouraged all relevant and interested jurisdictions to work on equal footing to complete the areas which to join the new inclusive framework on an equal footing. required further work in 2016 and continue to do so in The work of Inclusive Framework includes consideration 2017, such as finalizing transfer pricing guidance on the of the manner in which non-OECD countries will consider application of transactional profit split methods and on themselves committed to the agreed rules and their financial transactions, discussing the rules for the implementation. India continues to contribute to this attribution of profits to permanent establishments in light important phase of the BEPS Project. of the changes to the permanent establishment definition, The first meeting of the CFA and BEPS Inclusive a continued examination of the issues relating to the Framework was held in Kyoto, Japan from 30th June 2016 broader question of treaty entitlement of investment funds and 1st July 2016. In this meeting several governance (other than collective investment funds i.e. non-CIV issues for the inclusive framework as well as future road funds).G20 and OECD countries will keep working on an map were discussed and decided. As on December 31, equal footing to monitor the implementation of the BEPS 2017, total 111 members have joined the Inclusive measures. The monitoring will consist of an assessment Framework. The Steering Group of the Inclusive of compliance with the minimum standards in the form of Framework comprises members from 22 countries. India a periodic and public report on what countries have done has a representation in the Steering Group of the Inclusive to implement the BEPS recommendations. It will involve Framework. India strongly supports the inclusive some form of peer review which will have to be defined approach of the framework to monitor and review the and adapted to the different actions with a view to success of implementation of the BEPS recommendations, establishing a level playing field by ensuring all countries and would collaborate with all the G-20, developing implement their commitments so that no country would countries and international organizations to ensure that gain unfair competitive advantage. there is a level playing field amongst various economies. It may be noted that India participated in the BEPS India shall actively participate in the Inclusive Framework Project on an equal footing engaging constructively and to also ensure that the concerns of the developing extensively through different mechanisms including direct countries are appropriately addressed in the implementation phase. participation in Working Parties and Focus Groups set up under the Committee on Fiscal Affairs (CFA) of OECD in Today 111 countries and jurisdictions who have finalizing the deliverables with the twin purpose of: joined the Inclusive Framework have all committed to implement the BEPS package, and are now progressing (a) collaborating with other countries in development the Inclusive Framework’s mandate, which is to: of recommendations to prevent base erosion and profit shifting; and i. Review the implementation of the four BEPS minimum standards; (b) safeguarding the interests of India and other ii. Gather data for the monitoring of the other developing countries in development of new aspects of implementation, including under BEPS standards. Action 1 (on the tax challenges of the digital The recommendations made under the BEPS economy) and Action 11 (on measuring and Project have been made on the basis of consensus monitoring BEPS); arrived at by the OECD (34 in number) and non-OECD iii. Finalize the remaining technical work to address G20 countries (8 in number) and thus India is an equal BEPS challenges; and participant in making such recommendations. A summary iv. Support jurisdictions in their implementation of of the recommendations in the final report with regard to the BEPS package, including by providing further the 15 Action Points along with action taken on those guidance on the standards and by developing recommendations is placed at Annexure-2. toolkits for low income countries. BEPS Inclusive Framework In last one-year significant progress has been In Ankara in September 2015, the OECD was made in implementation of the BEPS package, including mandated by the G20 Finance Ministers to build an the four minimum standards, and these measures are inclusive framework for implementation and to report to already having major impact on BEPS activities. The work them by early 2016. The architecture for the inclusive of the Inclusive Framework in this 12-month period has framework was agreed at the January and March been related to the establishment of the peer review meetings of the CFA and welcomed by G20 Finance processes, the ongoing standard-setting work and Ministers at their meeting in Shanghai on 26-27 February delivery of guidance on implementation, as well as the and 14-15 April 2016 at Washington D.C. In the April assistance being delivered, often in partnership with other 161Annual Report 2017-2018 international organizations and regional bodies, to ensure financial account information, exchanged amongst all countries and jurisdictions are supported in the BEPS countries on an automatic basis. implementation process. In all these processes India has On the request of the G20, the OECD, working played active role and supported positive initiatives with all the non-OECD G20 countries, including India, keeping in mind concerns of developing nations. developed a single uniform standard for automatic 13.9.6 Automatic Exchange of Information (AEOI) exchange of information, the Common Reporting Standards (CRS) on AEOI. This new global standard was Automatic Exchange of Information (AEOI) is endorsed by the G20 Finance Ministers in their meeting systematic and periodic transmission of “bulk” taxpayer in Cairns on 21.09.2014 and by the G20 Leaders in their information by the source country to the residence summit at Brisbane on 16th November, 2014. As stated country, which is possible under most of the DTAAs and earlier, the Hon’ble Prime Minister in his intervention at Multilateral Convention on Mutual Administrative the G20 Leaders’ Summit on 16.11.2014 in Brisbane Assistance in Tax Matters. strongly supported the new global standard on automatic exchange of information and stated that this would be Although exchange on “request basis” has instrumental in getting information about unaccounted resulted in improving transparency, its scope is limited money hoarded abroad and enable its eventual since the offshore financial centres and tax havens are repatriation. Government of India is emphasising at obliged to provide information only when the requesting various international fora, the need to ensure that every State has some information already in its possession and financial centre commits to the new reporting standards investigation in the particular case has already and further, that their implementation at global level is commenced. The information on “request” thus may have monitored by the Global Forum. limited effect in identifying the financial assets hidden in offshore jurisdictions and tax havens through a complex In keeping with its leadership role in this area, web of entities. India also joined a group of 49 countries as “early adopters” of the new standards and has commenced Accordingly, the Government of India took a exchange of information in 2017. As on date, while 105 leading role in international fora, including at G20 and countries/jurisdictions, including India, have expressed Working Party 10 of the OECD, towards building an their commitment to implement CRS on AEOI in certain international consensus amongst major economies of the timeframe, 41 developing countries are yet to set the date world that the problem of offshore tax evasion and flow for first automatic exchange.The current status of of illicit money can be addressed only by the free flow of commitment for AEOI is tabulated below: 162Department of Revenue III For implementation of AEOI under CRS, as on to provide information about accounts held with them by 31.12.2017 98 countries/jurisdictions have joined the USA persons or entities (firms/companies/trusts) Multilateral Competent Authority Agreement controlled by USA persons. (“MCAA”)which provides a framework for exchange of Under IGA, India will receive information about information on automatic basis as per the new global Indian tax residents who have financial accounts in the standards. They have also signed a declaration to comply USA, which will include, with the provisions of the MCAA with an intended date for commencement of exchange of information on • The name, address and Indian TIN of any person automatic basis, which for most countries/jurisdictions is that is resident of India and is an account holder from 2017. After joining the framework of the MCAA, as of the account; above, countries/jurisdictions need to enter into bilateral/ • Account number; multilateral arrangements for exchanging information subject to confidentiality and data safeguards • Gross amount of interest, US source dividends requirements in the recipient country/jurisdiction. India or other income paid or credited, depending on has signed MCAA on 3rd June 2015. the nature of the financial account. As committed by India, the first exchanges have Reporting of information under the IGA with USA taken place in September 2017and the same has is began from 30th September, 2015 and information reflected in the AEOI Report of the Global Forum. India pertaining to the calendar year 2014, 2015 and 2016 has has automatically exchanged information for calendar already been exchanged between the two countries. year 2016 on reciprocal basiswith 40 jurisdictions with Implementation of AEOI and FATCA whom AEOI has been activated. Further, four jurisdictions have provided information to India on non-reciprocal For implementation of FATCA and CRS, basis. necessary legislative changes were made through Finance (No. 2) Act, 2014, by amending section 285BA The new global standards are very wide in scope of the Income-tax Act, 1961. Income-tax Rules, 1962 were and oblige the treaty partners to exchange wide range of amended vide Notification No. 62 of 2015 dated 7th financial information after collecting the same from August, 2015 by inserting Rules 114F to 114H and Form financial institutions in their country/jurisdictions including 61B to provide a legal basis for the Reporting Financial information about the ultimate controlling persons and Institutions (RFIs) for maintaining and reporting beneficial owners of entities. information about the Reportable Accounts. AEOI based on CRS, when fully implemented, A Guidance Note was released on 31st August would enable India to receive information from every 2015 to provide guidance to the Financial Institutions, country in the world including offshore financial centres Regulators and officers of the Income Tax Department and tax havens and would be the key to prevent for ensuring compliance with the reporting requirements international tax evasion and avoidance and would be provided in Rules 114F to 114H and Form 61B of the instrumental in getting information about money stashed Income-tax Rules, 1962. The Guidance Note is intended abroad and ultimately bringing it back. to explain the complex reporting requirements and provide 13.9.7 Inter-Governmental Agreement (IGA) with further guidance wherever required. To address the USA for purposes of FATCA evolving issues in the implementation the Guidance Note has been updated on 31.12.2015, 31.05.2016 and India entered into Inter-Governmental Agreement 30.11.2016. The financial institutions submitted their (IGA) with the USA under the Foreign Account Tax report in form 61B by 31.05.2017 based on which India Compliance Act (FATCA) on 9th July 2015. This will has exchanged information automatically under FATCA obligate the Indian financial institutions to provide financial and CRS on 30th September, 2017. India has also information to Indian tax authorities, which will then be received information from the USA in 2017. transmitted to USA automatically. Similarly, under the IGA the USA financial institutions will also be providing 13.9.8 India’s Association with OECD information to USA tax authorities, which will be The OECD is an organization of 34-member transmitted to India automatically. The USA had enacted countries who are signatories to the Convention on the the FATCA in 2010 with the objective of tackling tax Organization for Economic Co-operation and evasion by obtaining information in respect of offshore Development. Tax issues have always been an important financial accounts maintained by USA residents and part of OECD’s overall activities and are undertaken by citizens. The provisions of FATCA essentially provide for the Committee on Fiscal Affairs (CFA) and its subsidiary 30% withholding tax on US source payments made to bodies. These subsidiary bodies carry out the work on a Foreign Financial Institutions (FFIs) unless they enter into number of different topics, including development of the an agreement with the Internal Revenue Service (IRS) Model Tax Convention (Working Party 1), Tax Policy and 163Annual Report 2017-2018 Statistics (Working Party 2), Transfer Pricing (Working as experts. During 2017, 39 Indian officers Party 6), Consumption Taxes (Working Party 9), participated in 23 events abroad. Further, training Exchange of Information (Working Party 10) and events are hosted in NADT, Nagpur and OECD Aggressive Tax Planning (Working Party 11). experts are invited to lead these events. In addition the CFA has established a number of During the year 2017, following two events were other subsidiary bodies such as the Forum on Tax held at NADT, Nagpur: Administration, the Forum on Harmful tax Practices, the Task Forces on Tax Crime and Other Crimes, the Task i. Advanced Tax Treaties from 4th- Force on the Digital Economy and the Task Force on Tax 8thSeptember, 2017 and Development. The Centre for Tax Policy and Administration (CTPA) acts as the Secretariat to the CFA ii. TPG and Toolkits for Implementation from and its subsidiary bodies and provides technical expertise 4th-8th December, 2017 and support to the CFA. (b) Forum on Tax Administration (FTA) India’s engagement with OECD in the field of Active participation of India was ensured in the Direct Taxes began in the 1990s in the form of delivery of technical development programme at the National various activities for tax cooperation undertaken Academy of Direct Taxes at Nagpur. Since then, India by OECD through the Forum on Tax has been associated with the taxation work of OECD and Administration (FTA), which is an international since 2006 have been accorded the status of “Participant” forum for co-operation between revenue bodies. (earlier known as “Observer”) to the work of CFA and in The activities and projects undertaken by FTA this capacity was participating in the meetings of CFA aim to improve taxpayer services and tax and its subsidiary bodies, although as “participant”, India compliance by helping revenue bodies increase do not take part in the decision-making process and is the efficiency, effectiveness and fairness of tax not bound by the CFA’s conclusions, proposals or administration and reduce the costs of decisions. compliance. During the year, India has The Indian delegates have been participating in participated in meeting on digital tax payer the meetings of Working Parties and Task Force in view services organized by FTA and the best practices of the prominent role of OECD in development of and the meeting were meaningfully shared with international standards in the areas of international the Tax Payer Services (TPS) Division of the taxation, transfer pricing and exchange of information. Income Tax Department. The policy adopted by India was that of continuous engagement and participation, and influencing the Representation of India and active participation development of international standards to protect our of India was also ensured in Working Party-1 revenue interests while ensuring at the same time that in (WP-1) meeting and in the follow-up work areas where the stand and position taken by India is not undertaken as per the agreed Final Reports of in conformity with the stand taken by the OECD, the Base Erosion and Profit Shifting (BEPS) project, reservations and positions of India are taken into account particularly in action 6 for preventing treaty abuse, during the updating of various standards and guidelines action 7 in preventing artificial avoidance of PE being developed by the OECD. status and action 1 for addressing tax challenges For the last two years, the work of OECD is primarily of digital economy. Participation of India was also concentrated on BEPS and AEOI discussed above. Some ensured in the development of the draft of the other areas of OECD’s work related to taxation in Multilateral Instrument (MLI), which is a which India is associated are summarized below: multilateral treaty which seeks to modify bilateral tax treaties of signatory states to implement the (a) OECD Global Relations Training Programme tax treaty measures developed in the BEPS Each year, under the Global Relations Project. Concerns of India and its preferences Programme (GRP), OECD holds around 75 were brought to the notice of global community events on a variety of international tax policy and as part of India’s participation and it was ensured administration topics bringing together some that the outcomes proposed and agreed therein 2000 serving tax officials from over 100 countries are in accordance with India’s interests. in more than 20 venues globally. (c) Forum on Harmful Tax Practices (FHTP) India’s engagement with OECD’s Global Relations Programme (GRP) includes Forum on Harmful Tax Practices (FHTP) was participation of tax officers in training events established following the publication of OECD’s abroad both in the capacity of participants as well 1998 report on “Harmful Tax Competition: An 164Department of Revenue III Emerging Global Issue” to identify those (including spillover effects across countries) and preferential tax regimes that have harmful effects. actions to address it. Main work of FHTP is to review preferential tax India has been regularly attending the previous regimes of member countries and to make meetings of Working Party 2 and provided inputs recommendations to remove features that create for Measuring and Monitoring the Scale of BEPS harmful effect or to abolish the regime. and its Countermeasures. The Working Party No. Forum on Harmful Tax Practices (FHTP) of CFA, 2 provides us an opportunity to convey India’s OECD is presently undertaking work under Action views on BEPS Action 11 recommendations and 5 of Base Erosion and Profit Shifting (BEPS) next steps. Engagement with WP2 will help us Action Plan. Under Action Item 5 of BEPS Action in learning international best practices and Plan, FHTP is required to deliver three outputs sharing valuable experience. (i) Finalisation of review of member/associate (e) OECD’s Working Part 10 country regimes; (ii) A strategy to expand participation to non-OECD member countries; (iii) The mandate of OECD Working Party 10 (WP Revision of existing criteria. 10) on Exchange of information and Tax Compliance is to provide support for During 2017, India’s transparency framework improvements in the legal, practical and under Action 5 of the Base Erosion and Profit administrative framework to facilitate exchange Shifting was reviewed. The information gathering of information and mutual administrative process of India has been held ot be sound. India assistance between the countries with the view has the necessary legal framework and to improving tax compliance and ensuring administrative processes in place for exchanging protection of taxpayers’ rights. information and India has met all the terms of reference for confidentiality during the course of The financial crisis of 2009 was a watershed for the review process. fighting tax havens when the G20 announced that (d) OECD’s Working Party 2 the “era of bank secrecy is over”. Global Forum on Transparency and Exchange of Information India participated in Working Party 2 (WP2) for Tax Purposes was restructured to strengthen meeting in the capacity of being a G-20 member. the capacity for co-operation in international tax India’s engagement with Working Party No.2 of matters and it developed a standard of OECD started in the year 2011. In the changing transparency and exchange of information for tax international tax environment, a number of purposes (EOIR). It was also decided to countries expressed concern about how implement automatic exchange of information international standards, on which bilateral tax (AEOI), which is systematic and periodic treaties are based, allocate taxing rights between transmission of “bulk” taxpayer information by the source and residence States. The G20 finance source country to the residence country, on a ministers called on the OECD to develop an global basis to curb offshore tax evasion. The action plan to address BEPS issues in a co- G20 Leaders in the Los Cabos summit in June, ordinated and comprehensive manner. OECD 2012, accordingly requested the OECD to work therefore formulated Action Plan focused on with G20 countries to develop a Common addressing Base Erosion and Profit Shifting Reporting Standard (CRS) on Automatic (BEPS). Exchange of Information (AEOI). The OECD One of the main items in the agenda is Base Working Party 10 (WP 10) on Exchange of Erosion and Profit Shifting (BEPS)’s Action Item information and Tax Compliance was entrusted No.11. The object of this action item is to develop with the work of developing standards for AEOI. recommendations regarding indicators of the WP 10, working with G20 countries, developed scale and economic impact of BEPS and ensure the CRS on AEOI which was endorsed by the that tools are available to monitor and evaluate G20 Finance Ministers in their meeting in Cairns the effectiveness and economic impact of the on 21.09.2014. The Hon’ble Prime Minister in his actions taken to address BEPS on an ongoing intervention at the G20 Leaders’ Summit on 16th basis. This will involve developing an economic November, 2014, in Brisbane strongly supported analysis of the scale and impact of BEPS the new global standard on AEOI and stated that 165Annual Report 2017-2018 this would be instrumental in getting information ability of portfolio investors to effectively claim about unaccounted money hoarded abroad and the reduced rates of withholding tax to which they enable its eventual repatriation. are entitled under tax treaties or the domestic law of the country of investment, thereby The Government of India took a leading role in providing tax certainty. international fora, including at Working Party 10 of the OECD, towards building an international (f) OECD’s Working Part 11 consensus amongst major economies of the WP11 is entrusted with the responsibility of world that the problem of offshore tax evasion addressing the following BEPS Action Points and flow of illicit money can be addressed only related to ‘Aggressive Tax Planning’ (ATP): by the free flow of financial account information, exchanged amongst countries on an automatic • Action Item No. 2 – Neutralize the effects of basis. In keeping with its leadership role in this hybrid mismatch arrangements; area, India has also joined a group of 48 countries as “early adopters” of the new standards and has • Action Item No. 3 – Strengthening Controlled committed to exchange information automatically Foreign Corporation (CFC) Rules; starting from 2017.WP 10 has not only played • Action Item No. 4 – Limit Base Erosion via the instrumental role in development of AEOI Interest Deductions and other Financial Standards, it is even now continuously issuing payments; and FAQs and other guidance to clarify the matters pertaining to implementation of CRS on AEOI. A • Action Item No. 12 – Require taxpayers to meeting of the WP 10 was held in March, 2017 disclose their aggressive tax planning in which various issues related to AEOI were arrangements [Mandatory Disclosure discussed and clarified. The Business Advisory Regime (MDR)]. Group pointed out the issues that were being faced by the financial institutions in reporting the India has been actively associated with WP11 data as mandated under CRS. Also, FAQs with and in 2015 Indian delegate was elected as a Vice-chair respect to the due diligence procedures expected of Working Party 11, being only the second non-OECD from the financial institutions were decided during country (China is the other) to have a representation in a the meeting. Deliberations on CRS Loophole leadership position of the subsidiary body of OECD. As a Strategy i.e. strategies being adopted to avoid Vice-Chair of WP11 Indian delegate has the additional getting reported under CRS, were also responsibility of conducting WP11 meetings, participating discussed. in the decision-making process of the Bureau of WP11, to determine the agenda/program of work for WP11 etc. In the WP 10 meeting in October, 2017, among other issues, there was a discussion on draft The main issues that have been discussed and report of Model Mandatory Disclosure Rules for finalized in WP 11 in 2017 are the report on Hybrid CRS avoidance arrangements and Opaque Branches, Mandatory Disclosure Rules on CRS Offshore Structures. The report sets out the key Avoidance Arrangements and Opaque Offshore elements of mandatory disclosure rules that are Structures. designed to target the most high risk structures 13.9.9 Cooperation with BRICS Countries on Tax and promoters, while limiting the compliance Matters burdens on low-risk taxpayers. This initiative is likely to benefit participating jurisdictions including BRICS is an important multilateral block that India in detecting and dealing with CRS seeks to represent the interests of the developing avoidance arrangements and hence India is countries. The BRICS countries together account for 30% actively participating in finalisation of these Rules. of the global land, 43% of the global population and 21% To take the benefit of the AEOI platform that was of the world’s GDP. This platform aims to promote peace, designed as per CRS, the Tax Relief and security, prosperity and development in multi polar, Compliance Enhancement (“TRACE”) project interconnected and globalized world. The BRICS has been taken up by WP 10 during 2017. The countries represent Asia, Africa, Europe and Latina TRACE system aims to remove the America, which gives their cooperation a transcontinental administrative barriers that currently affect the dimension making it especially valuable and significant. 166Department of Revenue III A meeting of the BRICS Heads of Revenue and India participated in the Technical Conference by Experts on Tax Matters was held at Hangzhou, China CATA during the year in Accra, Ghana. Indian contribution from the 25th to the 28th of July, 2017 in which taxation was widely appreciated. of the digital economy, Mutual Agreement procedures, 13.9.11 Income Tax Overseas Units Anti treaty abuse, capacity building and multilateral tax cooperation amongst BRICS countries was discussed. A During the year 2017, Income Tax Overseas memorandum of cooperation in respect of tax matters Units (ITOUs) remained functional in eight Indian Missions was signed by India during the course of this meeting. viz. Mauritius, Singapore, France, Japan, Netherlands, This MoC will further facilitate and strengthen international UK, Germany and USA. IRS officers have been posted cooperation and capacity building in taxation leading to as First Secretary (Economic), in these Income Tax increase in effectiveness of tax administrations. Overseas Units (ITOUs). During this year tenure of incumbents posted at seven ITOUs, namely Mauritius, South Africa hosts the BRICS Heads of Tax Singapore, France, Japan, Netherlands, UK and USA Authorities and Experts meeting in 2018. Accordingly, expired. The process of appointing replacement officers officers of the South African Revenue Service (SARS) as per approved policy, has been completed and these visited India in December 2017 to interact with the logistics officers are in the process of joining the Missions. team that made the arrangements for logistics, security, transport arrangements at BRICS Heads of Tax The ITOU posts were created to assist Indian Authorities and Experts meeting at Mumbai in 2016. Competent Authority on matters relating to exchange of information under DTAAs, other matters concerning 13.9.10Coordination with other Multilateral Agencies Double Taxation Avoidance Agreements (DTAAs), India is an Associate member of Center for Inter facilitate Mutual Agreement Procedure (MAP) cases American Tax Administration (CIAT), a multilateral under DTAAs, facilitate Advance Pricing Agreements organization. The efforts of CIAT are focused on (APA) and to liaison with various Departments, liaison cooperation between the tax administrations of different with investors, etc. jurisdictions with a view to work jointly against international 13.9.12Mutual Agreement Procedure tax evasion. To fulfil this objective, CIAT organizes different activities, studies, workshops, seminars etc. Multinational Enterprises (MNEs) operating wherein tax administrations can share their suggestions, across the world are subjected to transfer pricing audit in practices, experiences, etc. During 2017, India various countries to ensure that their related party participated in the General Assembly, Technical international transactions are priced at arm’s length. Conference and Risk Assessment Network meeting held Sometimes, the income of the group is taxed in various by CIAT. Indian contributions to the event were jurisdictions and disputes arise due to economic double appreciated. taxation of the same income in the hands of different taxpayers of the same MNE group. Similarly, MNEs also Commonwealth Association of Tax Administrators face juridical double taxation where the same income is (CATA) was established as a result of decision taken at taxed in the hands of the same taxpayer in different the meeting of the Commonwealth Finance Ministers in jurisdictions. To resolve such disputes, the Double Barbados in 1977. India has been an important member Taxation Avoidance Agreements (DTAAs) provide a of Commonwealth Association of Tax Administrators mechanism through the “Mutual Agreement Procedure” (CATA) since 1979. CATA’s activities include organizing Article of such DTAAs. Under this mechanism, the annual technical workshops, high quality training competent authorities of countries having a DTAA programmes for tax officials, in country training between them may consult each other and reach an programmes tailored to meet specific needs of members, understanding to avoid double taxation. publication of a quarterly newsletter, provision of India has a wide network of DTAAs and has been consultancy services and research facilities for members able to successfully resolve double taxation issues with upon request, supply of information to members, etc. various treaty partners by effectively using the Mutual In August 2017, on request by CATA, a workshop Agreement Procedure (MAP) Article. The largest number on investigation and intelligence gathering was conducted of tax disputes is with the United States of America, which by the National Academy of Direct Taxes in which 29 tax is not surprising because both countries have a very high officials from 15 CATA member countries had attended. volume of trade and American MNEs have significant The workshop was appreciated and requests for the business presence in India. This calls for a constant and second workshop have been received. deep engagement by the Indian competent authority with 167Annual Report 2017-2018 the American competent authority. India also has a APA; etc. Besides, Rule 44GA was inserted to provide number of tax disputes with United Kingdom, Japan, for procedural aspects while dealing with bilateral or China, Netherlands, Canada, Switzerland, Australia, multilateral APAs. In May 2013, a Taxpayers Information Denmark, Sweden, Finland, etc. Both the Joint Series on “Advance Pricing Agreement Guidance with Secretaries in the Foreign Tax and Tax Research (FT & FAQs” was released to provide clarifications on certain TR) Division of CBDT (JS, FT & TR-I and JS, FT & TR-II) issues. are the two Indian competent authorities. While JS, FT & The Advance Pricing Agreement (APA) Scheme TR-I is the competent authority for North American and was introduced to reduce litigation in transfer pricing European countries, JS, FT & TR-II is the competent matters and provide tax certainty to Multinational authority for the rest of the world. Enterprises (MNEs) doing business in India. It was Between 1st April, 2017 to 31st December, 2017, provided that APAs could be entered into with taxpayers bilateral meetings for resolving tax disputes under MAP for a maximum period of 5 years in respect of international have been held with the competent authorities of USA transactions between Associated Enterprises (AEs) within (twice), United Kingdom, Japan, Switzerland, Australia, a MNE group. The APAs would determine the Arm’s Netherlands, Finland, etc. More such meetings have been Length Price (ALP) of such international transactions and/ scheduled till 31st March, 2018 with USA, Japan, Canada, or specify the manner in which the ALP is to be UK, etc. The meetings have proved to be very successful determined. in resolving various disputes relating to double taxation. Legislative provisions for Rollback of APAs were At the October-November, 2017 meeting between the brought into the Income-tax Act, 1961 through the Finance competent authorities of India and USA at Washington (No. 2), Act 2014 in July, 2014. The Rules governing the D.C., about 100 pending disputes of double taxation were Rollback of APAs were notified in the Income-tax Rules, agreed to be resolved. Similarly, a number of disputes 1962 on 14th March, 2015 [Rules 10 MA and 10 RA] and were agreed to be resolved during meetings with Japan the existing APA Scheme got amended accordingly. and United Kingdom. Subsequently, CBDT issued a Circular on 10th June, 2015 The Mutual Agreement Procedure (MAP) has [Circular No. 10/2015] to provide clarifications on certain proved to be a very useful instrument for India in resolving issues related to the Rollback provisions in a question long-standing and complex issues of double taxation. and answer format. During the period 1st April, 2014 to 31st December, 2017, The Rollback provisions allow the terms and almost 500 tax disputes have been resolved under MAP conditions of the APA to be rolled back for a maximum of by the Competent Authorities of India through negotiations 4 years prior to the first year of the APA period. Thus, a with their counterparts of various countries. Along with taxpayer would be able to have certainty in matters of the Advance Pricing Agreement (APA) scheme of the transfer pricing for a maximum period of 9 years by Government of India, MAP has come to be recognized applying for an APA with Rollback. as an effective and efficient alternate dispute resolution mechanism. Together, APA and MAP have helped in Under the APA Scheme, APAs can be multilateral reducing tax disputes, fostering a non-adversarial tax or bilateral (involving CBDT and 1 or more countries and regime and have helped in creating a conducive taxation the taxpayers) or unilateral (involving the CBDT only and environment in India. the taxpayer). Over the last four and a half years, more than 700 APA applications have been filed in India. A large 13.9.13Advance Pricing Agreements majority of these applications (about 85%) are for unilateral APAs between the Indian taxpayer and the Advance Pricing Agreement (APA) provisions CBDT. Till 31st December, 2017, 189 Agreements have were introduced in the Income-tax Act, 1961 through the been entered into and it is expected that some more APAs Finance Act 2012. Sections 92CC and 92CD were could possibly be entered into by 31st March, 2018. The introduced in the Act to provide the legislative backing to average time taken by CBDT to conclude an APA is about the APA Scheme, which was notified in the Income-tax 30 months, which is less than the average time taken by Rules, 1962 on 30th August, 2012 [Rules 10F to 10T]. advanced tax jurisdictions like USA and UK. These rules lay down the detailed procedures for filing of pre-filing consultation application; pre-filing consultation; The Competent Authorities of India and Japan payments of fees; filing of APA application; processing of have been meeting regularly to discuss and resolve APA application; withdrawal of APA application; terms and Mutual Agreement Procedure (MAP) and bi-lateral conditions of APA; filing of Annual Compliance Report; Advance Pricing Agreement (APA) cases as per Compliance Audit; revision, cancellation and renewal of provisions of Double Taxation Avoidance Convention 168Department of Revenue III (DTAC) between India and Japan. During the year 12 The details of APA applications received and cases of dispute resolution through Mutual Agreement APAs entered into have been provided in the two tables Procedure have been concluded. below. Table 1: Details of APA Applications Received and Disposed Financial Year No. of No. of Agreements No. of Applications No. of Applications Applications Signed till 31st disposed of due to under Processing Filed December, 2017 withdrawal or other reasons as on 31st till 31st December, 2017 December, 2017 2012-13 146 85 13 48 2013-14 232 82 8 142 2014-15 206 17 2 187 2015-16 132 4 2 126 2016-17 100 1 - 99 2017-18* 6 - 6 Total 822 189 25 608 * Till 31st December, 2017 Table 2: Details of Agreements Signed Financial Year Unilateral APA Bilateral APA Total 2013-14 5 - 5 2014-15 3 1 4 2015-16 53 2 55 2016-17 80 8 88 2017-18* 32 5 37 Total 173 16 189 * Till 31st December, 2017 In April, 2017 the Central Board of Direct Taxes 13.9.14Policy Issues on International Taxation published an APA Annual Report for the first time. The • India’s Active participation in Task Force on Annual Report was an initiative of the CBDT to bring into Digital Economy (TFDE): the public domain various statistical and qualitative aspects of India’s APA programme, with a view to As a part of follow up work on outcomes of Action encouraging discussion and debate amongst taxpayers, 1 report of BEPS project on addressing the policy makers, media, economists, etc. on the strengths challenges of digital economy, India has been and weaknesses of the programme. The first Annual active participant on OECD initiatives relating to Report on the APA programme could not have been digital economy and has consistently supported published for a year better than 2016-17, a year in which the need to address the tax challenges arising out the CBDT managed to enter into 88 APAs. This is a of new business models in digital technology which phenomenal achievement by the CBDT and its officers have transformed the way the business operates. working in the Foreign Tax & Tax Research Division and The Task Force on the Digital Economy (TFDE), in the APA teams at the field level. a subsidiary body of the Committee on Fiscal Affairs (CFA) in which non-OECD G-20 countries The Annual Report is also unique because it participate as Associates on an equal footing with actually condenses the first five years of the programme (1st July, 2012 to 31st March, 2017) into one report. This OECD member countries, was established in was necessary to lend proper perspective to the September 2013 to develop a report identifying programme and also to cover all the years in one tax issues raised by the digital economy and document. It would be the CBDT’s endeavour to come detailed options to address these challenges. India out with regular Annual Reports henceforth. being a member of the TFDE Bureau, has actively 169Annual Report 2017-2018 participated in all the meeting of TFDE during the are prepared and furnished to the C & AG on which C & year and submitted its inputs and comments on AG issues vetting comments, either finalizing the ATN or various issues raised during the meetings. issuing a rejoinder with comments for reconsideration. After incorporating the vetting comments of C & AG and Recently, India has submitted its inputs and rebuttal by the Ministry, the Ministry sends the ATNs online comments on Public Consultation meeting held (through APMS portal) to the Monitoring Cell (MC) under at USA and reiterated its position by stating that the Department of Expenditure (DoE) for placing before the issues arising out of digital economy are not the Public Accounts Committee. simple BEPS issues and they cannot be addressed by other BEPS measure but they have Performance: to dealt separately as suggested in Action 1 report. Committee of Secretaries (CoS) Meeting: This year, During the last meeting held in December 2017, meeting of CoS was held on 21/07/2017. As per India actively participated in drafting of the interim guidelines issued by CoS, Draft paras are required to be report of TFDE which is scheduled to be submitted liquidated within 120 days from the date the report is in G-20 Finance Ministers meeting in April 2018. tabled before Parliament. The taxation of digital economy is an important component of the evolving international tax SAC Meeting: The CoS has mandated that Standing Audit Committee’s monthly meetings be held under the landscape and this report has significant chairmanship of Secretary / FA of the Ministry. The SAC implication for India which is an exporter and user meetings are held regularly. of digital services. Internal Audit • Circulars issued During the year, Instruction No. 6 for Internal Audit Circular 7 of 2017 was issued on 27.1.2017 in the Department has been issued. providing clarification and tax certainty on implementation of GAAR provisions under the Details of work done by different authorities under Income tax Act 1961, which came into effect from the internal audit up to quarter ending on 31/12/2017, are given below: 1st April, 2017. Circular No. 13 of 2017 was issued by this Division Cases audited by the authorities on 11.04.2017 to clarify with respect to taxation of Addl. CIT SAP IAP Total income of sea-farers on foreign going ships 1063 2268 61,140 64,471 Circular 28 of 2017 was issued on 7.11.2017 A statement of Internal Audit Objections which clarifying that indirect transfer provision under the are pending, raised and Settled with revenue effect is IT Act, 1961 shall not apply to non-residents in given below: case of redemption or buyback of share or interest indirectly held in specified funds in India, where Objections Raised/Settled & Balance for the period income therefrom is chargeable to tax in India. 01/04/2017 to 31/12/2017 (FY 2017-18) are as under: 13.10 Audit & PAC Division No. of Objections General Functioning: Number Amount (Rs. In lakh) Given the importance of C&AG and Public Accounts Committee of Parliament in providing checks Opening balance 21,133 11,29,573.14 and balances to the functioning of the Income Tax as on 01/04/2017 Department, the observations of the C&AG by way of Raised 8,850 1,99,652.91 Draft Paragraphs (DPs) and System Appraisals are Total 29,983 13,29,226.05 thoroughly examined by the Audit & Public Accounts Settled 5,665 74,,397.88 Committee (A&PAC) Section of CBDT. The replies/ comments of the Ministry are compiled in consultation Outstanding as on 24,318 12,54,828.17 with the field authorities and then furnished to the C&AG 31/12/2017 and the PAC as the case may be. Monthly and quarterly reports are regularly The Performance Audit Reports and draft paras prepared and submitted. Review meetings to settle audit reported by the Comptroller and Auditor General and the objections and workshop, on internal audit are also held report of PAC on the subjects selected by the PAC are periodically. Besides these the work of inspection is also examined in the Ministry and Action Taken Notes (ATNs) carried out as per Instruction No. 16 of 2008. 170Department of Revenue III 13.11 Pr. DGIT (Systems) and dispatching of PAN cards have been outsourced to two PAN service providers, M/s 13.11.1 Project Name: PAN UTI Infrastructure Technology and Services a) Permanent Account Number (PAN) Limited (UTIITSL) and M/s NSDL e-Governance Infrastructure Limited (NSDL e-Gov). The service PAN (Permanent Account Number) is a 10 digit providers through their network of more than alpha-numeric number allotted by the Income- 17,500 front offices (PAN centres), receive and tax department to taxpayers and to the persons process the PAN application submitted by who apply for it under the Income- tax Act, 1961. applicants. However, the PAN is generated Permanent Account Number (PAN) enables the centrally in the Income-tax department database department to link all transactions of the “person” through a robust software at its National with the department. The transactions linked Computer Centre (NCC) of the Income- tax through PAN include tax payments, TDS/TCS department. Thereafter it is printed and credits, returns of income, specified transactions, dispatched through the service providers. correspondences, and so on. PAN, thus, acts as an identifier for the “person” vis-à-vis the Income- e) PAN Verification Facility tax department. PAN verification facility is provided to the b) Common Business Identification Number Government departments through The Central (CBIN or BIN) Board of Direct Taxes’ (CBDT) e-filing server through the internet. One by one PAN verification PAN has now taken on the role of “identifier” or bulk verification can be done by the users. beyond the Income- tax department as it is now PAN can also be verified through “Know Your required for various activities like opening of bank PAN” facility on official website accounts, opening of demat accounts, obtaining www.incometaxindia.gov.in if name, father’s registration for Goods and Services Tax (GST) name and date of birth (DOB) /date of etc. PAN is leveraged to become Common incorporation (DOI) are known. Business Identification Number (CBIN) or simply Business Identification Number (BIN) for Service for PAN verification is also provided by providing registration to a number of Government Income-tax PAN Service Providers (UTITSL and departments and services. NSDLeGov) to agencies such as (i) Financial institutions (RBI/banks), (ii) Government c) One Person- One PAN agencies, (iii) Persons/entities required to file Annual Information Returns, (iv) Credit card The Income-tax Act permits one person to have companies/institutions (v) Companies and only one PAN. To avoid issuance of duplicate government deductors of TDS for the purpose PAN, the data is checked for duplication by using of verifying PAN of TDS/TCS deductees (vi) the software having phonetic matching algorithm. Department of Commercial Taxes of various In order to leverage the biometric data collected States (vii) Insurance companies (viii) through Aadhaar enrolment it was decided to Educational Institutions established by regulatory include Aadhaar card as a valid proof of identity bodies (ix) KYC registration agency (KRA) (x) (POI), proof of date of birth (PDOB) and proof of Depositories and depository participants (xi) address (POA) document for allotment of PAN Mutual funds (xii) Stock exchanges/commodity under Income-tax Rules, 1962. In order to further exchanges/clearing corporations (xiii) Credit strengthen the de-duplication process, the PAN information companies approved by RBI (xiv) database is being seeded with Aadhaar number Non-banking financial companies approved by for individuals and Company Identification RBI (xv) Insurance repositories (xvi) DSC Number (CIN) for corporate entities. Providers and (xvii) GSTN Network etc. The PAN verification facility provided by PAN service d) PAN Service Providers providers is on chargeable basis. The services related to PAN such as receiving f) Grievances Redressal Machinery: PAN application forms, verification of the documents submitted, digitizing the PAN Grievance redressal machinery related to PAN application form, uploading the data on the NCC is well defined. Whenever a grievance is (National Computer Centre), printing PAN cards received related to PAN, appropriate action is 171Annual Report 2017-2018 taken including forwarding the grievance to field b. Adoption of PAN as BIN formations with guidance and existing PAN has been adopted as Business instructions. The Income-tax department has Identification Number(BIN) for which also launched a special electronic grievance integration of PAN and Ministry of Corporate redressal system called e-Nivaran in order to Affairs(MCA) portal has been taken up for fast track income taxpayer’s grievances and issue of PAN in 4 hours of registration of a ensure early resolution of the complaints. In the company by the Registrar of companies and e-Nivaran website i.e. incometaxindia issue of Corporate Identification efiling.gov.in after submitting the grievance, an Number(CIN). Further PAN is also acknowledgement number is generated based envisaged to serve as an identifier for on which taxpayers’ can track its status. The new different registered entities. As per the system is being used by the Income-tax recommendations of Inter-Ministerial department to record, search, view, transfer, seek Technical Group (IMTG), PAN will serve as information from grievance filer, and resolve the Unique Entity Number (UEN) for different complaints online. Grievances are also received entities registered with different authorities. through Centralised Public Grievance Redressal Legislative changes are being incorporated and Monitoring System (CPGRAMS)/. All in the Income-tax Act/Rules for facilitating grievance related to PAN are downloaded from the use of PAN as UEN. the websites of CPGRAMS/e-Nivaran and after examination, appropriate action is taken. Further, c. Paperless Application using Digital the information about redressal/action taken in Signature Certificate such cases, is uploaded on the website. An online paperless procedure for Grievances are also received by PAN Service application of PAN using digital signature Providers i.e. UTIITSL and NSDL e-Gov. After certificate has been launched at websites examination of the grievances, appropriate of both service providers, M/s NSDL e-Gov remedial action is taken by the PAN Service and M/s UTIITSL. In this procedure a person Providers. If required, approval of the Systems having digital signature certificate can apply Directorate is obtained in specific cases and PAN for PAN through online form 49A and upload applicants are informed accordingly. digitally signed application with scanned copies of proof of identity, proof of date of g) New Initiatives birth, proof of address, photograph and a. Integration with e-Biz portal of DIPP signature without any need for sending physical documents by post. E-Biz programme is a mission mode project of Department of Industrial Policy and d. Paperless Application using Aadhaar Promotion (DIPP), Ministry of Commerce based eKYC and eSignature and Industry to facilitate the investors by An online paperless procedure for providing Single Window clearance like application of PAN using Aadhaar based licensing, environment & land clearances, eKYC and eSignature has been launched approvals from various ministries and at website of PAN service provider M/s departments for start-up businesses. L1 and NSDL e-Gov. In this procedure Aadhaar L3 integration of PAN and TAN services with data is used for allotment of PAN and PAN e-Biz portal of DIPP has been completed. applicant has no need to upload any In L1 integration, the applications for PAN documents. and TAN are received through e-Biz portal and forwarded to PAN Service Providers. In e. Issue of digitally signed ePAN card L3 integration, five services of CIN, PAN, Digitally signed ePAN card is sent on the TAN, EPFO and ESIC have been combined email id provided in PAN application form through common application form INC-29 for immediately after allotment of PAN or corporate entities. The applications received confirmation of changes in PAN data by the through L3 integration are serviced in T+1 Income-tax department. From 1.4.2017 to day by the Income- tax department i.e. PAN 31.12.2017; 1,67,08,060 ePAN cards have are being be allotted within nearly 24 hours. been issued. 172Department of Revenue III f. Integration with Aadhaar based Digital and (iii) to promote fair and judicious tax administration. Locker Under this project, an integrated data warehousing and business intelligence platform is being rolled out in a Integration of DSC based on-line PAN phased manner. application process with Aadhaar based Digital Locker facility of DeitY is available The major achievements are as under: for use by PAN applicants by PAN service i. A State-of-the-Art Data warehouse has been provider UTIITSL & NSDL eGov. In this operationalized under Project Insight with end- facility PAN applicant is able to upload of-day integration of key projects/data sources scanned copies of their POI, POA and of Income Tax Department. The new platform is PDOB documents from their Digital Locker being used for identifying high risk non-filers, IT to on-line PAN application. returns and tax deductors for further verification/ g. PAN Camps investigation. From 1.4.2017 to 31.12.2017, 524 and 935 i. Income Tax Transaction Analysis Centre PAN camps were held by PAN Service (INTRAC) has been operationalized for handling Providers M/s NSDL e-Gov and M/s UTIITSL data integration, data processing, data quality respectively at different remote and rural monitoring, data warehousing, master data sites across the country for providing ease management and data analytics. of access for obtaining PAN in view of ii. A dedicated reporting portal (https:// mandate for quoting of PAN for financial report.insight.gov.in) has been rolled out (soft transactions. PAN camps are regularly held launch) to provide a comprehensive interface during the current financial year to increase between Reporting Entities and the Income-tax the coverage of PAN. Department. The Reporting Portal enables PAN database has shown steady growth in seamless data processing, data quality tune with economic progress. The monitoring and report rectification. progressive number of PANs allotted up to iii. A dedicated compliance portal (https:// 31st December, 2017 (cumulative) is compliance.insight.gov.in) has been rolled out 35,94,59,294. During the current year (up (soft launch) to capture response on compliance to 31st December, 2017) 6,50,33,254 PANs issues in a structured manner for effective have been allotted. compliance monitoring and evaluation. h. Integration of PAN with AADHAAR UIDAI: iv. A new Compliance Management Central Integration of database with UIDAI has Processing Centre (CMCPC) has been already taken place for seeding of Aadhaar operationalized for leveraging campaign with PAN. The seeding of authenticated management approach (consisting of emails, Aadhaar has started w.e.f 01/05/2015 and SMS, reminders, outbound calls, letters) to till 31/12/2017, 15,01,42,059 PANs of support voluntary compliance and resolution of individuals have been seeded with Aadhaar compliance issues. data base, which is approximately 43% of total PANs allotted. During the month of 13.11.3 Project Name: Operation Clean Money December 2017, total 75,85,235 PANs have As a part of post-demonetisation exercise, been authenticated with the Aadhaar Income Tax Department (ITD) had to analyse cash database. Seeding of Aadhaar in remaining deposit data and seek information to identify possible PANs is presently going on. cases of tax evasion. Operation Clean Money (OCM) was 13.11.2 Project Name: Project Insight launched on 31st January 2017, with the mission to “Create a tax compliant society through a fair, Project Insight transparent and non-intrusive tax administration Project Insight was conceptualized to enable ITD where every Indian takes pride in paying taxes”. ITD to meet three goals namely (i) to promote voluntary on-boarded two specialised data analytics agencies and compliance and deter noncompliance; (ii) to impart a business process management agency to augment confidence that all eligible persons pay appropriate tax; departmental capability in analysing the large volume of 173Annual Report 2017-2018 cash deposit data and tracking the compliance status of to prioritise action on potential non-filers. Data analysis taxpayers and reporting entities. The major achievements was carried out to identify potential non-filers about whom are as under: specific information was available in AIR, CIB data and TDS/TCS Returns. The number of non-filers with potential • The cash deposit data was analysed to identify tax liabilities identified in various NMS cycles is as under: persons whose cash transactions did not appear • NMS Cycle 1 (2013): 12.19 lakh in line with the tax payers’ profile. Preliminary assessment was undertaken to analyse • NMS Cycle 2 (2014): 22.09 lakh distribution of large cash deposits across various • NMS Cycle 3 (2015): 44.07 lakh taxpayer segments (e.g. Business, Non-business etc.). This analysis resulted in identification of • NMS Cycle 4 (2016): 58.95 lakh about 17.92 lakh persons for verification process • NMS Cycle 5 (2017): 67.54 lakh in the first phase. Prioritization rules were applied to classify the • Online verification of cash transactions was cases as P1, P2, P3, P4 and P5 priority (P1 being the enabled and the information in respect of the highest priority) for follow-up and monitoring. Bulk letters identified cases was made available in the e-filing were sent in high priority cases seeking to know the window of the PAN holder (after log in) at the submission details of Income tax return. The letters also portal https://incometaxindiaefiling.gov.in. The included summary of the information available with the taxpayer was able to submit online explanation Department along with a customized response sheet. without any need to visit Income Tax office. Email A Compliance Management Cell was set up and SMS were sent to the taxpayers for under the Directorate of Systems to capture the response submitting online response on the e-filing portal. and take follow-up action. A comprehensive online There was an overwhelming response to online monitoring system was implemented in June, 2013 to verification and nearly 11 Lakh persons submitted ensure that information related to non-filers was online response. effectively used by the field Assessing Officers. The • High risk cases were made available to the field information in respect of the target segment was made available to the jurisdictional assessing officers for formation using an internal online portal for continuous monitoring and relevant follow up action. effective monitoring and follow-up. The internal and external portals were integrated to enable CBDT issued SOP to ensure that the field seamless electronic communication with the formations followed a standard procedure in NMS cases taxpayer. to maintain consistency in their approach. The results of the pilot project are very encouraging and many taxpayers • A dedicated web portal for ‘Operation Clean have paid self-assessment tax and filed returns after Money’ (OCM) (https://www.cleanmoney.gov.in) initiation of the pilot project. was launched to enable citizen engagement (pledge, contribution, feedback, social media A ‘Compliance Module’ has been created on the e-filing portal to address various compliance related integration etc.) and taxpayer education. issues. The compliance module shows the underlying • With the continuous flow of information from reasons for non-compliance to the taxpayer and enables various sources including Statement of Financial online capture of response from the taxpayer for further Transactions (SFT), incremental data analysis processing. was conducted (based on fuzzy matching of Under NMS Cycle 6 (AY 2016-17), 35.10 lakh cases were account numbers) to identify new cases for e- identified adopting the thematic risk assessment verification. approach, where income, investment, nature of transaction and type of business criteria has been applied. • Data analytics is being used to match information Cases with priority P1 to P3 identified under NMS Cycle in IT return with cash deposit data (including fuzzy 6 have been pushed on compliance portal for identified matching) and identify high risk cases/groups for non-filers to submit online response. further verification/investigation. Project Name: Refund Banker 13.11.4 Project Name: Non-filers Monitoring System (NMS) Pilot Project The Refund Banker project has enabled system driven process for determination, generation, issue, The Non-filers Monitoring System (NMS) was dispatch and credit of refunds. This project has made conceptualised as a pilot project under the Data the process of delivery of refund completely automated, Warehouse and Business Intelligence (DW&BI) Project speedy and transparent. 174Department of Revenue III Under the Refund Banker Scheme, paper and Depository Ltd. (NSDL) is available under the Scheme. electronic refunds determined by the Income Tax Call centre facility with toll free number 1800-42-59-760 Assessing Officers are sent in electronic files by Income is also available for tracking status of refunds issued Tax Department to the State Bank of India (SBI), which through the scheme. has been designated as the Refund Banker agent of the The status of refunds is updated on the Department. The Refund Banker sends ECS or Direct departmental application with reasons for non- payment Credits to the bank accounts, where the refunds have in case of unpaid or returned refunds, to enable the been processed for electronic payment. In case of paper assessing officers to re-send the refund for payment after refunds, Refund Banker prints and dispatches the refund removing the deficiency. Audit trail and MIS on unpaid/ cheques (payable at par through Core Banking all over unpicked refunds (with ageing) are available on system India) by speed post to the tax-payers. The electronic for monitoring status of issue of refunds. method of payment has reduced the delivery time to 1-2 days as against paper refund which takes 4-8 days. The There has been a steady increase in number and percentage of refunds issued through the scheme. During Assessing Officer’s role in issuing refunds is limited to current Financial Year, 2017- 18 (up to October, 2017), processing the return of income on computer. the percentage of refunds issued through the scheme is A web based status tracking facility in 99.96% of the total number of refunds issued all over collaboration with India Post and National Securities India as under: Financial Year No. of Refunds No. of Other Total Percentage of (Paid)through Refunds (Paid) Refunds Paid through Refund 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 1,35,56,088 22,517 1,35,78,605 99.84% 2015-16 21,008,960 13,162 2,10,22,122 99.93% 2016-17 1,76,59,245 10,617 1,76,69,862 99.94% 2017-18 1,28,87,974 5,622 1,28,93,596 99.96% (upto Oct. 2017) A new mechanism of PAN Account validation Under the project, all payments made in bank are using PFMS has been implemented since last two years uploaded on T+3 basis. Cash payments can be mapped to shift to electronic payment of refund. Under this with the bank and the assessee with PAN/TAN arrangement, the PAN Account information is transmitted irrespective of the place of payment. A country wide to the banks using PFMS interface and banks provided network of 30 agency banks and their 13,000 branches the PAN seeded in the account to enable validation of including 3 private sector banks are authorized by the PAN and Account linkage. In case of validated PAN RBI for collecting direct tax payments under OLTAS. Account record, the refund exceeding the predefined threshold (50,000) is issued electronically. As a result of Under this Project, the banks enter data of tax this initiative, the number of electronic refunds has payment challans in their computer system and transmit increased substantially in last two years. the challan information online to the server of the Tax Information Network (TIN) of the Income-tax Department, 13.11.5 Project Name: OLTAS (Online Tax Accounting maintained by NSDL. Modified File validation instructions System) have been installed in the software of all collecting banks and at TIN to ensure better data quality. In over 99% of OLTAS project integrates online tax payments made by tax payers with the running ledger accounts of tax total cases, correct PAN and TAN is being quoted in the payers maintained by the Income tax department for tax challans, which shows definite improvement in quality of credit. OLTAS functions in close coordination with RBI, tax payment as well as payment data linked by the agency Agency Banks and TIN (presently being managed by NSDL). banks. The objective of OLTAS project was to do away NSDL extracts the data, prepares OLTAS files and with the paper trail for tax credit and paper validation transmits the same to the OLTAS server maintained at system. OLTAS project has been one of the landmark e- NCC, New Delhi. From there, the data is populated into governance initiatives undertaken by the department. the ITD OLTAS database, enabling the Assessing Officers 175Annual Report 2017-2018 to give due credit to the taxpayers for the tax payments E-payment facility has been now extended to 30 made by them, and generation of collection reports for agency banks collecting direct taxes. SBI has started the e- AO/ Range Head/CIT/Pr. CIT/CCIT based on PAN/ TAN payment facility online through its debit cards as well. Facility jurisdiction, irrespective of the place or mode of payment. of payment of direct taxes has been launched through ATMs of Corporation Bank, Bank of Maharashtra, Axis Bank, The salient features of the OLTAS Project are Central Bank of India, Bank of India, HDFC Bank, Canara as under: Bank, Union Bank of India, Punjab & Sind Bank, Punjab • The collecting and nodal branches of banks can National Bank, Indian Bank, UCO Bank, Andhra Bank, Bank of Baroda and Oriental Bank of Commerce. verify the status of the tax payment data transmitted by them to TIN through TIN website In Financial Year 2013-14, the percentage of tin-nsdl.com. count and amount of e-tax payments was 64.41 % and 86.48% respectively. In Financial Year 2014-15, the • The taxpayers can verify their tax payments percentage of such count and amount went up to 69.20 through Challan Status Enquiry at the TIN % and 87.10% respectively. In F Y 2015-16, the website, on the basis of TAN/CIN (Challan percentage of count and amount of such payment was Identification Number). Challan Identification 74% and 88% respectively. In F Y 2016-17, the Number under OLTAS is a unique combination percentage of count and amount of such payment was of BSR Code of the bank/branch, Date of deposit 77% and 89% respectively. In F Y 2017-18 (upto Oct and Challan serial number. 2017), the percentage of count and amount of such • Reports on top advance tax payers and TDS payment has gone upto 79.91% and 90.23% respectively. payers with quarter-wise comparative analysis 13.11.7 TAXNET project with preceding financial year are also available to the Commissioners of Income Tax and Aim and object of the ongoing TAXNET project Commissioners of Income Tax (TDS) for is to provide seamless connectivity (IP- VPN services) to monitoring of collections. the departmental users in the Income Tax department all over India. • Monthly MIS reports are generated by TIN for Income Tax Department as well as for Pr. CCA, The TAXNET project acts as the architectural backbone of the entire digital edifice of the Direct tax CBDT and RBI, for monitoring and follow-up. administration in India. It provides seamless, secure, efficient • TIN provides an OLTAS dashboard facility to the & dedicated connectivity to more than 770 locations spread collecting bank branches, their nodal branches over more than 500 cities in India. It is like a golden thread as well as their link cells for monitoring upload of which permeates through all modules, applications & tax payment data and for its reconciliation with platforms of the Income Tax Department. In effect, it serves funds remitted by them to RBI. as a force multiplier for the entire digital machinery of the department. The ultimate success & the execution of the all • A separate OLTAS dashboard facility is also the modules like Operation Clean Money, ITBA, CPC-TDS available through TIN website for the Finance and CPC-ITR-Bangalore, Project Insight etc. entirely rest Minister, senior functionaries of CBDT, Chief on its shoulders. It works silently in the background, being Commissioners/Directors General of Income successfully executed since the year 2008. Tax, Commissioners of Income Tax (TDS) and Commissioners of Income Tax (Computer Change Order Management is an integral part Operations) for monitoring direct tax collections of the management of the TAXNET contract. The on a daily basis. department has to place change orders to ensure the connectivity and optimize the intranet NETWORK. In the During Financial Year, 2017-18 (till Oct 31, 2017) instant dynamic environment, it provides much needed the count and amount of tax payment challans handled operational flexibility. The major activities in change orders through OLTAS were 2.99 crore and Rs 5,30,707.83 crore are as follows: respectively. • Relocation of nodes/ Additional nodes 13.11.6 Project Name: E-Payment • Establishing New Site The E-Payment project has enabled online payment of all direct taxes using net banking facility. The • Shifting of site scheme provides for ease of payment anytime, anywhere. • Bandwidth Augmentation With effect from 1 April, 2008, e-payment of direct taxes was made mandatory for all Companies and 44AB audit These are executed as per the departmental cases. requirement and requisitions from the field formations. 176Department of Revenue III 13.11.8 Web Master Project Filing, Tax Payment, Tax calendar, Tax Chart & Tables, Tax utilities, Tax Helplines and National Website (https://www.incometax more have been provided. india.gov.in) hosts a number of services with user friendly functionalities and features. The various services that 6. Website is friendly toward the differently- the website hosts, includes a list of all the facilities put abled. The website is friendly for blind users, online viz. PAN, TAN etc., besides providing returns & users with partial or poor sight including statements of e-filed cases, international tax related colour blind users and deaf users. contents, FAQs/ tutorials/tax information, press release, latest news etc. The number of visitors to the website 7. Website is bilingual and Rajbhasha has been continuously increasing which shows its efficacy compliant. and popularity. 8. Separate corner for Senior Citizen. New web site of the Income Tax Department was launched on 22nd September 2014. The same was 9. Web site has information and videos for revamped in November 2015 and new services children. incorporated keeping in mind feedback received from 10. Latest News & Press Releases are updated various users, trade associations and other stakeholders. on real time basis. The feedback received on the website is analysed by a team of the officers on regular basis and suitable follow 11. Other facilities up is done wherever required. a. Income Tax Office Locator (Covers Some of the existing features of the website are: details of all Income-tax Offices across India) 1. Website is now one of the most educative sites, built on state of the art technology, b. Separate pages of Pr. CCIT/DGIT- having a rich repository of more than 100 Includes information about field offices, Tax and Allied Laws, Rules, approximately Grievance Redressal Mechanism, 10,000 Circulars and Notifications which are respective CPIOs, Appellate Authorities cross-referenced & hyperlinked for users’ under RTI Act. convenience. c. Tenders from Department. 2. International Taxation related contents 12. Complete information regarding ‘Income includes: Disclosure Scheme 2016’ on a single click a. More than 130 Tax Treaties which India was provided on the home page of the had entered into with Foreign website. Countries- (With Unique Facility of 13. Complete information regarding “Pradhan Treaty Comparison) Mantri Garib Kalyan Yojana 2016 (PMGKY b. International Business- Sections to be 2016)” is provided on home page. remembered. From Jan’ 2017 to Dec’ 2017, total 4,99,55,455 c. Tax rates as per Income Tax Act vis-à- visitors accessed the website as against 4,25,21,806 vis Tax Treaties. visitors during Jan’ 2016 to Dec’ 2016 which shows increasing utility and popularity of new layout of the d. Relevant provisions under Income-Tax National website. There were 180,642 visitors of Hindi Act, Companies Act, Service Tax and Version also. FEMA for Non-resident A new ‘Tax Payer Services Module’ and 3. Providing information to the Tax Payer in the ‘Aayakar Setu (Mobile Application on Android)’ had form of FAQs/Tutorials. been launched at the website on 10th July, 2017 by Hon’ble Finance Minister of India, Shri Arun Jaitley. 4. Cross linking: - Cross linking across all the sections of Income-Tax Act 1961, has been The main highlights of the Aayakar Setu are- provided. Further, all related Income-Tax Rules 1962, FAQs, Tax Services, Income- 1. ASK IT – It functions as a CHATBOT (A virtual Tax from are available on that page itself. machine chatting with the user) which provides solution to queries of taxpayers relating to PAN, 5. Services centric information Page for TAN, TDS, Return Filing, Refund Status, Tax various services such as PAN/TAN, Return Payment etc. on real time basis. 177Annual Report 2017-2018 2. Live Chat with Tax Experts – In case users 13.11.10 Video Conferencing have any query they can use the chat option Video Conference facility is available across 48 at TPS section. This facility will be available stations (57 sites), which is assigned to Telecommunications on all working days (i.e. Monday to Friday) Consultants India Limited (TCIL) with effect from April between 10:00 AM to 06:00 PM. 2017. While the bandwidth is being provided by the TAXNET MSP under TAXNET project, the maintenance 3. Tax Return Preparers at your doorstep – of VIDEO CONFERENCE devices and facilitation during It helps to locate the TRP on Google map. A VIDEO CONFERENCEs, have been ensured by the Unit- Tax Payer can locate/search the TRP at the 4 team. The VIDEO CONFERENCE facility that covers desktop as well as on his mobile App. 57 locations across India, is one of the major activities of Unit-4 given the fact that authorities now frequently used 4. Tax Tools – It facilitates tax calculations for such conferences to save precious time and resources. filing ITR. Various tax tools are available, The frequency of VIDEO CONFERENCE has been which will give the output required for ITR increased many fold since its inception in the year 2006. on the basis of inputs/information available with user. 13.11.11 Facility Management Services 5. PAN/TAN – All the services related to PAN/ Facility Management Services (FMS). The TAN i.e. PAN/TAN application, De- Project -4 Unit, through its MSP, provides the Facility Management Services (FMS). Till 1st June-2014 FMS duplication, PAN surrender, PAN-Aadhar was supporting 13,000 network users. Network user Linking are available through the portal count increased to 14500 in 2015, 15500 in 2016 and as 6. TDS/TRACES – It provides links to all the on December 2017 this further increased to 17000. RSA services useful for a tax deductor/collector, tokens are supplied and supported by TCS and tax deductee in one place along with proper distributed by the FMS team through respective CIT bifurcation of services between Tax (Admin & TPS) concerned. In the month of September 2017 the FMS team has distributed 11800 RSA tokens Deductor/Deductee etc. to all the 18 Regions. FMS team also facilitates the Video 7. Payment of Taxes – It provides ease of use conference organized by the Hon’ble Chairperson and of all the services related to tax payment Members of CBDT. including tax calculation, View tax credit 13.11.12 Project Name: E-TDS statement etc. Project Features 8. Latest Updates on website and email/ SMS – It will help the taxpayers in finding The Centralized Processing Cell for Tax out the information required as per Deduction at source (CPC-TDS) is a technology driven initiative of the Income Tax Department to put in place upcoming compliance dates on the main Non-Intrusive, Non-Adversarial administration in the window of the Tax Payer Services. country. The robust technology platform has been 9. Tax Gyaan –Tax Gyaan is a multiple choice leveraged to provide value added services to more than question web-based game to provide 19.33 lakh deductors, 5 crore taxpayers from all over India knowledge to the youths accessible from and abroad and more than 500 officers of the Income Tax Department who are administering TDS across India. mobile as well as desktop. Centralized Processing Cell – TDS (CPC-TDS) 13.11.9 Other New Features: undertakes end to end processing of TDS statements 1. Complete information related to Direct through a Rule Based Technology enabled system Taxes Dates and offers e-enabled services that are accessible on any- time, any-where basis with no cost to the taxpayers / 2. Promoting Tax Payers to take Integrity deductors. The rule based automated processing of Pledge – Integrity pledge is being promoted ‘Statements’ facilitates uniform interpretation of laws, through publishing of relevant link to take faster turnaround time besides ensuring seamless flow Integrity Pledge at Home Page of the of data for tax credits. CPC-TDS introduces transparency Website in the processes through online display of information and provides an integrated platform for tax deductors, The new modules of the website have been taxpayers and the officers of Income tax department. widely appreciated by a large number of Tax Thus, it forms the backbone of overall TDS Payers. administration in the Income Tax Department. 178Department of Revenue III India is one of the very few countries to put in • More than 500 Field Officers of the Income place an initiative of this scale for reconciliation of Tax Tax Department, spread across the country, who Deducted at Source. are responsible for TDS administration. Attributes of the CPC-TDS • Tax policy wing of the Central Board of Direct Taxes. i. Database size – 2600 crores transactional Re-engineered process through CPC-TDS data. With the inception of CPC-TDS, following ii. State of the art Data Centres at NOIDA and processes have been reengineered:- Pune. Issue of Digital TDS Certificate iii. 250 plus operational resources. The traditional practice of manual TDS iv. Processing Capacity certificates was a major cause of TDS mismatch in the processing of Income Tax Returns. • Processing capacity of more than 1 crore deductee records in 24 hours. The CPC-TDS now generates TDS certificates from the data reported by the deductors and after • Average processing time < 5 days from matching tax payments (reported through banks or other the date of receipt of statements at competent entities). These certificates, having a CPC-TDS. reference number, are verifiable online and unique for a deductor-deductee combination. In this way, the • Processing capacity of nearly 2000 amount depicted in the TDS certificate matches with the inbound letters in a day. amount reflected in the Annual Tax Credit Statement. This • Processing capacity of nearly 30000 rules out possibility of a mismatch while processing of Income Tax Returns. More than 107.07 Crore digital TDS outbound intimations in a day. certificates have been downloaded by deductors from v. Intimation of defaults is also sent to the TRACES website till date. registered email IDs of the deductors. l The matching of TDS credits, while processing anmgraphi of Income Tax Returns has improved upto 96%. Verifiable single version of truth, through reengineering, also Demographic spread eliminates any possibility of fraudulent claim of TDS based CPC-TDS brings value to various institutions, on bogus TDS certificates. organizations (both within and outside government). It Online Correction of TDS statements touches all government establishments, banks, financial institutions, corporates on one hand and on the other, The CPC-TDS provides facility for online correction of TDS statements. Thus the deductors can provides services to all the taxpayers, whether filing tax now correct PANs and other attributes of the transactions returns or otherwise. The users of the facilities at CPC- by promptly filing a correction any time anywhere. At TDS include – the same time, with this facility, any correction, for • More than 5.2crores Taxpayers including resolution of defaults can also be carried out at deductors’ convenience. More than 45 lakh corrections were corporates, individuals, business entities and received and resolved by the CPC-TDS till date. others. 43 banks& E-filling website are linked to the CPC-TDS System for online access to Tax E-Office Credit Statement (26AS). Around 6.49 Crore The CPC-TDS provides an integrated technology registered users of e-filing website of the Income driven platform for enabling e-office in the Income Tax Tax Department have online access to Tax Credit Department. Over 500 Officers of the Income Tax Statement (26AS) with over 56.22 crore 26AS Department, administering TDS provisions across viewed till date. India, connect with CPC-TDS system through its • More than 19.33 Lakh Deductors including Intranet services. In addition, a dedicated Helpdesk for assistance to these officers has been enabled. more than 1,75,000 offices of the Central & State Governments. Proactive dissemination of Information - PROMOTING voluntary compliance • More than 5,000 Government (Central & state) treasuries, sub-treasuries in each district and The inception of CPC-TDS marks a paradigm shift in the TDS administration towards achieving a Non- other Principal Accounts officers. 179Annual Report 2017-2018 Adversarial, Non-Intrusive Tax administration. Around manual paper TDS certificates. All information 4.72 Crore of educational e-mails on various issues have related to TDS credits, is available online in the already been sent by CPC-TDS to the deductors. E-mails form of Annual Tax Credit statement (Form sent through manual campaign are 3.22 Crore & through 26AS). The taxpayer has to only verify it from automated server are 1.50 Crore. 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 • Improvement in deposit of tax within due date. of tax credits. • Reduction in TDS default cases. 4. The availability of Form 26AS online has facilitated accurate & complete reporting of • Reduction in quoting of invalid PANs. Income. As a consequence, compliance cost Institutionalized mechanisms for Grievance redressal for the taxpayer has come down. & Communications 5. The e-filing website of the Income tax department The CPC-TDS has put in place a Call Centre for pre-populates Tax Credit data in the Income Tax real time support to all the stakeholders. Further, the Return based on information sent by CPC-TDS. stakeholders can also reach CPC-TDS through e-mail, This has made the process of filing Income Tax Grievance Portal on the website and by writing a letter. Return easy. The grievances are being handled in a centralized manner and all the stakeholders are given visibility regarding 6. The Annual Tax Credit Statement is updated grievance by virtue of an integrated system. More than on a near real time basis. Hence discrepancies 48.20 lakhs grievances have been responded by CPC- in the TDS reported by the deductor, can be TDS since inception. reported by taxpayer to deductor, while the Data for Policy Formulation and Social Policy transaction is very recent. Planning 7. Malpractices in the issuance of refunds, etc Using data mining and analytics tools, CPC-TDS have been minimized. provides an updated Management Information System Deductors (MIS) and Business Intelligence (BI) reports to the field authorities. This helps them to focus on the potential 1. Single Window Delivery: A comprehensive web cases involving high-risk. Field authorities stand based service delivery platform takes care of all empowered and equipped to take up the enforcement the compliance needs of deductors and is a work in effective and efficient manner. source of constant feedback. The output of analytical tools also acts as an input 2. Online and Offline Correction facility is for effective policy formulation. available on anytime anywhere basis. This is Citizen Centricity one of the major components of the integrated interactive platform of CPC-TDS. The operationalization of CPC-TDS has benefitted multiple stakeholders involved in TDS 3. The CPC-TDS has promoted voluntary administration by way of an integrated interactive platform compliance by the deductors. Through for Service Delivery. This has made a tremendous impact proactive dissemination of Information, CPC- on effort, time and cost. TDS has been able to help the deductors in Taxpayers avoiding defaults and consequent costs by providing valuable updates through 1. With CPC-TDS generating TDS certificates centrally, the initiative has eliminated mismatch educational emails and other sources. of tax credits at the time of claiming credit Feedback and Grievance Redressal: The for TDS in the Income Tax Return. centralized tracking of grievance ensures that the time 2. The taxpayers do not have to maintain record of taken for redressal is minimized. 180Department of Revenue III The performance of CPC(TDS) during the year • View Form 26AS is presented below: • ITR-V Receipt Status a. Overall performace: • Register as Legal Heir • Add / Disengage CA and ERI Description From 1.4.2017 to 30.11.2017 • Profile Settings -Change Password, Update TDS statements 81.32 lakhs Contact details etc processed for 26AS • E-Vault Additional Security Option TDS certificates 25.44 Crore • Using PINS (OTP to mobile number and e-mail id) downloaded • Login through Net Banking TDS statements 5.83 lalkhs • Verification and Validation of Contact details of processed for defaults Taxpayers No. of intimation issued Via e-mail- 28.29 lakhs • Compliance Module updated with NMS-3 (FY (for TDS statements/26 QB 2012) data statements/RUD/Reprocessing • Filing of Form 6 (Disclosure of Foreign Income of statement & Assets) Via print- 9.25 lakhs • Submitting Response to Outstanding Tax Demand b. Download statistics • E-Nivaran – Grievance Submission for multiple entities From 1st April 2017 to • Schematron Implementation – ITR Validation Download Type Rule engine 30th Nov., 2017 • Electronic Verification Code for filing of ITRs(EVC) Form 16A 21.05 Crores • TDS Statement submission Form 16 4.37 Crores Form 16B 2.45 Lakhs The dedicated help desk deals with query or grievance related to e-Filing. The portal also provides help c. 26AS views: and static content ‘in Hindi’ for users. Total 26ASviews : Over 11.04 Crores Electronic filing of IT returns over the internet picked up from AY 2006-07 and the number of returns Unique PANs viewing 26AS : Over 3 Crores filed electronically has risen from around 4 Lakh in Financial (From 1st April, 2017 to Year, 2006-07 to 528.68 Lakh in Financial Year 2016-17. 30th Nov., 2017) In Financial Year, 2017-18, 441.41 Lakh returns were received up to 8th January 2018 as compared to 374.84 13.11.13 Project Name: E-filing of Income Tax Returns Lakh returns for same period in Financial Year 2016-17, representing a growth of around 17.76%. The progressive Project Description achievement of e-filing scheme is as under: The e-Filing project is an eminent e-governance Financial Year Number of Growth and e-delivery measure taken by the Income Tax Department for providing web- enabled services to the e-returns (in lacs) taxpayers. The project aims at enabling e-filing of Income 2006-07 4 tax returns, audit reports and other Forms prescribed 2007-08 22 450% under the Income Tax Act over Internet directly by taxpayers and through e-return intermediaries (ERIs).The 2008-09 48.5 120% project also provides other web- enabled services to 2009-10 52.5 8% facilitate public private participation in the filing of returns. 2010-11 91.56 74% The e-Filing portal https://incometax indiaefiling.gov.in provides following personalized 2011-12 164.12 79% services to the taxpayer: 2012-13 214.87 31% • Status of returns – Processing/Demand/Refund 2013-14 296.81 38.67% • PAN Aadhaar Linking 2014-15 341.73 15.13% • Rectification uploads and status after processing 2015-16 433.43 26.83% • Refund Re-issue Request • Request for Intimation u/s 143(1) and 154 2016-17 528.68 21.97% • Outstanding Tax Demand 2017-18 (Upto 441.41 17.76% • Tax Credit Mismatch Summary 08-01-2018) 181Annual Report 2017-2018 There has been significant growth in the New e-filled returns, that CPC was to process in 5 years. PANs getting registered on the e-filing site, showing • Electronic Verification Code (EVC) process increased use of the e-Filing and other facilities through the e-Filing website. The number of registered users of implemented in April 2015 is successful and more the e-Filing portal as on 8th January 2018 is 6.97 Crore. than 50 lakh taxpayers have adopted this Green Initiative. CPC has already processed 308.02 13.11.14 Project Name: CPC, Bengaluru Central lakhs returns validated through EVC. Processing Centre for Income Tax Returns • Average processing time is reduced to 67 days, • CPC has processed 4.57 crore returns of income which is less than the period specified in citizen’s during Financial Year 2016-17 with a year on year charter (6 months) and much less than growth rate of 10%, (4.14 crores processed performance in manual processing (approx. 14 during Financial Year 2015-16). Further, till 31st months). Prior to CPC, average processing December 2017, CPC has processed 4.48 crore capacity of the department was approx. 2.5 crore returns in Financial Year 2017-18. return per annum against receipt of more than 3 • CPC has achieved a peak processing capacity crore returns each year. of 7.37 lakhs returns per day. • Projected/Estimated Volumes for the period • CPC has processed 22,50,10,970 E-Returns till 31st January 2018 - March 2018 and Actuals as on December 2017, as against the target of 2.7 crore 31st March 2017 are as under: - Activity Achievements during Projections for Jan Achievements during 01-04-2017 to 31-12-2017 2018 - Mar 2018 01-04-2016 to 31-03-2017 (In Lakhs) (in Lakhs) (in Lakhs) Processing of Returns 448 114 457 Rectifications 3.02 1 6.23 Calls handling 6.44 2 7.10 E-mail Communications 1,415 295 1,182 SMS Communications 1,663 287 1,149 • Till date, CPC has sent around 73.73 Crore Crore intimations sent by Speed Post all over the digitally signed PDF based intimations by email, country. Savings due to e-delivery as compared around 67.96Crore SMS alerts and around 4.17 to postage is Rs. 1106 crore. Description Communications via email Postage cost saved sent to taxpayers count (Rs. Crores) # FY 2010-11 5927080 8.89 FY 2011-12 36769270 55.15 FY 2012-13 42943613 64.42 FY 2013-14 65630267 98.45 FY 2014-15 93941486 140.91 FY 2015-16 232366069 348.55 FY 2016-17 118245615 177.36 FY 2017-18 (Up to 31st December 2017) 141519754 212.27 %age Growth over last year 20% Total Savings in 8 FYs 1106 # Average cost of speed-post/ordinary post taken as Rs.15/-. 182Department of Revenue III • To enable handling of large volume and facilitated Tax payers to revert on the demand managing size of the e-mails and improving position by agreeing/disagreeing to the demand aesthetics of intimations, email through HTML through E filing website. Responses received in template has been enabled and used. 35,38,163 entries totalling to Rs.2,47,578.63 Crores have been received from Taxpayers • 90 call centre agents attend to over 5,000 calls through efiling website. daily in 3 languages. Around 59.87 lakh calls attended till 31st December 2017. • CPC has stored over 18.59 Crore ITR V physical documents through a Record Management • CPC, call centre made 3,31,352 outbound calls Service and has been awarded ISO 15489 for Demand Management to Assessing Officers. certification, the first entity in Asia to achieve this. • CPC has enabled Web based Taxpayer 13.11.15 Other Significant Initiatives: Grievance Mechanism in the last Financial year. • Online Grievance Portal of CPC has been Under this system, the taxpayers can login to the integrated with E-Nivaran Centralized Grievance e-filing web portal of the department and submit System from 19th August 2016 which facilitates their grievances online. The resolution of the speedier redressal of taxpayer grievances in co- grievances and other assistance is provided ordination with the Assessing Officers. through registered e-mails of the taxpayers. Status of redressal of the grievance is also • Auto Dialler introduced in CPC Call Centre to updated on the e-filing web portal. Up to 31st make reminder calls notifying the taxpayers to December 2016, 6.01 lakh grievances have been submit their ITRV/to do e-verification so that the received out of which 5.98 (99%) grievance have return can be taken up for processing. Through been addressed. E-Nivaran Centralized auto dialler CPC is able to make 10,000 out- Grievance System has been integrated with bound calls in a day. Online Grievance Portal from 19th August 2016, • Enabling Online condonation request on e- 3.83lakh grievances were received and 3.80 lakh filing portal - Using this facility online request were processed till 31st December 2017. can be raised by tax payer where he has not • Rectification requests received from taxpayers filed his ITRV within 120 days or has not e-verified are processed within the statutory limits. For the returns within the prescribed time seeking financial year 2017-18(till 31.12.2017) CPC has condonation of the delay so that the returns can processed 3.02 lakh rectification request out of be taken up for processing 2.97 lakh rectification requests received. • Enhancing Life cycle of ITR status in e-filing • Due to the higher accuracy level of processing - To facilitate the assesse to view the complete at CPC, there has been a sharp drop in overall life cycle of the Income Tax Return (ITR), system rectification requests. was enhanced to share more processing feed status of taxpayer to e-filing at various stages in • Refund reissue requests due to refund failures, CPC. This will enable tax payer to know more incorrect bank account number involving amount details on the return processing status including of Rs.128.47 cr. for A.Y. 2017-18 were processed. the communication details. All such requests are processed within 7 days of • Enabling E pay link for DDT and BBS request accepted by CPC. demands - A separate option/Link is provided in • In addition to processing of Income Tax returns, Intimation for tax payer to pay his DDT and BBS CPC has processed 125,978 Wealth Tax Returns demands which will re-direct to NSDL website Form BB filed electronically. with pre filled details. • Demand Management: To deal with the issue 13.12 Vigilance of cleaning and updating of arrear demands, the 1. Functions/Working of Organization outstanding demand position in CPC FAS (Financial Accounting System) was made The Vigilance set-up of the Income Tax available to field AO’s through the AO Portal and Department is headed by the Principal Director General to taxpayers through ‘My Account’ on efiling of Income Tax (Vigilance). Who is also the Chief Vigilance website. As on 31st December 2017, AO has Officer of the Organization. CVO is responsible for taking acted on 14,59,219 entries involving arrear the initial decision on complaints against Group-A officers. demand of Rs. 2,20,119.97 Crore. CPC has also CVO is also required to maintain an up to date record of 183Annual Report 2017-2018 such complaints and their latest status, through the Four Zonal Directorates of Income Tax prescribed registers, for submission of reports to the CVC, (Vigilance) assist CVO in the handling of vigilance matters DOP&T etc. All the complaints against Group-A officers pertaining to their respective regional jurisdictions. These are, therefore, required to be forwarded to her for Directorates process complaints against Group ‘B’ officers registration in the CVO’s register as well as for further and also conduct preliminary verifications and necessary action. investigations in respect of both Group - A and Group - B officers. CVO is required to examine and comment on all proposals where a reference to the CVC is required to Zonal offices are headed by officers of the rank be made. Four regional Directorates of Income Tax of Commissioners who work under the control and (Vigilance) assist her in conduct of preliminary supervision of DGIT(V)/CVO, CBDT. They are CVOs for verifications or investigations. more than 15000 Group ‘B’ officers under their respective jurisdictions. Besides, they assist Pr. DGIT(V)/CVO, CVO attends to all matters concerning CBDT in respect of all enquiries/ investigation etc. disciplinary proceedings against all serving Group ‘A’ assigned to them by Pr. DGIT(V)/CVO, CBDT from time officers and all retired Group ‘A’ to Group ‘C’ officers/ to time. officials. Thus, Pr. DGIT(V)/CVO, CBDT, Delhi assists the Disciplinary Authority (DA) i.e. the Finance Minister 2. Performance and Achievements during on all vigilance matters in consultation with CVC, UPSC Current Year January-December, 2017 and DoP&T. SR. NO ITEMS OF WORK (DISPOSAL) Achievements A . CORE AREAS OF ACTION 1 Disciplinary proceedings concluded 59 1 a). Penalties Imposed 37 1 b). Out of above J.S. and above Rank 5 2 Dept. Inquiry disposed 71 3 Sanction for prosecution approved/granted 1 4 Vigilance clearance issued 9190 3. Significant Developments Section 133A of the Income Tax Act were issued by CBDT to all the Pr. CCsIT, Pr. DGsIT for The process of Vigilance Clearance (VC) has circulation to all the officers. A Central Inspection been modified and made faster and less cumbersome. Team has been formed to conduct immediate The VCs earlier were granted in a period varying from vigilance inspections in cases of serious 10/15 days to even two/three months. Now with the revised procedure it has been reduced to 1 day in the complaints. Pursuant to spot inspection in a case of individual officers and not more than 7 days in recent case, the earlier CBDT instructions the case of panel of officers. This also finds a mention in regarding Limited Scrutiny and maintenance of the RFD. proper order-sheet were reiterated by issue of OM dated 30.11.2017. Also, to strengthen (i) Systems Improvement Vigilance Administration it has been decided (OM Systems studies are carried out regularly by the dated 08.06.2017) that quarterly meetings of Pr. Vigilance Directorate. Based upon the findings CCsIT and Zonal ADsG(Vigilance) will be held of the study, feedback and suggestions are given by the 15th of the month following the end of each to the concerned wing of the Department. quarter. The agenda of the meeting includes Recently, systems study was carried out by the issues like sharing of information regarding Vigilance Directorate with regard to the Survey officers and officials of suspected integrity, actions u/s 133A of the I. T. Act as a measure of discussion on implementation of rotational preventive vigilance in pursuance of frequent transfer policy, status of pending IO reports, receipt of complaints. Based on the findings of status of complaints and pending DP matters in the system study, vide letter dated 09.08.2017, respect of Group ‘B’ and ‘C’ employees, systemic guidelines regarding conduct of survey under improvements etc. 184Department of Revenue III 4. Significant developments/policy decisions (b) Being vigilant taken during the year for the development of i. Vigilance Inspections a particular sector, including initiatives for improving delivery of public services and for ii. Feedback from zonal ADG (Vig) in transfer ensuring inclusive growth: and posting 4.1 Preventive Vigilance iii. Complete profiling of suspect officers Preventive Vigilance: steps taken and (ii) Sensitive posts and rotation transfers - achievements: implementation status (i) Preventive Vigilance - Steps already taken as The Transfer Policy of the CBDT lays down the part of Preventive Vigilance: - guidelines for transfer & postingof IRS officers. As per Institutional Level the policy, the officers posted in sensitive posts are transferred out on a regular basis. It is ensured that no Reduced interface between Tax Payers and Departmental Officer continues in such posts for more than three years Officials by use of technology:- at a stretch. The process of the Annual General Transfers • E-filing: Online Return Filing for the year 2017 has been carried out by the CBDT strictly • E-assessment: Online assessment proceedings in accordance with the Transfer Policy. • E-appeal: Online Appeal filing (iii) Scrutiny of APARs • E-nivaran: Online grievance redressal The CBDT is the custodian of the APARs. Any • Centralized Processing of Returns at CPC adverse remarks in APAR about integrity of any officer Bengaluru are communicated to the DGIT (Vigilance) for • Refund Banker Scheme investigation and further necessary action. • Computer Assisted Selection for Scrutiny (CASS) (iv) Training and awareness campaigns • Aayakar Sewa Kendras (ASK) conducted and proposed • Call Centre Helpline Many training and awareness programmes on Supervisory level vigilance issues have been conducted for officers and staff at various levels. These programmes were held at CCsIT - Monitoring of orders u/s 263/ 264 of I T the National Academy of Direct Taxes at Nagpur as well Act, 1961, Review of Appellate Orders as at different Direct Tax Regional Training Institutes and CsIT - Monitoring of surveys, Central Scrutiny Ministerial Staff Training Units. Reports, directions u/s 144A, Routine Officers from the Directorate of Vigilance have inspection of assessments been taking sessions at the National Academy of Direct Addl. CsIT - Monitoring of appeal effect registers, Taxes at Nagpur for probationers of the Indian Revenue rectification registers Service as well as for Senior IRS Officers undergoing refresher courses. Apart from these programmes, A.O. - Monitoring of grievance petitions, seminars were conducted by various field offices during Monitoring of Return Receipt the Vigilance Awareness Week held in 2017. Registers (where ever maintained) 4.2 e-Nivaran Directorate General of Income Tax (Vigilance) - e-Nivaran is the online grievance redressal Guidance to Officers on Do’s and Don’ts, Dissemination system of the Income Tax Department. All types of of information by Seminars and Lectures, Scrutiny of Grievances such as PAN application, processing, Private Foreign visits, IPRs, High Value intimations assessment, appeals, TDS etc can be filed by tax payers. Way Forward It is a cent percent paperless system, where communication is enabled through, e-mail & SMS. (a) Increasing awareness 4.3 Central Inspection team i. Counselling of suspect officials A Central Inspection Team has been formed to ii. Training and seminars conduct immediate vigilance inspections in cases of iii. Printing of books on Do’s and Don’ts serious complaints. 185Annual Report 2017-2018 5. Mechanism put in place to measure • E-filing of returns, development outcomes of major schemes/ • Refund Banker Scheme to improve channel programmers implemented through the delivery of refunds; department/Division. 5.1 Probity • Sevottam Scheme for moni toring of dak and grievances; Steps to ensure probity in Government Servants: • Dedicated Call Centre In order to ensure probity in income Tax Department following steps have been taken. • Comprehensive Website that consolidated all e- services etc. i) (Review of Officers under FR 56(j) is now being done for all Officers between 50 to 60 years of age. 6.2 Through comprehensive computerisation initiatives, the department has enabled end-to-end e- ii) In review meetings of FR56(j) not only IPR, delivery services that inter alia include: APAR but also Secret note in i n t e g r i t y column, doubtful reputation etc. are made the • E-Payment of taxes basis of examination. • E-filing of TDS statements iii) Separate efforts are being made to bring • E-Processing of TDS statements comprehensive data updation on • E-view of tax credits absconding/ resigned/ expired Officers. • E-filing of Income Tax Returns iv) Offices of Pr. CCIT (CCA) have been asked to • E-Processing of Income Tax Returns conduct review under FR 56(j) for grade B & C • E-Matching of tax Credits employees with due seriousness. • E-tracking of processing of the Income Tax v) This exercise of review under Rule 56-(j) is being Returns done regularly on quarterly basis for all employees (Group-‘A’, ‘B’& ’C’). Till date 2196 • E-Delivery of Refunds cases have been reviewed. During the year, • E-tracking of Refunds action on 1 group ‘B’ officer and 3 group ‘C’ officials has been taken u/r 56 (j) of FR. 6.3 Therefore the present initiatives of the department have made it possible to comply with the tax obligations vi) Besides inspections by the Central Inspection without visiting the Income Tax Office on anywhere, Team, a total of 33 Inspections made by the Zonal anytime basis. This is reflected in the latest initiatives of ADGs. the Department regarding e-Assessment, e-Nivaran and 6. Inputs on E-Governance activities : e-Appeal. Thus, the tax payers can participate in scrutiny assessment proceedings using e-Assessment facility, get Income Tax Department has undertaken the their grievances redressed through e-Nivaran and file following reform initiatives in last few years by harnessing appeals online through e-Appeal. latest technology to enable a System driven working environment in the Department. These measures are 13.13 Grievance Redressal Machinery: aimed to introduce objectivity and reduce human interface A comprehensive and multi-layered Grievance between the taxpayer and the officials. The following Redressal Machinery is functioning in the CBDT and its initiatives have been taken: subordinate offices all across the country as detailed 6.1 Undertaking a comprehensive Business Process hereunder: Re-engineering (BPR)study to understand AS-IS processes and to recommend TO-BE processes; (i) A Central Grievance Cell under the Chairman, Central Board of Direct Taxes at New Delhi which • Setting up of Tax Information Network; is looked after by an officer of the rank of Deputy • Taxnet project for networking of all its offices Secretary/Director to the Government. across the country; (ii) Regional Grievance Cells under each Chief • Setting up of Centralized Processing Center at Commissioner/Director General of Income-tax. Bengaluru In places like Delhi, Kolkata, Mumbai and Chennai. Where there are more than one Chief • Setting up of Centralized Processing Cell (TDS) Commissioners, the Regional Grievance Cell at Vaishali functions under the Cade Controlling Principal 186Department of Revenue III Chief Commissioner of Income Tax. A Commissioner & Director General of Income Tax Commissioner of Income Tax(Helpline) is also have been created in CBDT by giving them user functional in the four metropolitan cities for ID and Password to monitor and redress grievances settlement of public grievances. received online through this system. Even grievances received through Dak are also now (iii) Out station Grievance Cells which function under being scanned and forwarded online to concerned Commissioners/Directors of Income Tax in all offices for necessary action and report. other places, where there is no Chief (v) e-Nivaran Commissioner or Director General of Income Tax. e-Nivaran is the online grievance redressal Grievance application can be made on a plain system of the Income Tax Department. All types paper to the Grievance Cell functioning under the of Grievances such as PAN application, concerned Commissioner or by directly processing, assessment, appeals, TDS etc can approaching the concerned officer who needs to be filed by tax payers. It is a cent percent redress the grievances, with a copy to the paperless system, where communication is Grievance Cell. The applicant should give his enabled through, e-mail & SMS. name, address and PAN so that the Grievance Cell can make further communication with him, if 13.14 Media Centre (M&TP) required. If the grievance is not redressed even The Media Centre, set up in the CBDT in August after month of making the application, the 2006, disseminates information of public value relating applicant may address the grievance to the to Direct Taxes through the Print and Electronic Media. Regional Grievance Cell functioning under the During the year, various press releases were issued to concerned Principal CCIT or the Chief bring different important decisions and tax issues to the Commissioner of Income Tax. Nodal Officer has public notice and to highlight different achievements of been placed in charge of these Cells. Besides, the Income Tax Department. Several press briefings of there are facilitation Counters to receive grievance senior functionaries were organized. As a result of regular petitions and to assist the public. If the grievance interface with the media, a more realistic and positive is not redressed by the Regional Grievance Cell image of the Department could be projected. within 2 months, an application may be sent to 13.15 ADG (PR,P&P) the Central Grievance Cell functioning under the Chairman, Central Board of Direct Taxes. The Directorate of PR, P&P is tasked with Presently, Deputy Secretary (Hqrs), CBDT who is carrying out the advertisement and awareness campaign the designated Nodal Officer for grievances in for the Income Tax Department in print, electronic media, CBDT, is responsible for the activities of the internet, social media and outdoor publicity to bring Central Grievance Cell, CBDT. awareness amongst taxpayers about income tax provisions and statutory timelines. It also brings out The number of grievances received and disposed booklets, brochures/pamphlets pertaining to various tax of by the Central Grievance Cell during the year related issues in the form of Tax Payer Information Series 2017-18 (from 01.04.2017 to 11.01.2018) is as and publications for internal use of Income Tax under: Department and sets up and operates the Tax Payer Lounge at the Indian International Trade Fair, New Delhi No. of grievances Number of Number of and also in other fair/exhibitions in India. The Twitter as on 01.04.2017 grievances grievances account of the Income Tax Department is managed by the Publicity Wing of the DIT(PR, P&P). received disposed off 3577 32705 34507 The Twitter account of the Department as on date has over 1.94 lakh followers including Hon’ble President of India, Prime Minister of India (@PMOIndia), Sh. (iv) Besides, CBDT has adopted the web Centralised Narendra Modi (@narendramodi.in), MOS Finance Sh. Public Grievance Redress and Monitoring Shiv Pratap Shukla, NDMA India, Dr. Hasmukh Adhia System(CPGRAMS) introduced by the Department (@adhia03), Finance Secretary , Central Board of Excise of Administrative Reforms & Public Grievances for and Custom etc. redressal and effective monitoring of grievances lodged online, by the citizens on various issues For the first time the tableau of the Department against the Income Tax Department. 56 was selected for participation in Republic Day Parade, subordinate offices at the level of the Chief 2018. 187Annual Report 2017-2018 Annexure - 1 : India’s DTAA/TIEA/Multilateral Agreement as on 31st December, 2017 No. Jurisdiction Type of EOI agreement Date signed Date from which in force 1. Afghanistan SAARC Multilateral Agreement 13.11.2005 19.5.2010 2. Albania Double Taxation Avoidance Agreement (“DTAA”) 08.07.2013 4.12.2013 Multilateral Convention on Mutual Administrative Assistance in Tax Matters (“Multilateral Convention”) 1.3.2013 1.12.2013 3. Andorra Multilateral Convention 05.11.2013 01.12.2016 4. Anguilla Multilateral Convention Extension by the United Kingdom 01.03.2014 5. Argentina Taxation Information Exchange Agreement (“TIEA”) 21.11.2011 28.01.2013 Multilateral Convention 03.11.2011 01.01.2013 6. Armenia DTAA 31.10.2003 09.09.2004 Protocol 27.01.2016 Not yet entered into force 7. Aruba Multilateral Convention Extension by the Netherlands 01.09.2013 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 Protocol 06.02.2017 Not yet entered into force Multilateral Convention 29.5.2013 01.12.2014 10. Azerbaijan Multilateral Convention 23.5.2014 01.09.2015 11. Bahamas TIEA 11.02.2011 01.03.2011 Multilateral Convention 15.12.2017 Not Yet in force in Bahamas 12. Bahrain TIEA 31.05.2012 11.04.2013 Multilateral Convention 29.06.2017 Not Yet in force in Bahrain 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 01.11.2016 15. Belarus DTAA 27.09.1997 17.07.1998 Amending Protocol 03.06.2015 19.11.2015 16. Belgium DTAA 26.04.1993 01.10.1997 Protocol 09.03.2017 Not yet entered into force Multilateral Convention 04.04.2011 01.04.2015 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 United Kingdom 01.03.2014 188Department of Revenue III No. Jurisdiction Type of EOI agreement Date signed Date from which in force 19. Bhutan SAARC Multilateral Agreement 13.11.2005 19.05.2010 DTAA 04.03.2013 17.07.2014 20. Botswana DTAA 08.12.2006 30.01.2008 21. Brazil DTAA 26.04.1988 11.03.1992 Protocol 15.10.2013 Not yet in force Multilateral Convention 03.11.2011 01.10.2016 22. British Virgin Islands TIEA 09.02.2011 22.08.2011 Multilateral Convention Extension by United Kingdom 01.03.2014 23. Brunei Darussalam Multilateral Convention 12.09.2017 Not yet in force in Brunei Darussalam 24. Bulgaria DTAA 26.05.1994 23.06.1995 Multilateral Convention 26.10.2015 01.07.2016 25. Burkina Faso Multilateral Convention 25.08.2016 Not yet in force in Burkina Faso 26. Canada DTAA 11.01.1996 06.05.1997 Multilateral Convention 03.11.2011 01.03.2014 27. Cameroon Multilateral Convention 25.06.2014 01.10.2015 28. Cayman Islands TIEA 21.03.2011 08.11.2011 Multilateral Convention Extension by United Kingdom 01.01.2014 29. China DTAA 18.07.1994 21.11.1994 Multilateral Convention 27.08.2013 01.02.2016 30. Chinese Taipei (Taiwan) DTAA 12.07.2011 12.08.2011 31. Chile Multilateral Convention 24.10.2013 01.11.2016 32. Colombia DTAA 13.05.2011 07.07.2014 Multilateral Convention 23.05.2012 01.07.2014 33. Cook Island Multilateral Convention 28.10.2016 01.09.2017 34. Costa Rica Multilateral Convention 01.03.2012 01.08.2013 35. Croatia DTAA 12.02.2014 06.02.2015 Multilateral Convention 11.10.2013 01.06.2014 36. Curacao Multilateral Convention Extension by the Netherlands 01.09.2013 37. Cyprus DTAA 13.06.1994 21.12.1994 Protocol 18.11.2016 14.12.2016 Multilateral Convention 10.07.2014 05.09.2014 38. Czech Republic DTAA 01.10.1998 27.09.1999 Multilateral Convention 26.10.2012 01.02.2014 39. Denmark1 DTAA 08.03.1989 13.06.1989 Protocol 10.10.2013 01.02.2015 Multilateral Convention 27.05.2010 01.06.2011 40. Dominican Republic Multilateral Convention 28.06.2016 Not yet in force in Dominican Republic 41. Egypt (United Arab Republic) DTAA 20.02.1969 30.09.1969 189Annual Report 2017-2018 No. Jurisdiction Type of EOI agreement Date signed Date from which in force 42. El Salvador Multilateral Convention 01.06.2015 Not yet into force in El Salvador 43. Estonia DTAA 19.09.2011 20.06.2012 Multilateral Convention 29.05.2013 01.11.2014 44. Ethiopia DTAA 25.05.2011 15.10.2012 45. Faroe Islands Multilateral Convention Extension by Denmark 01.06.2011 46. Fiji DTAA 30.01.2014 15.05.2014 47. Finland DTAA 15.01.2010 19.04.2010 Multilateral Convention 27.05.2010 01.06.2011 48. France DTAA 29.09.1992 01.08.1994 Multilateral Convention 27.05.2010 01.04.2012 49. Gabon Multilateral Convention 03.07.2014 Not yet in force in Gabon 50. Georgia DTAA 24.08.2011 08.12.2011 Multilateral Convention 03.11.2010 01.06.2011 51. Germany DTAA 19.06.1995 26.10.1996 Multilateral Convention 03.11.2011 01.12.2015 52. Ghana Multilateral Convention 10.07.2012 01.09.2013 53. Gibraltar TIEA 01.02.2013 11.03.2013 Multilateral Convention Extension by the United Kingdom 01.03.2014 54. Green Land Multilateral Convention Extension by the Denmark 01.06.2011 55. Greece DTAA 11.02.1965 17.03.1967 Multilateral Convention 21.02.2012 01.09.2013 56. Guatemala Multilateral Convention 05.12.2012 01.10.2017 57. Guernsey TIEA 20.12.2011 11.06.2012 Multilateral Convention Extension by the United Kingdom 01.08.2014 58. Hungary DTAA 03.11.2003 04.03.2005 Multilateral Convention 12.11.2013 01.11.2014 59. Iceland DTAA 23.11.2007 21.12.2007 Multilateral Convention 27.05.2010 01.02.2012 60. Indonesia DTAA 07.08.1987 19.12.1987 Revised DTAA 27.07.2012 05.02.2016 Multilateral Convention 03.11.2011 01.05.2015 61. Ireland DTAA 06.11.2000 26.12.2001 Multilateral Convention 30.06.2011 01.09.2013 62. Isle of Man TIEA 04.02.2011 17.03.2011 Multilateral Convention Extension by the United Kingdom 01.03.2014 63. Israel DTAA 29.01.1996 15.05.1996 Protocol 14.10.2015 19.12.2016 Multilateral Convention 24.11.2015 01.12.2016 64. Italy DTAA 19.02.1993 23.11.1995 Multilateral Convention 27.05.2010 01.05.2012 65. Japan DTAA 07.03.1989 29.12.1989 Protocol 11.12.2015 29.10.2016 Multilateral Convention 03.11.2011 01.10.2013 190Department of Revenue III No. Jurisdiction Type of EOI agreement Date signed Date from which in force 66. Jamaica Multilateral Convention 01.06.2016 Yet to be in force in Jamaica 67. Jersey TIEA 03.11.2011 08.05.2012 Multilateral Convention Extension by the United Kingdom 01.06.2014 68. Jordan DTAA 20.04.1999 16.10.1999 69. Kazakhstan DTAA 09.12.1996 02.10.1997 Multilateral Convention 23.12.2013 01.08.2015 Protocol 06.01.2017 Yet to be in force 70. Kenya DTAA 12.04.1985 20.08.1985 Revised DTAA 07.11.2016 Yet to be entered into force Multilateral Convention 08.02.2016 Yet to be in force in Kenya 71. Korea (Republic of) DTAA 19.07.1985 01.08.1986 Revised DTAA 18.05.2015 Yet to be in force Multilateral Convention 27.05.2010 01.07.2012 72. Kuwait DTAA 15.06.2006 17.10.2007 Multilateral Convention 05.05.2017 Yet to be in force in Kuwait 73. Kyrgyz Republic DTAA 13.04.1999 10.01.2001 74. Latvia DTAA 18.09.2013 28.12.2013 Multilateral Convention 29.05.2013 01.11.2014 75. Lebanon Multilateral Convention 12.05.2017 01.09.2017 76. Liechtenstein TIEA 28.03.2013 20.01.2014 Multilateral Convention 21.11.2013 01.12.2016 77. Liberia TIEA 03.10.2011 30.03.2012 78. Libya DTAA 02.03.1981 01.07.1982 79. Lithuania DTAA 26.07.2011 10.07.2012 Multilateral Convention 07.03.2013 01.06.2014 80. Luxembourg DTAA 02.06.2008 09.07.2009 Multilateral Convention 29.05.2013 01.11.2014 81. Macau, China TIEA 03.01.2012 16.04.2012 82. Macedonia DTAA 17.12.2013 12.9.2014 83. Malaysia DTAA 14.05.2001 14.08.2003 Revised DTAA 09.05.2012 26.12.2012 Multilateral Convention 25.08.2016 01.05.2017 84. Maldives SAARC Multilateral Agreement 13.11.2005 19.05.2010 TIEA 11.04.2016 02.09.2016 85. Malta DTAA 28.09.1994 08.02.1995 Revised DTAA 08.04.2013 07.02.2014 Multilateral Convention 26.10.2012 01.09.2013 86. Marshall Island TIEA 18.03.2016 Yet to be in force Multilateral Convention 22.12.2016 01.04.2017 191Annual Report 2017-2018 No. Jurisdiction Type of EOI agreement Date signed Date from which in force 87. Mauritius DTAA 24.08.1982 06.12.1983 Protocol 10.05.2016 19.07.2016 Multilateral Convention 23.06.2015 01.12.2015 88. Mexico DTAA 10.09.2007 01.02.2010 Multilateral Convention 27.05.2010 01.09.2012 89. Moldova Multilateral Convention 27.01.2011 01.03.2012 90. Monaco TIEA 31.07.2012 27.03.2013 Multilateral Convention 13.10.2014 01.04.2017 91. Mongolia DTAA 22.02.1994 29.03.1996 92. Montenegro DTAA 08.02.2006 23.09.2008 93. Montserrat Multilateral Convention Extension by the United Kingdom 01.10.2013 94. Morocco DTAA 30.10.1998 20.02.2000 Protocol 08.08.2013 Not yet in force Multilateral Convention 21.05.2013 Not yet in force in Morocco 95. Mozambique DTAA 30.09.2010 28.02.2011 96. Myanmar DTAA 02.04.2008 30.01.2009 97. Namibia DTAA 15.02.1997 22.01.1999 98. Nauru Multilateral Convention 28.06.2016 01.10.2016 99. Nepal DTAA 18.01.1987 01.11.1988 Revised DTAA 27.11.2011 16.03.2012 SAARC Multilateral Agreement 13.11.2005 19.05.2010 100. Netherlands DTAA 30.07.1988 21.01.1989 Protocol 10.05.2012 02.11.2012 Multilateral Convention 27.05.2010 01.09.2013 101. New Zealand DTAA 17.10.1986 03.12.1986 Protocol 26.10.2016 07.09.2017 Multilateral Convention 26.10.2012 01.03.2014 102. Nigeria Multilateral Convention 29.05.2013 01.09.2015 103. Niue Multilateral Convention 27.11.2015 01.10.2016 104. Norway DTAA 02.02.2011 20.12.2011 Multilateral Convention 27.05.2010 01.06.2011 105. Oman DTAA 02.04.1997 03.06.1997 106. Pakistan SAARC Multilateral Agreement 13.11.2005 19.05.2010 Multilateral Convention 14.09.2016 01.04.2017 107. Panama Multilateral Convention 27.10.2016 01.07.2017 108. Peru Multilateral Convention 25.10.2017 Not yet in force in Peru 109. Philippines DTAA 12.02.1990 21.03.1994 Multilateral Convention 26.09.2014 Not yet in force in Philippines 110. Poland DTAA 21.06.1989 26.10.1989 Protocol 29.01.2013 01.06.2014 Multilateral Convention 09.07.2010 01.10.2011 111. Portugal DTAA 11.09.1998 30.04.2000 Protocol 24.06.2017 Yet to be entered into force Multilateral Convention 27.05.2010 01.03.2015 192Department of Revenue III No. Jurisdiction Type of EOI agreement Date signed Date from which in force 112. Qatar DTAA 07.04.1999 15.01.2000 Multilateral Convention 10.11.2017 Not yet in force in Qatar 113. Romania DTAA 10.03.1987 14.11.1987 Revised DTAA 08.03.2013 16.12.2013 Multilateral Convention 15.10.2012 01.11.2014 114. Russia DTAA 25.03.1997 11.04.1998 Multilateral Convention 03.11.2011 01.07.2015 115. Samoa Multilateral Convention 25.08.2016 01.12.2016 116. San Marino TIEA 19.12.2013 29.08.2014 Multilateral Convention 21.11.2013 01.12.2015 117. Saint Kitts and Nevis TIEA 11.11.2014 02.02.2016 Multilateral Convention 25.08.2016 01.12.2016 118. Saint Lucia Multilateral Convention 21.11.2016 01.03.2017 119. Saint Vincent and the Grenadines Multilateral Convention 25.08.2016 01.12.2016 120. Saudi Arabia DTAA 25.01.2006 01.11.2006 Multilateral Convention 29.05.2013 01.04.2016 121. Senegal Multilateral Convention 04.02.2016 01.12.2016 122. Serbia DTAA 08.02.2006 23.09.2008 123. Seychelles TIEA 26.08.2015 28.09.2016 Multilateral Convention 24.02.2015 01.10.2015 124. Singapore DTAA 24.01.1994 27.05.1994 Protocol 29.06.2005 01.08.2005 Protocol 24.06.2011 01.09.2011 Protocol 31.12.2016 27.02.2017 Multilateral Convention 29.05.2013 01.05.2016 125. Sint Maarten Multilateral Convention Extension by the Netherlands 01.09.2013 126. Slovak Republic DTAA 01.10.1998 27.09.1999 Multilateral Convention 29.05.2013 01.03.2014 127. Slovenia DTAA 13.01.2003 17.02.2005 Protocol 17.05.2016 21.12.2016 Multilateral Convention 27.05.2010 01.06.2011 128. South Africa DTAA 04.12.1996 28.11.1997 Protocol 26.7.2013 26.11.2014 Multilateral Convention 03.11.2011 01.03.2014 129. Spain DTAA 08.02.1993 12.01.1995 Protocol 26.10.2012 Not yet in force Multilateral Convention 11.03.2011 01.01.2013 130. Sri Lanka DTAA 27.01.1982 19.04.1983 Revised DTAA 22.01.2013 22.10.2013 SAARC Multilateral Agreement 13.11.2005 19.05.2010 131. Sudan DTAA 22.10.2003 15.04.2004 132. Sweden DTAA 24.06.1997 25.12.1997 Protocol 07.02.2013 16.08.2013 Multilateral Convention 27.05.2011 01.09.2011 193Annual Report 2017-2018 No. Jurisdiction Type of EOI agreement Date signed Date from which in force 133. Switzerland DTAA 02.11.1994 29.12.1994 Protocol 30.08.2010 07.10.2011 Multilateral Convention 15.10.2013 01.01.2017 134. Syria DTAA 06.02.1984 25.06.1985 Revised DTAA 18.06.2008 10.11.2008 135. Tanzania DTAA 27.05.2011 12.12.2011 136. Tajikistan DTAA 20.11.2008 10.04.2009 Protocol 17.12.2016 Not yet in force 137. Thailand DTAA 22.03.1985 13.03.1986 Revised DTAA 29.06.2015 13.10.2015 138. Trinidad and Tobago DTAA 08.02.1999 13.10.1999 139. Tunisia Multilateral Convention 16.07.2012 01.02.2014 140. Turkey DTAA 31.01.1995 01.02.1997 Multilateral Convention 03.11.2011 Not yet in force in Turkey 141. Turkmenistan DTAA 25.02.1997 07.07.1997 142. Turks & Caicos Multilateral Convention Extension by the United Kingdom 01.12.2013 143. Uganda DTAA 30.04.2004 27.08.2004 Multilateral Convention 04.11.2015 01.09.2016 144. Ukraine DTAA 07.04.1999 31.10.2001 Multilateral Convention 27.05.2010 01.09.2013 145. United Arab Emirates DTAA 29.04.1992 22.09.1993 Protocol 26.03.2007 03.10.2007 Protocol 16.04.2012 12.03.2013 Multilateral Convention 21.04.2017 Not yet in force in UAE 146. United Kingdom DTAA 25.01.1993 26.10.1993 Protocol 30.10.2012 27.12.2013 Multilateral Convention 27.05.2010 01.10.2011 147. United States DTAA 12.09.1989 18.12.1990 Multilateral Convention 27.05.2010 Not yet in force in United States Foreign Account Tax Compliance Act (FATCA) 09.07.2015 31.08.2015 148. Uruguay DTAA 08.09.2011 21.6.2013 Multilateral Convention 01.06.2016 01.12.2016 149. Uzbekistan DTAA 29.07.1993 25.01.1994 Protocol 11.04.2012 20.07.2012 150. Vietnam DTAA 07.09.1994 02.02.1995 Protocol 03.09.2016 21.02.2017 151. Zambia DTAA 05.06.1981 18.01.1984 1 Under a protocol, the DTC with Denmark is extended to apply in its entirety to the territory of the Faroe Islands. 194Department of Revenue III Annexure - 2 Summary of Outcome under BEPS Project Action 1 – Address the Tax Challenges of the Digital practices for the building blocks of effective CFC Rules, Economy while recognizing that the policy objectives of these rules vary among jurisdictions. The recommendations are The Action 1 report concludes that the digital designed to ensure that jurisdictions that choose to economy cannot be ring-fenced as it is the economy itself. implement them will have rules that effectively prevent The report analyses BEPS risks exacerbated in the digital taxpayers from shifting income into foreign subsidiaries. economy and shows the expected impact of the It identifies the challenges to existing CFC Rules posed measures developed across the BEPS Project. Rules and by mobile income such as that from intellectual property, implementation mechanisms have been developed to services and digital transactions, and allows jurisdictions help collect value-added tax (VAT) in the country where to reflect on appropriate policies in this regard. The work the consumer is located in the case of cross-border emphasizes that CFC Rules have a continuing, important business-to-consumers transactions. This will help to role in tackling BEPS, as a backstop to transfer pricing level the playing field between domestic and foreign and other rules. suppliers and facilitate the efficient collection of VAT due on these transactions. Technical options to deal with the Action 4 – Limit base erosion via interest deductions broader tax challenges raised by the digital economy such and other financial payments as nexus and data have been discussed and analysed. A common approach to facilitate the convergence of As both the challenges and the potential options raise national rules has been elaborated in the area of interest systemic issues regarding the future framework for the deductibility. The influence of tax rules on the location of taxation of cross-border activities that go beyond BEPS debt within multinational groups has been established in issues, OECD and G20 countries have agreed to monitor a number of academic studies and various media reports developments in this regard. have shown how groups can easily multiply the level of India has been a participant in the Task Force on debt at the individual group entity level via intra-group Digital Economy, which was created to carry out the work financing. At the same time, the ability to achieve of „the tax challenges of digital economy . In 2016, India excessive interest deductions including those that finance has introduced Equalization Levy which is one of the three the production of exempt or deferred income is best options to deal with the taxation challenges presented by addressed in a coordinated manner given the importance digital economy recognized in the Final Report on Action of addressing competitiveness considerations and of 1 of BEPS. ensuring that appropriate interest expense limitations do not themselves lead to double taxation. The common Action 2 – Neutralize the Effects of Hybrid Mismatch approach aims at ensuring that an entitys net interest Arrangements deductions are directly linked to the taxable income A common approach which will facilitate the generated by its economic activities and fostering convergence of national practices through domestic and increased coordination of national rules in this space. treaty rules have been developed under Action 2 to India has introduced limit on interest deduction neutralize hybrid mismatch arrangements. This will help through Finance Bill, 2017. The new section 94B of the to prevent double non-taxation by eliminating the tax Income-tax Act provides that interest income claimed by benefits of mismatches and to put an end to costly multiple an entity as a payment to its Associated Enterprise (AE) deductions for a single expense, deductions in one shall be restricted to 30% of its earnings before interest, country without corresponding taxation in another, and taxes, depreciation and amortization (EBITDA) or interest the generation of multiple foreign tax credits for one paid/payable to AE, whichever is less. amount of foreign tax paid. By neutralizing the mismatch in tax outcomes, but not otherwise interfering with the Action 5 - Counter Harmful Tax Practices More use of such instruments or entities, the rules will inhibit Effectively, Taking into Account Transparency and the use of these arrangements as a tool for BEPS without Substance adversely impacting cross-border trade and investment. Current concerns on harmful tax practices are Action 3 – Strengthen CFC Rules primarily about preferential regimes which can be used for artificial profit shifting and about a lack of transparency The report on Controlled Foreign Company Rules in connection with certain rulings. The Action 5 report (CFC Rules) establishes guidance based on best sets out a minimum standard based on an agreed 195Annual Report 2017-2018 methodology to assess whether there is substantial Tax Convention, which is widely used as the basis for activity in a preferential regime. In the context of IP negotiating tax treaties. These changes address regimes such as patent boxes, consensus was reached techniques used to inappropriately avoid tax nexus, on the “nexus” approach. This approach uses including via replacement of distributors with expenditures in the country as a proxy for substantial commissionaire arrangements or via the artificial activity and ensures that taxpayers benefiting from these fragmentation of business activities. Together with the regimes did in fact engage in research and development changes to tax treaties proposed in the reports on Actions and incurred actual expenditures on such activities. The 2 and 6, the changes will restore taxation in a number of same principle can also be applied to other preferential cases where cross-border income would otherwise go regimes. In the area of transparency, a framework has untaxed or would be taxed at very low rates as result of been agreed for mandatory spontaneous exchange of the current provisions in tax treaties. information on rulings that could give rise to BEPS Actions 8-10 Assure that transfer pricing outcomes concerns in the absence of such exchange. The results are in line with value creation of the application of the elaborated substantial activity and transparency factors to a number of preferential Transfer pricing rules, which are set out in Article 9 regimes are included in the report. India has created the of tax treaties and the Transfer Pricing Guidelines, are necessary framework for implementation of transparency used to determine on the basis of the arms length principle framework and the same has been subject to peer review the price for transactions within an MNE group. The also. existing standards in this area have been strengthened, including the guidance on the arms length principle and Action 6 - Prevent Treaty Abuse an approach to ensure the appropriate pricing of hard- The Action 6 report includes a minimum standard on to-value-intangibles has been agreed upon within the preventing abuse including through treaty shopping and arms length principle. The work has focused on three new rules that provide safeguards to prevent treaty abuse key areas. Action 8 looked at transfer pricing issues and offer a certain degree of flexibility regarding how to relating to controlled transactions involving intangibles, do so. The new treaty anti-abuse rules included in the since intangibles are by definition mobile and they are report first address treaty shopping, which involves often hard-to-value. Misallocation of the profits generated strategies through which a person who is not a resident by valuable intangibles has heavily contributed to base of a State attempts to obtain the benefits of a tax treaty erosion and profit shifting. Under action 9, contractual concluded by that State. More targeted rules have been allocations of risk are respected only when they are designed to address other forms of treaty abuse. Other supported by actual decision-making and thus exercising changes to the OECD Model Tax Convention have been control over these risks. Action 10 has focused on other agreed to ensure that treaties do not inadvertently prevent high-risk areas, including the scope for addressing profit the application of domestic anti-abuse rules. A clarification allocations resulting from controlled transactions which that tax treaties are not intended to be used to generate are not commercially rational, the scope for targeting the double non-taxation is provided through a reformulation use of transfer pricing methods in a way which results in of the title and preamble of the Model Tax Convention. diverting profits from the most economically important Finally, the report contains the policy considerations to activities of the MNE group, and the use of certain type be taken into account when entering into tax treaties with of payments between members of the MNE group (such certain low or no-tax jurisdictions. To achieve this as management fees and head office expenses) to erode minimum standard in a swift manner, India has signed the tax base in the absence of alignment with the value- the Multilateral Instrument (MLI). creation activity undertaken. The combined report Action 7 – Prevent the Artificial Avoidance of PE contains revised guidance which responds to these issues Status and ensures that the Transfer Pricing Guidelines secure outcomes that see operational profits aligned with the Tax treaties generally provide that the business profits economic activities which generate them. of a foreign enterprise are taxable in a State only to the extent that the enterprise has in that State a permanent BEPS creates additional transfer pricing challenges establishment to which the profits are attributable. The for developing countries beyond those also experienced definition of permanent establishment included in tax by developed countries. The report contains guidance treaties is therefore crucial in determining whether a non- on transactions involving cross-border commodity resident enterprise must pay income tax in another State. transactions as well as on low value-adding intra-group The report includes changes to the definition of services, two areas identified by developing countries as permanent establishment in Article 5 of the OECD Model of critical importance. This guidance will be supplemented 196Department of Revenue III with further work mandated by the G20 Development disclosure regimes, in order to enhance the effectiveness Working Group, which will provide knowledge, best of those regimes. The recommendations provide the practices, and tools for developing countries to price necessary flexibility to balance a countrys need for better commodity transactions for transfer pricing purposes and and more timely information with the compliance burdens to prevent the erosion of their tax bases through common for taxpayers. It also sets out specific best practice types of base-eroding payments. recommendations for rules targeting international tax schemes, coupled with the development and Action 11 – Measuring and monitoring BEPS implementation of more effective information exchange There are hundreds of empirical studies finding and co-operation between tax administrations. evidence of tax-motivated profit shifting, using different Action 13 – Re-examine Transfer Pricing data sources and estimation strategies. While measuring Documentation the scope of BEPS is challenging given the complexity of BEPS and existing data limitations, a number of recent Improved and better-coordinated transfer pricing studies suggest that global CIT revenue losses due to documentation will increase the quality of information BEPS could be significant. Action 11 assesses currently provided to tax administrations and limit the compliance available data and methodologies and concludes that burden on businesses. The Action 13 report contains a significant limitations severely constrain economic minimum standard based on a three-tiered standardised analyses of the scale and economic impact of BEPS and approach to transfer pricing documentation. First, the improved data and methodologies are required. Noting guidance on transfer pricing documentation requires these data limitations, a dashboard of six BEPS indicators multinational enterprises (MNEs) to provide tax has been constructed, using different data sources and administrations with high-level information regarding their assessing different BEPS channels. These indicators global business operations and transfer pricing policies provide strong signals that BEPS exists and suggest it in a “master file” that is to be available to all relevant tax has been increasing over time. New OECD empirical administrations. Second, it requires that detailed analyses estimate, while acknowledging the complexity transactional transfer pricing documentation be provided of BEPS as well as methodological and data limitations, in a “local file” specific to each country, identifying material that the scale of global corporate income tax revenue related-party transactions, the amounts involved in those losses could be between USD 100 to 240 billion annually. transactions, and the companys analysis of the transfer The research also finds significant non-fiscal economic pricing determinations they have made with regard to distortions arising from BEPS, and proposes those transactions. Third, large MNEs are required to file recommendations for taking better advantage of available a country-by-country report that will provide annually and tax data and improving analyses to support the monitoring for each tax jurisdiction in which they do business the of BEPS in the future, including through analytical tools amount of revenue, profit before income tax and income to assist countries to evaluate the fiscal effects of BEPS tax paid and accrued and other indicators of economic and countermeasures for their countries. Going forward activities. Country-by-country reports should be filed in enhancing the economic analysis and monitoring of BEPS the ultimate parent entity’s jurisdiction and shared will require countries to improve the collection, compilation automatically through government-to-government and analysis of data. exchange of information. In limited circumstances, secondary mechanisms, including local filing can be used Action 12 – Require taxpayers to disclose their as a backup. An agreed implementation plan will ensure aggressive tax planning arrangements that information is provided to the tax administration in a The lack of timely, comprehensive and relevant timely manner, that confidentiality of the reported information on aggressive tax planning strategies is one information is preserved and that the Country-by-Country of the main challenges faced by tax authorities worldwide. reports are used appropriately. Taken together, these Early access to such information provides the opportunity three documentation tiers will require taxpayers to to quickly respond to tax risks through informed risk articulate consistent transfer pricing positions, and will assessment, audits, or changes to legislation. The Action provide tax administrations with useful information to 12 report provides a modular framework of guidance assess transfer pricing risks, make determinations about drawn from best practices for use by countries with where audit resources can most effectively be deployed, mandatory disclosure rules which seeks to design a and, in the event audits are called for, provide information regime that fits host countries need to obtain early to commence and target audit enquiries. By ensuring a information on aggressive or abusive tax planning consistent approach to transfer pricing documentation schemes and their users. The framework is also intended across countries, and by limiting the need for multiple as a reference for countries that already have mandatory filings of country-by-country reports through making use 197Annual Report 2017-2018 of information exchange among tax administrations, Settlement Commission was established as a forum of MNEs will also see the benefits in terms of a more limited mediation in place of litigation. The aim was to move the conflicting parties to a consensus rather than subjecting compliance burden. Law enabling exchange of CbC them to adversial procedure inherent in the regular report was introduced through Finance Act, 2016. administration of justice. This was envisaged as an Subsequently, amendments have been brought in the institution for statutory arbitration. Rules by inserting new rules (rules 10DA & 10DB) and the rules were notified on 1-11-2017, with effect from 31- 14.2 The objective behind this institution is aptly 10-2017. summarized in the off-quoted passage from the report of the Wanchoo Committee as under: Action 14 – Make dispute resolution mechanisms “This, however, does not mean that the door for more effective compromise with an errant tax payer should forever Countries recognize that the changes introduced by remain closed. In the administration of fiscal laws, whose primary objective is to raise revenue, there has to be room the BEPS Project may lead to some uncertainty, and for compromise and settlement. A rigid attitude would not could, without action, increase double taxation and MAP only inhibit a one-time tax evader or an un-intending disputes in the short term. Recognizing the importance defaulter from making a clean breast of his affairs, but of removing double taxation as an obstacle to cross- also unnecessarily strain the investigational resources border trade and investment, countries have committed of the Department in cases of doubtful benefit to revenue, to a minimum standard that will address obstacles that while needlessly proliferating litigation and holding up currently prevent the effective and efficient resolution of collections”. double taxation cases. In particular, this includes a strong 14.3 The Settlement Commission has seven benches political commitment to the effective and timely resolution as under:- of disputes through the mutual agreement procedure. The commitment also includes the establishment of an (i) One Principal Bench and Two Additional Benches at New Delhi. effective monitoring mechanism to ensure the minimum standard is met and countries make further progress to (ii) Two Additional Bench at Mumbai. rapidly resolve disputes. (iii) One Additional Bench at Kolkata. (iv) One Additional Bench at Chennai. Action 15 - Develop a Multilateral Instrument 14.4 The Commission comprises of Members who are Drawing on the expertise of public international law appointed by the Central Government from amongst the and tax experts, the Action 15 report explores the persons of integrity and outstanding ability, having special technical feasibility of a multilateral instrument (MLI) to knowledge of and experience in problems relating to the implement the BEPS treaty-related measures and amend direct taxes and business accounts. bilateral tax treaties. It concludes that a multilateral 14.5 Each bench has three Members. The Principal instrument is desirable and feasible, and that negotiations is presided over by the Chairman and each Additional for such an instrument should be convened quickly. Based Bench is presided over by Vice Chairman. The Chairman on this analysis, a mandate was developed for an ad- is of the rank of a Secretary to Government of India. The hoc group, open to the participation of all countries, to Vice-Chairman and the Members are of the rank of an develop the multilateral instrument and open it for Additional Secretary to the Government of India. Members signature in 2016. More than 100 countries participated of the Commission are appointed from the serving Chief in the work on an equal footing. The MLI has been Commissioners or Principal Chief Commissioners or finalized and on the first date for signing the MLI on 7th Principal Commissioner of Income Tax or of equivalent June, 2017, 68 jurisdictions including India signed the rank. The senior most Member of every Bench, other MLI. than the Principal Bench is called Vice-Chairman of the respective Bench. The Chairman in the Principal Bench 14.Income Tax Settlement Commission is appointed from amongst the serving Members of the Commission having minimum remaining service of six 14.1 The Income Tax Settlement Commission (ITSC) months on the date of notifying the vacancy for the post was set up in pursuance of the recommendations of the of Chairman of the Commission. Wanchoo Committee (1971) w.e.f. 01.04.1976. It is an 14.6 An assessee is required to make an application Alternate Disputes Resolution (ADR) body within the to the Settlement Commission in the prescribed form to realm of Direct Taxes for settlement of Income Tax and get his case settled. He has to disclose Additional Income Wealth Tax cases. The main objective for setting up of not disclosed before the assessing officer and the this commission was to give a statutory basis for Additional Tax Payable on the Additional Income should settlement of cases in the interest of revenue. The be more than Rs. 50 lakhs in search cases and Rs. 10 198Department of Revenue III lakhs in other cases. The applicants are required to pay from penalty and prosecution under the Income Tax Act, the Additional Tax together with the interest before filing 1961 and Wealth Tax Act, 1957, which in usual course, the application in the Settlement Commission. The would involve prolonged litigation between the department Commission then decides upon the admissibility of the and the taxpayer. An order passed by the Commission is application and in case of admitted applications, the final and conclusive. At present the benefit of the Settlement Commission carries out the process of Settlement in a mechanism can be availed by a tax payer only once in life- time bound manner by giving opportunity to both the parties. time, who has made the first application as on or after 1st An Application filed before the Commission, if admitted, is June, 2007. Further details about the Commission are required to be disposed of by the Settlement Commission available on its Website.[www.itscindia.gov.in] within 18 months from the date of filing of the application. 14.7 A statement showing the number of Application The Commission has wide power of granting immunity files and disposal of is as under: Disposal and Pendency of cases u/s 245 D(4) FY Pendency Disposal Balance Percentage (Opening + received Disposal during the year 2015-16 742 242 500 32.6 2016-17 1117 541 576 48.4 2017-18(upto 747 249 498 33.3 30.11.2017 14.8 E- Governance Activities Authority for Advance Rulings (Customs, Central Excise & Service Tax) was constituted vide Finance Acts This Commission has its own official website i.e. of 1998, 1999 and 2003. Vide Section 93 of the Finance itscindia.gov. in. All the officers and staff members have Act, 2017 amending section 28F of the Custom Act, been provided the personal computers. Salary and other Authority for Advance Rulings(Customs, Central Excise dues are being paid to the officers of the Commission & Service Tax) constituted vide section 28F of the Custom thorough e. transfer system. Act, 1962 has been merged with Authority for Advance 15.Authority for Advance Rulings (Income Tax) Rulings(Income Tax) constituted under section 245-O of the Income-tax Act, 1961. The Authority for Advance Rulings (Income-Tax) (in short “the Authority”) is a quasi-judicial body under the 15.1 Central Sales Tax Appellate Authority Ministry of Finance, Department of Revenue. It consists of a Chairman and two Members, one each from the The Authority for Advance Rulings (Income-tax) has also been notified vide notification dated 17.03.2005 (as Indian Revenue Service and the Indian Legal Service. It amended vide notification dated 07.06.2005) as Central was established through introduction of Chapter XIX-B Sales Tax Appellate Authority to settle inter-state disputes in the Income Tax Act, 1961 (in short “the Act”) vide falling under Section 6A read with Section 9 of the Central Finance Act 1993 w.e.f. 01.06.1993. Sales Tax Act, 1956. It started functioning w.e.f. The Authority gives rulings on the taxation issues 01.03.2006. raised by non-residents relating to transactions (i) Two New Benches of the Authority namely NCR undertaken/proposed to be undertaken with a resident. Bench and Mumbai Bench have been constituted in Residents having transactions with non-residents can also the year 2015. Mumbai Bench has become functional seek ruling in relation to the tax liability of a non-resident. since 01st December, 2017 and process to make Public Sector Undertakings can also apply to the AAR NCR Bench functional is ongoing. for a ruling. (ii) Statistical data about performance for financial year The scope of the Authority has been expanded 2017-18 up to 30th Nov, 2017 are as under: further vide notification dated 28.11.2014 and now a Table - 1 resident taxpayer can also seek ruling in relation to his Income tax liability arising out of one or more PENDENCY POSITIION OF IT CASES AS ON 30TH transactions valuing rupees one hundred crore or more NOVEMBER, 2017 in total. Financial Opening Applications Total Disposed Closing Year balance received off Balance The ruling given by the Authority is of binding nature and no further appeal against this is provided under the 2017-18 434 71 505 33 472 Act. 199Annual Report 2017-2018 Table - 2 economic offences. iv) Organizes training programmes in premier training PENDENCY LIST OF CST CASES AS ON 30TH institutions for officers of the Department of Revenue/ NOVEMBER, 2017 Member agencies of REICs. Financial Opening Applications Total Decision Closing Year balance received Balance v) Vets applications under Global Entry Program (GEP) 2017-18 163 21 184 57 127 16.2 Major activities undertaken by the Bureau during Table - 3 the current financial year 2017-18 (upto November 2017) are as follows: PENDENCY LIST OF (CUSTOM, CENTRAL EXCISE 16.2.1 Head of Agencies (HOA): & SERVICE TAX) CASES AS ON 30TH NOVEMBER, 2017 The Head of Agencies Committee comprises of Heads Financial Opening Applications Total Decision Closing of Intelligence and Investigative Agencies under the Year balance received Balance Department of Revenue and discusses the trends of 2017-18 46 11 57 16 41 intelligence emerging in the economic field. It shares 16.Central Economic Intelligence Bureau strategic intelligence in the areas of Customs, Central (CEIB) Excise and Service Tax, Income Tax, Hawala, Drugs and FICN and identifies other cases with inter agency 16.1 Organization and Functions ramifications, for joint and / or coordinated action. 16.1.1 The Central Economic Intelligence Bureau is the 16.2.2 Group on Economic Intelligence (GEI): nodal agency on economic intelligence. It was set up in A GEI was formed on prevention of smuggling, 1985 for coordinating and strengthening the economic foreign exchange manipulation, trade based money intelligence and enforcement activities under the Ministry laundering and terror financing under the chairmanship of Finance of ADG (EI) consisting member agencies COFEPOSA/ 16.1.2 The Bureau is headed by a Director General who CEIB, DGFT, NIA, ED, SFIO, DGGSTI, DRI, RBI & NCB. is assisted by two Additional Directors General (JS- The group met on 30.08.2017 and 22.09.2017 and the Equivalent), Joint Secretary (COFEPOSA), Additional/ recommendations of the group are to be approved by Joint Directors (DS/Director equivalent), Under the Economic Intelligence Council. Secretaries, Deputy Directors (US equivalent) and other The Group on Economic Intelligence (GEI) provides staff. The Bureau has a sanctioned strength of 113 a co-ordination platform for sharing of intelligence Officers & Staff. At present, its working strength is 65 between the Member Agencies. Inputs shared through only. this platform help in pooling of resources for coordinated 16.1.3 In terms of its existing charter, the CEIB functions action for combating economic offences, some of which as also form predicate offences and the Intelligence so gathered on Trade Based Money Laundering is a) The Secretariat for the Economic Intelligence Council (EIC) instrumental in booking cases under PMLA & FEMA. The Bureau, on its own, also develops inputs in the field of b) Coordination between various agencies for economic offences and shares them with appropriate coordinating action and repository of economic intelligence (ECOINT) and Intelligence and Enforcement Agencies for further action. c) Administers the COFEPOSA Act 1974 at Central 16.2.3. Regional Economic Intelligence Councils Government Level. (REICs): The Bureau monitors the functioning of 30 16.1.4 As part of its mandate, the CEIB REICs which are Nodal Agencies at the Regional level for coordinating action of the Enforcement/Intelligence i) Maintains databases on economic offenders and Agencies at the field level. offences ii) Acts as a Think Tank and studies and analyses macro 16.2.4 Coordination: level economic activities a. Coordination regarding detection and destruction of iii) Supervises and monitors the functioning of Regional illicit opium poppy cultivation:- Economic Intelligence Councils (REICs), which are coordinating bodies at the field level and comprise The Bureau coordinates with field Agencies for of representatives from various Central and State reporting on illicit opium cultivation in various States and enforcement and investigative agencies dealing with in destruction thereof. 200Department of Revenue III b. Secure Information Exchange Network (SIEN): As D. During the current year, intelligence inputs developed per the decision of the EIC in 2007, a secured network by the Bureau as well as received from other agencies platform for online exchange of intelligence and were disseminated to the Member Agencies for further information is fully operationalised in the Bureau action. The inputs covered various fields such as where under fourteen Member Agencies can smuggling of FICN, Drugs, Hawala networks, Customs communicate with each other in a secured frauds, Excise Duty and Service Tax evasion, Income environment. Two agencies have been added to the network recently. Tax evasion, Bank Loan Frauds, illegal mining, Multi-level marketing, corrupt and suspicious activities by officials 16.2.5 Studies in the Bureau and Reports of Inter- and ploughing back of concealed income by companies, Ministerial Groups: etc. A. Economic Frauds by Bogus Invoices / Fake Bills: Other issues discussed / monitored were: It had come to the notice of the Bureau that producing and using fake/ bogus bills is a common method of i. Information on important offenders. committing economic fraud by submitting them before ii. Dossier Status. one or more agencies like to avail loan, to claim CENVAT iii. Identification of issues for examination like unlawful credit and VAT credit and to inflate expenses etc. The imports, use of Fake Bills/ Bogus invoices, MLM issue was raised during the Working Group on Schemes, Cross Border Money Laundering, etc. Intelligence Apparatus (WGIA) meeting dated 23.12.2015 All above tasks relating to examination/ analysis of and on the direction of WGIA, a group was constituted in Economic offences are spread across vast spectrum CEIB with representation from DGCEI, CBDT, DFS, RBI, ranging from illegal export/ import, money laundering, ED, various State Commercial Tax authorities and Fake Indian Currency detection, use of fake bills/ bogus commercial Banks. invoices, mis-use of financial channels like Commercial The group is scheduled to submit its final report shortly. Banks, Insurance, NBFCs etc which bring to the fore the policy gaps highlighted by CEIB. This data & modus B. Export Outstanding (XOS) Statement: operandi can be used for National Risk Assessment. The issue of non-sharing of Export Outstanding 16.2.6 Disclosure of the Source of undisclosed income: (XOS) Statement by RBI with the concerned Law Pertains to Coordination Section. Enforcement Agencies was raised during the EIC meeting dated 06.04.2016 and on the direction of Finance Minister, 16.2.7 Some major cases coordinated by the Bureau a group was constituted in CEIB with representation from relate to: RBI, ED, DFS and IBA to resolve the issue. Subsequently, (i) Dissemination of cases culled out from reports the group had decided that RBI would share the XOS received in the Bureau: data with CEIB and CEIB would transmit the data to ED (a) On account of sharing of the information having and the concerned agencies after examination as it has inter Agency implication, an amount of Rs. 1 Crore ramifications on defaulters under FT (D&R) Act etc. has been realized by various agencies and demands/ Further, on an another platform, RBI suggested that CEIB SCNs for an amount of more than Rs. 1100 Crores can obtain the data from CBEC as they share the XOS were raised / issued by various departments. During with CBEC on regular basis. Matter has been taken up the period January 2017 to November 2017, Bureau with CBEC and sharing of the XOS data is expected in has developed and shared 98 intelligence inputs having estimated amount involved more than 16000 due course of time. crores and covering new tactical modus operandi and C. Sharing of data on FETERS: issues with concerned law enforcement agencies like IB, CBEC, CBDT, CBI, ED, DGFT and State CBEC had desired various types of data from Government authorities. FETERS (Foreign Exchange Transaction-Electronics (b) During the period January 2017 to Novemebr Reporting System) database of RBI and a group 2017, 173 cases related to Service Tax/Central constituted in CEIB with representation from DRI, FIU- Excise duty/ Customs duty evasion amounting Rs. IND and RBI decided that Authorized Dealers would be 3884 crores have been shared with 30 Regional instructed by RBI for pushing data as required by DRI to Economic Intelligence Council (REIC) forums. DRI and FIU on real time basis. Later on, RBI expressed (c) Intelligence regarding evasion of Customs duty difficulty in sharing the FETERS data due to oimitations on import of various brand of beers through Mumbai within the available statute. Accordingly, Finance Act has Port (JNPT) and ICD Tughalakabad, Delhi by M/s been amended and corresponding rules are to be notified Crown Beers India Pvt. Ltd., was developed in the Bureau and referred to the Customs authorities. As shortly to enable RBI to share the FETERS data. 201Annual Report 2017-2018 on date, demand of more than Rs.2 crores has been 16.2.9 Money Stashed in Overseas Accounts raised by various commissionerates of CBEC. As further investigation is in process, this seems only a The Bureau had forwarded to CBDT, ED, FIU, DRI fraction of total revenue deferred, which is estimated and DGCEI, a list containing over 600 names and to Rs. 10 crores. addresses of individuals/entities of Indian origin who may have stashed funds abroad in tax havens. Certificates of (d) Recently, intelligence regarding Central Excise duty evasion at huge scale by 28 numbers of zip Incorporation of 11 legal entities listed in the ICIJ Report manufacturing units in UP on manufacturing of which were received from two FIUs of foreign countries Polyester (CFC) ZIP without getting registered with were shared with CBDT for further action. the Central Excise authorities, was developed in the CBDT has informed that 542 Indian persons have Bureau and shared with Central Excise authorities. been traced so far and 431 persons found to be The factual aspects of the intelligence are confirmed ‘Resident’s. On verification of Income Tax Returns in and amount of duty evaded would be quantified in due course. these cases, it was found that details of offshore entities/ transactions were not disclosed to the Income Tax (e) Intelligence regarding evasion of Service Tax Department. During the course of investigation, 183 by a company who had cheated people through persons have admitted their relationship with such ponzi schemes and instead of repaying the investor’s money to the tune of Rs.7500 crore, offshore entities/transactions. An amount of about Rs. siphoned off a large amount of money to sister 135 Crore has been admitted by certain assesses as their companies, was coordinated by the Bureau among undisclosed income relatable to offshore transactions. various agencies. In this case, demand of more Out of these, in 3 cases prosecution complaints have than Rs.900 crores has been raised by DGGSTI been filed under Income Tax Act 1961. against the company. 16.2.10Information sought from CEIB (f) Information regarding money laundering by overvaluation of imported coal from Indonesia was CEIB receives requests from Agencies like IB, FIU, referred to various agencies. Difference of the SFIO, RBI, CBDT and DGCEI seeking information on declared and correct value by an importer was noticed economic offenders/ offence(s), which are promptly approx. Rs.600 crores. responded to. The Bureau has sensitized the field (g) CEIB developed intelligence inputs on corrupt formations across the country, through the REICs, on the activities being adopted post-demonetization and information available in CEIB, urging them to maximize disseminated the same to the concerned law its use. enforcement agencies. Further, as per the guidelines on detection, reporting, 16.2.8 Bank Fraud investigation etc. relating to large value bank frauds of Information on misuse of Bank Loans and Technology more than Rs. 50 Crores, report on borrowers are being Up-gradation Fund Scheme (TUFS) of more than Rs. sought from CEIB by Public Sector Banks. Such reports 3000 Crores and violation of various Acts by a Group are being furnished by CEIB as and when such references are received from banks. During the period January 2017 Company was recorded and developed in the Bureau. to November 2017, 630 references were replied to. The Group consisting of 8 companies has taken more than Rs. 3000 Crores from various Public Sector Banks 16.2.11 Other Steps taken by Bureau: by submitting forged/ fake documents and instead of (i) Non-payment of central excise duty by Ready Mix investing this money in the projects has diverted more Concrete (RMC) manufacturers prior to 1st March, than 95% of the same for: 2016 was noticed in the bureau. Manufacturing of • Buying Lands/ Flats/Building/Malls at various places Ready Mix Concrete (RMC) (classification under Chapter 3824 50 10 of the Central Excise Tariff Act, across the country. 1985) had effective rate of Central Excise duty of • Buying shares; 1% ad valorem as per notification no. 01/2011- • Jacking up prices of shares of listed companies; CE.,dated 1.03.2011 which was increased to 2% ad valorem vide notification 16/2012-CE dated • Parking of money overseas. 17.03.2012, chargeable irrespective of place of On the basis of information shared by the Bureau, manufacturing (at site or away from site). In the DGCEI had issued 16 Show Cause Notice (SCNs) budgetary changes of 2016 the RMC manufactured at the site of construction for use in construction work demanding duty of Rs.17.46 Crores. Income Tax was exempted vide notification no. 12/2016 - CE Department has raised demand for an amount of Rs. dated 01.03.2016 (This provision of manufacturing 1377.95 crores and total tax liability comes to Rs.169.41 at site was not there in the notification 1/2011-CE crores. and 16/2012-CE referred above). It was gathered that 202Department of Revenue III many RMC manufacturer had neither taken Central to keep data base current and relevant. Bureau also has Excise registration nor paid any Central Excise duty details of over 36,000 offence cases, booked by various on RMC manufactured during the period prior to agencies. The DATA Base of dossier maintained in CEIB 01.03.2016. Accordingly, the concerned authorities has been designed to capture the data subject-wise and were intimated to initiate the recovery proceedings. stored accordingly which could be instantly retrieved and Consequently, demand of more than Rs.8 Crores has viewed for the requesting agency. The DATA Base of been raised by various CBEC commissionerates / DGCEI. dossier maintained in CEIB has been designed to capture the data subject-wise and stored accordingly which could be instantly retrieved and viewed for the requesting (ii) Bureau observed that violations under Passport Act agency. To make the system robust and user-friendly, may have ramifications on serious crimes like terror hardware and operating system has been upgraded. financing and cross-border crimes etc as offenders of such crimes can resort to violations under Passport Member agencies of Secured Information Exchange Act to avoid easy detection. Hence, coordination Network (SIEN) have been provided simultaneous access among various intelligence / investigation agencies to National Economic Intelligence Network (NEIN) is warranted. CEIB, being the apex coordination database for their utilization during investigation/ agency has taken up the matter with the Ministry of External Affairs (MEA). intelligence development. (iii) It was also observed that bank frauds may provide 16.3 Fake Indian Currency Notes (FICN): lead to other offences like evasion of taxes, manipulation of foreign exchange, siphoning of funds In pursuance of GOM Report tasking the NSCS to and culpability of officials etc. Also, there is possibility track the developments relating to Fake Indian Currency of impending offences which has a corrosive effect Notes and to alert concerned Agencies, the Central on a country’s economy, government, and social well- Economic Intelligence Bureau was directed vide the being. To prevent further offences, coordination Cabinet Secretariat (NSCS) U.O. No.C-183/1/2001/ among the concerned intelligence / investigation NSCS (CS) dated 22nd May, 2001 to take steps to keep agencies is required and the Bureau has taken up NSCS informed on a continual basis regarding the the matter with all the Public Sector banks. development as far as printing, smuggling and circulation (iv) Bureau has been providing its opinion/suggestions/ of Fake Indian Currency were concerned. Accordingly, comments as and when sought by other Ministry/ the Bureau collects data from all concerned Agencies Department on various draft bills/ reports/ schemes with the prospective of protecting revenue and and prepares a half yearly nationwide comprehensive curbing the economic offences. During the period analysis report on printing, smuggling and circulation of comments / inputs for on following were provided by Fake Indian Currency Notes which is sent to the National the Bureau: Security Council Secretariat and shared with National (a) Proposal for Padma Awards-2017 received from Security Advisor (NSA), MEA, MHA, CBI, IB, ED, DRI Ministry of Home Affairs. and the Regional Economic Intelligence Councils (b) Report of National Tea for Threat and Vulnerability operating in different parts of the country. Last report on Assessment f0r Money Laundering for National FICN was circulated on 21.11.2017. Risk Assessment exercise. 16.4 Administration of COFEPOSA Act (c) Bureau is a member agency in Inter-Disciplinary Committee formed in Ministry of Finance on Smuggling, foreign exchange racketeering and Crypto-currencies. related activities have a deleterious effect on the national (d) Bureau is a member agency in Committee on economy and thereby a serious adverse effect on the Combating Terror Financing, formed in security of the state. To deal with this menace, the Ministry of Home Affairs. Conservation of Foreign Exchange and Prevention of (e) Rules for rewards for cases booked under NDPS Act, Smuggling Activities Act, 1974 (COFEPOSA Act, 1974) 1985. has been enacted to provide for preventive detention law 16.2.12 NEIN DATABASE to detain smugglers and foreign exchange manipulators from indulging in these prejudicial activities. The CEIB maintains a database of Dossiers of Economic COFEPOSA Division of the Department functioning under Offenders/ Suspected Tax Evaders, on the basis of the the Central Economic Intelligence Bureau administers this inputs received from the Law Enforcement Agencies Act. During the year2017, Preventive Detention Orders across the country. CEIB so far has more than 6600 were passed against 24 persons and 28 persons dossiers. The Bureau periodically reviews the dossiers (including absconders from Detention Orders of previous and seeks updates from concerned member agencies years) were detained under the COFEPOSA Act. 203Annual Report 2017-2018 16.5 Coordination with FIU-IND:- 17.Directorate of Enforcement There is a regular inflow of inputs from FIU-IND, 17.1 ORGANIZATION AND FUNCTIONS: which are analysed and disseminated for further action 17.1.1 The Directorate of Enforcement is headed by the by the Bureau after due process. The inputs are found Director of Enforcement. The other officers of the useful for economic intelligence. Directorate are Special Directors, Additional Directors, Joint Directors, Deputy Legal Advisor, Deputy Directors, 16.6 Training: Assistant Legal Advisors, Assistant Directors, The Bureau organized training courses at various Enforcement Officers and Assistant Enforcement Officers specialized training institutions to enhance the assisted by other ministerial staff. In view of the enhanced investigative skills and intelligence gathering techniques role of the Directorate in the enforcement of the Prevention of the Money Laundering Act (PMLA), 2002, for the Revenue Officers. The following programmes have the strength of the Directorate was restructured by organized in the year 2017: Government in March, 2011. (1) “Intelligence Gathering & Intelligence Tradecraft” at 17.1.2 The Directorate is in the process of opening new Cabinet Secretariat Training Institute, Gurgaon. offices as well as to fill up the posts in a phased manner, (2) “Capsule course on legal aspects/court matters” at keeping in view the need to ensure the quality of intake National Law University, Delhi. necessary for an investigative agency. The Directorate has a Head Quarters Office at New Delhi, 05 Regional Offices (3) “Investigating Economic Crime in Securities Market” at New Delhi, Mumbai, Kolkata, Chennai and Chandigarh at NISM, Mumbai. besides 19 Zonal Offices and 13 Sub Zonal Offices. (4) “Banking Operations & Fiscal Law Enforcement” at The total sanctioned strength of the Directorate is State Bank Staff College, Hyderabad. now 2064, as under:- (5) “Intelligence Gathering & Intelligence Tradecraft” at Post Sanctioned In position Intelligence Bureau Central Training School, New Strength (as of Delhi. 30.11.2017) 16.7 Global Entry Program (GEP) Executive 1218 620 Ministerial 376 217 GEP is a US Customs and Border Protection (CBP) Computer Staff/ 69 06 program for expedited clearance of travellers arriving Official Language at US airports which has been rolled out for India during Staff the last visit of Hon’ble Prime Minister to US and India Operational Staff 375 62 has becomes only the 11th country whose citizens are Legal Staff 26 08 eligible to enrol in the program along with Argentina, Total 2064 913 Colombia, Germany, Mexico, the Netherlands, (I) Functions of Executive Wing:- Panama, the Republic of Korea, Singapore, Switzerland, and the United Kingdom. Before granting The Directorate of Enforcement implements two Acts GEP membership to any applicant, United States seeks viz. Foreign Exchange Management Act, 1999 (FEMA) and Prevention of Money Laundering Act, 2002 (PMLA). cooperation from our nation in background check of FEMA replaced the Foreign Exchange Regulation Act, the applicant as the MOU in this regard emphasize the 1973 (FERA) with effect from 01.06.2000. The need for vetting process. Directorate also continues to perform the residual work In order to complete the vetting process, Ministry of under the repealed FERA, 1973. The Directorate also implements the provisions of COFEPOSA, 1974. External Affairs (MEA) seeks reports from Ministry of Finance (MOF). ADG (EI), CEIB has been designated as The main functions of the Directorate are as under:- nodal officer on behalf of Ministry of Finance to provide i) To collect, develop and disseminate intelligence clearance report to MEA. Bureau has provided clearance relating to contraventions of FEMA. The intelligence report w.r.t. more than 600 GEP applicants to MEA. For inputs are received from various sources such as expedite clearances of GEP applications, an online GEP Central and State Intelligence agencies, RBI, clearance system has been developed. The system is a complaints, information gathered by officers, etc. cloud based system which uses Virtual Private Network ii) To investigate suspected contraventions of the (VPN) and expansion of the same to field offices of provisions of FEMA relating to activities such as member agencies across the nation, is under Hawala, unauthorized dealings in foreign exchange, consideration. non-realization of export proceeds, unauthorized 204Department of Revenue III retention of funds abroad including bank accounts, presenting cases before the Adjudicating Authority unauthorized acquisition of immovable properties and Appellate Tribunals. The Legal Wing makes use abroad, contraventions relating to Foreign Direct of the services of the competent lawyers to represent Investments (FDIs), External Commercial Borrowings the Directorate in cases of significance. The Officers (ECBs), Foreign Currency Convertible Bonds of the Legal Wing make significant contribution while (FCCBs), etc. attending to matters pending before the Adjudicating Authority, Appellate Tribunal for Foreign Exchange, iii) To adjudicate cases of violations of the erstwhile Appellate Tribunal under PMLA, Special Courts, High FERA, 1973 and FEMA, 1999. Courts and Supreme Court. In addition, the Law iv) To realize penalties imposed on conclusion of Officers review the adjudication and judicial orders adjudication proceedings. and suggest appropriate course of action in v) To handle appeals under FEMA. accordance with law. vi) To handle appeals and prosecution cases under the iii) The Officers in the Legal Wing of the Directorate do erstwhile FERA, 1973. the vetting of Prosecution complaints under PMLA vii) To process and recommend cases for detention Appeals, LRs and other documents from legal angle. under the Conservation of Foreign Exchange and iv) The Legal Wing also monitors the progress and Prevention of Smuggling Activities Act (COFEPOSA) speedy disposal of prosecution cases under FERA in respect of contraventions under FEMA. and PMLA. The Officers of the Legal Wing also brief viii) To initiate investigations under PMLA to ascertain the Senior Counsels, the learned AG, SG and ASG whether proceeds of crime have been on case to case basis as and when so required. generated from the Scheduled offences in the cases v) The Legal Wing monitors the Legal Cases Monitoring booked by the concerned Law Enforcement Agencies System (LCMS) for its day to day updates for effective and such proceeds have been laundered. If a prima and speedy disposal of PMLA cases pertaining to facie case of money laundering is made out, Adjudicating Authority/Appellate Tribunal under Enforcement Directorate attaches the property PMLA/High Courts and the Supreme Court. derived from the proceeds of crime for its ultimate 17.2 HIGHLIGHTS OF THE PERFORMANCE AND confiscation. ACHIEVEMENTS DURING THE YEAR 2017-18 ix) To file prosecution complaints in the designated (1st January-30st November) PMLA Court for the offence of money laundering under PMLA. The performance and achievements of the x) To provide and seek mutual legal assistance to/from Directorate during the year 2017-18 (up to November, contracting states inrespect of attachment/ 2017) are as per Annexure 'I' (in respect of FEMA and confiscation of proceeds of crime as well as in FERA) and Annexure 'II' (in respect of PMLA). respect of transfer of accused persons under PMLA. 17.3 PERFORMANCE/ACHIEVEMENTS UPTO THE xi) To facilitate international cooperation in Anti-Money LAST YEAR (2016-17) Laundering (AML) efforts. II) Functions of Legal Wing The performance and achievements of the Directorate during the financial year 2016-17 are as per i) The Legal Wing in the Directorate of Enforcement is Annexure 'III' (in respect of FEMA and FERA). The headed by the Additional Director (Prosecution) which performance and achievements of the Directorate during is lying vacant and Deputy Legal Adviser is presently discharging all such function/duties. The Deputy the financial year 2016-17 are as per Annexure 'IV' (in Legal Adviser is assisted by the ALA and AD Legal in respect of PMLA). the Headquarter and the Zones. Comparison in performance of the cases viz-a-viz ii) The Officers in the Legal Wing render legal the corresponding period of 2016-17 are as under: - assistance and perform advisory duties besides Cases under Investigation Pending at beginning of Registered during the Disposed Pendency Percentage the year year off disposal w.r.t. pendency FEMA As on As on From From From From From From From From 01.01.17 01.01.16 01.01.17- 01.01.16- 01.01.17- 01.01.16- 01.01.17- 01.01.16- 01.01.17- 01.01.16- 30.11.17 30.11.16 30.11.17 30.11.16 30.11.17 30.11.16 30.11.17 30.11.16 4707 4758 3693 1355 1709 1525 6798 4588 36.20 32.05 205Annual Report 2017-2018 Cases under Investigation PMLA Pending at beginning Registered during the Disposed Pendency Percentage of the year year off disposal w.r.t. pendency As on As on From From From From From From From From 01.01.17 01.01.16 01.01.17- 01.01.16- 01.01.17- 01.01.16- 01.01.17- 01.01.16- 01.01.17- 01.01.16- 30.11.17 30.11.16 30.11.17 30.11.16 30.11.17 30.11.16 30.11.17 30.11.16 1155 1336 154 122 237 337 1072 1121 20.52 25.76 17.4 e- GOVERNANCE viii) Legal Cases Monitoring System (LCMS) - This is a web based application to monitor the status of the Enforcement Directorate, Headquarters Office and legal cases filed by the Directorate or by the Party in zonal offices have their own LAN, which is connected to Supreme Court, PMLA Tribunal, PMLA Adjudication NICNET WAN, ED HQ and Zonal offices are using the Authority and PMLA Special Court. It captures the office automation tool like Microsoft Office, to accomplish information such as Petition Number, Petitioner the day to day activities like preparing letter, excel sheet Name, Role of DoE, Concern Zone Name, ECIR and graphs. Number, PAO Number etc. It records the status/ progress of the case on last date hearing. Some e-governance initiatives taken by the Directorate of Enforcement are as under:- ix) Enforcement Directorate Offenders Tracking System (E-DOT)- A web based application for FEMA and i) Website - Directorate has a web site having the PMLA cases has been developed to capture and contents in both English and Hindi, where citizen can create a database for FEMA and PMLA related cases get information related to this office, various acts starting from the T-3 file stage. This has been enforced and other related information. Recently, the developed in ASP.Net technology to provide the user website has been completely revamped to provide friendly interface to the users, and SQL Server as a for a new and user friendly interface. Apart from it, backend database to store the data. Forms have various new features like Details of Confirmed been designed with user friendly interface. Attached Properties, Information about senior x) Notice Board Application- A new application 'Notice officers, Contact Information of PIOs for providing Board' has been developed for uploading/publishing/ information under RTI Act etc. have also been added. viewing the various circulars/downloadable forms/ ii) Comp DDO - A pay roll system has been implemented training related information/important judgments under for managing the salary of its employees. FEMA/PMLA etc. The uploaded information is grouped iii) E-mail - NIC email id has been provided to officials. into major category and then in sub categories. On login, it will display the list of all the major categories iv) Video Conferencing-- A web based Video and which in turn is hyperlinked to display the details Conferencing system has been introduced in the of uploaded information for this major category. This Directorate. application is a ROLE based and there are four pre- The Directorate of Enforcement has also developed defined ROLE viz. 'ADMIN', 'ENTRY', 'PUBLISH' and an internal website for its internal use. The website 'VIEW'. There are further options for raising queries contains following items: based on various parameters like Category, Circular v) MPR (Monthly Progressive Report) - A web based Year, Circular Number and subject. application has been developed to enter and xi) Expenditure Monitoring System (EMS) This consolidate the statistical information related to application is developed to capture the details of monthly progressive report to FERA, FEMA, and budget estimates, budget allocation, and monthly PMLA related cases. expenditure by the various officers of the directorate. vi) MIP (Monthly Integrated Proforma) - A web based xii) National Risk Assessment Monitoring System: This application has been developed to enter and is a web based application developed for creating a consolidate the information related to monthly database with respect to National Risk Assessment Integrated Proforma for PMLA. exercise being undertaken at the Directorate. The vii) Employee Information System (EIS) - This is a web basic objectives of this application is to provide the based application to store, process and generate the option for capturing the offender's details such as various reports of an employee. It provides the ECIR No., FIR No., Predicate offence and its information of an employee such as present post, corresponding section, status of predicate offence place of posting, date of joining in Enforcement and total value of POC accessed by LEA and ED, Directorate, date of birth and retirement, mode of status of LR sent to foreign countries and modus recruitment, next date of promotion and post, operandi used by the offenders/conspirator. information of sanctioned post, working post and xiii)Discussion forum: This is a web based application vacant post at Directorate and its subordinate offices. for collaboration or discussion where officials can hold 206Department of Revenue III conversations in the form of posted messages/ 17.6 GENDER BUDGETING/EMPOWERMENT OF replies. A discussion forum is an area where WOMEN: participants can discuss a topic or a group of related No case has been reported regarding sexual topic. Within each subject, participants can create harassment at work place during the year 2017-18 (upto multiple threads. A thread includes the initial post and 30.11.2017). all replies to it. Users can participate in any available topics relevant to the department. 17.7 ACTIVITIES UNDERTAKEN FOR DISABILITY xiv)FTS: FTS application is being reconfigured to meet SECTOR & SC/ST & OTHER W E A K E R the requirement of the Directorate. A new instance SECTIONS OF THE SOCIETY. of data base and application has been created on The rules framed by the Government and guidelines the existing server. New sections and users are being issued from time to time are adhered to and followed by created as per the requirement of the Directorate. the Directorate. 17.5 GRIEVANCES REDRESSAL MACHINERY 17.8 OTHER INITIATIVES IN ED Grievance officers have been nominated at Headquarters Office and Zonal / Sub-Zonal Offices of The activities initiated in ED viz. Swachch Bharat the Directorate for redressal of public/staff grievances Abhiyan, Biometric Attendance System, Creation of Cyber and prompt action is being taken to redress their Lab and acquisition of Field Kits, Intelligence Information grievances. As on date there are 12 grievances pending Monitoring System (IIMS) and Vigilance Awareness Weak as on 30.11.2017. is mentioned in Annexure V. Annexure I (FERA & FEMA) STATISTICAL DATA FROM JAN, 2017 TO NOV, 2017 Jan-Nov A Searches & Seizures FEMA 1 Searches Conducted 110 2 FE seized (Rs. in Lakhs) 547.41 3 IC seized (Rs. in Lakhs) 753.49 B Investigation FEMA 1 Initiated 3693 2 Disposed 1709 3 Pending 6798 4 SCNs issued 622 C Adjudication FERA FEMA Total 1 Cases Adjudicated 38 + 1022 1060 2 Cases pending adjudication 395 + 1121 1516 Confiscation of Foreign 3 Exchange (Rs. in Lakhs) 0.18 + 221.71 221.89 Confiscation of Indian 4 Currency (Rs. in Lakhs) 34.6 + 553.04 587.64 D Penalties FERA FEMA Total 1 Imposed (Rs. in Lakhs) 1306.94 + 5082.6 6389.54 2 Realized (Rs. in Lakhs) 207.63 + 1018.29 1225.92 Pending for realization 3 (Rs. in Lakhs) 866406.87 + 186665.55 1053072.42 E COFEPOSA FERA FEMA Total 1 Orders issued 0 + 0 0 2 Detained 0 + 0 0 F Prosecutions FERA Total 1 Disposal 59 59 i) Conviction 19 19 ii) Acquittal 10 10 iii) Discharge 15 15 iv) Withdrawn 0 0 v) Otherwise disposed off 15 15 vi) Cases reduced 0 0 2 Pending 2314 2314 207Annual Report 2017-2018 Annexure II (PMLA) STATISTICAL DATA OF PMLA CASES FROM JAN, 2017 TO NOV, 2017 Sl. No. ACTIONS Total at the end of the month 1. No. of ECIRs 154 2. No. of provisional Attachment Orders issued 177 3. Value of properties under attachment 505698.59 (in Lacs of Rupees) 4. No. of PAOs confirmed 165 5. Value of assets under PAO confirmed by the 1033291.45 Adjudicating Authority (in Lacs of Rupees) 6. No. of PAOs not confirmed by the Adjudicating 3 Authority 7. Value of Assets in respect of PAOs not 24927.63 confirmed by the Adjudicating Authority ( in Lacs of rupees) 8. No. of Appeals before Tribunal a) Filed by the party 275 b) Filed by the Directorate 10 Total: 285 9. No. of persons arrested 40 10. No. of cases in which prosecution complaints 92 filed Annexure III (FERA & FEMA) STATISTICAL DATA FROM JAN, 2017 TO NOV, 2016 A Searches & Seizures FEMA 1 Searches Conducted 141 2 FE seized (Rs. in Lakhs) 1047.6 3 IC seized (Rs. in Lakhs) 1128.53 B Investigation FEMA 1 Initiated 1355 2 Disposed 1525 3 Pending 4588 4 SCNs issued 668 C Adjudication FERA FEMA Total 1 Cases Adjudicated 132 + 652 784 2 Cases pending adjudication 434 + 1370 1804 3 Confiscation of Foreign 60.028 + 79.34 139.368 Exchange (Rs. in Lakhs) 4 Confiscation of Indian 6.11 + 448.66 454.77 Currency (Rs. in Lakhs) D Penalties FERA FEMA Total 1 Imposed (Rs. in Lakhs) 676.63 + 2359.96 3036.59 2 Realized (Rs. in Lakhs) 118.15 + 701.21 819.36 3 Pending for realization 864273.27 + 181283.8 1045557.07 (Rs. in Lakhs) E COFEPOSA FERA FEMA Total 1 Orders issued 0 + 0 0 2 Detained -2 + 1 -1 F Prosecutions FERA Total 1 Disposal 133 133 i) Conviction 6 6 ii) Acquittal 13 13 iii) Discharge 9 9 iv) Withdrawn 1 1 v) Otherwise disposed off 97 97 vi) Cases reduced 7 7 2 Pending 2369 2369 208Department of Revenue III Annexure IV (PMLA) STATISTICAL DATA OF PMLA CASES FROM FROM JAN, 2016 TO NOV, 2016 Sl. No. ACTIONS Total at the end of the month of Nov 2016 1. No. of ECIRs 122 2. No. of provisional Attachment 126 Orders issued 3. Value of properties under 841548.89 attachment (in Lacs of Rupees) 4. No. of PAOs confirmed 90 5. Value of assets under PAO 128526.81 confirmed by the Adjudicating Authority (in Lacs of Rupees) 6. No. of PAOs not confirmed by 0 the Adjudicating Authority 7. Value of Assets in respect of 0 PAOs not confirmed by the Adjudicating Authority ( in Lacs of rupees) 8. No. of Appeals before Tribunal a) Filed by the party 181 b) Filed by the Directorate -1 Total: 180 9. No. of persons arrested 3 10. No. of cases in which 78 prosecution complaints filed Annexure V 1. Swachh Bharat Abhiyan launched by our Hon’ble Laboratory (FSL) to analyse digital evidence. This used Prime Minister on 2nd October, 2014 is being vigorously to delay the investigation proceedings. At times the followed by this Directorate. On 2nd October, a pledge analysis from FSL used to come to ED after a long delay ceremony was organized across all offices of Enforcement which at times used to affect /delay the investigation Directorate where all the officers and staff members took proceedings. Thus ED came up with the idea of pledge to keep our nation ‘Swachh’. Further, various drives commissioning its own Cyber lab. Now with the have been organized including installation of banners for commissioning of this lab we can analyse digital media creating awareness among citizens and government like phones, hard drives, pen drives, laptops, etc for digital officials towards the cause of this “Abhiyan”. Regular evidence with our own workforce. The lab also has the inspection of the office premises is also being done. capability to recover data from damaged media. 7 ED personnel were trained as a capacity building measure 2. The Biometric Attendance System has also been to operate the newly commissioned lab. Further, the installed in various offices of this Directorate including Directorate has taken the initiative to open 5 more such the Headquarters where it was installed during October, cyber labs at its regional offices with more advanced 2014. The same is being continuously monitored for any technology and provision to train at least 5 officials at aberrations from defined inputs/complaints have been each cyber lab. It is also mentioned that the Directorate lodged in the software and rules & regulations by is providing Cyber Forensics Field Acquisition Kits to each employees. Zonal and Sub-zonal office for instant analysis from digital 3. Creation of Cyber Lab and acquisition of Field evidences for getting investigation leads and to enhance Kits: Enforcement Directorate has commissioned its own the quality of intelligence and investigation follow ups. Cyber Lab in January 2015. Earlier on, ED used to send 4. Intelligence Information Monitoring System the seized Digital Media (Phones, hard Drives, Pen (IIMS): It is software designed by NIC in line with Drives, Computers, Laptops, etc) to Forensic Science 209Annual Report 2017-2018 Government of India policy of digitalization with active Ø Analysis and dissemination of information:- inputs from Intelligence Section of this Directorate and  60460 STRs processed. hosted over Intranet of the Directorate. It is a database  44115 STRs disseminated. of intelligence inputs received by this Directorate, which Ø Collaboration with domestic Law Enforcement includes every correspondence received from FIU-IND and Intelligence Agencies:- viz. STR, ESW or EGMONT Request raised by the zones  Regular interaction and exchange of information. of this Directorate. 19272 inputs/complaints have been lodged in the software and 12523 FIU-IND related  Received 915 requests for information from correspondences including 11627 STRs, 603 ESWs and intelligence and Law Enforcement Agencies. 293 EGMONT Requests have been entered so far in the  Provided information in 648 cases requested by software. the agencies. Ø Regional and global AML/CFT efforts:- 5. A Vigilance Awareness Weak was also organized by the Directorate during 30th October to 4th November,  120 requests received from foreign FIUs during 2017 to create awareness among staff to check corruption 01.01.2017 to 31.12.2017. at every level so that a corruption free society could be  159 requests sent to foreign FIUs during attained. 01.01.2017 to 31.12.2017. Ø Increasing awareness about money laundering 18.Financial Intelligence Unit–India (FIU- and terrorists financing: IND)  Contribution in 03 seminars and training RE/ 18.1 Background and function of FIU-IND workshops covering 83 participants. Ö In all 18 trainings programmes (07 by FIU-IND Financial Intelligence Unit-India (FIU-IND) was set and 11 by LEAs) were arranged with LEAs in which up by the Govt. of India to coordinate and strengthen 629 participants participated. collection and sharing of financial intelligence through an effective national, regional and global network to combat Ø Improving compliance with the PMLA: money laundering and related crimes.  07 review meetings held with Reporting Entities. Ø Strengthening legislative and regulatory 18.2 The main functions of FIU-IND include all framework: matters pertaining to  Regular interaction with the Department of a) Analysis of information/reports received from Revenue and Regulators. Reporting Entities as per the provisions of PMLA 2002  Suggestions received from stake holders or and Rules made thereunder and their dissemination through Department of Revenue for amendments to to authorized domestic agencies for further action. the Prevention of Money Laundering Act, 2002 and b) Enforcement of the provision of PMLA insofar as it the PML (Maintenance of Records) Rules, 2005 were relates to FIU-IND. dealt with. c) Egmont Group and exchange of information with  Participated in proceedings of the AML Steering foreign FIUs. Committee for evolving Risk based approach and d) Interface with reporting entities and their regulators framing of the National ML/TF Risk Assessment. and domestic agencies authorized to receive Ø Strengthening IT information: information from FIU-IND including promoting awareness about AML/CFT, capacity building and  Strengthening of data validation so as to improve training. the quality of data reported by various reporting entities. 18.3 Highlights of the Performance /achievements during 2017-18 (upto Nov, 2017)  Introduction of user-friendly features in FInex as per the feedback received from various agencies. Ø Collection of information:-  Appointment of Consultant for designing project  9033784 Cash Transaction Report (CTRs) FINnet 2.0 received. 18.4 IT Information  1411140 Suspicious Transaction Reports (STRs) received 18.4.1. FIU-IND initiated project FINnet in 2006 with the  222806 Counterfeit Currency Reports (CCRs) objective to ‘Adopt Industry Best Practices and received. appropriate technology to collect, analyze and  477911 NPO Transaction Report (NTRs) disseminate valuable financial information for combating received. money laundering, related crimes and terrorist financing. 210Department of Revenue III 18.4.2. The first phase commenced in March, 2007 Director (Finance), D/o Revenue/Excise & Customs and during which the functional and technical specifications Director (Finance), Direct Taxes/Expenditure assist the of project FINnet were finalised and a detailed Request JS&FA (Fin). for Proposal (RFP) for selection of System Integrator (SI) 19.1 Activities undertaken by the Integrated was also finalised. Finance Unit: 18.4.3. The second phase started with signing of contract All offices under the Department of Revenue, which with SI on 25th February, 2010. All the phases of the inter-alia include Revenue headquarters, Central Board implementation of the project have been completed and of Direct Taxes, Central Board of Excise & Customs, the Gateway Portal became live on 20th October, 2012. Narcotics Control Division, Central Bureau of Narcotics, 18.4.4. Changes in the legal and operational framework Chief Controller of Factories, Central Economic have necessitated the re-assessment of processes and Intelligence Bureau, Financial Intelligence Unit (FIU-IND), Technology. With this in view FIU-IND has initiated the Goods & Service Tax Council Secretariat, Enforcement design of FINnet 2.0. Directorate, Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Settlement Commission (IT/WT), 18.4.5. Main functionalities envisaged in FINnet 2.0 are Authority for Advance Rulings, Appellate Tribunal for as given below: Forfeited Property, Adjudicating Authority under PMLA, Ø Advanced case analysis capabilities Income Tax Ombudsman, National Committee for  Advanced Analysis Promotion of Social & Economic Welfare, all field offices of Income Tax Department which include Directorate  Parallel processing of data General of Income Tax (Systems), Directorate General  Integration of Open source Intelligence of Income Tax (Legal & Research), Directorate of Income  Strategic Analysis Module Tax (O&M Services), Directorate of Income Tax  Alert Module enhancement (Infrastructure), National Academy of Direct Taxes and  Machine Learning other field offices under the Central Board of Direct Taxes, all field offices under Central Board of Excise & Customs o Automatic case assignment and review which include Directorate General of Systems & Data o The processing module to learn from the Management, Directorate General of Human Resource history of cases analysed and disseminated Development, Directorate of Revenue Intelligence, o Faster case analysis and subsequent Directorate General of Goods and Service Tax dissemination Intelligence, Directorate General of Goods and Service o Algorithms to decode patterns of case Tax, National Academy of Customs, Indirect Taxes & analysis in the past and use these insights Narcotics, etc., are serviced by the three units of to accelerate case dissemination. Integrated Finance Division in terms of Budget Ø Expansion of FINnet ecosystem formulation, allocation, expenditure monitoring, control,  Mobile Application enforcing economy, scrutiny and sanction of expenditure o Secure mobile eco-system for FINnet users proposals beyond the delegated powers of field offices. o Seamless and real time information sharing 19.2 Details of expenditure and financial proposals between entities scrutinized and approved o Comprehensive notification Framework (email, mobile, sms) (a) Creation and continuation of posts, construction/ purchase/hiring of offices, as well as residential o Automated reporting to FIU accommodation for the field formations of Central  API Integration Board of Excise & Customs and Central Board of Ø Ensuring Compliance Direct Taxes, Department of Revenue and its  ELearning Module attached offices. (b) Procurement of goods and services including 19. Integrated Financial Unit (IFU) procurement of anti-smuggling equipments i.e. Integrated Finance Division of the Department of scanners and marine vessels. Revenue is under the direct supervision of Joint Secretary (c) Proposals for deputation abroad of officers of the & Financial Advisor (Finance). There are three units Department, CBDT, CBEC and their field offices. dealing with budget, finance and expenditure (d) Restructuring proposals, redeployment of personnel management in respect of the grants pertaining to in field formations and constituent units. Department of Revenue, Direct Taxes and Indirect Taxes. (e) Comprehensive Computerization of Department of 211Annual Report 2017-2018 Revenue, its field formation including Customs and (ii) Review of Monthly and Quarterly Expenditure vis-à- Central Excise formations and Income Tax field vis budgetary allocations and MEP/QEA and report formations. to Revenue Secretary and Expenditure Secretary in (f) Proposals from Committee of Management (COM), compliance to the guidelines of the Department of D/o Revenue which oversees the functioning of Expenditure , Ministry of Finance for strict financial Government Opium & Alkaloid Works (GOAWs). discipline. (g) Grants-in-aid to National Institute of Public Finance & (iii) Review of specific activities/developments of Policy and Central Revenue Sports & Cultural Board. Department of Revenue and report to Secretary (Expenditure) through monthly DOs. (h) Proposals for Delegated Investment Board (DIB), Public Investment Board and Cabinet Committee on (iv) Enforcement of instructions on economy in Economic Affairs (CCEA) relating to comprehensive expenditure by periodic review of expenditure and computerization plan of CBDT/CBEC, capital advisories to spending authorities for expenditure expenditure involving construction of office/residential control in line with the economy instructions issued complexes and readymade office/residential by the Department of Expenditure. buildings of all the three Departments, and (v) Preparation and budgetary allocation for construction of Rajaswa Bhawan. Compensation to States/UTs for loss of revenue due (i) Proposals received for sanction of financial to implementation of VAT/CST; Compensation to assistance from the Customs & Central Excise States/UTs for revenue loss on roll out of GST; Welfare Fund and Special Equipment Fund. Revision Compensation to States/UTs for revenue loss due to of norms were finalized in respect of setting up of/ phasing out of CST; Government Opium & Alkaloid refurbishing of recreation/sports clubs, gymnasiums, Works; Acquisition of residential and office Departmental Canteens, crèches for children of accommodation; Strengthening of IT capability for e- Departmental officials and guest houses. Scope of governance of CBEC and CBDT; Acquisition of ships cash award scheme for meritorious children with and fleets to strengthen Marine capability & special emphasis on girl children and children of group 'D' staff was revised. As a result, more wards Acquisition of Anti-Smuggling equipments. of the employees were benefited. 19.5 In addition, the allocation and monitoring of the (j) Schemes proposed by CBDT/CBEC for utilizing the budget relating to advances, viz. House Building Advance, budget provision under 1% Incremental Revenue Computer Advance etc. was also done. Incentive Scheme for obtaining approvals of the 19.6. The Integrated Finance Division has also been competent authority. entrusted in the formulation of schemes of important (k) Proposals involving relaxation/interpretation of expenditure proposals from their initial stage. It also financial rules and all proposals requiring reference followed up with the Department/Boards for the settlement to the Department of Expenditure. of audit objections, inspection reports, draft audit paras 19.3 The expenditure budget/non-tax revenue receipts and reports of PAC/Standing Committee. of Department of Revenue, Direct Taxes and Indirect 20. National Committee for Promotion of Social and Taxes for BE 2017-18 was prepared. RE 2017-18 and Economic Welfare BE 2018-19 ceiling has been communicated by the Budget Division, Department of Economic Affairs. The 20.1 The Government of India constituted the National Details of RE 2017-18 and BE 2018-19 in respect of all Committee for Promotion of Social & Economic Welfare the three grants are as below: in 1992 for recommending the projects for promotion of sports, social and economic welfare, pollution control, (Rs. in crore) etc. received from Trusts/Institutions, to the Central Grant Gr. No. 2017-18 2018-19 Government for Notification under Section 35 AC of BE RE BE Income Tax Act, 1961. The funding of the approved D/o Revenue 33 500.68 63396.62 90736.44 projects is through donations on which the donors are Direct Taxes 34 6108.64 6500.00 6980.00 entitled to 100% deduction under the Income Tax Law. Indirect Taxes 35 6089.51 7850.00 7825.00 20.2 The National Committee for Promotion of Social 19.4 Integrated Finance Division has taken the and Economic Welfare is constituted by the Central following steps/initiatives in 2017-18:- Government for a term of (03) three years and consists of 14 Members including its Chairman. The Government (i) Implementation of Cash Management Plan as per appoints former Chief Justice of India as Chairman of Monthly Expenditure Plan (MEP) and Quarterly the Committee and other 13 persons of public eminence, Expenditure Allocations (QEA) as envisaged by hailing from various walks of life, as Members of the Budget Division of Department of Economic Affairs, Committee. So far 9 such Committees have been Ministry of Finance. constituted, all headed by a retired Chief Justice of India. 212Department of Revenue III 20.3 In this context, it may be stated that Section 35AC eligible project or scheme and as such no deduction u/s of IT Act, as amended by the Finance Act, 2016, provides 35 AC is available after 31.3.2017 (F.Y.). that no deduction under this section shall be allowed in 20.4 In view of the above, the 9th National Committee respect of any assessment year on or after 1st April, 2018. for Promotion of Social and Economic Welfare was Accordingly, the benefit of deduction under Section 35AC reconstituted and subsequently notified on 31st March, of Income tax Act was available only upto previous year 2017 only for a period of one year. The composition of ending 31.3.2017 (Assessment year 2017-18) in respect the Committee is as follows:- of payment made to association or institution already approved by the National Committee for carrying out any S.No. Name of the Committee Members Designation Place 1. Justice Mr. R.C. Lahoti, Chairman Noida, Uttar Pradesh former Chief Justice of India 2. Shri Amardeep Singh Cheema Member Batala, Punjab 3. Shri Amiya Kumar Sharma Member Guwahati, Assam 4. Shri Baldev Chowdhary Member Lucknow, Uttar Pradesh 5. Smt. Chetna Sinha Member Satara Maharashtra 6. Shri D.R. Mehta Member Jaipur, Rajasthan 7. Shri Enrico Piperno Member Kolkata, West Bengal 8. Shri Habib A. Fakih Member Mumbai, Maharashtra 9. Prof. Naladi Samuyelu Member Guntur, Andhra Pradesh 10. Dr. Naresh Gupta Member New Delhi 11. Shri Sanjiv Kumar Arora Member New Delhi. 12. Smt. Shameema Raina Member Srinagar, J&K. 13. Smt. Shashikala Vamanan Member Chegalpattu, Tamil Nadu. 14. Shri Vinayak Lohani Member Kolkata, West Bengal 20.5 The functions and procedures of the National 21.2. The Governing Body is chaired by an Economist Committee are governed by Rules 11-F to 11-O of the of Eminence and at present Dr. Vijay Kelkar, Chairman Income Tax Rules, 1962. The procedure of filing the of the Forum of Federations, Ottawa & India Development application and the manner in which the applications are Foundation, New Delhi and Chairman of Janwani, is the to be considered and decided by the National Committee Chairman of the Governing Body. Government is are enumerated in Rules 11-L and 11-M of the Income represented by the Secretary (Revenue), Secretary Tax Rules, 1962. The projects/schemes of the institutions/ (Economic Affairs), Chief Economic Adviser of the Ministry organizations recommended by the National Committee of Finance. There are three eminent Economists on the and accepted by the Central Government are notified in Governing Body and representatives of FICCI and the Official Gazette. In cases where the National ASSOCHAM. There is an Academic Committee advising Committee does not recommend the scheme or project the Director. for approval, the decision of the Committee is 22. Implementation of Official Language Policy communicated to the applicants by the Secretariat of the National Committee. 22.1 The Department of Revenue has a full-fledged Official Language Division which is entrusted with the task 21. National Institute of Public Finance and Policy of implementing the Official Language Policy of the (NIPFP) Government of India. The Division is headed by a Director 21.1. The NIPFP is a premier research organization (OL) and operates through four Official Language for conducting research, policy advocacy, and capacity Sections; each headed by an Assistant Director (OL) and building activities in the field of public economics and supervised by two Deputy Directors (OL). The Division macro finance. Established in 1976 as an autonomous deals with matters relating to implementation of Official institution under the Societies Registration Act, 1860 the Language Policy of the Union and takes follow up action Institute has made significant contribution to policy on the orders and instructions issued by the Department reforms at all levels of Government of India. The NIPFP of Official Language from time to time. Entire translation provides research, advisory, and capacity building support work of the Department from English to Hindi and vice- on macroeconomics, fiscal policy, and intergovernmental versa is ensured by the Official Language Division. finance at both national and international levels. The vision of the Institute is to "promote stable and sustainable The Department of Revenue is notified under Rule development". 10(4) of the Official Language Rules, 1976. 30 sections 213Annual Report 2017-2018 of the Department have been specified for doing their 22.5 Hindi Day/Hindi Pakhwara: entire work in Hindi. On the occasion of Hindi Day, a message was issued 22.2 Performance of the OL Division during the by the Hon'ble Finance Minister exhorting all the officers/ year under report: employees of the Department to do their maximum official a. All the documents pertaining to CBEC, CBDT & work in Hindi. Revenue HQs were invariably issued bilingually as per the requirement under Section 3(3) of the Official Hindi Pakhwara was celebrated from 01 September, Languages Act, 1963 ; 2017 to 15 September, 2017. Various competitions like b. All gazette notifications, replies to Parliament Hindi noting & drafting, Essay writing, Extempore Speech Questions and Assurances pertaining to CBEC, competition, Quiz competition, Hindi typing and Hindi CBDT and Revenue HQs were furnished bilingually; Shorthand competition were organized during the Hindi c. Notes and monthly summaries for the Cabinet, Action Pakhwara. Also, there was an award scheme for doing Taken Reports(ATRs) on the Report of the maximum work in Hindi during the Hindi fortnight for the Comptroller & Auditor General of India, Annual Report gazetted officers, Hindi speaking non-gazetted officers and Outcome Budget of the Ministry of Finance were as well as the non-Hindi Speaking non-gazetted officers translated and made available bilingually; and separately. Those who secured first, second and third d. A number of Double Tax Avoidance Agreements positions in these competitions have been given cash entered into with various countries were translated prizes of Rs. 5000/-(First prize), Rs. 3000/- (Second prize) into Hindi; and and Rs. 2000/- (Third prize) and also 3 consolation prizes e. Website material received from all the sections of of Rs. 1000/- each were given. the Department of Revenue (HQs), CBDT and CBEC was translated into Hindi and uploaded on the 22.6 Incentive Schemes: Ministry's website. Under the incentive scheme of the Department of 22.3 Hindi Salahkar Samiti and OLIC meetings: Official Language, Ministry of Home Affairs, cash awards A meeting of the Joint Hindi Advisory Committee of of Rs. 5000/-, Rs. 3000/- and Rs. 2000/- are given to the Departments of Revenue, Expenditure and those officials who do noting/drafting and other official Investment & Public Asset Management and Office of work in Hindi. the Comptroller and Auditor General of India was held on 27 December, 2017 under the chairmanship of the 22.7 Training: Minister of State for Finance (Revenue & FS) in which the position regarding implementation of Official During the year 2017-18, 3 LDC/ASOs and 6 Language Policy of the Union in the Department of Stenographers were nominated for training in Hindi typing Revenue was reviewed and discussed in detail. and Hindi stenography, respectively, in the courses run Suggestions were put forth by the Members regarding by the Central Hindi Training Institute, Ministry of Home ways for increasing the use of the Official language in the official work and follow-up action is being taken up by Affairs. the concerned sections/offices thereon. 22.8 Hindi Workshop: The meetings of the Official Language In order to remove hesitation amongst Hindi knowing Implementation Committee of the Department of Revenue were also organized. In the meetings, members employees to do their work in Hindi, a two day discussed the steps required to be taken for effective Departmental Hindi workshop was organized on 07 & 09 implementation of the Official Language Policy of the June, 2017 in which 21 officers/employees were imparted Union. Apart from this, the representatives of the OL training in Hindi noting/drafting. Division of the Department of Revenue also attended the Official Language Implementation Committee meetings 23. Implementation of the Right to Information Act, of the attached and subordinate offices situated in Delhi. 2005 22.4 Official Language Inspections: 23.1 CBEC is implementing the provisions of Right to The officers of the Hindi Division of the Department Information Act, 2005 since its enforcement. In the also carried out inspections of 3 offices of Income Tax Headquarters office, there are 34 CPIOs, one CPIO for under the control of the Department during the year under each of the section. The no. of applications received, report with the view to assess the progress in use of Hindi applications rejected and requests accepted by the CPIOs in the office and suggested ways to accelerate the use of in CBEC during the year 2017 are given below:- Hindi in the official work. 214Department of Revenue III Quarter no. of applications No. of cases No. of No. of ending on received during transferred to other requests requests the quarter Public Authorities rejected accepted under Section 6 (3) 31.03.2017 777 173 8 568 30.06.2017 812 229 22 540 30.09.2017 926 236 4 686 There are 21 Appellate Authorities, who decides and appeals accepted by the CPIOs in CBEC during the the appeals received under the RTI Act from various year 2017 are given below:- applicants. The no. of appeals received, appeals rejected Quarter no. of appeals No. of appeals No. of appeals ending on received rejected accepted during the quarter 31.03.2017 34 0 32 30.06.2017 83 0 73 30.09.2017 37 0 37 Registration fee collected under section 7(1) and three quarters is as given below:- the additional fee collected under section 7(3) during these Quarter Fee collected Additional fee ending on under section collected under 7(1) (in Rs.) section 7(3) (in Rs.) 31.03.2017 1170 8498 30.06.2017 1240 9806 30.09.2017 1580 11169 The fee is excluding the amount of fee received on the portal itself. CBEC has received 211 appeals from for submitting applications online on the RTI portal. January, 2017 to September, 2017. The Government has also launched RTI Portal 23.2 Financial Intelligence Unit- India (FIU-IND) which facilitates filing of applications online by the During the financial year 2017-2018 44 number of Citizens. The applications concerning Department of RTI applications were received which were disposed of Revenue are accessed by the two Nodal Officers, one promptly within the stipulated period. for Customs and the other for rest of the matters pertaining to CBEC. Thereafter, these applications are 23.3 Customs, Excise & Service Tax Appellate transferred, online, to concern CPIOs in the Board, who Tribunal are required to provide requisite information, online, on The Public Information Officer and 1st Appellate the Portal itself so that the applicant may immediately Authority have been nominated by the Public Authority in access the requisite information. So far, CBEC has each Bench of the Tribunal, and they are acting in received 2668applications from January, 2017 to accordance to the provisions of the Right to Information September, 2017. Act, 2005, in dispensing the information. At present, the facility for transferring the 23.4 Customs & Central Excise Settlement applications received on the RTI portal is limited to the Commission CPIOs in the Board and 44 CCs/DGs of CBEC. Hence, applications pertaining to the remaining field formations Right to information Act, 2005 has been implemented. are transferred manually with the direction provide Twelve manuals, as prescribed under RTI related to the information directly to the citizen. Commission were duly prepared. CPIOs & ACPIOs have been nominated. Appeals against the information provided in response to RTI online applications are also made online, 23.5 Income Tax Settlement Commission which are transferred to concerned First Appellate Authority, who also provide requisite reply to the citizen The Settlement Commission is very sensitive to the 215Annual Report 2017-2018 implementation of the RTI Act, 2005. In the all four (04) Government of India on the occasion of 150th Anniversary Benches including Principal at New Delhi. The JDI/ADI of Mahatma Gandhi. and Administrative Officer has been designated as CPIO 24.2 Under Swachhta Action Plan 2017-18, various under the said Act. The Secretary and Director of Income activities have been taken viz. Swatchhta Pakhwara from Tax (Investigation) who is equivalent to the Joint Secretary 16.01.2018 to 31.01.2018 comprising of various activities to the Government of India in each Bench has been including Swatchhta pledge by Minister of State(Finance); designated as Appellate Authority under the said Act. and 26 activities' documents and 324 images have been 23.6 Directorate of Enforcement uploaded on the web portal as provided by Ministry of Drinking Water and Sanitation. The Department has been During the year 2017-18 (up to November, 2017), monitoring the implementation of Swatchhta Action Plan 423 RTI applications were received in Headquarters office of all field formations of CBDT and CBEC. of the Directorate, which were promptly disposed of within the stipulated period. 24.3 During 2017-18, to encourage cleanliness in the office complexes, awareness drives for maintaining 23.7 Central Bureau of Narcotics cleanliness with the participation of the officers and Various provisions of Right to Information Act, 2005 employees were done in this Department in addition to have been implemented in the Central Bureau of routine cleaning, sweeping, mopping of floor / corridors Narcotics. Central Public Information Officers have been including staircases and all the rooms / halls and placing nominated. Detailed functions and various aspects of appropriate warning signs to avoid accidents during the work done by the Department are also available on cleaning activities including cleaning of toilets and CBN website http://www.cbn.nic.in adjoining areas using disinfectors with necessary provisioning of soap, toilet paper, hand dryer, dustbins 23.8 Chief Controller of Factories and necessary items. Collection of all obsolete A cell in each unit of this organization, such as the equipments and removal thereof viz. newspapers/ factories at Ghazipur and Neemuch, as also at the Delhi magazines, old computers & peripherals through e-waste office of the CCF have been set up. These cells function auction and general waste through normal auction, directly under the officials designated as CPIO/APIO. The disposal of old cars/vehicles following due procedure applications received are regularly disposed off within the following the provisions of GFR, 2017. Renovation work prescribed time-frame. to create better working ambience has been done in 23.9 NIPFP several rooms with a view to optimization of office space. Weeding/recording drive was also done and During the year (from 1.1.2017 to 31.12.2017) 18 RTI simultaneously digitization/scanning of old records/files application (including transferred to other Public have been done through a hired private company targeting Authority) were disposed off within the prescribed time- optimization of office space. frame. 24.4 To increase awareness amongst personnel of 24. Swachh Bharat Campaign this Department, several competitions have been 24.1 Department of Revenue has taken several steps conducted and the winners have been appreciated with as a part of Swachh Bharat Campaign initiated by mementos. 216Department of Revenue III 217 I - eruxennA 6102/21/13 ot 6102/10/10 fo doirep eht rof s’CBO DNA s’TS ,s’CS FO NOITATNESERPER )TDBC( sexaT tceriD fo draoB lartneC :noitazinagrO evoba 5 ot 2 nmuloc eht ni dedulcni ton dna rupgaN ,TDAN ,noitutitsni gniniart eht ni gniogrednu era sreciffo ehT .7102 raey eht ni edam tnemtnioppA*Annual Report 2017-2018 218 I - eruxennA )CEBC( smotsuC dna esicxE fo draoB lartneC :noitazinagrODepartment of Revenue III 219 I - eruxennA retrauQ daeH euneveR :noitazinagrOAnnual Report 2017-2018 220 I - eruxennA )DNI-UIF( tinU ecnegilletnI laicnaniF :noitazinagrO yb edam era stnebmucni eht fo gnitsop hcihw tsniagA .CIN htiw deredacne era 01 ,stsop 24 eseht fo tuo sreciffo A puorG 24 fo htgnerts denoitcnas gnivah si DNI-UIF * 6102.21.03 no sa delif era 32 ,stsop 23 gniniamer fo tuO .erdac CIN .5102.20.90 detad redro ediv ihleD fo truoC hgiH elb’noH ho redro eht yb dellif erew stsop STM 40 **. .)C puorG( STM 40 fo stsop rof tpecxe ylno noitatuped si tnemtnioppa fo edom eht :etoNDepartment of Revenue III 221 I - eruxennA AMEFAS rednu lanubirT etalleppA ehT :noitazinagrOAnnual Report 2017-2018 222 I - eruxennA ytreporP deriuqcA lagellI fo erutiefroF rof ytirohtuA tnetepmoC :noitazinagrODepartment of Revenue III 223 I - eruxennA )TATSEC( lanubirT etalleppA xaT ecivreS & esicxE ,smotsuC :noitazinagrOAnnual Report 2017-2018 224 I - eruxennA noissimmoC tnemeltteS esicxE lartneC & smotsuC :noitazinagrO .sisab noitatuped no pu dellif gnieb era stsop ”C“ & ”B“ puorG .yrtsiniM yb pu dellif gnieb era ”A“ puorG noissimmoC tnemeltteS ni stsoP ehT *Department of Revenue III 225 I - eruxennA scitocraN fo uaeruB lartneC :noitazinagrOAnnual Report 2017-2018 226 I - eruxennA tnemecrofnE fo etarotceriD :noitazinagrODepartment of Revenue III 227 I - eruxennA ycilop dna ecnaniF cilbuP fo etutitsnI lanoitaN :noitazinagrOAnnual Report 2017-2018 228 I - eruxennA uaeruB ecnegilletnI cimonocE lartneC :noitazinagrODepartment of Revenue III 229 I - eruxennA )xaT emocnI( sgniluR ecnavdA rof ytirohtuA :noitazinagrOAnnual Report 2017-2018 230 I - eruxennA noissimmoC tnemeltteS xaT emocnI :noitazinagrO setsaC deludehcS rof dnats sCS )i( sebirT deludehcS rof dnats sTS )ii( setsaC drawkcaB rehtO rof dnats sCBO )iii(Department of Revenue III 231 II - eruxennA SEITILIBAID HTIW SNOSREP EHT FO NOITATNESERPER )TDBC( sexaT tceriD fo draoB lartneC :noitazinagrO .evoba 5 ot 2 nmuloc eht ni dedulcni ton dna rupgaN ,TDAN ,noitutitsni gniniart eht ni gniogrednu era sreciffo ehT .7102 raey eht ni edam tnemtnioppA*Annual Report 2017-2018 232 II- eruxennA )CEBC( smotsuC dna esicxE fo draoB lartneC :noitazinagrODepartment of Revenue III 233 II- eruxennA retrauQ daeH euneveR :noitazinagrOAnnual Report 2017-2018 234 II - eruxennA )TATSEC( lanubirT etalleppA xaT ecivreS & esicxE ,smotsuC :noitazinagrODepartment of Revenue III 235 II- eruxennA AMEFAS rednU lanubirT etalleppA ehT :noitazinagrOAnnual Report 2017-2018 236 II- eruxennA ytreporP deriuqcA lagellI fo erutiefroF rof ytirohtuA tnetepmoC :noitazinagrODepartment of Revenue III 237 II - eruxennA tnemecrofnE fo etarotceriD :noitazinagrOAnnual Report 2017-2018 238 II - eruxennA yciloP dna ecnaniF cilbuP fo etutitsnI lanoitaN :noitazinagrO .detiawa si ecnaniF o/M eht morf thguos neeb sah laviver rof noitcnas ,eroferehT .yrogetac noitiloba demeed rednu enog sah tsop ehT *Department of Revenue III 239 II- eruxennA 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(Annual Report 2017-2018 240 II- eruxennA )xaT emocnI( sgniluR ecnavdA rof ytirohtuA :noitazinagrODepartment of Revenue III 241 II- eruxennA uaeruB ecnegilletnI cimonocE lartneC :noitazinagrOAnnual Report 2017-2018 Annexure - III Summary of important observations included in Audit Reports presented to Parliament during 2017 CBEC During the year, 4 Draft Review Paras were received from C&AG office, and Ministry’s Comments on all of them During this financial year 2017-18, 320 Draft Audit have been sent to C&AG Office. Paras (DAPs) of A, B&D category (Central Excise & Service Tax) and 90 Audit Paras( 28 Audit Paras of AR Audit Report No. 3 of 2017 of Central Excise and No. 03 of 2017 & 62 Audit paras of AR No. 41 of 2016) Audit Report No. 41 of 2016 of Service Tax was laid in and 122 Audit Paras (46 Audit Paras of AR No. 42 of the Parliament 10th March, 2017. Similarly, Audit Report 2017 & 79 Audit Paras of AR No. 43 of 2017 which are No.31 of 2017 was laid in the parliament on 4th August, received in the last week of December 2017) in respect 2017. Recently, Audit Report No. 42 of 2017 and Audit of Central Excise & Service Tax were received from C&AG Report No.43 of 2017 were laid in the parliament 19th office. December, 2017. The Ministry’s Comments and replies on all the DAPs During the year, PAC had selected 2 Audit Reports and Audit Paras have been sent to C&AG Office except for detailed examination and Ministry’s Detailed latest 122 Audit Paras of Audit Report No. 42 & 43 of Background Note was sent in all the reports to Lok Sabha 2017 which are received from the O/o C&AG in the last Secretariat well in time. The details of the audit reports week of December 2017. are as follows:- S. AUDIT REPORT NO. SUBJECT DATE OF SENDING NO. DBN TO LOK SABHA 1. 3 of 2017 (Indirect Taxes – Recovery of Arrears 12.07.2017 Central Excise) in Central Excise Para No.s 1.12, 1.14, 1.18, 2.8.2, 2.8.3, 2.8.6, 2.11.1 2. 41 of 2016 (Indirect Taxes – Recovery of Arrears 12.07.2017 Service Tax) in Service Tax Para No.s 1.12, 1.17, 1.18, 2.8.2, 2.8.3, 2.8.5, 2.11.1, 5.4, 5.4.1, 5.4.2 in respect of Chapter I, II and V Further, it may be stated that after finalisation of ATN/ Monitoring Cell during the year on the direction of settled by C&AG, the same will be upload in the portal of Committee of Secretaries (CoS). Sl. Year No. of Paras/PA Details of the Paras/PA reports on which ATNs are No. reports on which pending ATNs have been submitted to PAC after vetting by Audit No. of ATNs No. of ATNs sent No. of ATNs which not sent by but returned with have been finally the Ministry observations and vetted by Audit but even for the is awaiting their have not been first time resubmission by submitted by the the Ministry Ministry to PAC 01 2017-18 234 Nil 6 10 # # Settled Audit Paras/Report have been sent to Hindi Section for Hindi translation for onward submission to Monitoring Cell 242 G BDepartment of Revenue III CBDT chapters were physically sent and draft ATNs were Instruction No. 7 has been issued on 21/07/2017 to uploaded in all the cases and chapters. bring uniformity in the procedure to deal with the Revenue In addition to the Report No. 2 of 2017, Report No. 4, Audit Objection, Draft Audit Paras etc. The ITBA module Report No. 27 and Report No. 30 of 2017 have also been to deal with the revenue audit objections has also be rolled tabled during the year before the Lok Sabha. Action Taken out and it will be fully function from 31/03/2018. Notes (ATNs) have been submitted in these cases also During the year, compliance Report No. 2 of 2017 to the C & AG and uploaded on APMS portal. [Tabled before Parliament on 10/03/2017] having 463 draft paras was dealt wi9th. Besides draft paras, there were Besides, the draft compliance report having 459 draft five chapters / long draft paras involving multiple illustrated paras is being dealt with this year and present status is cases. Initial replies in all the draft paras as well as as under: Status of Draft Paras for Audit Year 2016-17 i.e. Current DP Cases Particulars PAC-I PAC-II Total Total DP from C & AG 132 327 459 Present Status break up – as on 31/12/2017 1 Letters sent to C & AG (disposed of) till 31 Dec 108 297 405 2017 2 Pending 24 30 54 Apart from above, there are 5 chapters containing 5 of Report No. 2 of 2017 during the year and also multiple paras and illustrative cases. Initial reply has been submitted updated background note on Report No. 28 of sent in respect of one chapter. 2016. No PAC report is pending as on 30/11/2017 for furnishing Action Taken Reports. For starting a performance audit, the C & AG takes an entry conference to discuss the modalities. In this The Ministry has submitted a background note on the subject selected by PAC on the para 2.6.2 and chapter year, following entry conferences were held: S. Subject Date of Entry No. Conference 1 Assessment of assessees in 25/10/2017 Real Estate Sector 2 Assessment in assessees in 25/10/2017 Entertainment Sector INTEGRATED FINANCIAL UNIT (IFU) 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 2017 - 2 - - Total - 2 - - 243EUNEVER FO TNEMRAPED FO TRAHC NOITASINAGRO )EUNE VER( YRATERCES .lanoitiddA NAMRIAHC .yraterceS oiciffo-xe & CEBC NAMRIAHC )euneveR( yraterceS .lpS oiciffo-xe &TDBC yraterceS .lpS )J &M L( ) X M C( SG/ t e )M TgduB( & I & I R )P / ESUC( M ).nmdA( M )& SM PR T( )nm M dA( )V M NI( )M L( )J &M A( & ) M CTI( ).drooC(GDA )IE( GDA )ASOPEFOC( .S.J )euneveR( .S.J )WEIVER( .S.J )TS( .RMMOC )I&IR( .RMMOC ).KBD( .S.J ).drooC(.RMMOC CEBC )NMDA( .S.J TDBC )NMDA( .S.J )II-LPT( .S.J )I-LPT( .S.J rotceriD )tnemecrofnE( )B.I.E.C( GD euneveR fo .ttpeD eht fo seidoB rehto /seciffO dehcattA DNEGEL DNEGEL ).Q.H( tnemecrofnE rotceriD laicepS -: EDS sexaT tceriD fo draoB lartneC : TDBC tinU hcraeseR xaT :URT smotsuC & esicxE fo draoB lartneC : CEBC etarotceriD tnemecrofnE .1 smotsuC :SUC .lpS oiciffo-xe & noitasiretupmoC dna xaT emocnI( rebmeM : )C&TI( M uaeruB ecnegilletnI cimonocE lartneC .2 )yraterceS kcabwarD :KBD scitocraN fo uaeruB lartneC .3 )yraterceS .lpS oiciffo-xe & laiciduJ & tiduA( rebmeM : )J&A( M seirotcaF fo rellortnoC feihC .4 noitartsinimdA :NMDA )yraterceS .lpS oiciffo-xe & noitalsigeL( rebmeM : ))L(M & tcA )POF( MEFAS( seitirohtuA tnetepmoC .5 noitalsigeL dna yciloP xaT :LPT )yraterceS .lpS oiciffo-xe & noitagitsevnI( rebmeM : ).vnI( M )tcA SPDN hcraeseR xaT dna xaT ngieroF :RT&TF )yraterceS .lpS oiciffo-xe & noitartsinimdA( rebmeM : )nmdA( M & laicoS fo noitomorP rof eettimmoC lanoitaN .6 )ecnaniF( rosivdA laicnaniF :)NIF( AF )yraterceS .lpS oiciffo-xe & euneveR( rebmeM : )R(M erafleW cimonocE noitacilppA noisiveR :AR )yraterceS .lpS oiciffo-xe & noitartsinimdA(rebmeM : )nmdA(M noissimmoC tnemeltteS esicxE lartneC & smotsuC .7 euneveR :.veR dna ecnegilletnI euneveR/smotsuC( rebmeM : )PE & I&IR/suC( M noissimmoC tnemeltteS xaT emocnI .8 fo noitavresnoC( yraterceS tnioJ :)ASOPEFOC( SJ ) yraterceS .lpS oiciffo-xe & noitomorP/tropxE/noitagitsevnI )AMEFAS rednu( lanubirT etalleppA .9 )yraterceS .lpS oiciffo-xe & secivreS & sdooG/tegduB(rebmeM : )TSG/tgB(M gnilggumS fo noitneverP & egnahcxE ngieroF lanubirT etalleppA xaT ecivreS & esicxE smotsuC .01 )yraterceS .lpS oiciffo-xe & xaT ecivreS( rebmeM : )TS(M sgniluR ecnavdA rof ytirohtuA .11 )seitivitcA ) yraterceS .lpS oiciffo-xe & esicxE lartneC( rebmeM : ) XC(M )DNI-UIF( aidnI-tinU ecnegilletnI laicnaniF .21 cimonocE lartneC( lareneG rotceriD :)BIEC(GD )yraterceS .lpS oiciffo-xe & laiciduJ & lageL(rebmeM : ) J&L(M namsdubmO xaT emocnI .31 )uaeruB ecnegilletnI erafleW cimonocE & laicoS fo noitomorP rof eettimmoC lanoitaN : WESPCN )PFPIN( yciloP & ecnaniF cilbuP fo etutitsnI lanoitaN .41 lareneG rotceriD lanoitiddA :GDA ) ecnaligiV( lareneG rotceriD & reciffO ecnaligiV feihC : )GIV( GD & OVC ALMP rednu ytirohtuA gnitacidujdA .51 eettimmoC stnuoccA cilbuP :CAP yraterceS tnioJ : .S.J namsdubmO xaT tceridnI .61 .tnemecrofnE : .fnE xaT emocnI fo renoissimmoC : TIC renoissimmoC : .RMMOC tnemssessA xaT emocnI :ATI smetsyS dna noitanidrooC :S&C )lageL( .RMMOC )XC( .RMMOC )CAP(.RMMOC )II-URT(.S.J )I-URT( .S.J )PE/suC( .RMMOC ).SUC( .S.J )ecnaligiV( GD/ OVC )TC&TI( TIC )GIV( TIC )VNI( TIC )J&A( .RMMOC )ATI( TIC TIC )S & C( & )I-RT&TF(SJ .yceS )WESPCN( )II-RT&TF( .S.J lapicnirP -xE & )AR(.rmmoC ihleD ,SA oiciffo )DNI-UIF( .riD M )TS( IHLED noigeR lartneC EDS IANNEHC noigeR nrehtuoS EDS ATAKLOK noigeR nretsaE EDS HRAGIDNACnoigeR nrehtroN EDS .A.F .NIF( ) IABMUM noigeR nretseW EDS ihleD eciffO daeH EDS .rmmoC lapicnirP oiciffo-xE iabmuM SA Annual Report 2017-2018 2(cid:23)(cid:23)Department of Investment and Public Asset Management IV Chapter - IV Department of Investment and Public Asset Management I Functions shareholders. As per the present Allocation of Business rules, (ii) To bring in operational efficiencies in CPSEs through the mandate of the Department is as follows: strategic disinvestment, ensuring their greater contribution to economy. 1. (a) All matters relating to management of Central Government investments in equity including (iii) Adopt a professional approach for financial disinvestment of equity in Central Public Sector management of CPSEs in the national interest and Undertakings. disinvestment aimed at expanding public participation in ownership of CPSEs. (b) All matters relating to sale of Central Government IV. Organisational Strcture equity through offer for sale or private placement or any other mode in the erstwhile Central Public Shri Neeraj Kumar Gupta assumed the charge of Sector Undertakings. Secretary, Department of Disinvestment on 4th January, Note: All other post disinvestment matters, including 2016. The Secretary is assisted by four Joint Secretaries those relating to and arising out of the exercise and one Economic Adviser. The Department functions of Call option by the Strategic Partner in the on the Desk Officer pattern and the work is handled at erstwhile Central Public Sector Undertakings, the levels of Joint Secretary, Director/Deputy Secretary shall continue to be handled by the administrative and Under Secretary. Ministry or Department concerned, where 2. The Organizational Structure of the Department is necessary, in consultation with the Department placed at Appendix –I. of Investment and Public Asset Management V. Policy and Approach to Disinvestment of (DIPAM). CPSES 2. Decisions on the recommendations of Administrative The current policy envisages development of people’s Ministries, NITI Aayog, etc. for disinvestment including ownership of Central Public Sector Enterprises (CPSEs) strategic disinvestment. so as to share in their wealth and prosperity, while 3. All matters related to Independent External Monitor ensuring that the Government equity does not fall below (s) for disinvestment and public asset management. 51% and Government retains management control. 4. (a). Decisions in matters relating to Central Public The salient features of the Current Policy on Sector Undertakings for purposes of Government Disinvestment of CPSEs are: investment in equity like capital restructuring, (i) Public Sector Undertakings are the wealth of the bonus, dividends, disinvestment of government nation and to ensure this wealth rests in the hands equity and other related issues. of the people, promote public ownership of (b) Advise the Government in matters of financial CPSEs; restructuring of the Central Public Sector (ii) While pursuing disinvestment through minority Enterprises and for attracting investment in the stake sale in listed CPSEs, the Government will said Enterprises through capital market. retain majority shareholding, i.e. at least 51 per 5. The Unit Trust of India Act, 1963 (52 of 1963) along cent of the shareholding and management with subjects relating to Specified Undertaking of the Unit control of the Public Sector Undertakings; Trust of India (SUUTI). (iii) Strategic disinvestment by way of sale of II. Vision substantial portion of Government shareholding in identified CPSEs upto 50 per cent or more, (i) Promote people’s ownership of Central Public Sector alongwith transfer of management control. Enterprises (CPSEs) to share in their prosperity through disinvestment. (iv) Efficient management of GoI’s investment in CPSEs, with the overall focus on higher (ii) Efficient management of public investment in CPSEs economic growth. for accelerating economic development and augmenting Government’s resources for higher Approach for Disinvestment expenditure. (a) Disinvestment through minority stake sale III. Mission On 5th November 2009, Government approved the (i) List CPSEs on stock exchanges to promote people’s following action plan for disinvestment in profit making ownership through public participation and improving Government companies: efficiencies of CPSEs through accountability to its (i) Already listed profitable CPSEs (not meeting 245Annual Report 2017-2018 mandatory shareholding of 10 per cent which is ensured through rationalization of decision stands revised to 25 per cent) are to be made making process for all related issues and compliant through ‘Offer for Sale’ (OFS) by the seamless inter-departmental coordination in the Government or by the CPSEs through issue of matter. fresh shares or a combination of both; VI. Policy Initiatives And Performance: (ii) Unlisted CPSEs with no accumulated losses and i. Disinvestment to Investment Management having earned net profit in three preceding Approach consecutive years to be listed;  The thrust of the Government is presently directed (iii) Follow-on public offers would be considered, towards efficient management of GoI’s investment taking into consideration the needs for capital in CPSEs, with the overall focus on higher economic investment of CPSEs on a case by case basis, growth through consistent long-term policies as well and the Government could simultaneously or as efficient and effective allocation of resources. independently offer a portion of its equity shareholding;  Based on this philosophy, Budget 2016-17 focused on the need to migrate from the ‘divestment based (iv) All cases of disinvestment are to be decided on approach’ to ‘investment based approach’ for CPSEs. a case by case basis; Accordingly, renaming the Department as (v) The Department of Investment and Public Asset ‘Department of Investment & Public Asset Management (DIPAM) is to identify CPSEs in Management’ (DIPAM) with expanded mandate consultation with respective administrative denotes a paradigm shift in the thinking process of ministries and submit proposal to Government the Government on its strategy to manage its in cases requiring Offer for Sale of Government investment in CPSEs. equity.  Efficient management of GoI’s investment in CPSEs (b) Strategic Disinvestment by adopting suitable strategies is aimed at bringing a professional approach in investment management, (i) To be undertaken through a consultation process improving investors’ confidence in CPSEs and among differentMinistries/Departments, supports their market capitalization, which is essential including NITI Aayog. for raising fresh investment for their expansion and (ii) NITI Aayog to identify CPSEs for strategic growth. disinvestment and advice on the mode of sale, ii. Guidelines on “Capital Restructuring of CPSEs” percentage of shares to be sold of the CPSE and method for valuation of the CPSE.  As announced in the Budget, guidelines on “Capital Restructuring of CPSEs” have also been issued by (iii) The Core Group of Secretaries on Disinvestment this Department on 27th May, 2016. These guidelines (CGD) to consider the recommendations of NITI supersede all previously issued guidelines by various Aayog to facilitate a decision by the Cabinet Ministries/Departments from time to time and Committee on Economic Affairs (CCEA) on comprehensively deal with the inter-related issues strategic disinvestment and to supervise/monitor on payment of dividend, buy back of shares, issue of the process of implementation. bonus shares and splitting of shares. The focus of (c) Comprehensive management of GoI’s investment these guidelines is on optimum utilization of funds in CPSEs by CPSEs/Government to spur economic growth. (i) The Government recognises its investment in  With this policy intervention, the Government could CPSEs as an important asset for accelerating realise Rs 51729 crore by way of payment of dividend economic growth and is committed to the efficient by CPSEs during 2016-17 as compared to Rs 30616 use of these resources to achieve optimum crore during 2015-16, which represents a jump of 69 return. per cent over a span of just one year and has (ii) The Government to achieve these objectives by benefited both Government and other investors. adopting a comprehensive approach for  Payment of higher dividend has also resulted into addressing critical inter-linked issues such as improvement in investors’ confidence in the CPSEs. leveraging of assets to attract fresh investment, iii. Listing of large sized CPSEs in a time-bound capital restructuring, financial restructuring, etc. manner: (iii) Different options are assessed to adopt suitable  In the past, the Government was able to facilitate investment management strategies to improve listing of only 13 CPSEs over a span of 9 years investors’ confidence in the CPSEs and support between 2003-04 and 2011-12. In the subsequent 5 their market capitalization which is essential for years, there was no listing of even a single CPSE on raising fresh investment from the capital market the stock exchanges. for their expansion and growth.  The commitment for listing of unlisted CPSEs has (iv) Efficient management of investment in CPSEs 246 G BDepartment of Investment and Public Asset Management IV been taken on-board as an integral part of the reforms  Strategic divestment involves divestment of major initiatives of the Government by making an shareholding of the Government alongwith transfer announcement to this effect in the Budget 2017-18. of management in the CPSEs. It involves legal and  Pursuant to the announcement made in the Budget financial issues having implications for the future performance of the CPSEs undergoing strategic on 1st February, 2016, the Government put in place divestment. Hence, as a precursor to this process, a mechanism/procedure alongwith indicative the Government has laid down an elaborate policy timelines for listing of CPSEs on 17th February, 2017. framework, structure & mechanism for strategic All Ministries/Departments have been requested to disinvestment in February, 2016. follow the suggested timelines, aimed at time-bound listing of identified CPSEs as per the extant Act, Rules  Based on the report of NITI Aayog and and Regulations. recommendations of core group on divestment  In line with the budget announcement, the (CGD), 24 cases of CPSEs/Subsidiaries/Units of CPSEs (including Air India) have been approved ‘in Government also approved listing of 14 CPSEs principle’ for strategic divestment by the Government. (including 2 insurance companies) on the stock exchanges.  The process of strategic divestment is in progress.  During the current FY, 4 IPO issues of Housing and Expression of Interests (EoIs) for strategic divestment has been invited in 7 cases, namely, Hindustan Urban Development Corporation (HUDCO), Cochin Prefab Ltd, Engineering Projects India Ltd. (EPIL), Shipyard Ltd. (CSL), General Insurance Corporation Hospital Services Consultancy Corporation (HSCC), and New India Assurance Company Ltd have been National Project Construction Corporation (NPCC), successfully listed on the stock exchange. Project and Development India (PDIL), Bridge & Roof  Regulatory compliances and other procedural Company India Ltd and Pawan Hans Ltd. requirements are being expedited for the listing of  An in-principle approval for the strategic divestment remaining CPSEs. of Air India has also been recommended by CGD  The decision to list CPSEs on stock exchanges will and approved by the Government in June, 2017. not only help in unlocking their true value, but will Specific Alternative Mechanism created by also promote ‘people’s ownership’ by encouraging Government has also settled the broad contours of their public participation, trigger multilayered oversight the transaction. Transaction advisor and legal advisor mechanism which not only enhances shareholders’ have been appointed. value but also promotes corporate governance norms v. Central Public Sector Enterprises (CPSE) in such companies. Exchange Traded Fund (ETF)  With general public becoming the shareholder in the  ETF, as an asset class offers the benefits of liquidity CPSEs through the listing route, the management is and diversification of risk with similar tax benefits as open to public scrutiny and thus become more applicable for equity. With stable and better yield than accountable to its shareholders, as per the disclosure broader market index and low transaction cost, this and compliance norms for listed companies. instrument has grown very fast, especially among  Presently, CPSEs listed on the stock exchanges the new investors like retirement funds and retail. accounts for approx. 11 per cent of the total market Globally also ETF is popular a large and fast growing capitalization. With the listing of other identified asset class. CPSEs, not only the share of market capitalization  Keeping in view its inherent benefits, beginning of CPSEs is expected to go up substantially, but at January, 2017 the Government started using index the same time, it will also expand the universe of based ETF to offer an investment opportunity in stocks, thereby, providing enough headroom and CPSEs to pension funds and retail investors in India. flexibility to the Government for divestment of CPSEs’ stocks.  Understanding the demand and popularity of this  After listing, value of CPSEs is generally unlocked in instrument, an announcement was also made in the budget 2017-18 to use ETF as a vehicle to offer multiples of book value of its equity with the resultant opportunities to large no. of investors to participate increase in their respective market capitalization. A in India’s growth story and to launch a new ETF during positive and healthy growth in market capitalization 2017-18. of CPSEs will thus enable them to raise fresh capital from the market for their business expansion, thereby,  In pursuance of the announcement made, also facilitating higher economic activities and growth Government decided to launch a New Exchange in the economy. Trade Fund (ETF), named BHARAT 22 in August, 2017. iv. Strategic Divestment  The process of strategic disinvestment was initiated  This New ETF consists of a basket of 22 stocks (including 16 CPSEs, 3 banks, and 3 private after a gap of approx. 12 years. The last strategic companies’ stocks held by SUUTI) from 6 sectors, sale was done in 2003-04. 247Annual Report 2017-2018 namely, basic materials, energy, finance, FMCG, crore through disinvestment of its 10.193% paid industrials and utilities. up equity capital in HUDCO through an IPO  The CPSEs are taken from sectors driven by a large transaction on 08-11.05.2017. number of economic reforms implemented by the (d) Oil India Ltd. (OIL): The Government received Government which is driving the domestic economic an amount of Rs. 1135.26 crore through buyback growth. Reforms in the pipeline will further boost the transaction on 13.06.2017. growth prospects of sectors forming part of the New (e) Rashtriya Chemicals & Fertilizers Ltd. (RCFL): ETF, thereby further playing on India’s growth story. The Government received an amount of  The New Fund Offer (NFO) of BHARAT 22 which Rs.205.15 crore through disinvestment of its 5% opened for subscription from November 14, 2017 was paid up equity capital in RCFL through an OFS oversubscribed in all segments of investors, such as, transaction on 29-30.06.2017. anchor investors, retirement funds, retail investors (f) National Fertilizers Ltd. (NFL): The and others, i.e. QIB/HNI. Government received an amount of Rs.530.72  In order to satisfy the demand from large number of crore through disinvestment of its 15% paid up investors, especially from the retail and the retirement equity capital in NFL through an OFS transaction fund category the Government has decided to retain on 26-27.07.2017. a portion of the oversubscription by increasing the (g) Hindustan Copper Ltd. (HCL): The issue size of the offer to Rs. 14,500 crore. Government received an amount of Rs.404.71 vi. Disinvestment Target and Achievements, crore through disinvestment of its 6.83% paid up 2016-17 & 2017-18 equity capital in HCL through an OFS transaction on 02-03.08.2017. 2016-17  During 2016-17, there had been 16 transactions (h) Cochin Shipyard Ltd.(CSL) : The Government received an amount of Rs. 470.01 crore through generating Revenue from investment management Piggy back transaction on 01-03.08.2017. in CPSEs to the tune of Rs. 46,247 crore against the revised budget estimate of Rs. 45,500 crore. (i) Engineers India Limited (EIL): The Government received an amount of Rs. 657.81 2017-18 crore through buyback transaction on 25.7 –  The budget estimate (BE) for disinvestment during 07.08.2017. the year 2017-18 is Rs. 72,500 crore. This comprises (j) National Thermal Power Corporation Rs. 46,500 crore from disinvestment of Central Public Ltd.(NTPC): The Government received an Sector Enterprises (CPSEs). Rs. 15,000 crore from amount of Rs.9117.92 crore through Strategic disinvestment and Rs. 11,000 crore from disinvestment of its 6.63% paid up equity capital listing of Insurance Companies. This is the highest in NTPC through an OFS transaction on 11- ever disinvestment target and far exceeds Rs.46,247 13.09.2017. crore achieved during the year 2016-17.  During the current financial year, Goyernment has (k) Bharat Electronics Ltd.(BEL): The Government received an amount of Rs. 79.51 crore through so far realized Rs. 92,505.69 crore, which include employees OFS transaction on 14-23.08.2017. Rs.34,079.56 crore through minority stake sale in 25 CPSEs, Rs.41,068.65 crore through disinvestment (l) National Thermal Power Corporation Ltd. of strategic holdings in SUUTI & HPCL - ONGC Deal (NTPC): The Government received an amount and Rs.17,357.48 crore through listing of Insurance of Rs.151.14 crore through Employees OFS Companies. transaction on 11-13.09.2017. vii.Disinvestment Transactions during 2017- (m)Bharat Dynamics Ltd. (BDL): The Government 18 ( As on 31.01.2018): received an amount of Rs.450.53 crore through buyback transaction on 22-25.09.2017. (a) Hindustan Copper Ltd. (HCL): The Government received an amount of Rs.3.73 (n) Neyveli Lignite Corporation Ltd. (NLC) : The crore through employees OFS transaction on 22- Government received an amount of Rs.722.29 28.3.2017. crore through disinvestment of its 5% paid up equity capital in NLC through an OFS transaction (b) National Aluminium Company Limited on 25-26.10.2017. (NALCO): The Government received an amount of Rs. 1191.73 crore through disinvestment of (o) Hindustan Copper Ltd. (HCL): The its 9.2125% paid up equity capital in NALCO Government received an amount of Rs. 0.36 through an OFS transaction on 19-20.4.2017. crore through employees OFS transaction on 10-18.10.2017. (c) Housing and Urban Development Corporation Limited (HUDCO): The (p) National Aluminium Company Limited Government received an amount of Rs. 1207.35 (NALCO): The Government received an amount 248 G BDepartment of Investment and Public Asset Management IV of Rs. 50.51 crore through employees OFS VII. Initiatives undertaken for Persons transaction on 01-09.11.2017. with Disabilities, Scheduled Castes, Scheduled Tribes and other Backward (q) Bharat 22: The Government received an amount classes: of Rs. 14,500 crore through NFO transaction on 14-17.11.2017. A Special Reservation Cell for Scheduled Castes, (r) Mazagaon Dock Ltd. (MDL): The Government Scheduled Tribes, Persons with disabilities and Other received an amount of Rs. 253.48 crore through Backward Classes has been set up, along with a liaison buyback transaction on 28.11 – 04.12.2017. officer, for enforcement of orders of reservation in posts and services of the Central Government. (s) Ircon International Ltd. (IRCON): The Government received an amount of Rs. 190.59 The staff strength in the Department along with crore through buyback transaction on 15.11 – representation of Scheduled Castes, Scheduled Tribes, 04.12.2017. Persons with disabilities and Other Backward Classes is given in Annexure II. (t) Hindustan Aeronautics Ltd. (HAL): The Government received an amount of Rs. 921.49 VIII. Initiatives relating to Gender crore through buyback transaction on 04- Budgeting and Empowerment of Women 11.12.2017. The nature of allocated work of the Department does (u) Garden Reach Shipbuilders & Engineers Ltd. not have any scope for gender budgeting and (GRSE): The Government received an amount empowerment of women. of Rs.77.62 crore through buyback transaction IX. Official Language Policy on 14-28.12.2017. The Department has a full-fledged Official Language (v) Hospital Services Consultancy Corporation Unit to implement the Official Language Policy. The (India) Ltd. (HSCC): The Government received an amount of Rs. 49.55 crore through buyback website of the Department is bilingual. transaction on 13-29.12.2017. X. E-governance (w) General Insurance Corporation of India (GIC): As a part of good governance through the use of The Government received an amount of information technology, the following initiatives have been Rs.9,704.16 crore through Piggy back taken: transaction on 11-13.10.2017. (i) Website of the Department (www.dipam.gov.in) has (x) New India Assurance Company Ltd. (NIACL): been made compliant with the Guidelines for Indian The Government received an amount of Rs. Government Websites (GIGW). It is updated on a 7,653.32 crore through Piggy back transaction regular basis, both in English and Hindi. on 01-03.11.2017. (ii) Maintenance of the Payroll Package. (y) Disinvestment of strategic holdings in SUUTI: The Government received an amount of Rs. (iii) Use of e-Office Portal 4,153.65 crore through disinvestment of strategic (iv) Following web based monitoring systems are in place: holdings in SUUTI. (a) Rajya Sabha Question, Answer Monitoring (z) Security Printing & Minting Corporation of System. India Ltd. (SPMCIL): The Governmentreceived (b) Public Grievance information system an amount of Rs. 455.00 crore through buyback transaction on 29.11.2017. (c) Centralized Tender/Procurement Monitoring System. Tenders are regularly put on the (aa) National Buildings Construction Corporation website and e-Publishing in e-procurement portal Ltd. (NBCC): The Government received an is being done regularly. amount of Rs. 29.96 crore through employees OFS transaction on 28.12.2017 -05.01.2018. (d) Representations of Reserved Categories in Posts and Services in Government of India (RRCPS) (bb)National Mineral Development Corporation Monitoring System (SC/ST Commission Portal). Ltd. (NMDC): The Government received an amount of Rs.l,223.13 crore through (e) APAR Monitoring system for IAS Officers (JS disinvestment of its 2.52% paid up equity capital level & above), CSS/ CSSS Officers (DS level & above). in NMDC through an OFS transaction on 09- 10.01,2018. (f) Cadre Management System (for CSS Officers). (cc) Hindustan Petroleum Corporation Ltd, (g) Pension Portal (HPCL) - Oil and Natural Gas Corporation Ltd. (h) RTI Annual Return Information Systems. (ONGC) Deal: The Government received an amount of Rs.36,915.00 crore through HPCL- (i) Quarterly Rolling Plan ONGC deal. (j) Data Portal (Data.gov.in). 249Annual Report 2017-2018 XI. Redressal of Public Grievances compliance with Section 4(1)(b) of the RTI Act and is updated from time to time. The Department is using the Centralized Public Grievance Monitoring System (CPGRAMS). The website (iii) One Under Secretary has been designated as of the Department also has an in built mechanism for the Nodal Central Public Information Officer and receiving grievances from public. A Joint Secretary has eight other Under Secretaries as Central Public been designated as Director of Public Grievances for the Information Officers under Section 5(1) of the Act, purpose. in respect of subjects handled by them. Internal Complaints Committee on Sexual (iv) Five Joint Secretary level officers have been harassment of women employees designated as First Appellate Authorities in terms In compliance with Supreme Court’s Judgement of Section 19(1) of the Act for all matters relating dated 13th August, 1997 in Visakha case relating to to their respective divisions of this Department. prevention of sexual harassment of women at work place, XIV. Initiatives for Good Governance an internal complaints committee has been put in place for considering complaints of sexual harassment of As per the mandate provided by the Government of India women employees in Department of Investment and (Allocation of Business) Rules, 1961, the Department is Public Asset Management (DIPAM). not involved in the delivery of any public services and XII. Vigilance Machinery thus, does not have any direct interface with the citizens or public at large. However, the Department has initiated A Joint Secretary has been designated as part-time Chief the following measures as a part of good governance: Vigilance Officer in the Department.  Timelines have been prescribed for disposal of XIII. Right to Information Act, 2005. transaction related bills to avoid delay and any In order to facilitate dissemination of information scope of corruption as also to promote good under the provisions of the Right to Information Act, 2005, governance. the following initiatives have been taken by the Department: XV. Audit Paras/Objections (i) An RTI Cell has been set up to collect, transfer No Audit paras/Objections are pending in the Department. the applications under RTI Act, 2005 to the XVI. Integrated Finance Unit Central Public Information Officers/ Public Authorities concerned and to submit the quarterly The Integrated Finance Unit works under Joint returns regarding receipt and disposal of the RTI Secretary & Financial Adviser (Finance) and deals with applications/ appeals, to the Central Information expenditure and Budget related proposals of Grant No. Commission. 32 – Department of Investment & Public Asset (ii) Details of functions of the Department along with Management - which includes Secretariat General its functionaries etc. have been placed on Services covering the establishment budget for the Department’s website (www.dipam.gov.in) in Department of Investment & Public Asset Management. The budget allocation under Grant No. 32 is as under:- (Rs. in crores) Grant No. Budget Estimates 2017-18 Revised Estimates 2017-18 Capital Revenue Total Capital Revenue Total 32 - Department of Investment & ---- 44.00 44.00 ---- 42.50 42.50 Public Asset Management 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 250 G BDepartment of Investment and Public Asset Management IV 251 I -eruxennA tnemeganaM tessA cilbuP & tnemtsevnI fo tnemtrapeD fo tcepser ni sCBO ,sTS ,sCS fo noitatneserpeR II -eruxennA CBO & seitilibasiD htiw snosreP ,sTS ,sCS fo noitatneserpeRAnnual Report 2017-2018 252 G B TRAHC LANOITASINAGRO I -xidneppA TNEMEGANAM TESSA CILBUP & TNEMTSEVNI FO TNEMTRAPEDChapter - V Department of Financial Services V Department of Financial Services 1. Work allocation among Sections received from MPs/VIPs /PMO against Private Sector & Foreign Banks. Banking Customer Service Centres; 1.1 Banking Operation-I (BO-I) Banking Ombudsman. Appointment of Governor/Deputy Governor of 1.4 Banking Operation & Accounts (BOA) RBI, Chairman & MDs of SBI, CMDs and EDs of Nationalised Banks, CMDs of NABARD; appointments 1.4.1 Preparation of annual consolidated review on of Whole Time Director in IDBI, salary allowances and the working of Public Sector Banks (PSBs) and laying it other terms and conditions of Whole Time Directors of on the Tables of both Houses of Parliament; pattern of PSBs and NABARD; constitution of Boards of Directors accounting and final accounts in Public Sector Banks; of RBI and PSBs: appointment of Workmen Employee study and analysis of the working results of PSU Banks; Directors, appointment of Part Time Non Official Directors audit of banks, appointment and fixation of remuneration and Officer Employee Directors of PSBs. of auditors of PSBs/FIs; laying of annual reports and 1.2 Banking Operation-II (BO-II) audit reports etc., of PSU Banks in Parliament. 1.2.1 Deposit Insurance and Credit Guarantee 1.4.2 Taxation matters of PSBs/FIs; dividend payable Corporation (DICGC) policy matters and publicity in Public to Central Government by PSBs; scrutiny of the annual Sector Banks (PSBs), IFSC. financial reviews of PSBs conducted by RBI under Section 35 of the Banking Regulation Act, 1949 and follow up 1.2.2 Administration of all Acts/Regulations/Rules action; operation of the schemes of bank guarantee by related to Financial Systems like the Negotiable Instruments Act, 1881, the Chit Funds Act, 1982, the Price PSBs and related complaints. Chits and Money Circulation Schemes(Banning) Act, 1.4.3 Capital restructuring of PSBs (including 1978 and the Payment and Settlement System Act, 2007. restructuring of weak PSBs) and Government’s International Relations (Banking, Insurance and Pensions contribution to share capital, public issue of banks; Reforms), Financial Action Task Force (FATF); Release of externally aided grants to ICICI Bank under Administration of the Office of Court Liquidator, Kolkata. USAID, Citizen’s Charter of Public Sector Banks/RBI. 1.2.3 International Cooperation in Joint Investment 1.4.4 Disputes and arbitration between PSBs and Funds- Oman-India Fund and Indo-Saudi Fund. WTO and Border Banking facilities. Matters relating to operation between PSBs and other Govt. Departments/PSEs; of bank accounts of shell companies. KYC matters (other appointment of advocates in PSBs, acquisition/ leasing/ than CKYC). renting/ vacation of premises; residuary matters of Portuguese Banks in Goa, Estate Officers under Public 1.3 Banking Operation-III (BO-III) Premises Act, 1971; opening and shifting of administrative Customer Service in Banks/FI/Ins. All kinds of offices of banks. complaints/representations received from individual/ 1.4.5 All Policy matters related to Banking Operation associations for redressal of their grievances in these such as Licensing, amalgamation, reconstruction, institutions such as delay in clearance of cheques, non- moratorium funds, and acquisition of private sector banks; payment/non-issue of drafts, non issue/delay in issue of duplicate drafts, misbehaviour/rude behaviour/ overseas branches of Indian banks; operation of foreign harassment on the part of staff of these institutions, non banks in India and functioning of PSBs, Banking Sector settlement/delay in settlement of deceased accounts, Reforms. non-transfer/delay in transfer of accounts from one office 1.4.6 Notification regarding exemption from various to another, non opening/delay in opening of new sections of the Banking Regulation Act, 1949 and accounts, non-compliance with standing instructions of appointment of appellate authority to hear appeals under the customers, non-payment of term deposits before the BR Act and PSBs Act. Administration of all Acts/ maturity, delay in payment to pensioners, including those related to credit cards, ATMs, etc. All kind of complaints Regulations/ Rules related to Public Sector Banks, RBI received from DARPG/DPG relating to Public/ Private and State Level Banks. Appellate Authority on NBFCs Sector/Foreign Banks/FI/Ins. All kinds of complaints and NBFCs. 253Annual Report 2017-2018 1.5 Agriculture Credit (AC) of RBI pending matters; compilation and submission of material for Parliament Questions to other Ministries/ Credit flow to agriculture and allied sector, Kisan Departments; Parliament Questions regarding VIP Credit Card Scheme, matters related to NABARD (except references; Monthly DO letter to Cabinet Secretary from service matters), Banking related matters of Co-operative Secretary (FS); Appointment of CPIOs, ACPIOs, AAs and Banks, Secretarial assistance to the designated appellate Nodal Section for RTI matters of DFS and to deal with authority in regard to appeals by Urban Cooperative CIC for Annual Report etc.; Updation of Induction Material Banks against cancellation of license by RBI, externally for DFS; Co-ordination of VIP, PMO, President Sectt. etc. aided projects related to agriculture and allied sectors, references involving more than two Divisions of DFS. relief measures to farmers affected by natural calamities, bank credit to artisans of handloom and handicraft sector. 1.10 Establishment (Estt.) 1.6 Regional Rural Banks (RRB) Matters pertaining to the Officers and Staff of DFS including RRs, appointment, ACRs, deputation (including Legislative matters relating to RRB Act, 1976 abroad), training, IWSU, SIU, welfare, review of officers and guidelines framing of rules thereunder; nomination under FR 56(J), internal vigilance, staff grievances, of non-official directors on the Board of RRBs; pension, etc.; grant of various advances to officers and Appointment of Chairman of RRBs, review of staff, payment of fees to advocates, settlement of medical performance of RRBs, wage revision for RRB employees, claims and CGHS matters, family welfare programme. Staff Service Regulation and Promotion Rules for employees and officers of RRBs. Matters related to 1.11 General Administration (GA) Priority Sector Lending, lending to weaker sections Housekeeping, cleanliness, stores, canteen, R&I, including SC/ST, credit to minorities including PM’s New library, Staff Car Drivers, vehicles to the officers of DFS, 15 point programme for the welfare of Minorities; DRI purchase of Computer Hardware and Maintenance of Scheme. Computers, Printers and other equipments. Arranging farewell of staff of DFS. Providing of Identity Cards to the 1.7 Financial Inclusion (FI) Staff of DFS and CMDs/EDs/PROs of Public Sector Work relating to financial inclusion, coordination Banks/Financial Institutions/Insurance companies, etc. with other sections, offices, institutions etc on Financial 1.12 Parliament inclusion; Branch expansion of banks; Lead Bank Scheme and Service Area Approach; District and State Collection, identification and marking of Level Bankers’ Committee(SLBC); Regional imbalances Parliament Questions, Notices, admitted Questions, and of banking network, matters related to Business getting the files approved from the Minister. Preparation Correspondents/Business Facilitators, Mobile Banking of facts and replies for pads of Ministers; keeping track etc., matters relating to e-Governance in all FIs and e- and record of pending Assurances, Special Mentions and Payments in banking system and computerisation of References under 377 and other matters as mentioned PSBs. Matters relating to Payment Regulatory board in the Induction Material. (PRB) constitution and matters related to PRB. 1.13 Hindi 1.8 Industrial Relations (IR) Implementation of Official Language Policy of the Service matters of PSBs including IDBI / RBI; Government, translation work relating to Parliament Industrial Disputes Act matters, HR matters relating to Questions, Standing Committees, Minutes of the PSBs and RBI Unions and Associations in the Banking Meetings; Hindi Teaching Scheme and other Industry, Bipartite settlements or policy of transfer, miscellaneous work as mentioned in induction material promotion, and HRD in banks; IB reports about political of DFS. activities of bank employees; Pay and Allowances of bank 1.14 Welfare Section (SCT) employees in overseas branches; HR Reforms. Matters relating to recruitment, promotion and 1.9 Coordination (Coord.) welfare measures of SCs/STs/OBCs/ Persons with Organisation of FM’s meetings with CEOs of disabilities and Ex-servicemen in Public Sector Banks/ PSBs; and regional consultative committee meetings; Financial Institutions and Insurance Companies; matter Presidential address to the Joint Session of Parliament; of policy regarding reservation for these categories in Staff Meeting of Secretary (FS); monitoring & review of PSBs/FIs, Insurance Companies, reservation matters in disposal of VIP references, PMO references, coordination RRBs etc. 254Department of Financial Services V 1.15 Data Analysis (DA) 1.18 Vigilance Reserve Bank of India Credit Policy – Busy 1.18.1 Consultation with CVC/CTE; nomination of CVOs Season – Slack Season and selective credit control; for PSBs/FIs; correspondence with CBI; Annual Action financial sector assessment and sectoral credit analysis; Plan on Anti Corruption measures; investigation of cases Banking Statistics regarding bank deposits and advances; of frauds by CBI & RBI; matters under Prevention of deposits and advances of banks; rates of interest on bank Corruption Act; preventive vigilance; vigilance systems deposits and advances; Dissemination of results and and procedures in RBI/PSBs/FIs and Insurance Companies; inquiry into complaints against GMs/EDs and important information relating to RBI, IBA, studies on CMDs of PSBs/FIs and Vigilance Surveillance over them; banking reforms; analysis of other international reports major frauds in PSBs (in India and abroad); PMO relevant to banking sector in India; Analysis of Reports references on anti corruption measures; bank security; of committees on Financial Sector Reforms etc. robberies & loss prevention in banks; sanction of Management Information System – collection, collation prosecution in case of EDs/CMDs; War Book matters; of data relating to Banking Industry. Audit Paras. Annual Reports of CVC; Conduct Regulation in PSBs/ 1.16 Industrial Finance-I (IF-I) FIs, employment after retirement regulations in PSBs; CVC/CBI references relating to DRTs/DRATs. Administration of the “Export-Import Bank (EXIM Bank) Act-1981” and Scheme for financing viable 1.18.2 All issues pertaining to continuation of posts, Infrastructure Projects (SIFTI) of IIFCL, Policy and budget matters of the O/o Custodian and Special Court Budgetary matters relating to EXIM Bank, IIFCL and IFCI including extension of the Office of Custodian and Ltd.; Winding up of IIBI Ltd. and related matters; appointment of Custodian. Appointment of Whole Time Directors (WTDs), Non- 1.19 Debts Recovery Tribunals (DRT) official Directors (NoDs) and Government Nominee Directors in IIFCL, EXIM Bank, IFCI Ltd., IDFC Ltd.; Administration of the Recovery of Debts Due to Appointment of Statutory Auditor in EXIM Bank; Issues Banks and Financial Institutions Act, 1993 (RDDBFI Act). related to sector specific stressed assets; Laying of Establishment of Debts Recovery Tribunals / Debts annual reports of IIFCL, EXIM Bank, IFCI Ltd. and IIBI Recovery Appellate Tribunals (DRATs) under RDDBFI Ltd.; Project Monitoring Group (PMG) meeting etc.; Act; filling up of the posts of Chairpersons, Presiding Officers, Registrars, Assistant Registrars and Recovery Matters relating to IDFC Ltd. & IDFC Bank, Publicity. officers, and monitoring filling up of other posts in DRTs/ 1.17 Industrial Finance-II (IF-II) DRATs; issuing clarifications / guidelines etc. on administrative matters/review; monitoring progress and 1.17.1 Matters relating to NHB and Housing Policy, Post disposal of cases by DRT/DRATs; budget provisions, winding up of BIFR & AAIFR matters, Small and Medium monitoring, etc. relating to DRTs/DRATs. Administration Enterprises (SMEs), SIDBI, SFCs, Credit Guarantee of The Securitisation and Reconstruction of Financial Fund for Micro and Small Enterprises; MLIs, Credit Assets and Enforcement of Security Interest Act, 2002 Guarantee Scheme and other related matters on the (SARFAESI Act), all matters relating to registration of subject. Citizens Charter of NHB and SIDBI. Appointment ARCs and legal cases thereof, ease of doing business and all personnel matters of Whole Time Director in SIDBI agenda - flowing from recent amendments, appointment and NHB. Govt. Sponsored Schemes-PMEGP, of Registrar/MD & CEO, Central Registry of Securitisation Education, Employment generation scheme of SJSRY, Asset Reconstruction and Security Interest (CERSAI) and SGSY and other poverty alleviation programmes and Central Know Your Customer (CKYC) Registry matters. other related matters, VIP references, Audit Paras, 1.20 Recovery Section CPGRAM, RTI, Parliament Questions, Assurances, Grievances, Budget Announcements, Coordination with CIBIL; Work relating to monitoring of NPAs and RBI and State Govts, Administration of National Housing Recovery including compromises and OTS of all PSBs, Bank Act, 1987; Parliament matters, VIP/PMO references, Complaints and other matters relating to above works. All matters 1.17.2 All matters related to Educational Loans, matters related to NPA/Stressed Assets (other than Sectoral related to Micro Finance Institutions and Legislation Stress). thereon, Self Help Groups as well as NABARD’s Micro Finance, etc. 1.21 Insurance-I (Ins.-I) 1.17.3 All matters related to Pradhan Mantri Mudra 1.21.1 Life Insurance Corporation of India (LIC) Yojana. All matters related to Stand Up India. Business - Review of the performance of LIC; Laying of 255Annual Report 2017-2018 Reports of LIC in Parliament; Opening / winding up of insurance companies; Functioning of internal public branches of LIC in India; Appointment of Auditors for grievances redressal machinery in public sector insurance LIC; Administration of PP Act in LIC and references companies; Functioning of external redressal machinery relating to Estate matters in LIC; Foreign operations / like Consumer Courts, Ombudsmen, Lok Adalats, MACT subsidiaries of LIC; References on Social Security and Courts etc; Appellate Authority constituted under Schemes and other life insurance schemes; Review of Section 110H of the Insurance Act 1938. Citizen’s Charter performance and making budgetary provisions for of Non Life Insurance Companies. various GOI funded schemes such as Janashree Bima 1.22.2 Housekeeping - Care taking and maintenance Yojana, Shiksha Sahayog Yojana, Varishatha Bima of computers, furniture, photocopiers etc. in Insurance Yojana and Aam Aadmi Bima Yojana; Other Social Division. I-card for staff and executives of Insurance Security Group Insurance Schemes under LIC; Central Companies. Government Employees Group Insurance Scheme; Postal Life Insurance Scheme; Employees’ Provident 1.22.3 Insurance Sector Reforms - All matters relating Fund Scheme; All Government sponsored / supported to reforms in insurance sector; Reforms related schemes in life insurance; Any other life insurance or amendments to Insurance Act, 1938, LIC Act, 1956, social security products / scheme proposals; Others: GIBNA, 1972, IRDA Act, 1999 and Actuaries Act, 2006; Appellate Authority constituted under Section 110H of Implementation of Law Commission Reports.. the Insurance Act, 1938. 1.22.4 Appointments - Policy issues concerning 1.21.2 Coordination work relating to the following selection of Chief Executives in the PSU insurance Committees - Committee for the Welfare of Women; companies including AICL; Appointment on the Boards Committee for the Welfare of SC/ST; Estimates of public sector non-life companies including AICL; Committee. Foreign deputation of Insurance executives; permission for Chief Executives of non-life companies including AICL. 1.21.3 Appointments (LIC) - Selection & appointment of Chairman/ MDs, LIC, appointment of Directors on the 1.22.5 General Insurance - Review of the performance Board of LIC, appointment of ex-officio members on the of General Insurance Companies including AICL; Matters subsidiaries of LIC; Permission for foreign deputation of relating to Insurance Schemes of Public Sector General Chairman and MDs of LIC; Permission for commercial Insurance Companies including AICL and audit paras employment after retirement for Chairman/ MDs, LIC and thereon; Computerization of public sector general other executives of LIC. insurance companies; References relating to Surveyors and Agents of non-life PSICs; Foreign operations of public 1.21.4 Insurance Regulatory and Development sector general insurance companies; Reference relating Authority of India (IRDA) - Appointments of Chairperson to Re-insurance, Third Party Administrators, Tariff and Members of IRDA; Service condition of Chairman, Advisory Committee; Opening/ winding up of branches ; Members and employees of IRDA; Budget and Funds of Administration of War Risk (Marine Hull) Reinsurance IRDA; Other matters relating to Brokerage agencies, entry Schemes, 1976; Reference from RBI on permission for of new companies and regulations of IRDA. release of foreign exchange for insurance policy abroad; 1.21.5 Service Matters - Service matters, rules and Laying down of Annual reports of General Insurance regulations in all public sector insurance companies; Companies/ GIC/ AICL; Administration of PP Act in non- Representations on service matters by employees of life insurance companies and references relating to Estate public sector insurance companies; Service matters of matters in those companies. 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 1.22 Insurance-II (Ins.-II) related to e-payments in Insurance Companies, computerization of Insurance Companies. 1.22.1 Grievances - Public grievances against services provided by Public Sector Insurance Companies including 1.22.7 Coordination work relating to the following Agricultural Insurance Corporation of India Ltd. (AICL) Committees - Standing Committee on Finance; and IRDA other than on service matters; Periodical Committee on Subordinate Legislation; Petitions meetings of Public Grievances Officers of public sector Committee; Committee on Public Undertaking (COPU). 256Department of Financial Services V 1.22.8 Others - WTO multi-lateral/ bilateral agreements; above the minimum norms of Basel III, had, in Aug. Inter-Government agreement between India and any 2015, announced the Indradhanush Plan for other country. recapitalizing and revamping PSBs. Government having envisaged capital need of Rs. 1,80,000 crore till 2018- 1.23 Pension Reforms (PR) 19, had then made a provision of Rs. 70,000 crore to be Coordinating and introducing Pension Reforms; infused over a period of four years to supplement the Introduction of New Pension System and extension of its projected market-raising of capital to the tune of Rs. coverage to State Governments and unorganised sector 1,10,000 crore by the PSBs. So far capital of Rs. 59,435 and implementation of the Co-Contributory Atal Pension crore, including Rs 9,438 crore in 2017-18, has been Yojana (APY); Administrative and legislative matters infused by the Government. relating to Pension Fund Regulatory and Development RBI’s Asset Quality Review (AQR) findings in Authority (PFRDA); Swavalamban Scheme; Matters Dec. 2015 and consequent classification of large stressed relating to the Investment Pattern for Non-Government assets, which till then were being treated as non-NPA Provident Funds, Superannuation Funds and Gratuity through flexibility in loan classification and restructuring, Funds, matters relating to New Pension System. revealed high incidence of NPAs requiring manifold 1.24 IT Cell increase in provisions to meet expected losses from transparent recognition for clean balance sheets. Thus, IT cell in this Department deals with the work Gross NPAs in PSBs rose rapidly from 4.96% of advances related to the website, information technology, in Mar. 2015 to 12.75% in Jun 2017 with provisioning for digitalization, Digital India initiative, liaison/coordination expected losses too growing substantially – Rs. 3.79 lakh with NIC, etc. crore provisioning made for the period 2014-15 to 2017- 18 being almost double of Rs. 1.97 lakh crore made for 1.25 GST Cell the preceding ten years. Thus, the PSBs needed to be Oversee the preparedness of all institutions recapitalized more. under DFS to implement GST, to provide inputs to the 2.1 Measures taken in 2017-18 - Recapitalisation “Banking, Financial and Insurance” Sectoral Group with announcement and framework reference to GST, other matters related to coordination, rollout and implementation of GST w.r.t institutions under The Government thus announced its decision in administrative control of DFS etc. Oct. 2017 to recapitalize PSBs to essentially supplement the latter’s own efforts to adhere to the regulatory capital Performance and significant developments. adequacy norms and to also enable increased credit off- 2. Banking take and catalyse faster economic growth. The announced recapitalization entails mobilization of capital, The Scheduled Commercial Banks (SCBs) in the with maximum allocation in the current year, to the tune country comprise the public sector banks, private sector of Rs. 2,11,000 crore over the next two years, through banks, regional rural banks, and foreign banks. Presently, budgetary provisions of Rs. 18,139 crore (balance capital the total business of SCBs, as on 30.9.17 amounts to infusion under Indradhanush), recapitalization bonds to Rs. 198,86,961 crore (deposits Rs. 112,45,251 crore and the tune of Rs. 1,35,000 crore, and the balance through advances Rs. 86,41,710 crore).The Public Sector Banks capital raising by banks from the market while diluting (PSBs), presently numbering 21, have, as on 30.9.17, government equity (estimated potential Rs. 58,000 crore). total business of Rs. 139,31,155 crore, comprising A differentiated approach in infusing capital, keeping in aggregate deposits and advances of Rs. 81,00,858 crore view the strength of banks, would be followed. In the Third and Rs. 58,30,300 crore respectively. PSBs thus Supplementary Demand for Grants for FY 2017-18, an constitute about 70% of the banking industry in India. amount of Rs. 80,000 crore has already been provided, They are also the principal source of finance for several in addition to Rs. 10,000 crore already provided in the segments and areas underserved by private banks, budget of FY 2016-17. financial institutions and financial markets, including segments such as agriculture, MSMEs, housing, 2.2 Other measures education and infrastructure project financing. Therefore, i. The Banking Regulation Act, 1949 has been the health of the PSBs is of prime importance to enable amended in 2017, to enable Government of India the credit-offtake for economic growth. to authorise RBI to issue directions to banks to The Government of India wanting to adequately initiate the insolvency resolution process (IRP) capitalize all the banks to keep a safe buffer over and under Insolvency Bankruptcy Code 2016 (IBC) 257Annual Report 2017-2018 for time-bound resolution of stressed assets and continuous governance concern in India. While political cases instituted under it. RBI has, since then, and social inclusion have always occupied the public and initiated insolvency resolution process under the governance discourse prominently, financial inclusion has IBC against twelve major defaulter accounts attained focus recently. The history of financial involving NPAs of Rs. 1,75,000 crore. inclusion in India goes back to the 1960s, since then ii. Based on the request of Department of various steps promoting financial inclusion were taken. Investment and Public Asset Management Basic banking “no frills” accounts (subsequently renamed (DIPAM), the shares of Banks namely State Bank Basic Savings Bank Deposit (BSBD) accounts) and of India, Bank of Baroda and Indian Bank were business correspondent (BC) framework introduced by transferred to DIPAM’s Demat ESCROW RBI in 2005/06 provided greater impetus and focus to account for New Fund Offer (NFO) under the new these efforts. Exchange Traded Fund (ETF) Bharat-22 ETF The need for a comprehensive financial inclusion amounting to Rs. 1,556.64 crore. was underlined by several important reports. Census 2.3 State Bank of India Merger 2011 estimated that only 58.7% households had access to banking ; within this, rural households at 54.5% had State Bank of India (SBI), with the sanction of lower access as compared to 67.7% urban households. Government of India and in consultation with Reserve It was also assessed that in 2012 only 35% Indian adults Bank of India, acquired the business including all the had access to a formal bank account, but a much lower assets and liabilities of its associate banks (State Bank only 8% had borrowed from formal financial institutions of Bikaner & Jaipur, State Bank of Hyderabad, State within a year. RBI’s Annual Report of 2013 showed that Bank of Mysore, State Bank of Patiala and State Bank only 7% of 5.92 lakh villages had a bank branch. Critical of Travancore) and Bharatiya Mahila Bank, in 2017. SBI, issues remained in the delivery of banking services at due to its enhanced balance sheet size, now figures the last mile. In the absence of a robust, interoperable among the top-50 banks in the world. The merger has payment mechanism, BC network in rural areas was benefitted the customers of the associate banks, by limited not only in terms of access across banks but also offering products not earlier available to them and by across service points of the same bank. Thus, despite enhancing access through a bigger branch network etc. significant progress, considerable ground remained to and thus improving the customer services. It has be covered. benefitted the business by improving efficiencies of scale At the same time, India was also on the cusp of through optimal utilisation of the infrastructure network, a three-pronged revolution. By 2013, the branchless rationalization of resources, reduction of costs, better banking network was expanding, with 2.48 lakh Bank profitability, lower cost of funds leading to better rate of Mitras engaged by banks and significant collective interests for public at large, etc. and has benefitted the outreach of India Post, PoS, ATM terminals and network employees, by increased opportunities and avenues for of CSCs. A reliable national ID (Aadhaar) system had professional growth. emerged that had covered 65 crore individuals, and was 3. Financial Inclusion growing ; and a modern nation-wide telecom network had by then reached 88.6 crore mobile connections and 72% 3.1 Introduction mobile penetration. In short, though the financial exclusion Financial inclusion at a micro-level is about was still significant, elements of JAM were offering a convenient and affordable access to formal financial source of hope and opportunity. products and services like transaction, payment, saving, 3.3 National Mission for Financial Inclusion – credit, insurance, pension etc. for individuals and Pradhan Mantri Jan Dhan Yojana enterprises. From a macro-level perspective, financial inclusion is the basis for an inclusive growth that is For a major push to holistic financial inclusion broad-based, equitous and sustainably integrated with for unbanked households, Pradhan Mantri Jan Dhan the mainstream financial systems. Yojana (PMJDY) was launched as the National Mission for Financial Inclusion (NMFI) in August 2014. PMJDY 3.2 The context aimed comprehensive financial inclusion of all the Inclusive growth has been a paramount and households in the country by providing universal access 258Department of Financial Services V to banking facilities, at least one basic bank account to years). Atal Pension Yojana (APY) offers guaranteed minimum monthly pension between Rs. 1000-Rs. 5000 per every household, financial literacy, access to credit, and month after age of 60 years to subscribers (18-40 years) social security cover. Out of the multiple complementary based on their contribution. dimensions of PMJDY, six have been defined as its pillars. 4. Flagship Schemes of DFS for Financial Inclusion The financial pillars of the Mission were convenient access to a banking outlet for every 4.1 Pradhan Mantri Jan Dhan Yojana (PMJDY) habitation in the country; providing every household – The launch of the National Mission for Financial since expanded to every eligible adult citizen – a basic Inclusion titled the Pradhan Mantri Jan Dhan Yojana savings bank deposit (BSBD) account with overdraft (PMJDY) in August 2014 committed India to an ambitious facility and associated RuPay debit card; and creating and comprehensive agenda of financial inclusion in mission awareness about financial products and an environment mode.Its component dimensions aim at providing universal for participation by all in the Mission through financial access to banking facilities with at least one basic bank literacy. The final destination thus is to afford hitherto account to every household, financial literacy, access to excluded households micro-credit within the formal credit, and social security cover. financial system, thereby helping them escape the usurious informal money-lending and become financially 4.1.1 Banking Service Points for universal access secure / self-employed. to banking The social security pillars of the Mission aim A significant expansion of the effective banking at extending micro-insurance to the account holders for presence in rural areas was an identified target dimension accident and life risk cover and introducing them to an of PMJDY. Preparatory to this, over six lakh villages were unorganized sector pension for support during old age. mapped into 1.59 lakh Sub Service Areas (SSAs). Each To complement these dimensions of the NMFI, specific SSA, typically comprising of 1,000 to 1,500 households, social security schemes have also been launched by has to be covered by a bank branch or by deploying the Hon’ble Prime Minister in May 2015, for all eligible Business Correspondents (BCs) wherever needed. account holders. Pradhan Mantri Suraksha Bima Yojana (PMSBY) offers insurance of Rs. 2 lakh against For meeting the target of universal access set accidental death/permanent disability and Rs. 1 lakh out, the strength of bank branches, ATMs and BCs has for partial disability due to accident, at annual premium been augmented over the years by the Scheduled of Rs. 12 for savings bank account holders (18-70 Commercial Banks (SCBs) as part of their financial years). Pradhan Mantri Jeevan Jyoti Bima Yojana inclusion plans. The Table following shows the summary (PMJJBY) offers life insurance of Rs. 2 lakh at annual progress in banking service points of the Scheduled premium of Rs. 330 for bank account holders (18-50 Commercial Banks: Table-1: Number of Branches and ATMs and BCs As on As on As on As on As on 31.3.2014 31.3.2015 31.3.2016 31.3.2017 30.9.2017 I. Number of brick and mortar branches of SCBs i. Rural 41,924 45,158 47,457 48,865 49,223 ii. Semi-Urban 32,629 35,003 36959 38,170 38,581 iii. Urban 20,844 22,363 23,618 24,575 24,922 iv. Metropolitan 22,514 24,032 25,436 26,464 26,742 Total 1,17,911 1,26,556 1,33,470 1,38,074 1,39,468 II. Number of ATMs of 1,60,055 1,81,398 1,99,099 2,08,354 2,07,375 SCBs III. Rural banking 3,37,678 5,04,142 5,34,477 5,47,233 5,11,383 outlets- branchless IV. Urban locations 60,730 96,847 1,02,552 1,02,865 1,23,941 covered by BCs Source: Reserve Bank of India 259Annual Report 2017-2018 4.1.2 Bank accounts opened under PMJDY then, another 2.63 crore BSBD accounts have been opened under PMJDY, raising the total to 30.80 crore as Basic Saving Bank Deposit (BSBD) accounts on 27.12.2017. were introduced under RBI guidelines in 2005. Since then and till July 2014, the number of such accounts had grown Since the Jan Dhan accounts were introduced to 25.54 crore. After the launch of PMJDY, the Jan Dhan specifically for unbanked persons, the growth in these accounts also being deemed as BSBD in nature, number accounts is a key parameter for assessing PMJDY’s of BSBD accounts rose rapidly to 53.30 crore by March contribution to enhanced financial inclusion.Following 2017, of which 28.17 crore were accounts opened under table shows the cumulative number of BSBD accounts PMJDY, representing more than half of the total. Since during 31.3.2014 to 30.9.2017. Table-2: Number of BSBD accounts opened since launch of PMJDY (Figures in crore) As on As on As on As on As on 31.3.2014 31.3.2015 31.3.2016 31.3.2017 30.9.2017 i. BSBD accounts 12.6 21.03 23.8 25.4 24.5 through branches ii. BSBD accounts 11.69 18.78 23.1 28.0 27.8 through BCs iii. Total number of 24.3 39.81 46.9 53.3 52.2 BSBD accounts Source: RBI 4.1.3 Gender 4.1.4 Use of Bank accounts Gender sensitization is a core issue in financial Effective financial inclusion should find reflection inclusion. As of March 2014, women account holders with not only in terms of access to but use of financial services. 33.69 crore accounts constituted about 28% of all savings Following table depicts the use of BSBD accounts in terms accounts. As of December 2017, women account holder’s of deposit mobilisation. share is about 53% (16.25 crore) within the Jan Dhan accounts opened under PMJDY, representing a sizeable and rapid growth in financial inclusion of women. Table-3: Deposits in BSBD accounts (Figures in crore) As on As on As on As on As on 31.3.2014 31.3.2015 31.3.2016 31.3.2017 30.9.2017 No. of BSBD accounts 24.3 39.81 46.9 53.3 52.2 Total deposit in BSBD accounts 31,230 43,900 63,800 97,700 94,100 Average deposit per BSBD 1285.19 1102.74 1360.34 1833.02 1802.68 account Source: RBI 4.1.5 Transactions at BC outlets from less than 1% of all transactions at BC outlets till April 2016 to nearly 20.4% in December 2017. This has happened Aadhaar-enabled payments, the principal mode even as the number of BCs has remained steady. of transactions at BC outlets, have also witnessed a rapid growth, growing from 0.3 crore per month in August 2015 4.1.6 RuPay debit card to 2.3 crore in August 2016, 6.8 crore in May 2017 and 23.23 crore RuPay debit cards have been issued 8.6 crore in December 2017. As a result of expansion in till 27.12.2017 to PMJDY account-holders. Apart from the network and strengthening of interoperability, the banking convenience, these cards come with an inbuilt share of transactions performed by customers of one accident insurance cover of Rs. 1 lakh. As on 22.12.2017, bank at the BC outlet of another bank total 2,254 accidental claims, under this RuPay card linked (“off-us” transactions) has also risen, growing steadily insurance coverage, have been paid. 260Department of Financial Services V 4.1.7 Financial literacy under PMJDY 2017-2018, an amount of Rs 221.70 lakhs has been paid towards total number of 739 claims (Up to Dec 2017). As per advice of the Reserve Bank of India, financial literacy centres (FLCs) and rural branches of banks (* Subject to Govt guidelines and eligibility criteria conduct special camps on financial literacy awareness provided) including digital transactions. FLCs conduct target- 4.2 Pradhan Mantri MUDRA Yojana (PMMY) specific camps as well for target audience like farmers, small entrepreneurs, Self-Help Groups (SHGs), school An important aspect of financial inclusion is students, senior citizens, etc.For the quarter ended enabling the flow of credit to small businesses. In September 2017, 29,746 financial literacy camps have pursuance of the announcement in the Union Budget been conducted by FLCs and 58,489 by rural bank 2015-16, the Micro Units Development finance Agency branches. (MUDRA) was set-up and the Pradhan Mantri Mudra Yojana (PMMY) launched on 8th April, 2015. 4.1.8 Micro-Credit under PMJDY - Overdraft facility For achieving sustained expansion in the flow of for Jan Dhan Accounts credit to the non-corporate small business sector, loans Overdraft facility was introduced in Phase-II of upto Rs. 10 lakh without collateral at reasonable rates of PMJDY since 15 August, 2015. Under this facility, an interest term loans and composite loans are extended to overdraft of amount up to Rs. 5,000 is made available to borrowers under PMMY. These loans are extended through partner Member Lending Institutions (MLIs) – one PMJDY account holder (preferably the lady) per such as Scheduled Commercial Banks, Non-Banking household, after 6 months of satisfactory conduct of Financial Companies (NBFCs) and Micro-Finance PMJDY account. Up to 15.12.2017, overdraft amount Rs. Institutions (MFIs). In turn, MUDRA Ltd. offers refinance 35,387.17 lakh has been availed by 31.04 lakh PMJDY to MLIs for PMMY loans extended by them. accounts-holders. Post launch of Pradhan Mantri Mudra Yojana (PMMY), overdraft has been included in the The loans under PMMY are categorized as Shishu ‘Shishu’ category of credits under PMMY. (up to Rs.50,000), Kishor (Rs.50,000 to Rs.5 lakh) and Tarun (Rs.5 lakh to Rs.10 lakh). Activities allied to agriculture and 4.1.9 Life Insurance cover under Pradhan Mantri services supporting these (excluding crop loans, land Jan Dhan Yojana (PMJDY) improvement such as canals, irrigation, wells) have also been included uner PMMY from April, 2016 onwards. Pradhan Mantri Jan Dhan Yojana was launched on 28.08.2014. Under this scheme Bank accounts were PMMY credit rose from Rs. 1,37,449 crore in opened and benefits were given to the account holders. 2015-16 to Rs. 1,80,528 crore in 2016-17. For the current financial year, out of the target of Rs. 2,44,000 crore under One of the benefits is providing the Life Insurance cover PMMY, Rs. 1,34,433.55 crore has already been of Rs 30,000/- for the Natural Death only through Life sanctioned by December 2017. This includes Rs. Insurance Corporation of India. There is also a benefit of 61,615.26 crore that has been sanctioned under Shishu, Accident Insurance Cover of Rs 1 lakh, provided by Rs. 42,020.99 crore under Kishor and Rs.30,797.30 crore Government through General Insurance Companies. For under Tarun categories. In all, over 2.71 crore loans have availing the Life insurance coverage of Rs 30000/- * on been sanctioned during 2017-18 till December 2017, of death arising out of any cause under this scheme, a which 1.94 crore were for women borrowers, 62.80 lakh Person should be between 18 to 59 years of age and he/ for new entrepreneurs and 1.57 crore for borrowers she should have been enrolled under PMJDY between belonging to Scheduled Caste/Scheduled Tribe/Other 15.08.2014 to 31.01.2015. During the financial year Backward Classes category. Figure-1 Figure-2 PMMY: Category wise Loan share PMMY: Category wise Loan share in terms of Amount in terms of Accounts OBC OBC General 23% 34% 42% General ST 63% 3% SC 11% ST 5% SC 19% General SC ST OBC General SC ST OBC 261Annual Report 2017-2018 Figure-3 Figure-4 No Of A/Cs Sanctioned Amt (Rs. Cr.) 27142523 134433.55 72% 43% 35% 23% Total Women New Total Loans Women New Enterpreneurs Enterpreneurs / Enterpreneurs Enterpreneurs / Accounts Accounts 4.3 Stand Up India Scheme To extend collateral free coverage, Government of India has set up the Credit Guarantee Fund for Stand Government of India launched the Stand Up Up India (CGFSI). The scheme is built on the concept India scheme on 5th April, 2016. Stand Up India scheme of providing handholding support to those borrowers caters to promoting entrepreneurship amongst women, who might have a project in mind but lack the confidence SC & ST category i.e those section of the population and capability to start up. It also provides for facing significant hurdles due to lack of advice/ convergence with Central/State Government schemes. mentorship as well as inadequate and delayed credit. Applications under the scheme can also be made online. The scheme intends to leverage the institutional credit An online tracking system in the dedicated Stand Up structure to reach out to these underserved sectors of India portal (www.standupmitra.in) is being utilised. the population in starting greenfield enterprise. It caters to both ready and trainee borrowers. The Scheme A Credit Guarantee corpus fund of Rs.5000 facilitates bank loans between Rs.10 lakh and Rs.1 crores for Stand Up India scheme, operated by National crore to at least one Scheduled Caste/ Scheduled Tribe Credit Guarantee Trustee Company Ltd. (NCGTC) has borrower and at least one Woman borrower per bank been approved. branch of Scheduled Commercial Banks for setting up Total number of entrepreneurs benefited under Stand Up greenfield enterprises in trading, manufacturing and India scheme, as on 10.01.2018 is tabulated below: services sector. Table-4: Entrepreneurs benefited under Stand Up India (Amount in Rs. Crores) SC ST Women Total Number Number Number Number Amount Amount Amount Amount of of of of Sanctioned Sanctioned Sanctioned Sanctioned accounts accounts accounts accounts 7086 1344.7 2162 427.79 41639 9214.47 50887 10986.96 Fig- 5 : Stand Up India 262Department of Financial Services V 4.4 Micro-insurance under PMJDY The benefits under PMSBY are as follows: Table 5 : Benefits under PMSBY In order to move towards creating a universal social security system for all Indians, specially the poor Sum Table of Benefits and the under-privileged, three ambitious Jan Suraksha Insured Schemes or Social Security Schemes pertaining to a. Death Rs. 2 Insurance and Pension Sector were announced by the Total and irrecoverable loss of Lakh Government in the Budget for 2015-16. both eyes or loss of use of both b. hands or feet or loss of sight of Rs. 2 Lakh Eventually, Pradhan Mantri Jeevan Jyoti Bima one eye and loss of use of hand Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima or foot Yojana (PMSBY) insurance schemes were launched on Total and irrecoverable loss of 9th May, 2015, for providing life and accident risk insurance c. sight of one eye or loss of use Rs. 1 Lakh of one hand or foot at a very affordable cost. The scheme is offered / administered through 4.4.1 Pradhan Mantri Jeevan Jyoti Bima Yojana Public Sector General Insurance Companies (PSGICs) (PMJJBY) and 8 other General Insurance companies offering the product on similar terms. The initial cover period from PMJJBY offers renewable annual life cover of 1st June 2015 to 31st May 2016 now stands renewed every year from 1st of June to 31st May the next year. Rupees two lakh to all subscribing bank account holders in the age group of 18 to 50 years, covering death due’ to 13.25 crore account-holders have insured themselves for personal accident cover under PMSBY any reason, for a premium of Rs.330/- per annum per till December 2017. Accordingly, the achievements under subscriber. PMJJBY and PMSBY as on 28th December, 2017 are as follows - The scheme is administered through LIC and 10 Table- 6: Achievements under PMJJBY and PMSBY other Life Insurance companies offering the product on (Enrolment and Amount in crores) similar terms at the choice of the Bank / RRB / Cooperative Bank concerned. The initial cover period Pradhan Mantri Jeevan Jyoti BimaYojana (PMJJBY) from 1st June 2015 to 31st May 2016 now stands renewed No. of Claims Enrolments Amount disbursed Paid every year from 1st of June to 31st May the next year. 5.22 79,312 1586.24 5.22 crore account-holders have insured themselves for life insurance cover under PMJJBY till Pradhan Mantri Suraksha BimaYojana (PMSBY) December 2017. No. of Claims Enrolments Amount disbursed Paid 4.4.2 Pradhan Mantri Suraksha Bima Yojana (PMSBY) 13.25 14,292 285.84 TOTAL (PMJJBY + PMSBY) PMSBY offers a renewable one year accidental death cum disability cover of Rupees two Lakh to all Enrolments No. of Claims Amount disbursed Paid subscribing bank account holders in the age group of 18 to 70 years for a premium of Rs.12/- per annum per subscriber. 18.47 93,604 1872.08 263Annual Report 2017-2018 Jan Dhan account holders can also subscribe to 1st June, 2015 and 31st March, 2016 and who are not PMJJBY and PMSBY, besides the personal accident members of any statutory social security scheme and insurance cover inbuilt with the RuPay debit cards. As up who are not income-tax payers. Contributions under APY to December 2017, 29.47 lakh Jan Dhan account holders can be made on monthly/ quarterly/ half yearly basis. APY have subscribed to PMJJBY and 1.25 crore Jan Dhan enjoys tax benefits at par with National Pension System account holders have subscribed to PMSBY. This has (NPS). As on 30th December, 2017, 79.20 lakh been achieved while substantially lowering the premium subscribers have been enrolled under APY. amount, to make it affordable to large sections of 4.5.2 Pradhan Mantri Vaya Vandana Yojana population. Government has also launched a scheme 4.4.3 Convergence of life and accident insurance namely ‘Pradhan Mantri Vaya Vandana Yojana ’ schemes to PMJJBY and PMSBY - In view of decisions (PMVVY)to protect elderly persons aged 60 and above taken in the meeting of Committee of Secretaries on against a future fall in their interest income due to the Convergence of Insurance Schemes held on 9th May, uncertain market condition, as also to provide social 2017, all Ministries / Departments except Ministry of security during old age. Labour and Employment (for Aam Aadmi Bima Yojana (AABY)) have completed convergence of their life and The scheme is being implemented through Life accident insurance schemes to PMJJBY and PMSBY as Insurance Corporation (LIC) of India. The scheme on 1st June, 2017. For convergence of AABY to PMJJBY provides an assured return of 8% per annum payable / PMSBY, which is under process, Ministry of Labour has monthly for 10 years. The differential return i.e. the held several meetings with the State Governments and difference between return generated by LIC and the LIC. assured return of 8% per annum would be borne by Government of India as subsidy on annual basis. 4.5 Unorganised sector pension As per the scheme, on payment of an initial lump With the aim to provide monthly pension to the sum amount ranging from a minimum purchase price of persons not covered under any organized pension Rs. 1,50,000/- for a minimum pension of Rs 1,000/- per scheme, unorganized sector pension schemes were month to a maximum purchase price of Rs. 7,50,000/- launched to protect elderly persons aged 60 and above for maximum pension of Rs. 5,000/- per month, against a future fall in their income, as also to provide subscribers will get an assured pension based on a social security during old age. guaranteed rate of return of 8% per annum, payable monthly. LIC had conducted soft launch of Pradhan Mantri 4.5.1 Atal Pension Yojana Vaya Vandana Yojana (PMVVY) on 4th May, 2017. The Atal Pension Yojana (APY) was launched by the duration of the scheme will be for a period of ten years Hon’ble Prime Minister on 9th May 2015 and is being and the scheme is open for subscription for a period of implemented with effect from 1st June, 2015. This aims one year i.e. from 4th May, 2017 to 3rd May, 2018. As on to provide monthly pension to eligible subscribers not 15.12.2017, a total of number of 1,96,641 subscribers covered under any organized pension scheme. APY is consisting corpus of Rs.9163.93 crore are being benefited open to all bank account holders in the age group of 18 under PMVVY. to 40 years. Under APY, any subscriber can opt a 5. Aadhaar-based authentication and guaranteed pension of Rs 1000 to Rs 5000 (in multiples digital payment as facilitators of Rs. 1,000) receivable at the age of 60 years. The contributions to be made vary based on pension amount 5.1 Aadhaar seeding and mobile seeding chosen. Out of 106 crore operative current and savings The monthly pension is available to the bank accounts more than 82 crore accounts are seeded subscriber, and after him/her to his/her spouse and after with biometric ID and more than 85 crore accounts are their death, the pension corpus, as accumulated at age seeded with mobile. Also, with 82% operative accounts 60 of the subscriber, would be returned to the nominee opened under PMJDY being seeded with Aadhaar of the subscriber. In case of death of subscriber before number on user consent basis, customers have been the age of 60 years, spouse of the subscriber has the enabled for interoperable and immediate Aadhaar- option to continue contributing to APY account of the enabled transactions, including those for direct benefit subscriber, for the remaining vesting period, till the original transfer. subscriber would have attained the age of 60 years. 5.2 Digital payment infrastructure The Central Government would co-contribute 50% of the total contribution or Rs. 1,000 per annum, A digital revolution is in making with more than whichever is lower, for a period of 5 years for those eligible 110 crore Indians having digital identity through Aadhaar, subscribers who joined the scheme between the period enabling them to authenticate and carry out financial 264Department of Financial Services V transactions. Using biometric ID, highly cost-effective  UPI: NPCI launched Unified Payment Interface payments solutions have been created both for banking (UPI) to enable customers to transfer funds services and for retail payments. securely using any one of virtual payment address, bank account number and Indian National Bank for Agriculture and Rural Financial System Code (IFSC), mobile numberor Development (NABARD) has extended supports to banks Mobile Money Identifier, Quick Response (QR) from the Financial Inclusion Fund for deployment of (i) Code or Aadhaar number. In financial year 2017- 2.17 lakh Aadhaar-ready PoS terminals in villages in Tier 18 (till December 2017), 41.40 crore transactions 5 and Tier 6 centres and (ii) 20 lakh BHIM Aadhaar Pay have taken place on UPI. devices including merchant on-boarding for merchant transactions. The number of card acceptance devices at  USSD : Further, NPCI has introduced Point of Sale (POS) has increased from 10.7 lakh in Unstructured Supplementary Service Data March 2014 to 29 lakh in September 2017. (USSD) for service for mobile banking. USSD as an interoperable payment platform which 5.3 Digital payment systems including Aadhaar provides basic banking services to account- based payment systems holders in 12 different languages across the country that works on both smart phones and  AEPS: Business Correspondents deployed in feature phones, without internet connectivity. rural areas also provide interoperable Aadhaar Enabled Payment System (AePS) banking 6. Agriculture Credit services. In December 2017, there were nearly In order to boost the agriculture sector with the 8.61 crore transactions through AEPS. help of effective and hassle-free agriculture credit, the  BHIM Aadhaar Pay: National Payments Government has been fixing annual targets for ground Corporation of India (NPCI) has launched this level agriculture credit by Scheduled Commercial Banks, mobile application for Aadhaar-based payments Regional Rural Banks (RRBs) and Cooperative Banks. through merchants, using the AePS. It allows the Year wise position of target and achievement customer to make purchases using their Aadhaar under agricultural credit flow for the last five years given number linked with their bank account. The below indicates the sustained trend of actual transaction requires only the customer’s disbursement, surpassing the incremental annual targets fingerprint for authentication. Installation has year after year. As against the annual target of Rs. been taken up of 20 lakh biometric enabled BHIM 9,00,000 crore for 2016-17, agriculture credit was Aadhaar Point of Sale (PoS) terminals with disbursed to the tune of Rs. 10,65,755.67 crore during merchants. 2016-17, registering 118.42 % achievement. Figure 6: Agricultural credit flow 12,00,000 10,65,755.67# 10,00,000 9,15,509.92# 9,00,000 8,45,328.23 8,50,000 7,30,122.628,00,000 8,00,000 7,00,000 6,07,376 5,75,000 6,00,000 4,00,000 2,00,000 0 2012-13 2013-14 2014-15 2015-16 2016-17 Year Target Achievement # Provisional Source: NABARD 265 erorc ni seepuRAnnual Report 2017-2018 6.1 Increase in the coverage of small & marginal including Rs. 18,500 crore for the Bharat Nirman farmers: component sanctioned to National Rural Roads Development Agency (NRRDA) under RIDF XII-XV. To increase the flow of credit to small and marginal farmers a sub-target of 8% for small and As against the allocation of Rs. 25,000 crore marginal farmers (SF/MF) (to be achieved in a phased made for RIDF XXIII tranche during 2017-18, sanctions manner, i.e. 7% by March 31, 2016 and 8% by March were accorded to the extent of Rs. 22,059 crore to various 2017) has been set by RBI through its revised guidelines State Governments upto 31.12.2017. on Priority Sector Lending issued in July, 2016. As against 6.4 Short Term Cooperative Rural Credit the target of 8% of Adjusted Net Bank Credit (ANBC) to (Refinance) Fund: SF/MF, Public Sector Banks (PSBs) have achieved 9.12% as on 31.03.2017, as reported by RBI. The Short Term Cooperative Rural Credit- STCRC (Refinance) Fund came into existence 2008-09 6.2 Kisan Credit Card with an initial corpus of Rs. 5,000 crore, to enable The Kisan Credit Card (KCC) scheme was NABARD to provide Short Term refinance to assist introduced in 1998-99, as an innovative credit delivery Cooperatives to meet the production and working capital system aiming at adequate and timely credit support from needs of farmers, thus channelling ground level credit the banking system to the farmers for their cultivation flow towards agriculture and allied activities so as to needs including purchase of inputs in a flexible, ensure increased and uninterrupted credit flow to farmers convenient and cost effective manner. The Scheme is at concessional rate of interest. being implemented by all Cooperative Banks, Regional An allocation of Rs.45,000 crore was made for Rural Banks (RRBs) and Public Sector Commercial the STCRC (Refinance) Fund during 2016-17. In addition Banks throughout the country. NABARD monitors the to this, in order to meet the increased credit demand of scheme in respect of Cooperative Banks and RRBs, cooperative banks, the Government decided that whereas RBI monitors the scheme in respect of NABARD would make additional short term borrowings Commercial Banks. A revised scheme for KCC was of Rs. 20000 crore at prevailing market rate of interest circulated by RBI and NABARD in 2012 prescribing the for on-lending to cooperative banks at 4.5% rate of provision for ATM enabled debit card which can be used interest. Out of this NABARD disbursed Rs. 17,880.78 at ATM/Point of sale (POS) terminal, with inter alia, crore to Cooperative Banks at 4.5% rate of interest during facilities of one-time documentation and built-in cost 2016-17. escalation in the credit limit, etc. 6.5 Financing and supporting Producer Hon’ble Prime Minister in his address to the Organisations through Producers nation on 31.12.2016 announced that 3 crore Kisan Credit Organisation Development and Upliftment Cards (KCCs) would be covered under Rupay Kisan Corpus (PRODUCE) Fund Credit Cards (RKCCs) within next 3 months. As on 31.03.2017, a total number of 3.71 crore KCCs had been Recognizing the various constraints and converted to RKCCs. Further, keeping with the spirit of difficulties faced by farmers such as continued ‘Digital’ India by facilitating digital and cashless fragmentation of farm holdings, declining profitability of transactions by farmers a total of 4.70 crore KCCs have small farm holding and farmers’ lack of access to been converted to RKCCs as on 03.01.2018. technology, credit and market, the Government of India in, 2014-15, took a novel initiative for setting up of 6.3 Rural Infrastructure Development Fund Producers Organisation Development and Upliftment (RIDF) Corpus (PRODUCE) Fund of Rs.200 crore in NABARD The Rural Infrastructure Development to be utilised for promoting 2,000 Farmers’ Producers Fund(RIDF) was set up in NABARD during 1995-96, out Organizations across the country over the next two years. of Priority Sector Lending Shortfall of Scheduled Strategies for promoting agriculture growth and Commercial Banks, with a view to increase investment sustainability, also include and efficient value-chain in critical infrastructure in rural areas in sectors such as approach through farmer producer organisation (FPOs). irrigation, rural connectivity, health, education, drinking In this context, NABARD successfully supported water etc. RIDF now covers 36 activities which are broadly promotion of, 2154 FPOs, as on 28.12.2017, under classified as: (i) agriculture and related sectors, (ii) rural PRODUCE fund. connectivity and (iii) social sector. 6.6 Strengthening the Capital Base of NABARD The annual allocation of funds has gradually increased from Rs.2000 crore in 1995-96 (RIDF I) to In view of the increasing commitments of Rs.25,000 crore in 2017-18 (RIDF XXIII). The aggregate NABARD under various initiatives relating to agriculture allocations till 2017-18 have reached Rs.2,92,500 crore and rural development, Parliament has passed a Bill, inter 266Department of Financial Services V alia, to enable increase in the authorized capital of 6.8.5 Amalgamation of RRBs NABARD from the existing Rs. 5,000 crore to Rs. 30,000 The structural consolidation of RRBs was crore. This could be increased further in consultation with RBI. This will enable NABARD to potentially increase initiated by Government in 2005-06 by amalgamating its borrowing in future for funding the large investments RRBs sponsored by same bank in a State. The process being made in rural infrastructure in sectors like irrigation, was completed in 2009-10 and the number of RRBs were housing, dairy, fisheries etc. reduced from 196 to 82. 6.7 Initiatives of NABARD With a view to minimize overhead expenses and optimize the use of technology in RRBs, amalgamation The Government in the Ministry Water of geographically contiguous RRBs, sponsored by Resources, River Development and Ganga different banks in State was started in 2011-12. 44 RRBs Rejuvenation has taken a major initiative to complete were amalgamated into 18 entities in 12 states. Thus the various stalled irrigation projects in the country for which number of RRBs has been brought down to 56 from 82. a Long Term Irrigation Fund (LTIF) was set up in NABARD. As on 26.12.2017, against the total estimated To bring about higher productivity and robust amount of Rs. 77,908 crore, sanctions to the tune of financial health of RRBs, the proposal for further Rs.53,456.75 crore have been accorded by NABARD consolidation of RRBs, is under consideration of the for 99 identified projects under LTIF and Rs. 3,960.90 Department. crore for the Polavaram project. 6.8.6 Systemic Reforms 6.8 Regional Rural Banks With a view to making the recruitment process 6.8.1 Introduction in RRBs more rigorous and transparent and also to align Regional Rural Banks (RRBs) were set up with the same with the government policy, wherever the objective to provide credit and other facilities, applicable, the Government, in consultation with NABARD especially to the small and marginal farmers, agricultural and the Sponsor Banks, brought in improvements in labourers, artisans and small entrepreneurs in rural recruitment process in RRBs by notifying the RRBs areas for development of agriculture, trade, commerce, (Appointment of Officers and Employees) Rules, 2017. industry and other productive activities. As per Section Further, to make the system of appointment of Auditors 6 of RRBs Act, 1976, the RRBs are jointly owned by for RRBs more objective and transparent and to improve Government of India, respective State Governments and the quality of audit, the Government has revised the sponsor banks in the proportion of 50%, 15% & 35% guidelines for Statutory Audit of RRBs and the respectively. Presently, there are 56 RRBs functioning remuneration of Auditors. in the country. 6.8.7 Financial Performance 6.8.2 Revitalizing Regional Rural Banks (RRBs) During 2016-17, 49 RRBs earned profit of With the view to strengthening the RRBs for Rs.2650 crore. However, 7 RRBs viz., Ellaquai Dehati playing a greater role in agriculture, rural lending and Bank, Madhyanchal Gramin Bank, Utkal Gramin Bank, J financial inclusion, the following measures were taken & K Gramin Bank, Sutlej Gramin Bank, Uttar Bihar Gramin during the year 2016-17. Bank and Nagaland Rural Bank incurred losses during 6.8.3 Branch Network of Regional Rural Banks the year aggregating to Rs.387 crore. Therefore, RRBs as an agency earned profit of Rs. 2264 crore as on 31st The number of branches of RRBs has increased March, 2017 as against Rs.2018 crore earned in from 20920 as on 31st March, 2016 to 21422 as on 2015-16. The aggregate reserves of RRBs stood at 31st March, 2017 covering 645 districts. During the year Rs. 23086 crore as on 31st March, 2017 as against 2016-17, 502 new branches have been opened by RRBs. Rs. 20665 crore as on 31st March, 2016, while their All branches of RRBs are on Core Banking Solution(CBS) ‘owned funds’ increased from Rs.27149 crore in Platform. 2015-16 to Rs. 29472 crore during 2016-17. 6.8.4 Capital Infusion for Improving CRAR 6.8.8 Priority Sector Lending (PSL) Based on recommendations of the Dr. K.C. Chakrabarty Committee, recapitalization RBI has prescribed a higher target of 75% PSL assistance is provided to the RRBs for maintaining for RRBs as against the target of 40% for Scheduled minimum requirement of CRAR of 9% prescribed by RBI. Commercial Banks (SCBs). During 2016-17 as against The GOI has released an amount of Rs.1107.20 crore the target of 75%, RRBs have extended 89% of their total as recapitalization support to RRBs upto 31st March 2017. loans, under Priority Sector Lending. 267Annual Report 2017-2018 7. Priority Sector Lending and Lending to sections, housing for poor, education, social infrastructure Women and Minorities and renewable energy. 7.1 Priority Sector Lending (PSL) The Priority Sector advances of Public Sector Banks increased from Rs. 19,85,036 crore as on March As per guidelines issued by Reserve Bank of 31, 2016 to Rs. 20,43,475 crore as on March 31, 2017, India (RBI) on Priority Sector Lending, a target of 40 per registering a growth of 2.94 per cent. cent of Adjusted Net Bank Credit (ANBC) or Credit Equivalent amount of Off-Balance Sheet Exposure, 7.2 Lending to Weaker Sections and Credit to whichever is higher, has been prescribed to all Scheduled Minorities Commercial Banks (excluding Regional Rural Banks) for RBI’s PSL guidelines include a target of 10 per lending to Priority Sector.Within this, sub-targets of 18 cent of ANBC or Credit Equivalent amount of Off-Balance percent, 10 percent and 7.5 percent of ANBC Credit Sheet Exposure, whichever is higher, for lending to Equivalent amount of Off-Balance Sheet Exposure, whichever is higher have been mandated for lending to Weaker sections. To achieve inclusive growth, priority agriculture, weaker sections, and micro enterprises, sector loans to distressed persons (other than farmers) respectively. not exceeding Rs. 1,00,000 per borrower to prepay their debt to non-institutional lenders and loans to individual The objective of PSL is to ensure that vulnerable women beneficiaries up to Rs. 1,00,000 per borrower are sections of society get access to credit and there is allowed to be categorized under Weaker sections. adequate flow of resources to those segments of the economy. This includes loans to Small and Marginal The performance of PSBs on lending to Weaker Farmers, Micro, Small and Medium Enterprises, weaker sections as on March 2015, 2016 and 2017 is as under:- Figure 7 : Lending to Weaker Sections Further, in order to ensure improved financial out to 13.91 per cent of total priority sector advances. services for the welfare of minorities, Reserve Bank of Total loans to minority communities as on March 31, 2017 India issued a Consolidated Master Circular dated in the 121 identified districts stood at Rs. 1,15,226.24 July 1, 2017 to all scheduled commercial banks advising crores which works out to 16.42 per cent of total priority them to take care to see that minority communities sector advances, in the identified districts(Minority secure, in a fair and adequate measure, the benefits Concentrated Districts). flowing from various Government sponsored special 7.3 Economic Empowerment of Women programmes. This Master Circular also envisages creating a separate cell in each bank to ensure smooth To help overcome the hurdles faced by women flow of credit to minority communities and also covers in accessing bank credit and credit plus services, the the role of the lead bank in the 121 districts identified for Government of India had drawn up a 14-point action plan purpose of earmarking of targets and location of (now 13-point action plan) in the year 2000 for development projects under the Prime Minister’s New implementation by PSBs. The PSBs were advised to earmark 5 per cent of their ANBC for lending to women. 15 Point Programme for the welfare of minorities. As on March 31, 2017, credit to women was Rs. 4,28,098 Total loans to minority communities as on March crore, forming 8.04 per cent of ANBC of public sector 31, 2017 stood at Rs. 3,67,593.12 crores which works banks. 268Department of Financial Services V 7.4 Education Loan 7.4.3 Vidya Lakshmi Portal: Every meritorious student should have access Vidya Lakshmi Portal is a first of its kind portal to bank credit to pursue higher education, if they so desire. providing single window for Students to access Indian Banks’ Association (IBA) had prepared the Model information and make application for Educational Loans Educational Loan Scheme and circulated to banks in the provided by Banks. The Portal has the following features: year 2001. The Scheme is for all students including 1) Information about Educational Loan Schemes of students belonging to the economically weaker sections Banks; and those below the poverty line. Indian Nationals who have secured admission to a higher education course in 2) Common Educational Loan Application Form for a recognized Institution in India or abroad through an Students; entrance test/merit based selection process are eligible for educational loans under the Scheme. The Scheme 3) Facility to apply to multiple Banks for Educational has been modified from time to time keeping in view the Loans; changing needs of the students. The last revision of the 4) Facility for Banks to download Students’ Loan Model Educational Loan Scheme was carried out on Applications; 17.08.2015 and circulated to Banks. The main features of revised Model Educational Loan Scheme are as under. 5) Facility for Banks to upload loan processing status; a) Provision for charging of differential interest rates based on status of collateral, employability and 6) Facility for Students to email grievances/queries reputation of institutions. relating to Educational Loans to Banks; b) Relaxation in margin and security for loans 7) Dashboard facility for Students to view status of guaranteed by NCGTC. their loan application c) Extension of repayment period (after moratorium) 8) Linkage to National Scholarship Portal for upto 15 years for all loans. information and application for Government d) Uniform one year moratorium for repayment after Scholarships. completion of studies in all cases. Banks have been requested to give wide publicity e) Provision for moratorium taking into account to this Portal so that students wanting education loans spells of unemployment/under-employment, say can apply for it and indicate their bank of choice. two or three times during the life cycle of the loan. 7.4.4 Interest Subsidy Scheme for Educational Moratorium may also be provided for the Loans incubation period if the student wants to take up a start-up venture after graduation. Ministry of Human Resource Development had formulated, in May, 2010, a Central Scheme to provide 7.4.1 Service Area Norms for Education Loans- RBI ‘Interest Subsidy’ for the period of moratorium on guidelines educational loans taken by students of economically RBI has advised the banks on November 09, weaker sections from scheduled banks under the 2012 that Service Area Norms are to be followed only in Educational Loan Scheme of the Indian Banks’ the case of Government Sponsored Schemes, circulated Association. The scheme is applicable to the following vide their circular dated December 8, 2004 and are not categories of loans. applicable to sanction of educational loans. Hence, banks have been advised not to reject any educational loan  Educational loan disbursed/availed after 1st April, application for reasons that the residence of the borrower 2009 from Scheduled Banks which follow IBA does not fall under the bank’s service area. Model Educational Loan Scheme. 7.4.2 Performance of Education Loans  Students belonging to economically weaker sections, i.e, whose parental income from all The total outstanding education loans of Public sources do not exceed Rs.4.5 lakhs per annum. Sector Banks (PSBs) as on September 30, 2017 stood at Rs. 72,289 crore in 24,28,380 accounts. This reflects  The scheme is applicable starting from increase of Rs. 3590 crore in total outstanding loans over academic year 2009-10, disbursement starting the correspondence period of the last year. In percentage on or after 01.04.2009, irrespective of date of terms it is an increase of 5.51 per cent. sanction. 269Annual Report 2017-2018 7.4.5 Skill Loan Scheme Debt Fund (IDF) subsidiary, IIFCL Asset Management Company Limited (IAMCL) and IIFCL Projects Limited Given a huge thrust on skill development, a need (IPL) to provide advisory services for the development of is felt to provide institutional credit to individuals for infrastructure in India. taking skill development courses aligned to National Occupation Standards and Qualification Packs and 8.2 Export-Import Bank Of India (Exim Bank) leading to a certificate/diploma/degree by the Training Exim Bank (‘the Bank’) has been established as Institutes as per National Skill Qualification Framework a statutory, apex financial institution in 1982 under an (NSQF). Ministry of Skill Development and Act of the Parliament, for financing, facilitating and Entrepreneurship, Govt of India has launched a Skill promoting India’s international trade, for functioning as India Mission on 15th July, 2015. The, “Skill Loan the principal financial institution for coordinating the Scheme” has been developed to support the national working of institutions engaged in financing export and initiatives for skill development. import of goods and services with a view to promoting Skill Loan Scheme aims at providing a loan facility the country’s international trade, and to function as a key to individuals who intend to take up skill development policy-input provider to the GOI. EXIM Bank seeks to courses as per the Skilling Loan Eligibility Criteria. serve the long-term objective outlined in the Foreign Trade Policy of the GOI, 2015-20, viz. doubling of India’s exports 8. Industrial Finance to US$ 900 billion by 2020. 8.1 India Infrastructure Finance Company Ltd 8.2.1 Performance Conceptualized in the Union Budget 2005-06, During April-November 2017, the Bank IIFCL provides long-term financial assistance to extended 8 GOI-guaranteed Lines of Credit (LOCs) to infrastructure projects in India with overriding priority to 8 countries, with credits aggregating US$ 5.51 billion. Public-Private-Partnership (PPP) projects. The sectors As on November 30, 2017, there are 217 operative GOI eligible for financial assistance from IIFCL are as per the LOCs to 59 countries, with credits aggregating US$ Harmonized list of Infrastructure Sub-Sectors as 21.14 billion guaranteed by the Government of India. approved by the Government and as amended from time Besides LOCs, the Bank’s other flagship product - to time. These broadly include transportation, energy, Buyer’s Credit under the National Export Insurance water, sanitation, communication, social and commercial Account (BC-NEIA), aims at catalysing project exports infrastructure. IIFCL is registered with the Reserve Bank from India. The Bank has till date sanctioned an of India as Non-Banking Finance Company – aggregate amount of US$ 2.82 billion for 22 projects, Infrastructure Finance Company (NBFC-IFC). The and has a robust pipeline of US$ 7.70 billion across 64 authorized and paid up capital of the company as on 30th projects. As regards Overseas Investment Finance, September 2017 stood at Rs 6,000 crore and Rs. 4,102 during April-November 2017, the Bank sanctioned crore, respectively. funded and non-funded assistance aggregating Rs. On a standalone basis, till 30th September 2017, 11.76 billion to 14 Indian corporate for part financing IIFCL has made cumulative gross sanctions of their overseas investments in 9 countries. As on Rs 1,09,894 crore under Direct lending, Takeout Finance November 30 2017, Exim Bank has provided finance to and Refinance schemes. This includes cumulative gross 597 ventures set up by 458 companies in 78 countries. sanctions of 78,167 crore to 447 projects under Direct During FY 2016-17, the Bank recorded 4% growth in Lending. The Company has made cumulative (net) loans and advances, 4% growth in the overall disbursements of Rs 57,417 crore, including customer assets portfolio (aggregate of funded and non- disbursements of Rs 6,256 crore under Refinance and funded portfolio) and 3% growth in total business Rs 14,899 crore under Takeout Finance till September (customer portfolio + borrowings). Net worth of the Bank 2017. The company raises long-term resources both from as on March 31, 2017 stood at Rs. 12,023 crore. domestic markets and overseas. IIFCL has also The Exim Bank is the principal agency for established strong relationships with bilateral and medium and long term export credit and needs large multilateral institutions like Asian Development Bank amount of capital to fulfil its objective. In the near term, (ADB), World Bank, KfW & European Investment Bank Exim Bank is focused on credit quality, recovery & (EIB) and has committed lines of credit. resolution of NPAs to shore up its balance sheet, in IIFCL, through its wholly-owned subsidiary the long term, its capital base will require strengthening. IIFC(UK), has played a crucial role in providing foreign As equity infusion is a necessary imperative, in view currency loans for financing import of capital equipment of the competing demand and fiscal situation there is by infrastructure projects in India. Till 30th September possibly a case for exploring alternate mechanisms 2017, IIFC (UK) has made cumulative disbursements of for financing the ever increasing capital need of Exim USD 1.97 billion. IIFCL has also set up an Infrastructure Bank. 270Department of Financial Services V 8.3 Industrial Finance Corporation of India Ltd. residex.nhbonline.org.in under Digital India (IFCI Ltd). Initiative, after transforming to provide housing price indices with wider geographic coverage and IFCI Ltd. is a Systemically Important Non-Deposit automated computation of indices. taking Non-Banking Finance Company (NBFC-ND-SI) registered with Reserve Bank of India (RBI) as per RBI  Research study on the ‘Impact of the Land Act, 1949 and a notified Public Financial Institution under Acquisition Act with special reference to Land Section 2(72) of the Companies Act, 2013. Pooling‘ was completed by NHB. The Operational and Financial Performance of  Till 30-06-2017, 174 PLIs have signed MoU under IFCI for the 2nd Quarter and its 1st half year ended as on Pradhan Mantri Awas Yojana, Credit Linked 30th September, 2017 for FY 2017-18 are indicated below: Subsidy Scheme (PMAY-CLSS) for EWS/LIG and 174 PLIs have signed MoU under PMAY-  Made gross sanctions and disbursements of CLSS for MIG with NHB as Central Nodal Agency. Rs 4,303 crore & Rs. 2,172 crore for the half year ending September, 2017 as against  NHB has disbursed interest subsidy of Rs. 624.81 Rs. 3,095 crore and Rs. 1,001 crore, respectively crore to 32,328 households under PMAY-CLSS for the half –year ended September, 2016. for EWS/LIG, and Rs. 4.94 crore to 239 households under PMAY-CLSS for MIG till 30-  Net profit in Q2 of FY 2017-18 was Rs. 12 crore 06-2017. as against profit of Rs. 15 crore in Q2 of FY 2016- 17 and loss of Rs. 277 crore in Q1 of FY 2017- 8.5 Small Industries Development Bank of India 18. Small Industries Development Bank of  Business Assets as on 30th September, 2017 India(SIDBI) was set up on April 2, 1990 under an Act of were Rs. 26,838 crore; Parliament for the promotion, financing and development of industry in the small-scale sector and to co-ordinate  Capital Adequacy Ratio as on 30th September, the functions of the institutions engaged in the promotion, 2017 was 15.02% with Tier 1 capital at 18%. financing or developing industry in the small-scale sector  Debt Equity Ratio as on 30th September, 2017 and for matters connected therewith or incidental thereto. was 4.1 times. 8.5.1 Performance of SIDBI 8.4 National Housing Bank The total MSME outstanding credit of SIDBI was 8.4.1 Operational Highlights during 2016-17 Rs. 82,242 crores as at end December 31, 2017 as against outstanding credit of Rs.68,290 crores- as on 31  Subscribed Equity share capital of NHB stood at March 2017, mainly driven by refinance activities. Rs. 1,450 crore. 8.5.2 Addressing Financial Gaps  Outstanding Loans & Advances of NHB stood at Rs. 54,384 crore as on 30-06-2017. SIDBI provides financial support by way of (a) indirect finance / refinance to eligible Primary Lending 8.4.2 Financing Institutions (PLIs), such as, Banks, Non-Banking finance  Disbursements of Rs. 22,759 crore were made and Micro finance companies for onward lending and (b) during the year ended 30-06-2017. direct assistance with focus on the niche areas like equity, sustainable finance, receivable financing, service sector 8.4.3 Promotion & Development financing, etc. SIDBI has promoted Receivables  NHB has extended Rs. 5.40 crore to the Tamil Exchange of India Ltd. to address the issues relating to Nadu Infrastructure Fund Management receivable financing and bill discounting. Corporation Limited (TNIFMC) under equity 8.5.3 Addressing Non-Financial / Promotional & participation window to facilitate the setting up Developmental Gaps of “Shelter Fund” by Government of Tamil Nadu (GoT), to provide houses for slum dwellers. This SIDBI’s promotional and developmental support is a new idea conceptualized by NHB, in has cumulatively helped in setting up of about 83,000 consultation with GoT. enterprises, providing employment to about 1.65 lakh people and benefitting more than 2.5 lakh people in the  NHB has provided draft Habitat & Housing Policy small-scale sector as on December 31, 2017. SIDBI has to Govt. of Tamil Nadu. partnered with CRISIL to bring out a quarterly MSME  It has made available NHB RESIDEX on-line with Sentiment Index Report known as CriSidEx to provide a easy interactive user interface at https:// sustainable outlook to policy makers and financiers. 271Annual Report 2017-2018 SIDBI has also created a loan market place for 9. Insurance Sector micro and small enterprises known as 9.1 Insurance in India www.udyamimitra.in. This universal enterprise portal hosts more than 140 lending institutions. On the portal Insurance, being an integral part of the financial more than 3200 online sanctions and 2500+ sector, plays a significant role in India’s economy. Apart disbursements have been done. The portal provides an from protecting against mortality, property and casualty opportunity to micro and small borrowers to seek loan risks and providing a safety net for individuals and without hassles of visiting bank branches etc. The portal enterprises in urban and rural areas, the insurance sector also extends handholding services, basket of project encourages savings and provides long-term funds for profiles and enables convergence with other infrastructure development and other long gestation stakeholders. There is a separate portal projects of the Nation. The development of the insurance www.standupmitra.in for Stand Up India Mission sector in India is necessary to support its continued extending credit connect to SC/ST and Women aspirants economic transformation. seeking to set up green field enterprises. 9.2 The Insurance Division of the Department of Financial Services 8.5.4 SIDBI as Nodal / Implementing Agency for Government Schemes. The Insurance Division deals with policy and legislative matters as well as monitoring of the SIDBI is the Nodal Agency for implementation of performance of both life and general insurance segments certain MSME related schemes of the Government of of the public sector insurance industry. It is also the India (GoI) for encouraging implementation of technology administrative division for the Insurance Regulatory and up-gradation and modernization in the MSME sector. Development Authority of India (IRDAI). The name SIDBI provides Nodal Agency services for ‘Insurance Regulatory and Development Authority’ was implementation of Credit Linked Capital Subsidy Scheme changed to ‘Insurance Regulatory and Development (CLCSS) and Technology and Quality Up-gradation Authority of India’ through the Insurance Laws Programme (TEQUP) (Ministry of MSME), Technology (Amendment) Act, 2015. Up-gradation Fund Scheme for Textile Industry (TUFS) 9.3 The Public Sector Insurance Companies (Ministry of Textiles), Integrated Development of Leather operating in the sector are as follows:- Sector Scheme (IDLSS) (Ministry of Commerce & Industry) and Scheme of Technology Up-gradation of a) Life Insurance Corporation of India Food Processing Industries (Ministry of Food Processing b) National Insurance Company Limited Industries). c) Oriental insurance Company Limited  Since the launching of the CLCS Scheme in October 2000, a total number of 24,152 capital d) United India Insurance Company Limited subsidy claims aggregating Rs.1,459 crore e) New India Assurance Company Limited (cumulative) were settled through SIDBI till December 31, 2017. f) General Insurance Corporation of India – GIC Re (Re-Insurer)  Since the launching of the TUF Scheme in April 1999, a total number of 3362 subsidy claims g) Agriculture Insurance Company of India Limited aggregating Rs. 858 Crore (cumulative) were – Specialised Insurer (Company floated by Public settled through SIDBI till December 31, 2017. Sector general insurance companies along with NABARD)  Since the launching of the IDLSS in November 2005, a total number of 1775 claims aggregating h) Export Credit Guarantee Corporation of India Rs. 296 crore (cumulative) were settled through Limited – Specialised Insurer (Government of SIDBI till December 31, 2017. India enterprise for export credit guarantee)  Under FPTUFS, subsequent to the 9.4 Legislative Framework governing the decentralization of the scheme from April 2007, Insurance Sector 48 claims aggregating Rs. 13 crore till December The Insurance Division is responsible for policy 31, 2017. formulation and administration of the following Acts:  Regarding TEQUP, towards 152 claims eligible a) The Insurance Act, 1938 subsidy of Rs.11 crore was disbursed till December 31, 2017. b) The Life Insurance Corporation Act, 1956 272Department of Financial Services V c) The General Insurance Business and Lloyd’s India. Of the 62 insurers eight are in the (Nationalisation) Act, 1972 public sector and the remaining fifty four are in the private sector. Two specialised insurers, namely Export Credit d) The IRDA Act, 1999 Guarantee Corporation of India Limited and Agricultural e) The Actuaries Act, 2006 Insurance Company of India Limited, one life insurer namely LIC of India, four in general insurers and one in f) The Securities and Insurance Laws (Amendment re-insurance namely GIC are in public sector. Twenty and Validation) Act, 2010. three life insurers, seventeen general insurers, six standalone health insurers and eight reinsurers including The Government promulgated an Ordinance foreign reinsurance branches and Lloyd’s India are in namely - the Insurance Laws (Amendment) Ordinance, private sector. During the current financial year (2017- 2014 on 26th December, 2014 to make amendments to 18) as on date, 4 general insurance companies under the Insurance Act, 1938, the General Insurance Business private sector and 2 foreign reinsurers’ branches have (Nationalization) Act, 1972 and the Insurance Regulatory been granted certificate of registration. and Development Authority Act, 1999 in accordance with the Insurance Laws (Amendment) Bill 2008 as reported 9.7 Industry Statistics by the Select Committee of the Rajya Sabha. The Ordinance was replaced by the Insurance Laws (a) Life insurance industry (Amendment) Act, 2015. With the coming into force of The post liberalization period has been witness the Insurance Laws (Amendment) Act, 2015, the foreign to sharp growth in the insurance industry, more particularly investment cap in an Indian Insurance Company has gone in the life segment. The first year premium is a measure up from 26 to 49% with the safeguard of Indian ownership of new business procured/underwritten by the life and control. insurers. During 2016-17 this was Rs 1,75,202.68 crore 9.5 Reforms in the Insurance Sector as compared to Rs 1,38,765.99 crore in 2015-16 registering a growth of 26.26% against 22.44% during The insurance sector was opened up for private the previous year. In terms of linked and non-linked participation with the enactment of the Insurance business during the year 2016-17, 12.10 percent of the Regulatory and Development Authority Act, 1999. The first year premium was underwritten in the linked segment IRDAI at present consists of the Chairman, 3 full-time while 87.90 percent of the business was in non-linked members and 3 part-time members. The Authority is segment as against 12.68 per cent and 87.32 per cent in functioning from its Head Office at Hyderabad, Telangana. the previous year. The total premium, which includes first The core functions of the Authority include (i) licensing/ year premium and renewal premium during 2016-17, was registration of insurers and insurance intermediaries; (ii) financial and regulatory supervision; (iii) regulation of Rs 4,18,476.62 crore as compared to Rs 3,66,943.23 premium rates; and (iv) protection of the interests of the crore in 2015-16 registering a growth of 14.04 per cent policyholders. With a view to facilitating development of against 11.84 percent in the previous year. Of the new the insurance sector, the Authority has issued regulations business premium underwritten, LIC accounted for Rs on protection of the interests of policyholders; obligations 1,24,583.31 crore (71.11 per cent market share) and the towards the rural and social sectors; micro insurance and private insurers accounted for Rs 50,619.37 crore (28.89 registration of agents, licensing/registration of corporate percent market share). The market share of these agents, brokers and third party administrators. IRDAI insurers was 70.54 per cent and 29.46 per cent has also laid down the regulatory framework for respectively during the year 2015-16. registration of insurance companies, maintenance of (b) General insurance industry solvency margin, investments and financial reporting requirements. The general insurers had underwritten gross direct premium of Rs 1,28,128.34 crore in 2016-17, as 9.6 New entrants in the insurance industry against Rs 96,379.38 crore in 2015-16 registering a Since its opening up in 2000 the number of growth of 32.94 per cent. This premium excludes the participants in the Insurance industry has gone up from business done outside India by the public sector insurers. seven insurers (including the Life Insurance Corporation The private sector (including standalone health insurers) of India [LIC], four public-sector general insurers, one had underwritten Rs 59,662.79 crore as against specialized insurer, and the General Insurance Rs 43,846.75 crore in the previous year achieving a Corporation as the national re-insurer) in 2000 to sixty growth rate of 36.07 percent whereas the public sector two insurers as on 31st March 2017 operating in the life, (including specialized insurers) had underwritten premium general, health and re-insurance segments; of which 24 of Rs 68,465.56 crore as against Rs 52,532.63 crore in are life insurers, 23 are general insurers, 6 are health the previous year with a growth rate of 30.33 percent. insurers exclusively doing health insurance business and The market share of the public and private insurers stood 9 are re-insurers including foreign reinsurance branches at 53.44 and 46.56 percent during the year 2016-17 as 273Annual Report 2017-2018 against 54.51 and 45.49 respectively in 2015-16. One of income segment of the population. IRDAI has permitted the benefits of opening up of the insurance sector has PMFBY covering non-loanee farmers, to be solicited and been the extension of health cover to a wider cross- marketed by Micro Insurance Agents under IRDAI (Micro section of the society. Health premium accounted for Insurance) Regulations, 2015. Further, general insurance 26.95 percent (Rs 34,526.61 crore) of the gross direct policies issued to Micro, Small and Medium Enterprises premium of the general insurance industry within India as classified in MSMED Act, 2006 under various lines of (including standalone health insurance companies) in general insurance business upto Rs 10,000 premium per 2016-17 as against 28.49 per cent (Rs 27,457.30 crore) annum per MSM enterprise. Total numbers of general in 2015-16. insurance policies issued by Micro Insurance Agents (excluding Micro insurance policies issued by Standalone 9.8 Investments of the Insurance sector health insurers) in the year 2016-17 are 35,065. As on 31st March, 2017 the accumulated total 9.11 Life Insurance Corporation of India (LIC) investments held by the insurance sector was Rs. 30,76,537 crore. During 2016-17, Assets under LIC of India was incorporated on 1st September, Management (AUM) had grown by 14.36 per cent. Life 1956 by amalgamating 243 Companies by the Act of insurers continue to contribute a major share with around Parliament called Insurance Act, 1956. LIC is governed 92.77 per cent of the total investments held by the by the Insurance Act 1938, LIC Act 1956, LIC Regulations insurance industry. Similarly, public sector insurers 1959 and Insurance Regulatory and Development continue to contribute a major share of 78.47 per cent in Authority Act 1999. As on 31st March, 2017, LIC has 8 total investments though investments by private sector Zonal Offices, 113 Divisional Offices, 2048 Branch insurers are growing at a fast pace in recent years. Offices, 73 Customer Zones, 1408 Satellite Offices and 1238 Mini Offices in India. The Corporation also has 9.9 Rural and Social Sector Business Branch Offices in Fiji, Mauritius and United Kingdom. It All the life insurers including LIC fulfilled their rural also operates through Joint Venture (JV) Companies in sector obligations for the year 2016-17.The life insurers several overseas Insurance Markets. LIC has also formed underwrote 60.45 lakh policies in the rural sector, viz., a Joint Venture Company, Life Insurance Corporation 22.9 percent of the new individual policies underwritten (LIC) of Bangladesh Limited, between Life Insurance (264.20 lakh policies) by them in 2016-17 . LIC underwrote Corporation of India, Strategic Equity Management Ltd 22.44 percent of the new individual policies and private and Mutual Trust Bank Ltd on 14.12.2015. A Wholly insurers underwrote 24.3 per cent of the new individual owned subsidiary, Life Insurance Corporation (Singapore) policies in the rural sector. All life insurers including LIC Pte Ltd. has been established on 30.4.2012. were compliant with their social sector obligations in terms LIC of India procured Rs 1,24,565.00 crore First of number of lives covered. All the public and private Year Premium (FYP) under 2,01,03,242 policies thereby sector general insurance companies including standalone registering growth of 27.53% in FYP as at 31st March health insurance companies have fulfilled their obligations 2017. The market share of the Corporation in First Year in the rural and social sector for the year 2016-17. Premium is 71.04 % (Last Year- 70.44%) and 76.09% 9.10 Micro insurance (Last Year- 76.84%) in Number of Policies. The Total Premium Income of the Corporation for the financial year In order to facilitate penetration of insurance to (FY) ending 31st March, 2017 is Rs 3,00,196.69 crore. the lower income segments of population, IRDAI had Gross investments of the Corporation for FY 2016-17 notified the micro insurance regulations, 2005. They stand at Rs 3,41,534.59 crore and the total investments provide a platform to distribute insurance products, which as on 31/3/2017 stand at 24,72,388.82 crore. The are affordable to the rural and urban poor and to enable Conservation Ratio was more than 92% and the Overall micro insurance to play its role in financial inclusion. In Expenses Ratio was 15.17%. In 2016-17, LIC has settled micro-insurance-life, the individual new business 205.11 lakh Maturity Claims having paid Rs 99,119.27 premium for the year 2016-17 was Rs 38.22 crore through crore. Similarly 10.47 lakh Death claims have been settled 9.56 lakh policies and the group business amounted to for an amount of Rs 13,581.14 crore. The percentage of Rs 460.43 crore premium for 322.46 lakh lives. Individual claims outstanding to claims payable as on 31/3/2017 death claims paid under micro insurance portfolio for the stands at 2.87%. year 2016-17 amounted to Rs 20.22 crore on 12,714 policies and in the group category Rs 550.04 crore was 9.12 Public Sector General Insurance Companies paid as death claims on 1,79,542 lives There were 35,200 The Public Sector General Insurance Companies micro insurance agents operating in the micro insurance provide coverage for insurance other than Life such as, sector at the end of 2016-17. Fire, Marine (Cargo & Hull), Motor, Workmen’s There are around sixty products offered by the Compensation, Personal Accident, Aviation, Engineering, registered general insurance companies targeting low Liability, Health, etc. The Public Sector General Insurance 274Department of Financial Services V Companies witnessed a growth rate of 24.51% during Rs.16,062 Crores against GDPI of Rs.12,250 crores in 2016-17 collecting a total GDPI (Gross Domestic 2015-16 showing a growth of 31.12% in 2016-17 against Premium Income) of Rs.63,058.92 crores against 14.58 % in 2015-16. The Incurred Claim Ratio for the Rs.50,644.29 crores during 2015-16. Motor, Health and year 2016-17 is 107% against 88% in 2015-16. Profit after Crop Insurance have been the major drivers of growth. Tax was (-) Rs.1,913 crores in 2016-17 as against Rs.221 The Company-wise details are as follows: Crores in 2015-16. ‘United India’ has 2128 offices with 16,167 employees. Rated “iAAA” by ICRA. (a) National Insurance Company Limited e) General Insurance Corporation of India Incorporated in 1906 with Headquarters at (GIC Re) Kolkata has a Paid-up Share Capital of Rs.100 crore. Gross Direct Premium Income (GDPI) in 2016-17 was General Insurance Corporation of India (GIC Re) Rs.14,282 Crores against GDPI of Rs.12,018.98 Crores was approved as ‘Indian Reinsurer’ on 3rd November, in 2015-16 showing a growth of 18.83% against a growth 2000. As an Indian Reinsurer, GIC Re has been giving of 6.53% in the previous year. The Incurred Claim Ratio reinsurance support to non-life as well as Life Insurance for the year 2016-17 is 97.00% as against 95.28% in companies in India. GIC Re also manages Marine Hull 2015-16. Profit After Tax was Rs.46 crores in 2016-17 Pool, Indian Market Terrorism Risk Insurance Pool and Indian Nuclear Insurance Pool on behalf of Indian against Rs.151 crores in 2015-16. It has 1,997 offices Insurance industry apart from FAIR Natural Catastrophe including micro offices and 13,900 employees. Foreign Reinsurance Pool. Operations: National has foreign operations in Nepal and operations are conducted through 8 offices there. During the year 2016-17, Gross premium of GIC Re was Rs 33,585.44 crore as against Rs 18,435.81 crore (b) The New India Assurance Company Limited in the previous year. The Net premium of the GIC Re Incorporated in 1919, with Headquarters at was Rs 30,174.55 crore as against Rs 16,374.78 crore Mumbai has a Paid-up Share Capital of Rs.200 crore. and net earned premium was Rs 26,714.89 crore as Gross Direct Premium Income (GDPI) in 2016-17 is against Rs 15,172.83 crore in the previous year. The net Rs.21597.92 crores against GDPI of Rs.17763.31 crores incurred claims were at Rs 21,646.41 crore i.e., 81.03% in 2015-16 showing a growth of 21.59 % against a growth of net earned premium as against Rs 12,899.86 crore of 14.75 % in the previous year. The Incurred claim Ratio i.e. 85.0% of net earned premium in the previous year. for the year 2016-17 is 91.26% as against 87.84% in GIC Re’s Profit after tax amounted to Rs 3,127.67 crore as on 31st March 2017 compared to Profit after tax of Rs 2015-16. Profit After Tax is Rs.1007.93 crores in 2016- 2,848.39 crore as on 31st March 2016. The total assets 17 against Rs.828.67 crores in 2015-16. It has 2457 and net worth as on 31st March 2017 was Rs 94,948.62 offices and 17,615 employees. Foreign Operations: NIA crore and Rs 17,946.63 crore, respectively. The present has a presence in 28 countries. It has taken a license to paid up capital of the Corporation is Rs 430.00 crore. operate in DIFC, Dubai through a Regional Office and is in the process of Registering with Qatar Financial 9.13 Grievance Redressal Services, Doha. Public Sector General Insurance Companies (c) The Oriental Insurance Company Limited redressed 98.21% Grievances (21,486 out of a total of 21,695) and had only 209 outstanding Grievances in Incorporated in 1947 with headquarters at New 2016-17. ‘National’ redressed 99.61% out of a total of Delhi and has a Paid-up Share Capital of Rs.200 crores. 5987 and outstanding grievances were 23. ‘New India’ Gross Direct Premium Income (GDPI) in 2016-17 was redressed 99.15% out of a total of 4,449 Grievances and Rs.11,117 Crores against GDPI of Rs.8,612 crores in 38 grievances were outstanding. ‘Oriental’ redressed 2015-16 showing a growth of 29.09% in 2016-17 as 99.64% grievances out of a total of 3,525 and 35 against a growth of 13.88% in 2015-16. The Incurred grievances were outstanding. ‘United India’ redressed Claim Ratio for the year 2016-17 is 112% against 84% in 98.54% of grievances out of a total of 7734 and 113 2015-16. Profit After Tax was (-) Rs.1,691 crores in 2016- grievances were outstanding. 17 as against Rs.300 crores in 2015-16. It has 1955 offices with 13923 employees. Foreign Operations: 9.14 Agriculture Insurance Company of India ‘Oriental’ has its foreign operations in Nepal, Dubai & Limited Kuwait with “B++”(very good) rating from AM Best & ‘Agriculture Insurance Company of India Limited’ Co.(Europe) and given the highest rating by CRISIL and (AIC) was established exclusively to cater to the insurance ICRA also. needs of the persons engaged in agriculture and allied (d) United India Insurance Company Limited activities in India under the Companies Act, 1956 on 20th December 2002. It has its Head Office in New Delhi, 18 Incorporated in 1938 with headquarters at Regional Offices in various State Capitals and one-man Chennai has a Paid-up Share Capital of Rs.150 crores. office at District levels. The total number of employees Gross Direct Premium Income (GDPI) in 2016-17 was as on 31st March 2017 is 285 all over the country. 275Annual Report 2017-2018 The erstwhile crop insurance schemes have 9.15 Other Social Security Schemes recently been reviewed in consultation with various a) Aam Admi Bima Yojana (AABY) stakeholders including States/UTs. Accordingly, the Company has during the year implemented Pradhan The Scheme provides life insurance protection Mantri Fasal Bima Yojana (PMFBY) from Kharif 2016 to the rural & urban persons living below poverty line or along with the pilot Unified Package Insurance Scheme marginally above poverty line. Persons between age 18 (UPIS) and the Restructured Weather Based Crop years and 59 years and who are the members of the Insurance Scheme (restructured based on premium identified 48 occupational groups are eligible to be structure and administrative lines of PMFBY and available covered under this scheme. The Scheme provides in the Country from Kharif 2016 as RWBCIS). The coverage of Rs. 30,000/- on natural death and Rs. 75,000/- Coconut Palm Insurance Scheme (CPIS) has also been on death/ total permanent disability due to accident. The continued. Apart from the above, the Company continued premium for the scheme is Rs. 200/- per member per to market various in-house products, including Rainfall annum and Scholarship as a free add-on benefit is also Insurance, Coffee Rainfall Insurance Scheme, Pulp provided to a maximum of two children of the beneficiary Wood, Bio fuel Insurance and Rubber Plantation studying between 9th to 12th standard (including ITI Insurance. courses) @ Rs.100/- per month for each child payable half yearly on 1st July and 1st January , each year. As on Pradhan Mantri Fasal Bima Yojna (PMFBY) is 30th November 2017, about 4.71 crore people have been operated on a commercial / actuarial basis with premium covered under AABY Scheme and about 45 lakh lives subsidy contribution from Union and State Governments. were covered under Social Security Group Schemes AIC has implemented PMFBY in 14 States during Kharif (SSGS - closed). During the financial year (2017-18), 2016-17 season and in 13 States and 1 UT during Rabi 33,94,100 scholarships were disbursed to beneficiaries 2016-17 season. Under the scheme, States are divided for an amount of Rs. 235.80 crore and an amount of into Clusters which are allotted to the empanelled Rs. 257.95 crore has been paid towards total number of insurance companies by State Governments through 83,699 claims (Up to November 2017). AABY stands bidding process. PMFBY provides the following covers: transferred to the Ministry of Labour and Employment  Individual loss assessment claims due to w.e.f 21st June, 2017. localised calamities viz. Hail Storm, Landslide, b) Varishtha Pension Bima Yojana (VPBY) and Inundation. The Varishtha Pension Bima Yojana (VPBY)  Post-harvest losses due to cyclone, cyclonic and 2003 launched on 14th July, 2003 and Varistha Pension unseasonal rains. Losses are assessed on Bima Yojana (VPBY) 2014 launched on 14th August, individual basis. 2014, are social security schemes for Senior Citizens intended to give an assured minimum pension to them  Prevented Sowing/Planting risk due to deficit based on an guaranteed minimum return on the rainfall or adverse seasonal conditions. subscription amount. The pension is envisaged until death  On-account claims due to mid-season adversity from the date of subscription or upto 15 years whichever viz. floods, prolonged dry spells, severe drought is earlier with payback of the subscription amount on etc. death of the subscriber to the nominee or after 15 years to the subscriber on surrender of policy.These Schemes  Wide spread calamities claim based on yield data are implemented through Life Insurance Corporation submitted by the State Governments. (LIC) of India, which is paid the difference between the During Kharif 2016 and Rabi 2016 seasons about actual yield earned by LIC on the funds invested under 571 lakh farmers for a sum insured of Rs. 2,02,231 crore the Scheme and the assured return of 9% committed by have been covered under PMFBY and WBCIS. Further, the Government. Both the schemes VPBY 2003 and Unified Package Insurance Scheme (UPIS) has been VPBY 2014 are closed for future subscriptions. However, approved for implementation in selected 45 Districts of policies sold during the currency of policy are being the country on pilot basis from Kharif 2016 to provide serviced as per the commitment of guaranteed 9% return financial protection and comprehensive risk coverage of announced by the Government under the schemes. As crops, assets, life, and student safety to farmers. Pilot on 31.03.2017, a total of number of 2,74,885 beneficiaries includes seven section, viz., crop Insurance (PMFBY/ and 3,11,981 beneficiaries are being benefited under WBCIS), Loss of Life (PMJJBY), Accidental Death and VPBY-2003 and VPBY-2014 respectively. Disability (PMSBY), Student Safety, Household, 9.16 New Initiatives- Listing of Public Sector Agriculture implements & Tractor. Crop Insurance Section General Insurance Companies is compulsory. However, farmers can choose at least two sections from remaining. Two flagship schemes of the To promote the objective of achieving higher Government viz PMSBY and PMJJBY have been included levels of transparency and accountability, government has apart from insurance of assets. approved listing of the five Government owned General 276Department of Financial Services V Insurance Companies on the stock exchanges, namely; PFRDA as a statutory body has notified The New India Assurance Company Ltd., United India regulations for governing the intermediaries under NPS Insurance Company Ltd., Oriental Insurance Company involved in collection and remittance of subscribers’ Ltd., National Insurance Company Ltd. and General contribution, record keeping, fund management and other Insurance Corporation of India. Out of these five related functions keeping in view the subscribers’ interest. companies, General Insurance Corporation of India and These regulations spell out the eligibility norms for registration, functions, roles and responsibilities of the the New India Assurance Company Ltd have already been intermediaries, the provisions for inspection, audit and successfully listed on the stock exchanges. grievance handling and the process for adjudication. 10 Pension Sector Following developments have taken place in the 10.1 National Pension System (NPS) recent past to facilitate subscribers interface with the NPS architecture. With a view to providing adequate retirement  Atal Pension Yojana–eNPS Channel income on cost effective basis, the National Pension (APY@eNPS)- With a view to expand the System (NPS) has been introduced by the Government outreach of APY, “APY@eNPS” has been of India. It has been made mandatory for all new recruits launched which is a complete digital enrolment to the Government (except armed forces) with effect from process without need of a physical application 1st January, 2004 and has also been rolled out for all form and visiting a bank branch. citizens with effect from 1st May, 2009 on a voluntary basis. The features of the NPS design are self-sustainability,  Aadhaar seeding - The Subscriber can now link portability and scalability. It is envisaged as a low-cost his/her Aadhaar to NPS account using Mobile and efficient pension system backed by sound regulation. App. The Subscriber logs into the App with his/ As a pure “defined contribution” product, returns would her User ID and password and select the option be totally market driven. The NPS-all citizen model of ‘Add/Update Aadhaar Number’. Once Aadhaar provides various investment options and choices to is entered, the details of Subscriber registered individuals to switch over from one option to another or under NPS get authenticated with details from one fund manager to another, subject to certain available in UIDAI database. Post authentication, an OTP is sent to the Subscriber’s mobile number regulatory restrictions. registered with UIDAI. The Subscriber enters the The NPS architecture is transparent and web- OTP and on submitting the correct OTP, Aadhaar enabled. It allows a subscriber to monitor his/her will get seeded for the PRAN. investments and returns. The facility for seamless  Increase in maximum age of joining NPS from portability is designed to enable subscribers to maintain 60 years to 65 years under NPS-Private Sector: a single pension account throughout the saving period. With a view to increase the pension coverage in the country, the maximum age of joining NPS Pension Fund Regulatory and Development has been increased from the existing 60 years Authority (PFRDA), set up as a regulatory body for the to 65 years of age. Any Indian Citizen, resident pension sector, is engaged in consolidating the initiatives or non-resident, in the age of 18- 65 years can taken so far regarding the full NPS architecture and also join NPS and continue in NPS upto the age expanding the reach of NPS distribution network. The of 70 years. process of making NPS available to all citizens entailed the appointment of NPS intermediaries, including  Modification in the partial withdrawal from Tier 1 institutional entities as Points of Presence (POPs) that accounts - Now a subscriber is allowed to partially withdraw from her/his NPS account upto 25% of will serve as pension account opening and collection her/his own contribution for certain specified centers, Central Record Keeping Agencies (CRAs) and purposes after 3 years of joining the NPS. Pension Fund Managers to manage the pension wealth Further, the requirement of 5 years gap for of the subscribers. applying for next partial withdrawal is now Till 30th December 2017, a total of around 191.7 dispensed with. lakh subscribers (including Atal Pension Yojana) have  NPS Mobile App is now available on Windows been enrolled under the NPS. Assets Under Management platform besides the Android and IOS platforms. (AUM) which includes the returns on the corpus, under Apart from viewing the current holding status on the NPS have witnessed an increase from Rs. 1,74,561 mobile app by logging using PRAN and crore as on 31st March 2017 to Rs. 2,19,046 crore as on password, a subscriber can do the following 30th December 2017, registering an increase of 25.48 activities though the mobile app: (i) Make per cent. The APY has a total of about 79.20 lakh contribution (ii) Address Change (iii) Scheme subscribers and AUM of Rs. 3,269 crore as on 30th Change (iv) Tier II Withdrawal (v) Grievance December 2017. lodgment. 277Annual Report 2017-2018 11. Legislative been able to completely address the issue of unregulated deposit taking by unscrupulous elements. 11.1 Proposal to amend the Negotiable Instruments Act, 1881 In view of the above, Government is in process of bringing a new law “The Banning of Unregulated Government has introduced “the Negotiable Deposit Schemes Bill (“Banning Bill”) to ensure a Instruments (Amendment) Bill, 2017” in the Parliament comprehensive ban on unregulated deposit taking activity on 02.01.2018 to address the issue of undue delay in and consequent enablement of effective enforcement. final resolution of cheque bounce cases by suitably The “Banning Bill” aims to prevent such unregulated amending the Negotiable Instruments Act, 1881 deposit schemes or arrangements at their inception and (“NI Act”). The Bill proposes to insert a new section 143A at the same time make soliciting, inviting or accepting in the NI Act, giving Courts trying an offence under deposits pursuant to an unregulated scheme a punishable section 138, the power to direct the drawer of the cheque offence. The Bill proposes severe punishment and heavy to pay interim compensation to the complainant, not pecuniary fines to act as deterrent. exceeding 20% of the amount of the cheque. Further, 11.3 Amendments to the Chit Funds Act, 1982. the Bill proposes to insert a new section 148 in the NI Act, giving Appellate Courts the power to order a deposit Chit Funds are indigenous financial institutions of a minimum of 20% of the fine or compensation in India, which satisfy the financial needs of the low- awarded by the Trial Court pending appeal against income households, which may or may not have access conviction. The Bill also provides that if the drawer of to the formal financial system. It is a mechanism which the cheque is acquitted, the Court shall direct the combines credit and savings in a single scheme. In a complainant to repay to the drawer the amount of interim Chit Fund Scheme, a group of individuals come together compensation, with interest at the bank rate prevalent for a pre-determined duration and contribute to a common at the beginning of the relevant financial year. Similarly, pool (savings) at regular intervals. Every month, up until if the appellant is acquitted, the court shall direct the the end of the tenure of the scheme, the collected pool of complainant to repay to the appellant the amount so money is loaned out internally through a bidding released, with interest at the bank rate prevalent at the mechanism to the most deserving member. This way, beginning of the relevant financial year. people who are in need of funds and those who want to save are able to meet their requirements simultaneously. 11.2 The Banning of Unregulated Deposit With a view to address some of the challenges being Schemes Bill (“Banning Bill”) faced and to facilitate orderly growth of the Chit Fund industry, it is proposed to carry out certain amendments The regulatory framework for deposit taking to the Chit Funds Act, 1982 by introducing the Chit Funds activity in the country is not seamless. The regulators (Amendment) Bill in the Parliament. operate in well-defined areas within the financial sector by regulating particular kinds of entities or activities. For 12. Miscellaneous instance, Non-Banking Financial Companies (NBFCs) are under the regulatory and supervisory jurisdiction of 12.1 Debts Recovery Tribunal the RBI, Chit Funds and Money Circulation including The Central Government has established 39 multi-level marketing schemes are under the domain of Debts Recovery Tribunals (DRTs) including 6 new DRTs State Governments, Collective Investment Schemes at Bengaluru, Chandigarh, Dehradun, Ernakulam, come under the purview of SEBI, schemes offered by Hyderabad and Siliguri and 5 Debts Recovery Appellate Cooperative Societies are under State Governments, Tribunals (DRATs) across the country, under the Multi State Cooperative Societies come under Central provisions of the Recovery of Debts Due to Banks and Registrar, Ministry of Agriculture and deposits taken by Financial Institutions Act, 1993. These tribunals have non-NBFC Companies are regulated by the Ministry of been set up for expeditious adjudication and speedy Corporate Affairs under the Companies Act. Despite such recovery of debts due to banks and financial institutions diverse and regulatory framework, schemes and and matters connected therewith. arrangements designed to avoid oversight by these As per data made available by DRTs, a total regulators and leading to unauthorized collection of number of 19,199 cases (Original Applications) involving money and deposits fraudulently by inducing public to Rs. 57,550.48 crore approximately were disposed of by invest in dubious schemes promising high returns or other 39 DRTs during the period 01.04.2017 to 30.11.2017. benefits, keep coming to notice. 12.2 Representation of SCs, STs, OBCs and PWDs. Enactment of laws such as the Prize Chit and Money Circulation Schemes (Banning) Act, 1978 and The Inspection/examination of Reservation Rosters Chit Fund Act, 1982 by the Central Government and SCs/STs/OBCs in Public Sector Banks/ Financial Protection of Interest of Depositors in Financial Institutions and Insurance Companies has been Establishment Act by various State Governments has not conducted. 278Department of Financial Services V After examining the proposal for establishing the within a maximum time limit of 60 days. All organisations equivalence of posts in Central Public Sector under DFS have made efforts to maximise the use of Undertakings (PSUs), Banks, Insurance Institutions with technology for reducing the grievance redressal time to posts in Government for establishing Creamy Layer one month from the existing two months. Action taken criteria amongst Other Backward Classes, the reports are uploaded on the system and a scanned copy Government has approved principles for determining the of the reply is provided to the complainant as pdf file that equivalence in respect of Public Sector Banks (PSBs), can be viewed by the complainant online. Replies through Public Sector Financial Institutions (PFIs), Public Sector post are also sent to those complainants who have lodged Insurance Companies (PSICs) as conveyed vide DOP&T their grievances physically. O.M. No. 41034/5/2014 Estt. (Res.) Vol. IV-Part dated Banks and Insurance Companies have grievance 6.10.2017 which inter-alia provide as follows: redressal mechanism in place and are also hosted on i) Junior Management Scale-I of PSBs/PFIs/PSICs their respective websites for information and access by will be treated as equivalence to Group A in the the customers. The first level of grievance redressal is Government of India. Branch Manager in Banks and Insurance Companies followed by Zonal Managers and then General Manager ii) Clerks and Peons in PSBs/PFIs/PSICs will be (Customer Care) in Head Office. Grievances concerning treated as equivalence to Group C in the Government of India. private banks and private insurance companies are resolved through Reserve Bank of India (RBI) and An Office Memorandum has been issued to all Insurance Regulatory and Development Authority (IRDA) PSBs/PFIs/PSICs and Regulators in this regard vide this respectively. The unresolved grievances are placed Department’s O.M. No. 19/04/2017-Welfare dated before the Customer Service Committee of the Board 06.12.2017. chaired by CMD/CEO for final settlement of grievances / The Representation of SCs/STs/OBCs and complaints. The Reserve Bank of India (RBI) has set up Persons with Disabilities (PWDs) in Public Sector Banks/ 20 Banking Ombudsmen across the country under Financial Institutions and Insurance Companies is at Banking Ombudsmen Scheme 2006. Similarly, there are Annexure I & Annexure II respectively. 17 Insurance Ombudsmen set up by IRDA. 12.3 Disposal of Public Grievances Grievances received from PMO are also attended promptly and the status is uploaded on portal by Timely redressal of public grievances relating to concerned Banks/ Insurance companies. Most of the banking and insurance sectors is an important step grievances pertain to issues related to ATM, Pension, towards upgrading the quality of customer service in this Loan Applications, Bank transactions, claim payment and crucial segment of financial sector. Department of fraud cases, which are handled by Bank / Insurance Administrative Reforms and Public Grievances (DARPG) officers. Grievances are monitored regularly and followed has established CPGRAMS (Centralised Public Grievance Redressal and Monitoring System), (an online by periodical reminders through emails to the concerned web-based system), to resolve public grievances. Nodal Public Grievance Officers in Banks and Insurance Companies and concerned Sections in the Department. In the Department of Financial Services, a large number of grievances/complaints concerning Banking As per CPGRAMS database the details of and Insurance Sectors are received directly from citizens, receipt, disposal and pending grievances during the both online and by post. The postal grievances are also period 01.01.2017 to 31.12.2017 in respect of banking digitized and processed through CPGRAMS for redressal and insurance sectors are as follows: Table 7: Details of Pending Grievances Sector Brought Received Disposed Pending as % of Less than More than Forward on Disposal 60 days 60 days 31.12.2017 as on old old 31.12.2017 Banking 20420 106299 121162 5557 95.61 5275 282 Insurance 717 11517 11695 539 95.59 511 28 Total 21137 117816 132857 6096 95.61 5786 310 Table 8: Status of Grievances on PG Portal from 01.01.2017 to 31.12.201 7 Total Grievances Balance % of disposal as on Average time of Grievances Disposed Off 31/12/2017 disposal received 138953 132857 6096 95.61 40 days 279Annual Report 2017-2018 The present status of public grievances for the security schemes launched by the Government is as period 01/01/2017 to 31/12/2017 relating to social under: Table 9: Grievances relating to Social Security Schemes from 01.01.2017 to 31.12.2017. Name of the scheme Total Grievance Grievance % of Grievance disposed pending disposal Atal Pension Yojna 214 189 25 88.32 Pradhan Mantri Jan Dhan Yojna 671 654 17 97.47 Pradhan Mantri Mudra Yojna 3932 3709 223 94.33 Pradhan Mantri Suraksha Bima Yojna 164 158 06 96.34 Pradhan Mantri Jeevan Jyoti Bima Yojna 143 132 11 92.31 The present status of public grievances received from PMO for the period 01.01.2017 to 31.12.2017 is as under: Table 10: Stats of Public Grievances received from Prime Minister Office Name of the Total Grievances Grievances % of disposal Sector Grievances disposed pending Banking 73517 70950 2567 96.51 Insurance 5830 5630 200 96.56 \12.4 Vigilance Table 11: Cases disposed off by Special Court Year Filed Disposed 12.4.1 Vigilance Machinery In Department Of Financial 2014 149 217 Services 2015 165 167 Department of Financial Services is the 2016 141 140 administrative department for Public Sector 2017 88 140 Banks(PSBs), Financial Institutions (FIs) and Public 12.4.2 Performance Sector Insurance Companies(PSICs). An Additional Secretary level officer has been designated as Chief  The Vigilance Division of the Department Vigilance Officer of the Department. He is assisted by a monitors the progress on disposal of complaints Joint Secretary(Vig.), Director(Vig.) and Under Secretary received from various sources and pendency of (Vig.) in the discharge of his functions. The Vigilance disciplinary / vigilance cases regularly and Section in the DFS deals with, inter alia, the following meeting with CVOs is undertaken in this issues pertaining to PSBs, FIs and PSICs:- Department at appropriate intervals. Vigilance Section deals the following matters: -  During the period of 01.01.2017 to 31.12.2017 a total no. of - 7 CVOs have been appointed in a) Processing of cases relating to complaints, PSBs/PSICs/FIs. Vigilance clearance, sanction of prosecution and related matters of  Instructions have been issued from time to time as and when any gap in the system is observed  The Board level appointees of PSBs, FIs, to strengthen the preventive vigilance in these PSICs, PFRDA, IRDA and RBI. organisations.  All officials in the Department of Financial 12.4.3 The Vigilance Awareness Week was observed Services, officers of office of Custodian and from 30th Oct., 2017 to 4th November, 2017. A pledge Government officials in DRTs/ DRATs. was administered by the Secretary (Financial Services) on 30.10.2017 to the officers of the Department. b) Appointment of CVOs in PSBs, FIs and PSICs. 12.5 Audit Paras Vigilance Section has the organisations of Special Court and Custodian working under it. 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