Annual Report 2019-20

Contents Page No. INTRODUCTION v CHAPTER I Department of Economic Affairs 1. Economic Division 1 2. Budget Division 4 3. Financial Markets Division 8 4. Financial Stability and Cyber Security Division 15 5. Financial Sector Reforms and Legislation Division 17 6. Infrastructure Policy and Finance Division 20 7. Investment and Digital Economy Division 25 8. FB & ADB Division 34 9. International Economic Relations Division 40 10. Aid Accounts & Audit Division 47 11. Administration Division 48 12. Bilateral Cooperation Division 51 13. Integrated Finance Division 59 14. Currency & Coin Division 60 Annexures 69 Organisation Chart 80 iCHAPTER II Department of Expenditure 1. Personnel Division 81 2. Public Finance-States Division 82 3. Public Finance Central Division 83 4. Public Procurement Division 84 5. Official Language 85 6. Integrated Finance Unit (IFU) 85 7. Chief Advisor Cost 86 8. Arun Jaitley National Institute of Financial Management (AJNIFM) 88 9. Controller General of Accounts 89 10. Chief Controller of Accounts 93 11. Central Pension Accounting Office 100 Annexures 104 Organisation Chart 106 CHAPTER III Department of Revenue 1. Organization and Functions 107 2. Revenue Headquarters Administration 108 3. Central Board of Indirect Taxes and Customs 142 4. Central Board of Direct Taxes 156 5. Integrated Financial Unit (IFU) 216 6. Implementation of Official Language Policy 217 7. Implementation of Right to Information Act, 2005 218 8. e-governance activities 221 9. Swachh Bharat Campaign 225 Annexure - I - Representation of SCs/STs/OBCs 227 Annexure - II - Representation of VH/OH 241 Annexure - III - Summary of Audit Reports / Paras 253 Annexure - IV - Organization Chart 255 iiCHAPTER IV Department of Investment and Public Asset Management I. Functions 257 II. Vision 257 III. Mission 257 IV. Organisational Structure 257 V. Policy and Approach to Disinvestment of CPSEs 257 VI. New Initiatives 260 VII. Recent Trends in Disinvestment 261 VIII. Initiatives Undertaken for Persons with Disabilities, Schedule Castes, Scheduled Tribes and Other Backward Classes 261 IX. Initiatives Relating to Gender Budgeting and Empowerment of Woman 261 X. Official Language Policy 262 XI. E-Governance 262 XII. Redressal of Public Grievances 262 XIII. Vigilance Machinery 262 XIV. Right to Information Act, 2005 262 XV. Initiatives for Good Goverance 262 XVI. Audit Paras/Objections 262 XVII.Integrated Finance Unit 262 APPENDIX - I 264 APPENDIX - II 265 iiiCHAPTER V Department of Financial Services 1. Work Allocation among Sections 267 2. Overiew of Banking 272 3. Financial Inclusion 278 4. Schemes 280 5. Agriculture Credit 285 6. Regional Rural Banks 286 7. Priority Sector Lending 287 8. Financial Institutions 290 9. Insurance Sector 292 10. Pension Sector 294 11. Legislative 296 12. Miscellaneous 296 Annexures 300 Organisation Chart 303 ivIntroduction Introduction The Ministry comprises of the five Departments cent in January 2020. Inflation measured in terms of namely:— Wholesale Price Index (WPI) stood at 4.3 per cent in  Department of Economic Affairs 2018-19 as compared to 3.0 per cent in 2017-18, 1.7 per cent in 2016-17, (-)3.7 per cent in 2015-16 and 1.2 per  Department of Expenditure cent in 2014-15. It averaged 1.7 per cent in 2019-20 (April  Department of Revenue to January) and stood at 3.1 per cent in January 2020  Department of Investment and Public Asset (Table 1). Management  Department of Financial Services Table 1: Inflation in WPI and CPI (in per cent) CPI-C WPI 1. Department of Economic Affairs All All CFPI Food Groups Commodities Economic Growth Base 2012=100 2011-12=100 As per the First Advance Estimates of National Weight 100 39.1 100 24.4 Income released by the National Statistical Office (NSO), the growth rate of the Gross Domestic Product (GDP) at 2014-15 5.9 6.4 1.2 4.3 constant market prices is estimated to be 5.0 per cent in 2015-16 4.9 4.9 -3.7 1.2 2019-2020. The growth of Gross Value Added (GVA) at 2016-17 4.5 4.2 1.7 5.8 constant basic prices is estimated to be 4.9 per cent in 2019-20, with agriculture and allied sectors, industrial 2017-18 3.6 1.8 3.0 1.9 sector and services sector growing at 2.8 per cent, 2.5 2018-19 3.4 0.1 4.3 0.6 per cent and 6.9 per cent respectively. 2019-20 4.5 6.1 1.7 7.0 On the demand side, the growth in government final (Apr-Jan) consumption expenditure at constant (2011-12) prices is Apr-18 4.6 2.8 3.6 0.8 estimated to have remained strong at 10.5 per cent in May-18 4.9 3.1 4.8 1.2 2019-20. The growth in gross fixed capital formation at Jun-18 4.9 2.9 5.7 1.6 constant prices is estimated at 1.0 per cent in 2019-20. Jul-18 4.2 1.3 5.3 -0.8 The First Revised Estimates of National Income Aug-18 3.7 0.3 4.6 -2.1 released on 31st January 2020, estimated the growth of real GDP at 6.1 percent in 2018-19, as compared to 7.0 Sep-18 3.7 0.5 5.2 0.1 percent in 2017-18. Oct-18 3.4 -0.9 5.5 -0.5 Gross saving as percentage of GDP at current Nov-18 2.3 -2.6 4.5 -2.0 market prices is estimated at 30.1 per cent in 2018-19, Dec-18 2.1 -2.6 3.5 -0.1 as compared to 32.4 percent in 2017-18. Investment rate as measured by share of gross capital formation to GDP, Jan-19 2.0 -2.2 2.8 2.0 is estimated at 32.2 per cent in 2018-19, as compared to Feb-19 2.6 -0.7 2.9 3.3 34.2 per cent in 2017-18. Fixed investment rate measured Mar-19 2.9 0.3 3.1 3.6 by share of Gross Fixed Capital Formation to GDP is Apr-19 3.0 1.1 3.2 4.5 estimated at 28.1 per cent in 2019-20 (1st advance estimates), as compared to 29.0 per cent in 2018-19 (1st May-19 3.0 1.8 2.8 5.5 revised estimates). Jun-19 3.2 2.2 2.0 5.4 Jul-19 3.1 2.4 1.2 4.9 Prices Consumer Price Index (Combined) (CPI-C) inflation Aug-19 3.3 3.0 1.2 5.9 (Base 2012=100) for 2018-19 declined to 3.4 per cent Sep-19 4.0 5.1 0.3 6.1 from 3.6 per cent in 2017-18, 4.5 per cent in 2016-17, Oct-19 4.6 7.9 0.0 7.6 4.9 per cent in 2015-16 and 5.9 per cent in 2014-15. It Nov-19 5.5 10.0 0.6 9.1 averaged 4.5 per cent in 2019-20 (April to January) and stood at 7.6 per cent in January 2020. Food inflation Dec-19 7.4 14.2 2.6 11.0 based on Consumer Food Price Index (CFPI) for 2018- Jan-20 7.6 13.6 3.1 10.1 19 declined to 0.1 per cent from 1.8 per cent in 2017-18, Source: Office of Economic Adviser, DPIIT and Central 4.2 per cent in 2016-17, 4.9 per cent in Statistics Office. 2015-16 and 6.4 per cent in 2014-15. It averaged 6.1 per Note: WPI inflation for last two months and CPI-NS cent in 2019-20 (April to January) and stood at 13.6 per inflation for last one month are provisional. vAnnual Report 2019-2020 Agriculture and Food Management Sector As per the 4th Advance Estimates (AE) released by During the South West Monsoon Season (June- Ministry of Agriculture & Farmers Welfare on 23.09.2019, September) of 2019, the country as a whole received the total production of food grains during 2018-19 is rainfall of 110 per cent of its long period average (LPA). estimated at 285.0 million tonnes which is an increase of After 1994 (110% of LPA), rainfall received in 2019 (110 19.2 million tonnes over that of the previous five years' % of LPA) is the highest season rainfall received by the (2013-14 to 2017-18) average production (Table 1). As country as a whole. Out of 36 meteorological subdivisions, per the first Advance estimate for 2019-20, the total 2 subdivisions received large excess, 10 received excess production of Kharif food grains is estimated at 140.6 and 19 subdivisions received normal monsoon rainfall. million tonnes. Production of Major Agricultural Crops (1st Advance Estimates) Table 1: Production of Major Agricultural Crops (1st Adv. Est.) Crops Production (Million Tonnes) 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20* (Final) (4th AE) (1st AE) Total Foodgrains 265.0 252.0 251.6 275.1 285.0 285.0 140.6** Rice 106.7 105.5 104.4 109.7 112.8 116.4 100.4 Wheat 95.9 86.5 92.3 98.5 100.0 102.2 -- Total Coarse 43.3 42.9 38.5 43.8 47.0 43.0 32.0 Cereals Total Pulses 19.3 17.2 16.4 23.1 25.4 23.4 8.2 Total Oilseeds 32.8 27.5 25.3 31.3 31.5 32.3 22.4 Sugarcane 352.1 362.3 348.4 306.1 379.9 400.2 377.8 Cotton# 35.9 34.8 30.0 32.6 32.8 28.7 32.3 Source: DES, DAC&FW, M/o Agriculture & Farmers Welfare. 1st AE: 1st Advance Estimates, *Kharif crops only; # Million bales of 170 kgs. Each; **Data for Wheat is not included. The total area sown under Rabi crops as on 24th manufacturing and electricity shows a reasonable growth January for the year 2019-20 stands at 654.03 lakh in industrial production during April-March 2018-19. hectares as compared to 597.52 lakh hectare for According to the data on the IIP released by the National corresponding period last year. Statistical Office (NSO) under the Ministry of Statistics and Programme Implementation (MOSPI), the Index of The milk production in the country in 2017-18 was 176.3 million tonnes which has increased to 187.7million Industrial Production (IIP) based industrial growth during tonne in 2018-19 and has registered an annual growth April-March 2018-19, was 3.8 per cent as compared to rate of 6.5% in 2018-19 over the previous year. 4.4 per cent growth achieved during the corresponding period of the previous year. Out of the three broad sectors, The total fish production in the country stood at 13.42 electricity sector has growth of 5.2 per cent during April- million metric tonnes (provisional) during 2018-19. Of this, March 2018-19 as against 5.4 per cent growth achieved the marine fisheries contributed 3.71 million metric tonnes during corresponding period of the previous year. Mining and the inland fisheries contributed 9.71 million metric and manufacturing sectors grew at 2.9 per cent and 3.9 tonnes. per cent respectively in April-March 2018-19 against 2.3 Industry percent and 4.6 per cent in the corresponding period of the previous year. During April-December 2019-20, the The performance of the industrial sectors based on IIP registered 0.5 per cent growth. The growth of different the Index of Industrial Production (IIP) comprising mining, used based industrial group is given below. viIntroduction Growth of Index of Industrial Production (IIP) (in Per cent) (Base 2011-12=100) Industry Group Weight 2017-18 2018-19 2019-20 (April- (April- (April-December) March) March) Mining 14.37 2.3 2.9 0.6 Manufacturing 77.63 4.6 3.9 0.5 Electricity 7.99 5.4 5.2 0.8 Growth by use-based industrial group Primary Goods 34.04 3.7 3.5 0.3 Capital Goods 8.22 4.0 2.7 -12.3 Intermediate Goods 17.22 2.3 0.9 12.2 Infrastructure/Construction 12.33 5.6 7.3 -2.7 Goods Consumer Durables Goods 12.83 0.8 5.5 -6.6 Consumer Non-durables 15.32 10.6 4.0 2.8 Goods General Index 100.00 4.4 3.8 0.5 Source: CSO As may be seen from the table, except intermediate 40 per cent in the IIP grew by 4.4 per cent in April-March goods, other used based goods sector has attained higher 2018-19 as compared to 4.3 per cent growth in April- growth in April-March 2018-19. The infrastructure/ March 2017-18. During April-March 2018-19, seven out construction goods and consumer durables goods of the eight core sectors namely coal, natural gas, refinery registered higher growth of 7.3 per cent and 5.5 per cent products, fertilizers, steel, cement, and electricity sectors respectively during the period in April-March 2018-19. achieved positive growth while crude oil sector recorded Infrastructure Sector negative growth. Natural gas and fertilizers sectors The index for eight core industries comprising coal, registered moderate growth in April-March 2018-19. The crude oil, natural gas, refinery products, fertilizers, steel, Eight Core Industries recorded 0.2 per cent growth in cement and electricity with a combined weight of nearly April-December 2019-20. Production growth (per cent) in Eight Core Infrastructure- Supportive Industries Industry 2017-18 2018-19 2019-20 (April-March) (April-March) (April-December) Coal 2.6 7.4 -3.8 Crude oil -0.9 -4.1 -6.0 Natural Gas 2.9 0.8 -3.8 Refinery Products 4.6 3.1 -0.6 Fertilizers 0.03 0.3 4.7 Steel 5.6 5.1 5.2 Cement 6.3 13.3 0.7 Electricity 5.3 5.2 0.5 Overall growth 4.3 4.4 0.2 Source: Office of the Economic Adviser, DPIIT (Ministry of Commerce & Industry) viiAnnual Report 2019-2020 As per report on Review of Infrastructure Sector Along with efforts for generating additional Performance for April-March 2018-19 released by Ministry employment, special focus has been on improving quality of Statistics and Programme Implementation (MOSPI), of jobs and formalisation of the economy. The share of in major infrastructure sectors such as, coal production, regular wage/salaried employees has increased by 5 cement production, railways freight earnings, and coal percentage points from 18 per cent in 2011-12 to 23 per handled at major ports were higher during April-March cent in 2017-18, while the proportion of workers in casual 2018-19 as compared to the same period of previous labour category has decreased by 5 percentage points year. from 30 per cent in 2011-12 to 25 per cent in 2017-18 with the decline being in rural areas. Total formal Social Sector employment in the economy increased from 8 per cent The expenditure on social services, as a proportion in 2011-12 to 9.98 per cent in 2017-18. However, gender of GDP, has increased by 1.5 percentage points during disparity in India's labour market has increased due to the period 2014-15 to 2019-20 (BE), from 6.2 to 7.7 per consistent decline in female labour force participation, cent. The share of expenditure on social services out of especially in rural areas due to their engagement in full total budgetary expenditure increased to 26 per cent in time domestic duties outside labour market. 2019-20 (BE) from 23.4 per cent in 2014-15. Ayushman Bharat, the world's biggest health care scheme, to improve access to health and delivery of India's rank in the Human Development Index (HDI) health services at massive scale, has set up 28,005 improved to 129 in 2018 from 130 in 2017, out of a total Health & Wellness Centres. Mission Indradhanush has of 189 countries. With 1.34 per cent average annual HDI vaccinated 3.39 crore children and 87.18 lakh pregnant growth, India is among the fastest improving countries, women of 680 districts across the country. There has and ahead of China (0.95), South Africa (0.78), Russian been massive increase in investment in provision of Federation (0.69) and Brazil (0.59). sanitation facilities to poorest of the poor sections under Swachh Bharat Mission. A Ten Year Rural Sanitation Strategy (2019-2029) has also been launched to focus To sustain this momentum in human development on sustaining the sanitation behaviour change and and to further accelerate it, the role of public sector in increasing access to solid and liquid waste management. delivery of social services such as education and health is critical. Samagra Shiksha 2018-19 has been launched External Sector to envisage school education as a continuum from pre- World Economic Development school to senior secondary level and aims to ensure inclusive and equitable quality education. Besides, scaling According to International Monetary Fund, World up of the efforts to impart necessary skills through a wide Economic Outlook, October 2019, "Global growth is network of ITIs focusing women, youth now can take up forecast at 3.0 percent for 2019, its lowest level since Short Term Training (STT) and get their skills certified 2008-09 and a 0.3 percentage point downgrade from the through Recognition of Prior Learning (RPL) under April 2019 World Economic Outlook. Growth is projected Pradhan Mantri Kaushal Vikas Yojana (PMKVY) to pick up to 3.4 percent in 2020 (a 0.2 percentage point 2016-20. downward revision compared with April)". Overview of the World Economic Outlook Projections (Percent change, noted otherwise) Projections as per Difference from WEO Oct, 2019 April 2019 WEO 2018 2019 2020 2019 2020 World Output 3.6 3.0 3.4 -0.3 -0.2 Advanced Economies 2.3 1.7 1.7 -0.1 0.0 Emerging Market and Developing 4.5 3.9 4.6 -0.5 -0.2 Economies India 6.8 6.1 7.0 -1.2 -0.5 World Trade Volume 3.6 1.1 3.2 -2.3 -0.7 (goods and services) viiiIntroduction Imports Advanced Economies 3.0 1.2 2.7 -1.8 -0.5 Emerging Market and Developing 5.1 0.7 4.3 -3.9 -1.0 Economies Exports Advanced Economies 3.1 0.9 2.5 -1.8 -0.6 Emerging Market and Developing 3.9 1.9 4.1 -2.1 -0.7 Economies Source: IMF, WEO October 2019. Further, with respect to External Sector Outlook of economies should support the pickup in trade growth, trade growth, WEO, October 2019 stated that "global offsetting the slowdown in capital spending in advanced trade growth slowed considerably in 2018 and the first economies that is projected for 2020 and beyond. half of 2019, after peaking in 2017 and is projected at 1¼ However, there is sizable uncertainty concerning the percent in 2019. The slowdown reflects a confluence of future structure of value chains and the repercussions of factors, including a slowdown in investment, the impact tensions related to technology, and these could weigh on of increased trade tensions on spending on capital goods trade growth." (which are heavily traded), a tech cycle, and a sizable India's Merchandise Trade developments during decline in trade in cars and car parts. Global trade growth 2018-19 and 2019-20 (April-January). is projected to recover to 3.2 percent in 2020 and 3.75 percent in subsequent years. The waning of some As per the data of Department of Commerce, the temporary factors, together with some recovery in global developments in India's merchandise trade during 2018- economic activity in 2020, buttressed by a gradual pickup 19 and 2019-20 (April-January) may be seen as under: in investment demand in emerging market and developing (Values in US$ billions) 2017-18 2018-19 % change in 2018-19 2019-20 % change in 2019- 2018-19 over (P) 20 (Apr-Nov) over 2017-18 2018-19 (Apr-Nov) (April-January) Total Merchandise Trade (Exports + 769.1 844.2 9.8 704.3 663.8 -5.7 Imports) Merchandise 303.5 330.1 8.7 270.5 265.3 -1.9 Exports Merchandise 465.6 514.1 10.4 433.8 398.5 -8.1 Imports POL Imports 108.7 140.9 29.7 119.7 108.7 -9.2 Non-POL Imports 356.9 373.2 4.5 314.0 289.9 -7.7 Trade Deficit -162.1 -184.0 13.5 -163.3 -133.3 -18.4 Source: Department of Commerce, Ministry of Commerce and Industry. Note: P: Provisional. It may be seen from table above that the it by using all means and wherewithal at our disposal. merchandise trade deficit had increased by 13.5 per cent UN Secretary General's Climate Action Summit was held to US$ 184.0 billion in 2018-19 from US$ 162.1 billion in on September 23, 2019 on the side lines of the UN 2017-18. During 2019-20 (April-January), trade deficit General Assembly. In this summit, India reiterated that declined by 18.4 percent to US$ 133.3 billion from US$ global actions to address climate change is not sufficient 163.7 billion in 2018-19 (April-January). and called for a massive movement to bring about behavioural changes to tackle the problem of climate Climate Change and Finance change. Action towards climate change is an undeniable In the Paris Agreement pertains to the post 2020 concern for humanity and it is our responsibility to address ixAnnual Report 2019-2020 period, the roadmap for implementation of India's NDC which continued to grow at a steady and robust pace is being prepared, by constituting an implementation during 2019-20 so far. The moderation was led by a sharp Committee and six Sub-Committees. A Sub-committee deceleration in credit growth to the services sector. Credit chaired by Department of Economic Affairs, is looking growth to industry also witnessed a significant slowdown into financing of India's NDCs. Climate Finance is the in the recent months. key pillar enabling climate actions. Under the Paris As on 20th December, 2019, on year-on-year Agreement, the developed countries have made a (y-o-y) basis, non-food bank credit growth decelerated commitment to a goal of mobilising USD 100 billion to 7.0 per cent from 12.8 per cent as on 21st December, annually by 2020 for supporting climate action in 2018. While credit growth to ‘agriculture and allied developing countries. However, various analysis and activities’ and ‘industries’ decelerated to 5.3 per cent and reports confirms that the level of climate finance flow is 1.6 per cent, respectively, as on 20th December, 2019 considerably low. from 8.4 per cent to 4.4 per cent, respectively, as on 21st December, 2018. Credit growth to services sector India has taken several measures to accomplish its decelerated sharply to 6.2 per cent as on 20th December, promises made to the International community through 2019 from 23.2 per cent as on 21st December, 2018. UNFCCC and its Paris Agreement. India has published Personal loans growth accelerated to 15.9 per cent as its Second Biennial Update Report (BUR) to the UNFCCC on 20th December, 2019 from 14.8 per cent as on 21st in the month of December, 2018. The BUR report tracks December, 2018. India's progress in climate actions. As per the report, "emission intensity of India's Gross Domestic Product Major Policy Changes related to Banking (GDP) has reduced by 21% over a period of 2005-2014." Regulations The report also states that India has taken steps like Implementation of the Guidelines on Loan System harnessing untapped potential of solar energy, carbon for Delivery of Bank Credit, with effect from April 1, 2019. sequestration through National Horticulture Mission, Guidelines on loan system for delivery of bank credit distribution of 312 LED bulbs through 'Unnat Jyoti by were issued on December 5, 2018, in order to enhance Affordable LED's for All' scheme etc. credit discipline among large borrowers. For borrowers with aggregate fund-based working capital limit of ?150 Banking Sector crore and above from the banking system, a minimum NPA ratio of banks which was increasing from past level of 'loan component' of 40 per cent of the sanctioned few years improved in 2018-19. The performance of the limit was made effective from April 1, 2019. Further, the banking sector (domestic operations), Public Sector undrawn portion of cash credit/overdraft limits sanctioned Banks (PSBs) in particular, improved in 2018- 19. to the aforesaid large borrowers, irrespective of whether The Gross Non-Performing Advances (GNPA) ratio unconditionally cancellable or not, shall attract a credit of Scheduled Commercial Banks decreased from 11.2 conversion factor of 20 per cent, effective April 1, 2019. per cent in March 2018 to 9.3 per cent in March 2019 Permitting One-time Restructuring of Existing Loans and their Restructured Standard Advances (RSA) ratio to MSMEs Classified as 'Standard' without a Downgrade decreased to 0.4 per cent in March 2019 from 0.9 per in the Asset Classification. cent in March 2018. The Stressed Advances (SA) ratio A one-time restructuring of existing loans to MSMEs decreased from 12.5 per cent in March 2018 to 9.7 per that were in default but with loan quality as 'standard' as cent in March 2019. SCBs' capital to risk-weighted assets on January 1, 2019, was permitted without an asset ratio (CRAR) improved from 13.7 per cent in September classification downgrade. The scheme is available to 2018 to 14.3 per cent in March 2019 after recapitalization MSMEs qualifying with objective criteria including, inter of PSBs. alia, a cap of `25 crore on the aggregate exposure of GNPA ratio of PSBs decreased to 12.6 percent in banks and NBFCs as on January 1, 2019. The March 2019 from 15.6 per cent March 2018. SA ratio of restructuring will have to be implemented by March 31, PSBs decreased to 13.1 percent in March 2019 from 16.7 2020 and an additional provision of 5 per cent will have per cent in March 2018. PSBs' CRAR improved from 11.3 to be maintained in respect of accounts restructured per cent in September 2018 to 12.2 per cent in March under this scheme. 2019. Harmonisation of Risk Weight for Exposure to NBFCs Credit Growth Non-Food Credit (NFC) growth, on a year-on-year With a view to facilitate flow of credit to well-rated (y-o-y) basis, moderated to 7.0 per cent as on 20th NBFCs and to harmonise risk weights applicable to banks' December 2019 from 11.9 per cent in April 2019. The exposure to various categories of NBFCs under the moderation in credit growth was witnessed across all the standardised approach for credit risk management, risk major segments of non-food credit, except personal loans, weight as per the ratings assigned by the rating agencies xIntroduction (registered with SEBI and accredited by the Reserve Bank and H2, all members of MPC unanimously decided to of India) has been made applicable to the banks' reduce the policy repo rate by 25 bps to 5.75 per cent exposures to all NBFCs, excluding Core Investment and change the stance of monetary policy from neutral to accommodative. Companies (CICs), in a manner similar to that of corporates under the extant regulations. Exposures to By the time of third bi-monthly policy in August 2019, CICs, rated as well as unrated, will continue to be risk- various high frequency indicators along with surveys weighted at 100 per cent. conducted by the Reserve Bank indicated a weakening of both domestic and external demand conditions; the External Benchmark Based Lending real GDP projections were revised downwards to 6.9 per As the transmission of policy rate changes to the cent for 2019-20. The inflation projections largely lending rate of the banks under the current MCLR remained unchanged from June policy and projected to framework was not satisfactory, guidelines were issued remain within the target rate. Considering these dynamics, to banks on September 4, 2019 mandating banks w.e.f. the MPC decided to reduce the policy repo rate by 35 bps to 5.40 per cent and unanimously voted to maintain October 1, 2019 to link all new floating rate personal or the accommodative stance of monetary policy; four retail loans and floating rate loans to MSE to an external members voted to reduce the policy rate by 35 bps, while benchmark as under: two members voted to reduce it by 25 bps. a) Benchmarks: The banks are free to choose one The fifth bi-monthly policy in December 5, 2019 was of the several benchmarks from Repo Rate, 3 held in the backdrop of GDP growth moderating to 4.5 Months and 6 Months Treasury Bill yield and any per cent in Q2:2019-20, extending the sequential other benchmark market interest rate published deceleration to the sixth consecutive quarter. The real by the Financial Benchmark India Private Ltd GDP growth for 2019-20 is revised downward from 6.1 (FBIL). per cent in the October policy to 5.0 per cent- 4.9-5.5 per b) Spread: Banks are free to decide the spread over cent in H2 and 5.9-6.3 per cent for H1:2020-21. In the fourth bi-monthly resolution of October 2019, CPI inflation the external benchmark. However, credit risk was projected at 3.4 per cent for Q2:2019-20, 3.5-3.7 premium may undergo change only when per cent for H2:2019-20 and 3.6 per cent for Q1: 2020- borrower's credit assessment undergoes a 21 with risks evenly balanced. The actual Inflation substantial change, as agreed upon in the loan outcome for Q2 evolved broadly in line with projections- contract. Further, other components of spread averaging 3.5 per cent. The inflation print for October, including operating cost could be altered once in however, was much higher than expected. three years. In the sixth bi-monthly policy in February 6, 2020, c) Reset of interest rates: The interest rate under the MPC kept Repo Rate unchanged at 5.15 per cent. external benchmark shall be reset at least once Reverse Repo Rate remain unchanged at 4.90 per cent in three months. and Marginal Standing Facility Rate and the Bank Rate Monetary Developments during 2019-20 remained unchanged at 5.40 per cent in February 2020. Under the revised statutory framework of 2016, the MPC decided to continue with teh accommodative stance Monetary Policy Committee (MPC) of the Reserve Bank as long as it is necessary to revive growth, while ensuring has met six times in 2019-20 so far. The bi-monthly that inflation remains within the target. CPI inflation monetary policy statements were published following projections was revised upwards to 6.5 per cent for each MPC meeting. Two Monetary Policy Reports (MPR) Q4:2019-20; 5.4-5.0 per cent for H1:2020-21; and 3.2 explaining the sources of inflation and forecasts of per cent for Q3:2020-21, with resiks broadly balanced. inflation were also published in April and October 2019, MPC projected the real GDP growth for 2020-21 at 6.0 as required under the amended RBI Act. per cent in the range of 5.5-6.0 per cent in H1 and 6.2 per cent in Q3. MPC noted that inflation has surged above In its first bi-monthly monetary policy statement for the upper tolerance band around the target in December, 2019-20 in April 2019, the MPC decided by a vote of 4-2 2019, primarily on the back of the unusual spike in onion to reduce policy repo rate by 25 basis points (bps) to 6.0 prices. MPC will remain vigilant about the potential per cent and maintained neutral policy stance by a generalisation of inflationary pressures. majority of 5-1. With CPI inflation trajectory projected to remain well below the target rate throughout the year, The MPC recognizes that there is monetary policy the MPC's decision was guided by the need to strengthen space for future action. However, given the evolving domestic growth by spurring private investment. growth-inflation dynamics, the MPC felt it appropriate to In the second bi-monthly monetary policy meeting take a pause at this juncture. Accordingly, the MPC of June 2019, the MPC noted that growth impulses further decided to keep the policy repo rate unchanged and weakened as reflected in widening of the output gap continue with the accommodative stance as long as it is compared to the April 2019 policy. With inflation path necessary to revive growth, while ensuring that inflation expected to remain below the target in both H1:2019-20 remains within the target. xiAnnual Report 2019-2020 Liquidity Conditions and its Management oil prices, surplus liquidity, and four consecutive policy Systemic liquidity in 2019-20 so far has been largely rate cuts amounting to 110 bps. in surplus since June 2019. Durable liquidity injection was Initially in Q1: 2019-20, up to mid-May, 10-year undertaken through four open market operation (OMO) benchmark yield hardened marginally on account of rise purchase auctions and one US$ 5 billion buy/sell swap in crude oil prices. Thereafter, it largely followed a auction all conducted during Q1:2019-20. Moreover, the downward trend. The primary drivers for the softening of Reserve Bank's forex operations augmented the yield may be attributed to change in monetary policy domestic rupee liquidity in contrast to absorption last year. stance of the US Fed (on global growth concerns and Furthermore, the statutory liquidity ratio (SLR) has been ongoing trade tensions), easing of liquidity condition of reduced by 25 bps each in four steps effective April 13, the banking system, consecutive policy rate cuts by the July 6, and October 12, January 4, 2020 respectively, to RBI along with change of stance from neutral to 18.25 per cent of net demand and time liabilities (NDTL) accommodative. Additionally, benign crude oil prices, of banks, in accordance with the roadmap announced in expectations of meeting fiscal deficit target and December 2018 with a view to aligning the SLR with the announcement of overseas borrowing programme by liquidity coverage ratio (LCR). Other factors creating Government of India during its budget announcement surplus liquidity are moderation in currency demand after aided the sentiment. two years of high demand following demonetisation. The softening bias in the benchmark yield continued In 2019-20, April and May were the only two months during early period of Q2: 2019-20 amidst expectation of when liquidity was in deficit due to restrained government another rate cut on the back of slowing economy. spending and high demand for cash. The unwinding of Thereafter, the yield started to harden on the back of news Government of India (GoI) cash balances - a regular of launch of a new 10-year security and unexpected rise feature every year in April - was much lower in the current in crude oil prices. year due to the imposition of the model code of conduct The risk-off sentiment on account of trade related during elections restraining government spending. issues between US and China and rate cuts by Federal Further, rising currency demand also caused liquidity Open Market Committee (FOMC) also aided the market tightness in the system. Consequently, the RBI conducted sentiment. The 10-year benchmark yield traded in a a US$/INR buy/sell swap auction of US$ 5 billion for a narrow band of 6.63-6.89 since mid-August till end- tenor of three years in April, thereby injecting `34,874 September and stood at 6.86 per cent on crore, and two OMO purchase auctions in May amounting January 31, 2020. to `25,000 crore. The increased spending by the government, net Services Sector: forex purchases by the RBI and return of currency to the The services sector's significance in the Indian banking system combined with the two OMO purchase economy has continued to increase, with the sector now auctions amounting to `27,500 crore conducted by the accounting for around 55 per cent of total size of the Reserve Bank resulted in surplus liquidity in June. economy and GVA growth, two-thirds of total FDI inflows into India and about 38 per cent of total exports. The share Developments in the G-Sec Market of services sector now exceeds 50 per cent of Gross State During the first half of 2019-20, the 10-year Value Added in 15 out of the 33 states and UTs, with this benchmark G-Sec yield softened, tracking subdued crude share more than 80 per cent in Delhi and Chandigarh. Table: Services Sector Performance in GVA Share in GVA Growth in GVA (per cent) (per cent) 2019-20 2017-18 2018-19 2019-20 (1st AE) (2nd RE) (1st RE) (1st AE) Services 55.3 6.9 7.7 6.9 Trade, hotels, transport, 18.3 7.6 7.7 5.9 communication & services related to broadcasting Financial, real estate & 21.3 4.7 6.8 6.4 professional services Public administration, defence & 15.6 9.9 9.4 9.1 other services Source: Ministry of Statistics and Programme Implementation (MoSPI). Note: Shares are in current prices and growth in constant 2011-12 prices; RE: Revised Estimates. 1st AE: 1st Advance Estimates xiiIntroduction As per the First Advance Estimates for Gross Value administration and enforcement of regulatory measures Added (GVA) from the Ministry of Statistics and Planning provided in the enactments concerning Goods and Implementation, services sector growth (YoY) continued Services Tax (GST), Central Sales tax, Stamp duties and to moderate during 2019-20, reaching 6.9 per cent from other relevant fiscal statutes. Control over production and 7.7 per cent in 2018-19. By sub-sector, growth (YoY) in disposal of opium and its products is vested in this 'financial services, real estate & professional services' Department. decelerated to 6.4 per cent during 2019-20. However, 2. The underlying theme of the tax proposals for the 'public administration, defence & other services' Budget 2019-20 and the Taxation Laws (Amendment) Act, witnessed acceleration in activity during 2019-20, with a 2019 is to continue to provide momentum to the buoyancy growth (YoY) of 9.1 per cent. in direct taxes through deepening and widening of the FDI data from the Department for Promotion of tax base, reducing corporate tax rate, promoting Industry and Internal Trade shows that gross FDI equity horizontal equity in personal income tax, simplifying tax inflows (excluding re-invested earnings) into the services procedure and enhancing the effectiveness, transparency sector1 witnessed a strong recovery during April- and accountability of the tax administration. In this September 2019 following a decline in 2018-19. Gross endeavour, a few of the legislative measures taken during FDI equity inflows jumped by 33 per cent YoY during April- FY 2019-20 are mentioned below: September 2019 to reach US$ 17.58 billion, accounting (i) Reduction in Corporate tax rate: The for about two-thirds of the total gross FDI equity inflows Finance (No.2) Act, 2019 reduced the base into India during this period. corporate tax rate for small and medium sized domestic companies whose turnover does not 2. Department of Expenditure exceed Rs 400 crore to 25 %. Further, vide the Taxation Laws (Amendment) Act, 2019, it The Department of Expenditure is the nodal has been provided that existing domestic Department for overseeing the public financial companies may opt for a concessional tax management system in the Central Government and regime at an effective tax rate of 25.17% (22% matters connected with state finances. It is responsible tax, plus surcharge at 10% and cess at 4%), for the implementation of the recommendations of the if they do not avail the specified deductions Finance Commission and Central Pay Commission, and incentives. Further, new manufacturing monitoring of audit comments/observations, preparation domestic companies set up on or after of Central Government Accounts. It further assists Central 01.10.2019 may opt to be taxed at an effective Ministries/Departments in controlling the costs and prices tax rate of 17.16% (15% tax, plus surcharge of public services, reviewing system and procedure to at 10% and cess at 4%), provided that they optimize outputs and outcomes of public expenditure. The do not avail of any specified incentives or principal activities of the Department include overseeing deductions and fulfil certain pre-conditions. the expenditure management in the Central Ministries/ The domestic companies opting to be taxed Departments through the interface with the Financial under any concessional tax regime will also Advisors and the administration of the Financial Rules/ not be required to pay Minimum Alternate Tax Regulations/Orders, pre-sanction appraisal of major (MAT). However, for companies which schemes/projects, handling bulk of the central budgetary continue to avail incentives or deduction, the resources transferred to State. existing rate of MAT has been reduced from 18.5% to 15%. The business allocated to the Department of Expenditure is carried out through its Personnel & (ii) Relief in Personal Income tax: Vide Finance Establishment Division, Public Finance-State and Public Act, 2019, 100% tax rebate has been provided Finance Central Divisions, Office of Chief Advisor Cost, to individuals having taxable income up to Rs. Office of Controller General of Accounts and Central 5 lakhs. Pension Accounting Office. The Department has under (iii) Incentives to National Pension System its administrative control the Arun Jaitley National Institute (NPS) subscribers: In order to enable the of Financial Management (AJNIFM), Faridabad, which pensioner to have more disposable funds, the is an autonomous body. limit of exemption has been increased to 60% of the total amount payable to the person at the time of closure or his opting out of the 3. Department of Revenue scheme. Further, section 80CCD of the Income-tax Act, 1961 has been amended to 1. The Department of Revenue exercises control in increase the limit from 10 to 14% of respect of revenue matters relating to Direct and Indirect contribution made by the Central Government Union taxes. The Department is also entrusted with the xiiiAnnual Report 2019-2020 to the account of its employee. In addition, (ix) Initiatives to promote housing: For any amount paid or deposited by a Central realisation of the goal of ‘Housing for All’ and Government employee as a contribution to his affordable housing, the provision of tax holiday Tier-II account of the new pension scheme has been extended up to 31.03.2020 for shall be eligible for deduction under section developers of affordable housing. Further, an 80C subject to the specified conditions. additional deduction of up to Rs. 1,50,000/- for interest paid on loans borrowed up to (iv) Faceless e-assessment: In order to remove 31.03.2020 for purchase of an affordable the existing human interface and personal house valued up to Rs. 45 lakh has been interaction prevailing in the assessment provided. procedure, a scheme of anonymized, jurisdiction-free and faceless assessment in (x) Boost to Automobile Industry: In order to electronic mode involving no human interface provide relief to tax payers purchasing new has been notified. vehicles for the purpose of business or profession, enhanced depreciation of 30 % (v) Pre-filling of return: In order to make tax and 45 % have been notified for motor cars compliance more convenient, pre-filled and motors buses/lorries. In addition to this, Income tax Returns (ITR) have been provided in order to promote electrical vehicles, to individual taxpayers. The ITR form now deduction in respect of interest on loan taken contains pre-filled details of salary income, for purchase of an electrical vehicle from any house property income, capital gains from financial institution up to a maximum of securities, bank interest, dividends and Rs1,50,000/- has been provided. various tax deductions. (vi) Interchangeability of PAN and Aadhaar - 3. During the Financial Year 2019-20, the Government To enable a person who does not have PAN has taken several steps, by way of policy-level initiatives but has Aadhaar, use Aadhaar in place of and more effective enforcement actions on the ground PAN, while entering into certain reportable to tackle the issue of black money. These steps include transactions, PAN will be allotted to such legislative and administrative measures, creation of more person on the basis of Aadhaar after obtaining advanced systems and processes with due focus on demographic data from UIDAI. capacity building and greater use of information (vii) Promoting Digital Payments : Vide the technology. The efforts made to combat the menace of Finance (No. 2) Act, 2019, section 269SU has black money are as follows: been introduced in the Act with effect from i. Search and seizure and survey actions: 01.11.2019 to provide that every person, During F.Y. 2019-20 (up to October, 2019), carrying on business whose total sales exceed search and seizure actions were carried out Rs 50 cr. in the year immediately preceding in over 750 groups. The actions in these cases the previous year, shall provide facility for led to seizure of assets worth over Rs. 810 accepting payment through the prescribed crore and an admission of undisclosed electronic modes, in addition to the facility for income of over Rs. 4,390 crore. Further, other electronic modes of payment, if any, during the same period, over 3,920 surveys being provided by such person. were conducted leading to detection of (viii) Simplification of compliance norms for undisclosed income of over Rs. 10,630 crore. Startups: Various steps have been ii. Prosecutions & compounding: Various undertaken by the Government to provide a measures have been taken by the Income- hassle-free tax environment to the startups. Tax Department in the recent past to CBDT has reiterated that the outstanding strengthen the prosecution mechanism with income-tax demand relating to additions made a view to identify the prosecutable cases at under section 56(2)(viib) of the Act (angel tax) the earliest and pursue the same with due would not be pursued and no communication seriousness. During F.Y. 2019-20 (up to in respect of outstanding demand would be October, 2019), 720 prosecution complaints made with the Start-up entity. Further, other have been filed, 760 cases have been income-tax demand of the Start-ups would not compounded and 28 persons have been be pursued unless the demand was confirmed convicted. by ITAT. CBDT has also constituted a Start- iii. Actions under The Black Money up Cell under the aegis of Member (IT&C), (Undisclosed Foreign Income and Assets) CBDT to redress grievances and to address and Imposition of Tax Act, 2015 (“the BM various tax related issues in the cases of Start- Act”): The BM Act has come into force w.e.f. ups. 01.07.2015 to specifically and more effectively xivIntroduction deal with the issue of black money stashed about Rs.1,565 crore. In Paradise paper away abroad. As an outcome of the actions cases, as on 31.10.2019, search & seizure taken by the Income-Tax Department under and/or survey has been conducted in 31 the BM Act, till 31/10/2019, undisclosed cases, notices under section 10 of the Black foreign assets and income valued at over Rs. Money Act have been issued in 40 cases; 12,500 crore (subject to fluctuations in criminal prosecution complaints have been currency conversion) have been detected. filed in 7 cases and undisclosed foreign During FY 2019-20 (till 31.10.2019), in 18 investments have been detected of approx. more cases, information has been sent to Rs.210 crore. Enforcement Directorate for action under 4. CBIC has put in place non-intrusive methods of PMLA, 2002. Further, as on 31.10.2019, 35 examination and checking by installing X-Ray Baggage prosecution complaints have been filed under Inspection Systems, Container Scanners and Pallet the BM Act during the year. Scanners to check smuggling by concealment besides iv. Actions under the Prohibition of Benami deploying marine vessels for patrolling. Indian Customs Property Transactions Act, 1988 (“the has participated in various global multilateral enforcement Benami Act”): The Benami Transactions operations from time to time organized by World Customs (Prohibition) Amendment Act, 2016 was Organization (WCO). WCO is an intergovernmental enacted to amend the Benami Transactions organization comprising customs administration of 180 (Prohibition) Act, 1988 with a view to, inter alia, countries comprising 98% of world trade. enable confiscation of benami property and prosecution of the benamidar(s), beneficial 5. The revenue contribution by way of excise duty/ owner(s) and/or abettor to such benami cesses of petroleum sector to central exchequer in 2018- transactions. During the F.Y. 2019-20 (up to 19 was Rs 2,31,000 crore. The central excise duty rates October, 2019), show cause notices for on petrol and diesel are calibrated from time to time taking provisional attachment of benami properties into account the crude prices and the exchange rate. The were issued in over 130 new cases and excise duty rates on petrol and diesel were reduced by provisional attachment has been made in 115 Rs 2 per litre in Oct 2017, and by Rs 1.5 per litre in Oct cases. The value of properties under 2018. In this year budget, the excise duty was raised by attachment is over Rs.2,240 crore. In more Rs 2 per litre as the prices of crude softened to about than 290 cases, references have been made USD 60/ bbl of crude as compared to a high of about to the Adjudicating Authority under the Act. USD 85/bbl in Oct 18. Exchange rate also softened during Further, in over 770 cases, the Adjudicating this period. Thus, increase in excise duty rate by Rs 2 a Authority has confirmed the orders of litre, while helped in generating annual revenue of about provisional attachment passed by the ITD. Rs 28000 crore, did not cause significant hardship to consumer in view of the lowering of price otherwise on v. Investigation in foreign assets cases: In account of softening of cost of crude. Also, it is a HSBC bank accounts cases, undisclosed conscious policy of the Government to reduce deposits made in unreported foreign bank dependence on fossil fuels (which in any case are largely accounts of about Rs.8,400 crore have been imported), incentivize new renewables like solar, wind brought to tax. Further, concealment penalty and also to incentivize use of EVs. Therefore, there is of about Rs.1,200 crore has been levied in considerable justification for imposing higher taxes on 172 cases. So far, 204 prosecution complaints fossil fuels. in HSBC cases have been filed in 89 cases. In International Consortium of 6. ICEDASH (Indian Customs EDI Dashboard) is an Investigative Journalists (ICIJ) cases, more extremely handy, user friendly, informative Dashboard than Rs.11,010 crore of credits in the which is automatically populated to indicate the Customs undisclosed foreign accounts have been station-wise performance in regard to time taken for detected so far and 99 prosecution complaints clearance of imports. This is mapped against the target in 58 such cases have been filed before time to enable the field formations to monitor on real time criminal courts. Investigation in the Panama basis whether or not their performance is below par and Paper Leaks cases have led, as on take remedial steps, whenever needed. It also enables 31.10.2019, to conduct of search and seizure comparison across similarly placed Customs stations. action in 64 cases and survey action in 12 ICEDASH also shows the progress made in the last one cases. In 38 cases, criminal prosecution month for each Customs station. Thus, it is a powerful complaints have been sanctioned; notices tool for real time monitoring of import clearances. Further, under section 10 of the Black Money Act it uses the colour coding like Green for clearances where issued in 53 cases. Investigations so far have time is less than 36 hours, red for clearances taking more detected undisclosed foreign investments of than 72 hours and amber for time in between two xvAnnual Report 2019-2020 extremes. This tool has actually altered the behaviour of warehouse. For this, Manufacture and other Operations the officers as they are now aware that their performance in Warehouse Regulations 2019 and Circular 34/2019- is being monitored by higher authorities. Customs dated 1st October 2019 issued by CBIC provide clarity on process, taxability and documentation 7. e-SANCHIT : The Single Window Interface for requirements for units operating under Section 65 of the Facilitation of Trade (SWIFT) was initiated as part of the Act. The scheme is streamlined with clear and transparent “Ease of Doing Business” initiatives to facilitate Trading procedures, documentation and compliance Across Borders in India. The objective of the project is to requirements. The main features of the scheme are as allow importers and exporters a facility to lodge their below - clearance documents online at a single point without/ with (i) A single application cum approval form has minimal interface with regulatory authorities. One of the been prescribed for uniformity of practice and key initiatives to facilitate online clearance at a single certainty of outcomes. There shall also be a point, is the paperless processing application e-SANCHIT. single point of approval to set up and oversee E-SANCHIT is an online application that allows a trader the operation of such units, viz., the to submit all supporting documents for clearance of jurisdictional Commissioner of Customs. consignments electronically with digital signatures. By (ii) There shall be no geographical limitation on using eSANCHIT, a trader does not have to approach where such units can be set up. different regulatory agencies with hard copy of the (iii) The scheme would also enable efficient documents thereby making the entire process of capacity utilization, as there is no limit on consignment clearance faceless and paperless. After quantum of clearances that can be exported implementing a successful pilot in October, 2017, e- or cleared to the domestic market. SANCHIT was made mandatory on import side from 1st (iv) A single digital account has been prescribed April, 2018 at all the Customs EDI locations in the country. for ease of doing business and easy From 2019, measures were initiated wherein more compliance. number of PGAs (Participating Government Agencies) have also been brought on the e-sanchit platform. The This will play a critical role in promoting investments into department has even taken measures for automatic India and enhancing ease of doing business. registration of the PGAs in the system. Further, e-sanchit is now being revamped from December 2019 by way of 10. Evolution of GST- An instrument of economic introducing unique document codes in the customs development system which further enables more efficient customs  GST was rolled out with effect from 1st July, administration. With eSANCHIT facility the need for paper 2017 with a motto of “One Nation One market, documentation and consequent physical touch point for One Tax”. It consolidated a myriad and every stage of clearance has drastically come down. It complex rate structure with multitude of rates, has resulted in substantial reduction in time and cost. varying with states, local bodies etc., and with 8. Turant Customs : In line with the drive to improve huge cascading into one tax and a simplified India‘s standing in the Ease of Doing Business index, procedural regime. The scale of reform was the department has launched several new measures gigantic and the law and regime evolved in under the umbrella of Turant Customs, for which a circular an inclusive way. There has been extensive was issued in March 2019. Reforms have been made in participation of all stake holders. customs procedures wherein goods can be given faster  One common tax across the length and clearances by new initiatives such as automated queuing breadth of the country, while ensured that all of bills of entry before customs officers which now does inter-state trade barrier had gone, logistic away with the need for the trade to come forward became efficient with turn -around time physically for clearance of goods. Other initiatives such transport decreasing significantly, cascading as virtual assessment under the umbrella of Turant of taxes gone and a transparent, neutral, customs are also being introduced on pilot basis. efficient tax regime coming into existence, it 9. A streamlined scheme has been launched for also evoked huge response as the entire promoting ‘Make in India’ by allowing manufacturing nation looked at the taxes exactly the same in Customs Bonded Warehouse with single point way. Council responded swiftly, glitches have approval, digital account keeping and simplified been addressed quickly and necessary compliance requirements. changes were made timely. Procedural glitches were addressed at fast pace. The objective is to give an impetus to the ‘Make in India’ policy of the government through a scheme under  While continuous improvements are being Section 65 of the Customs Act, 1962(hereinafter referred made in an extremely responsive way in GST, to as ‘the Act’). Section 65 of the Act enables conduct of never the less it has been a defining and manufacture and other operations in a Customs-bonded unprecedented tax reform in India. xviIntroduction  In certain opinions it has been argued that the September, 2001. From 27th May, 2004, the Department manner of implementation of GST may have of Disinvestment is one of the Departments under the had certain adverse impact. However, these Ministry of Finance. views /opinions were not based on any sound The Department of Disinvestment has been re- fundamental study, ignoring the benefits named as Department of Investment and Public Asset accrued to trade and consumer on account Management (DIPAM) with effect from 14th April, 2016. of single tax across country, uniform automated business processes, removal of check post at boarders, logistic becoming 5. Department of Financial Services efficient, lowering of effective tax rates, tax incidence going down almost on all supplies. As per Allocation of Business Rules (AOBR), Creating a single common tax with uniform law and procedure in such a diverse country functions of Department of Financial Services (DFS) inter- in itself is such a gigantic reform. alia include matters pertaining to Banking, Insurance,  It has also been argued that the present rate Pension Reforms, and Financial Institutions. The Department of Financial Services (DFS) oversees several slabs are too many and that GST compliance needs a substantial simplification. The GST key programs / initiatives and reforms of the Government rate structure has evolved with extensive concerning the Banking Sector, the Insurance Sector and deliberations in GST Council and the four-rate the Pension Sector in India. The key flagship schemes structure is a huge simplification over the being currently run / managed by the Department include multitude of taxes and cess with multiple state the Pradhan Mantri Jan Dhan Yojana (PMJDY), Stand wise rates. GST rate structure has been Up India, Pradhan Mantri Suraksha Bima Yojana further simplified after roll out of GST. 28% (PMSBY), Pradhan Mantri Jeevan Jyoti Bima Yojana slab has been pruned by 90% and now only a (PMJJBY), Pradhan Mantri Mudra Yojana (PMMY), Atal handful items, most of which being luxury or Pension Yojana (APY) and the Pradhan Mantri Vaya sin goods remain in 28% slab. Vandana Yojana (PMVVY). 11. Evolution of GST rate structure The Department provides policy support to the  The GST rates on goods and services were Public Sector Banks (PSBs), Public Sector Insurance initially fitted into 4 slabs i.e 5%, 12%, 18% Companies (PSICs) and Financial Institutions (FIs) like and 28%, largely based on the Pre-GST NABARD, SIDBI, NHB, IFCI, EXIM, IIFCL etc. through indirect tax incidence both of Centre and policy guidelines, legislative and other administrative States, including the embedded taxes. The measures. It also monitors the performance of these GST rates were fixed based on the pre-GST PSBs, PSICs and FIs and undertakes policy formulation tax incidence. However, 28% rate slab has since then been pruned considerably (229 in respect of the Banking and Insurance Sector in India. commodities to 29 commodities now). 28% DFS also deals with legislative and other issues pertaining list now has tobacco products, automobile, to the concerned regulatory bodies such as the Insurance auto parts, cement and certain white goods Regulatory and Development Authority of India (IRDAI), like air conditioners, large TVs. the Pension Fund Regulatory and Development Authority  The GST Council has reviewed the rates in a (PFRDA) and certain legislative matters related to number of its meetings and has suggested Reserve Bank of India (RBI). revision in the GST rates on around 400 The latest information on number of banks and commodities and 77 categories of services, insurance companies is as follows: since July 2017. These rate rationalizations have reduced the cost to the consumers thus increasing the purchasing capacity/ Scheduled Commercial Banks (as on 30.09.2019) consumption. Public Sector Banks 18 Private Sector Banks 22 4. Department of Investment and Small Finance Banks 10 Public Asset Management Regional Rural Banks 45 Foreign Banks 46 The Department of Disinvestment was set up as a TOTAL 141 separate Department on 10th December, 1999 and was later renamed as Ministry of Disinvestment from 6th Source : RBI xviiAnnual Report 2019-2020 Details of Insurance Companies are as follows: In addition to the aforesaid policy issues, the Department is also responsible for certain functional As on 30.09.2019 issues concerning the Regulatory Bodies [RBI, IRDAI and Private Public Total No. of PFRDA], the PSBs, PSICs and Financial Institutions. Sector Sector Insurers Foremost among these functional issues is the (Public & Private) appointment of key functionaries of Governor / Deputy Life Insurers 23 1 24 Governor of Reserve Bank of India, Chairman / Members of IRDAI and PFRDA, Chairman / Managing Director and General insurers 21 4 25 Chief Executive Officers (MD & CEOs), Executive Specialized - 2 2 Directors (EDs), Chairman cum Managing Directors Institutions (CMDs) etc of public sector banks, insurance companies Stand-alone 7 - 7 and other financial institutions. Matters relating to Health Insurers international banking relations are also dealt with by the Reinsurers 11 1 12 (including Foreign Department. Reinsurers Branches/LIoyd’s India) TOTAL 62 8 70 xviiiChapter - I Department of Economic Affairs I Department of Economic Affairs 1. Economic Division 1.5 As part of its advisory functions, the Economic Division prepares analytical notes and background papers 1.1 The Economic Division tenders expert advice to on important policy issues and provides briefs for the Government on important issues of economic policy. meetings of the Consultative Committees and Working The Division monitors economic developments-domestic Groups set up by the Government. The officers of the Economic Division participate in consultations with various and external and advises on policy measures relating to missions from international institutions such as macro management including agriculture, industry and International Monetary Fund (IMF), the World Bank and infrastructure sectors of the economy. As part of its regular the World Trade Organisation (WTO) etc. The Division activities, the Economic Division brings out the Economic works in close cooperation with the Reserve Bank of India, Survey annually, which is laid before both the Houses of the NITI Ayog, the Central Statistical Organisation, the Parliament one day before the presentation of the Union Ministry of Commerce and Industry and the Economic and Statistical Wings of their Ministries. An international Budget. Seminar the 7th Delhi Economics Conclave-(2017) was 1.2 The Economic Survey provides a comprehensive organized on 22.07.2017 wherein researchers, policy overview of important developments in the economy. It makers, industry leaders, bankers and economists & also analyses recent economic trends and provides an academicians from India and abroad participated. in-depth appraisal of policies. Over the years, the 1.6 The work of the Economic Division is organized Economic Survey has acquired the status of an under the following units: authoritative source and a useful compendium of the  Macro annual performance of the Indian economy. Further, the  Public Finance Fiscal Responsibility and Budget Management (FRBM)  Agriculture and Food Management Act, 2003 requires the Ministry of Finance to review every  Industry and Infrastructure quarter the trends in Receipts and Expenditure in relation  Social Infrastructure, Employment and to the Budget and lay it before both the Houses of Human Development Parliament. In addition, at the end of first quarter and  Trade and Global Economic Development third quarter a Macro-Economic backdrop statement is  External Debt Monitoring and Balance of prepared and provided to the Budget Division for Payments incorporating in the review of quarterly receipts and  Services Sector expenditure.  Prices 1.3 The Economic Division also brings out the  Money and Banking Economic and the Functional Classification of the Central  Climate change finance Government’s Budget, which is circulated among Hon’ble Members of Parliament. The publication presents an  Coordination estimate of the savings of the Central Government and  IES Cadre Unit its departmental undertakings, gross capital formation and Macro Unit the magnitude of the development and consumption 1.7 The Macro unit, Economic Division is primarily expenditure broken up under broad functional heads. responsible for : (a) Monitoring macroeconomic parameters, such as, GDP, savings and investment and 1.4 The Division also brings out every month an analysis of macroeconomic trends; (b) Preparation of abstract entitled “Monthly Economic Report”, which gives Economic Survey (c) Preparation of Monthly Economic the latest available data on the key sectors of the Report; (d) Country coordination for Special Data economy. The Division prepares, from time to time briefs Dissemination Standard (SDDS); (e) Updating of the on the performance of the infrastructure sector, agriculture National Summary Data Page of the economy for web- and industrial production, trends in tax collection, balance post in the Ministry of Finance’s website; (f) Annual updating of metadata in SDDS; (g) Preparation of State of payments and monetary situation. It also monitors the of Economy brief, giving an overview of the current price situation on a weekly basis. In addition, the Division economic situation; (h) Preparation of briefs, material/ undertakes short term forecasting of key economic speeches for G-20, World Bank, IMF and other meetings; variables. (i) Framing replies of parliament questions. 1Annual Report 2019-2020 1.8 Budget Related Work: (a) Preparation of Macro- Industry and Infrastructure Unit Economic Framework Statement for the Union Budget 1.11 Industry and Infrastructure Unit advises the every year; (b) Macroeconomic backdrop for the Government on policy issues relating to Industry at both statement on half yearly review of the trends in receipts macro and sectoral levels. The unit regularly monitors and expenditure in relation to the budget at the end of and reviews industrial growth and investment, first half and second half of financial year; (c) Projection developments in the industrial sector and investment / of GDP for giving to the Budget Division before the financing of public sector. The Unit is also responsible preparation of budget. for monitoring trends in production of core infrastructure Public Finance Unit industries. It undertakes analysis of developments in 1.9 Public finance unit is responsible for: (a) infrastructure sector, investment and financing and Economic and Functional Classification of Central renders advice on infrastructure sector policy issues. Government Budget; (b) Statistical Album on Public Social Infrastructure, Employment & Human Finance, including budgetary transactions of Centre, State and Union Territories; (c) Preparation of information for Development Government Finance Statistics (GFS) Yearbook to be sent 1.12 The unit is responsible for: (a) Providing policy to International Monetary Fund (IMF); (d) Monitoring of advice on issues related to social infrastructure, Central fiscal parameters, such as, fiscal deficit, revenue employment and human development; (b) Analysis of deficit, aggregate expenditure; (e) Policies relating to labour issues, employment trends, health, education and central plan outlays, resources and expenditures; (f) other topics concerning social sector; (c) Examining/ Review of Fiscal position and analysis of fiscal issues; Evaluating results of employment and unemployment (g) Analysis relating to tax measures, direct and indirect surveys; (d) Examine/ Appraise Cabinet Notes/CoS/EFC/ tax proposals/ reforms; (h) Providing inputs towards SFC/PIB/CEE notes on labour and skill development Macro-Economic Framework Statement for the Union including various issues related to health, education, Budget every year. social empowerment, gender issues, rural development Agriculture and Food Management Unit etc. those received from the other Divisions in DEA; (e) 1.10 Agriculture and Food Management unit is Participation/membership of Standing Committee on responsible for: (a) Providing policy advice on issues and Labour Force Statistics; (f) Preparation of chapter on matters related to Agriculture and Food Management; ‘Social Infrastructure, Employment and Human (b) Examining/ Appraising Cabinet/ CCEA/ CoS/ EFC and Development’ for Annual Economic Survey (Vol.-I & II); other policy notes on fixing Minimum Support Prices (g) Pre-budget meetings with labour unions, civil society (MSPs) for major crops/crop insurance policy/ other organizations, health, welfare and women’s organizations/ agricultural policies including those related to change duty experts etc.; (h) Handling VIP/Parliament/Other structure; (c) Pre-Budget meetings with stakeholders in references related to the themes in social sector; (i) farm sector; (d) Briefs for and appearances before the Occasional review/reports on specific issues as and when Parliamentary Standing Committee on Agriculture related required; (j) Organizing workshops/inter-departmental issues; (e) Participation/Membership of Committees on related subjects like Private Entrepreneurs Guarantee meetings on specific themes (PEG) schemes of Food Corporation of India (FCI); (f) Trade and Global Economic Development Unit Analyzing production and area sown in Rabi and Kharif 1.13 The unit is responsible for the following: (a) crops; (g) Occasional review/ reports on specific issues Monitoring India’s merchandise trade and its share in as and when required like “Incentivizing Pulses world trade; (b) Analysis of commodity composition and Production Through Minimum Support Price (MSP) and direction of merchandise trade; (c) Examining India’s Related Policies”; (h) Periodical monitoring of progress of Area sown/ Monsoon/ Rainfall distribution using inputs bilateral trade with other Country (ies)/ Region(s); (d) of the Crop Weather Watch Group (CWWG); (i) Analytical Monitoring global economic developments; (e) Providing issues related to Public Distribution System (PDS), buffer policy advice with respect to matters relating to India’s stock norms and food security and MSP analysis like Merchandise Trade, in the backdrop of changing global proportion of sales below MSP in several markets during economic situations; (f) Providing comments on Cabinet/ the procurement season; (j) Analysis of issues related to CCEA/ EFC/ GoM/ Policy notes, relating to trade. (g) Allied sectors like dairy sector, fisheries, forestry and food Drafting and finalizing the portion relating to Trade and processing; (k) Preparation of the Chapter on ‘Agriculture Global Economic Development in External Sector and Food Management’ for Annual Economic Survey Chapter for Economic Survey. (h) Providing inputs w.r.t. (Volume 1 and Volume 2); (l) Handling VIP/ Parliament/ trade for Monthly Cabinet Report and Monthly Economic Other references and Private Member Bills related to Report. agriculture and food management; (m) Offer comments External Debt Management Unit (EDMU) & Balance on Studies/ MoUs/ International Agreements/ Income tax exemptions to International Organizations dealing with of Payments (BoP) agriculture & food management. 1.14 The Unit brings out an Annual Status Report of 2Department of Economic Affairs I India’s External Debt and Quarterly Report on India’s Climate Change Finance Unit External Debt for the two Quarters ending September 1.18 (a) The Climate Change Finance Unit serves as and December based on information provided by the nodal point on all financing matters related to climate Securities Exchange Board of India (SEBI), Reserve Bank change in the Ministry of Finance. (b) It helps shape the of India (RBI), Office of Controller of Aid, Accounts and firming up of India’s stand on financing issues related to Audit (CAAA) and Ministry of Defence. The Unit is also climate change and sustainable development in fora like responsible for collection, compilation and supply of United Nations Framework Convention on Climate India’s external debt data to World Bank on a quarterly Change (UNFCCC), G20. (c) It is vested with the task of basis for their centralized database system called preparing submissions on behalf of India as well as ‘Quarterly External Debt Statistics (QEDS)’ in compliance assessing submissions of other member countries in with IMF’s Special Data Dissemination Standards (SDDS) these fora. (d) The unit frames inputs on an on-going requirements and supply of inputs to CAA&A for onward basis on issues related to National Action Plan on Climate submission to the World Bank for ‘Global Development Change and emerging issues like green growth, Finance’ report. The Unit is responsible for monitoring innovative and affordable financing options for sustainable developments in India’s BoP, foreign exchange reserves development by preparing positions papers and analysis and handling matters pertaining to Short-term Balance of technical issues and policy options. (e) The unit is also responsible for preparing and finalizing chapter on climate of Payments (STBoP) Monitoring Group. Other change and sustainable development for the Economic responsibilities include drafting chapter on the External Survey. Sector for Economic Survey with inputs from EDMU and Trade Unit, providing comments on Cabinet and GoM Coordination Unit notes. 1.19 The unit is responsible for: (a) Internal Services Sector Unit administration and coordination in Economic Division; (b) Organizing Finance Minister’s Pre-Budget meetings with 1.15 The unit is responsible for: (a) Preparing the various stake holders; (c) Nomination of officers of Chapter on Services Sector for the Economic Survey; Economic Division for Foreign Deputation to OECD (b) Monitoring the performance of services trade; (c) meetings and other meetings and workshops; (d) Parliament Matters; (e) Comments on Notes related to Coordination with all Units of Economic Division for trade in services, WTO negotiations in Services, etc. publishing Economic Survey and laying them before Prices Unit Parliament; (e) Preparation of Annual Report of 1.16 The unit is responsible for: (a) Inflation monitoring Department of Economic Affairs (portion relating to Economic Division); (f) Organizing Delhi Economic based on the following Price Indices: (i) Wholesale Price Conclave, the annual International Conference on Index (WPI), base: 2011-12=100; (ii) Consumer Price thematic issues; (g) Coordination of Parliament work, RTI Index (CPI)- Rural, Urban, Combined, base: 2012=100; matters, VIP references, public grievances etc; (h) All (iii) Consumer Price Index for Industrial workers (CPI- administrative matters of Economic Division, for example IW), base: 2001=100; (iv) Consumer Price Index for transfer/posting of Officers of Economic Division within Agricultural Labourers (CPI-AL), based on 1986-87=100; Economic Division. (v) Consumer Price Index for Rural Labourers (CPI-RL), based on 1986-87=100. (b) Price/inflation related issues: IES Cadre unit (i) issues related to domestic and international price 1.20 The unit is responsible for: (a) Career behavior; (ii) issues related to seasonal price behavior; Management and Placement of Officers; (b) Direct (iii) issues related to Price Policy and inflation Recruitment into IES through Examination conducted by management; (iv) Preparation of Monthly Inflation UPSC; (c) Examination Rules & Syllabus for IES Reports; (v) Drafting chapter on prices for pre-budget Examination; (d) Promotion of Feeder Post Holder to Economic Survey. (c) Committees/ Working groups: (i) Junior Time Scale (Entry level) of IES; (e) IES (service) Participation in the various committees on price indices Rules and policy Matters pertaining to IES; (f) Promotions/ (CPI, WPI and RESIDEX); (ii) Participation in Macro non-functional Up-gradations to various levels by financial monitoring group constituted under DEA; (iii) conduction/ arranging meetings of the Departmental Participation in the meeting of Committee of Secretaries Promotion Committee; (g) Cadre Clearance for on Review of prices of essential commodities. Deputation, study leave and other kinds of leave; (h) Empanelment of officers at various levels; (i) Seniority Money and Banking Unit List/ Civil list of IES Officers; (j) Seniority of Officers in 1.17 The unit is responsible for: (a) Monitoring of the Feeder Grade and Roster Management of Induction money market trends and developments in monetary Quota; (k) Training Programmes for In-Services officers policy; (b) Monitoring of banking policy and aggregate and Probationers based on training needs assessment trends in credit flows; (c) Fortnightly analysis of the for capacity building of officers; (l) Cadre Review and monetary parameters; (d) Monitoring yields on G-Sec/ restructuring of IES; (m) Maintenance of APARs of IES Treasury Bills; (e) Monitoring behavior of Call Money officers; (n) Budget of IES Cadre, Annual Accounts etc.; Rates and LAF operations; (f) Periodical updates on (o) Court Cases, Vigilance Cases and Disciplinary monetary policy and Quarterly Reviews of RBI. Matters; (p) Maintenance of IES website. 3Annual Report 2019-2020 2. Budget Division 2.2.2 During Financial year 2019-20, the First Batch of Supplementary Demands for Grants 2019-20 and 2.1 RESPONSIBILITIES connected Appropriation Bill 2019 was presented and 2.1.1 Budget Division is responsible for the preparation passed by the Parliament in December, 2019. The of and submission to the Parliament, the Annual Budget Second Batch of Supplementary Demands for Grants as well as Supplementary and Excess Demands for 2019-20 is likely to be laid in the Parliament in the month Grants of the Central Government and of States under of March 2020. President’s Rule. The Division also deals with issues 2.3 STATES SECTION: relating to Public Debt, Market Loans of the Central Government and State Government’s borrowing and 2.3.1 States Section is assigned the work relating to lending, guarantees given by the Government of India the following: and the administration of Contingency Fund of India.  Release of States’ share of Central Taxes and Processing of proposals from other Ministries/ duties to State Governments as per approved Departments for re-appropriation of savings in a Grant recommendations of the Finance Commission. where prior approval of the Ministry of Finance is required is also a part of the work handled by Budget Division.  Work relating to the Constitution of the Finance The Division also handles the issues pertaining to National Commission and processing of its reports. Savings Institute (NSI), Small Savings Schemes and  Matters relating to financial provisions of various National Defence Fund. The work relating to Treasurer, States’ Re-organisation Acts Monitoring and Charitable Endowment is also handled in the Budget review of repayment of Central loans and Division. payment of interest by State Governments. 2.1.2 Budget Division is assigned the matters relating  Processing and presentation of Budget and to Duties, Powers and Conditions of Service of the Supplementary Demands for Grants to Comptroller and Auditor General of India and submission Parliament in respect of States/Uts with of the Reports of the Comptroller and Auditor General of Legislature under President’s Rule. India relating to the accounts of the Union to the President 2.3.2 During the period, Budget Division has examined for being laid before Parliament. Entrustment/re- the recommendations made by the Fifteenth Finance entrustment of audit of various autonomous bodies/ organisations to the C&AG of India is also dealt by this Commission, seeking approval of the Cabinet to Division. implement major recommendations relating to tax devolution and Local Body Grants to States to be released 2.1.3 The Budget Division is responsible for to States during the financial year 2020-21. The first administration of “Fiscal Responsibility and Budget Report has been laid in both Houses of the Parliament Management Act, 2003” which was brought into force on 1.2.2020 along with an Explanatory Memorandum as w.e.f. 5th July, 2004. The Rules made under the Act were to the Action Taken Note on the recommendations made also made effective from that date. Statements of Fiscal by the Fifteenth Finance Commission. Policy, Half yearly Reviews including Mid-term Review and disclosure statements were presented in Parliament 2.4 PLANNING AND ALLOCATION SECTION: in accordance with the requirements of the FRBM Act. 2.4.1 The Planning & Allocation Section is responsible 2.1.4 Budget Division also oversees/facilitates the for finalization of Ministry/Department wise Gross implementation of ‘Gender Budgeting’ in various Budgetary Allocation, finalisation of estimates of Extra- Ministries/Department. budgetary Resources(EBRs) and their monitoring, 2.1.5 The work relating to form of Accounts kept under reporting, etc. Article 150 of the Constitution of India is also handled in 2.4.2 The details of EBRs raised are provided in this Division. Advice on the classification of Government Statement 27 of Expenditure Profile of Union Budget receipts and expenditure and on the accounting (2020-21). procedure drawn up for implementation of new schemes 2.5 NATIONAL SAVINGS SECTION: of the Government is also rendered by the Division. 2.5.1 Small Savings Schemes: 2.2 SUPPLEMENTARY DEMANDS SECTION: Following Small Savings Schemes are currently 2.2.1 Supplementary Demands Section is assigned administered by Budget Division in Department of with coordination and presentation of Supplementary Economic Affairs: Demands for Grants, Demands for Excess Grants and the connected Appropriation Bills and Parliamentary work.  Post Office Savings Account Other activities of the Section relate to administration of  National Savings Time Deposits ( 1,2,3 & 5 years) the Contingency Fund of India Act. This Section is also assigned the work of overall policy related to Central  National Savings Recurring Deposits Government Guarantees.  National Savings Monthly Income Scheme 4Department of Economic Affairs I  Senior Citizens Savings Scheme Special Securities of State Governments and U.T.s (with legislature), in addition to the special securities of the  National Savings Certificate ( VIII-Issue) Central Government. However, based on the  Public Provident Fund recommendation of the Fourteenth Finance Commission,  Kisan Vikas Patra it has been decided to advance NSSF loans only to the willing States w.e.f. 01.04.2016. Accordingly, only four  Sukanya Samriddhi Account. States, namely, Arunachal Pradesh, Delhi, Kerala and 2.5.2. Small Savings Collections: Madhya Pradesh have opted for the NSSF loan. Besides, The gross deposits under various Small Savings it has been decided to invest NSSF corpus in various Schemes during 2019-20 are estimated (RE) at Rs. Public Agencies (National Highways Authority of India, 828519.55 crore as against the deposit of Rs. 680021.32 Food Corporation of India, Air India etc.). During the crore during 2018-19. An amount of Rs. 16300 crore (RE) current financial year, an amount of Rs. 144517.86 crore is estimated to be transferred, as share of net small is estimated to be extended in these agencies. savings collections and amount received on redemption 2.5.4. Interest Rates on Small Savings Instruments of securities to the states of Arunachal Pradesh, Kerala, Madhya Pradesh and UT of Delhi during the current fiscal, Interest rates on Small Saving Schemes are as against the sum of Rs. 12193.06 crore transferred to decided/notified by Government every Quarter of the these States and UTs (with Legislature) during 2018-19. Financial Year. 2.5.3. National Small Savings Fund: The rate of interest on Small Savings Schemes is decided in view of the recommendations of Shyamala In order to account for all the monetary Gopinath Committee. The committee has recommended transactions under Small Savings Schemes of the Central to align the rate of interest on Small Savings Schemes Government under one umbrella, the “National Small with the G-sec rates of similar maturity. Savings Fund” (NSSF) was set up in the Public Account of India w.e.f. 1st April, 1999. The net accretions under The rates of interest on various Small Saving the Small Savings Schemes were being invested in the Schemes for the FY 2019-20 is given below: Rate of interest in FY 2019-20 (in %) Instrument Quarter I Quarter II Quarter III Quarter IV Savings Deposit 4.0 4.0 4.0 4.0 1 Year Time Deposit 7.0 6.9 6.9 6.9 2 Year Time Deposit 7.0 6.9 6.9 6.9 3 Year Time Deposit 7.0 6.9 6.9 6.9 5 Year Time Deposit 7.8 7.7 7.7 7.7 5 Year Recurring Deposit 7.3 7.2 7.2 7.2 5 Year SCSS 8.7 8.6 8.6 8.6 5 Year MIS 7.7 7.6 7.6 7.6 5 Year NSC 8.0 7.9 7.9 7.9 PPF 8.0 7.9 7.9 7.9 Sukanya Samriddhi Account 8.5 8.4 8.4 8.4 Kisan Vikas Patra 7.7 ( will mature 7.6 ( will mature 7.6 ( will mature 7.6 ( will mature in 112 months) in 113 months) in 113 months) in 113 months) 2.6 WAYS AND MEANS SECTION 2.6.1.3 The weighted average yield and maturity of 2.6.1 Government Borrowings dated securities issued during 2019-20 (April 2019 to January 2020) were 6.84% and 16.15 year respectively, 2.6.1.1.During the year, Government continued with the as compared to 7.84% and 14.92 years in the policy of announcement of half yearly indicative market corresponding period of the financial year 2018-19. The borrowing calendar based on its core borrowing final position of issuance of Government securities will requirements. only be known at the year-end as the issuance/repayment, 2.6.1.2 The Central Government’s normal borrowing buyback, switching and market making are in progress. through issue of dated securities for financing the fiscal 2.6.1.4 Detailed analysis of debt and liabilities of the deficit was budgeted in BE 2019-20 at ` 7,10,000 crore Government is brought out in the annual status papers. (Gross) and ` 4,23,122 crore (net). In the financial year The last updated ‘Status Paper on Government Debt’ for 2018-19, an aggregated amount of ` 5,71,000 crore was the year 2017-18 was released in December 2018, which mobilised through issuance of dated Securities as is available on http://dea.gov.in/documents-reports. Government borrowing. 5Annual Report 2019-2020 2.6.2 Cash Management c) Asset Register 2.6.2.1 With the objective to improve the Cash 3) Half yearly Statements on Review of the Management System in the Central Government, a trends in receipts and expenditure in relation modified cash management system, including exchequer to the budget at the end of- control based expenditure management system was a) Second Half of the financial year 2018-19 introduced in respect of 15 Demands for Grants in Central Government w.e.f. April 1, 2006 vide this Ministry’s O.M. b) First Half of the financial year 2019-20 No.21(1)-PD/2005 dated January 10, 2006. The system 2.7.3 Fiscal indicators in FY 2018-19 and targets for was later extended to 23 & 46 Demands for Grants w.e.f. RE 2019-20 and BE 2020-21 are as below: April 1, 2007 and April 1, 2012. It has now been made (% of GDP) applicable to all the Demands for Grants of the Union Government vide this Ministry’s O.M. No.21(1)-B(PD)/ Fiscal Indicator/ 2018-19 2019-20 2020-21 2014 dated July 22, 2015 and F.No. 4(10)-W&M/2016 Year (RE) (BE) dated August 4, 2016 and F.No.15(39)-B( R)/2016 dated August 22, 2017. According to the revised guidelines on Fiscal Deficit 3.4 3.8 3.5 the cash system vide Budget Division’s OM No.12(15)- Central Government B(W&M)/2019 dated 27.12.2019, all the Demand debt* 48.8 50.3 50.1 controlling authorities are required to prepare and send their Monthly Expenditure Plans (MEP) and Quarterly Note: GDP for the year 2018-19 is 189.71 Lakh crore at Expenditure Allocations (QEA) to Cash Management Cell current prices as shown in First Revised Estimates issued for better monitoring and compliance of the guidelines of by M/o Statistics & Programme Implementation on the Ministry of Finance regarding expenditure 31.01.2020. management. The guidelines also provide that the Central Government Debt” includes all liabilities of Central expenditure in the last quarter of the financial year may Government against the consolidated fund of India and not exceed 25 per cent of Budget Estimate and MEP for all public account liabilities, reduced by the cash balance the month of March may not exceed 10% of Budget available at the end of that date with external debt valued Estimate (BE). at current exchange rate. EBR (fully serviced Government 2.7 FISCAL RESPONSIBILITY AND BUDGET Bonds) have also been included. MANAGEMENT SECTION 2.8 PUBLIC DEPOSITS SECTION 2.7.1 Administration of Fiscal Responsibility and 2.8.1 Budget Division is also responsible for fixation Budget Management Act (FRBM), 2003 and the Rules of rate of interest on the following: framed there under is the prime function of the FRBM Section. The FRBM Act provide for the responsibility of a) House Building Advance (HBA). the Central Government to ensure inter-generational b) Employees Provident Fund (EPF). equity in fiscal management and long-term macro- c) General Provident Fund (GPF) and other economic stability by removing fiscal impediments in the similar Funds. effective conduct of monetary policy and prudential debt management consistent with fiscal sustainability through d) Special Deposit Scheme (SDS). limits on the Central Government borrowings, debt and e) Seamen’s Provident Fund (SPF). deficits, greater transparency in fiscal operations of the f) Coal Mines Provident Fund (CMPF). Central Government and conducting fiscal policy in a medium-term framework and for matters connected 2.8.2 Apart from the above, the responsibility of therewith or incidental thereto. compilation, monitoring and review of Non Tax Revenue Receipts also rests with Budget Division. 2.7.2 During the period from April 1, 2019 to December 31, 2019, in compliance with the relevant provisions of 2.9 REPORT AND COORDINATION SECTION the FRBM Act and Rules framed thereunder the following 2.9.1 During the above period, Budget Division also documents were prepared and laid before both Houses coordinated the Pre-Budget Meetings for finalization of of Parliament: Revised Estimates 2019-2020 and Budget Estimates 1) Statements of fiscal policy presented with 2020-2021. Work relating to security and other Regular Budget 2019-2020. arrangements in connection with presentation of Union a) Medium-Term Fiscal Policy cum Fiscal Policy Budget in the Parliament is also a part of the Strategy Statement responsibilities handled by the Division. b) Macro-Economic Framework Statement 2.9.2 From 1st April, 2019 to 31st January, 2020, 10 Reports of the C&AG of India were laid before the 2) Disclosure statements: Parliament and 40 proposals of entrustment/re- a) Tax Revenues raised but not realised entrustment of audit of various bodies to the C&AG of b) Arrears of Non-Tax Revenues India were dealt by this Division. 6Department of Economic Affairs I 2.10 PUBLIC DEBT MANAGEMENT CELL strategies of central government debt, etc. These publications include an annual Government Debt Status 2.10.1 As a first step towards the establishment of Paper (since 2010), Debt Management Strategy autonomous Debt Management Office, a Middle Office document (2015) and Handbook of Statistics on Central (MO) was set up in the DEA, MoF in September 2008. Government Debt (since 2013). Government has This was required to build skills and develop expertise in consolidated all these publications into this single report debt management functions which is a time consuming to bring complete Government Debt and its Management process. related information at one place. ‘Status Paper on 2.10.2 Consequent upon the announcement in Lok Government Debt’ for year 2017-18 was released last on Sabha in April 2015 by FM, consultations were held with January 18th, 2019. The work on “Status Paper on RBI and other stakeholders, to discuss way ahead Government Debt” for year 2018-19 is under progress. towards setting up Public Debt Management Agency This report covers various facets of public debt including (PDMA). It was decided to initially set up a Public Debt overall debt position of the country, assessment on Management Cell (PDMC) as an interim arrangement aspects of debt sustainability, debt management strategy before setting up of an independent and statutory PDMA covering various risks, etc. This publication now brings in due course. The interim arrangement will allow all components of public debt under the Debt separation of debt management functions from RBI to Management Strategy, thus widening its scope. PDMA in a gradual and seamless manner, without 2.11 BUDGET PRESS causing market disruptions. It was decided that the work 2.11.1 Budget Press is a integral part of Budget Division for moving towards PDMA would be taken up in a phased and is responsible for printing of all Budget documents manner. relating to the Union Budget including Detailed Demand 2.10.3 Considering the extant legal provision, only for Grants of Ministry of Finance and Supplementary advisory functions were assigned to PDMC to avoid any Demands for Grants. During the year 2019-2020 the conflict with the statutory functions of RBI. It was also budget Press successfully executed and printed two agreed that the operations concerning front office, Union Budget Documents in July, 2019 and January, 2020 comprising of electronic auction system and back office, which includes total 24 documents in Hind, English and comprising of depository and registry services would bilingual as well as multicolour Budget at a Glance. continue to be housed with RBI even with an independent During 01.04.2019 to 31.01.2020, 145 documents were PDMA coming into being since RBI has developed adequate infrastructure for the same and the arrangement printed in all with as many copies required. Apart from is working quite smoothly. Duplicating the set-up would Union Budget, the Budget Press printed Annual Report create avoidable expenditure. Infrastructure of Public 2018-2019 (Hindi & English), First Batch of Debt Management, i.e. NDS and NDS-OM for primary Supplementary Demands for Grants for the year 2019- and secondary market operations and depository of G- 2020, Detailed Demand for Grants for the year 2019-2020 Secs will continue with RBI under this arrangement. and 2020-2021, Action Taken Report, Cabinet Note (Hindi Accordingly, a Public Debt Management Cell (PDMC) was & English) and Discussion Paper. The Second and Final set up in DEA on October 4, 2016. Batch of Supplementary Demands for Grants for the year 2.10.4 Formation of PDMC was first step towards 2019-2020 and Annual report 2019-2020 were printed consolidation of all components of public debt under one during the Month of February-March, 2020. agency. In addition to carrying out various advisory 2.12 HINDI BRANCH functions assigned to it under the expanded mandate compared to that of MO, PDMC has been working 2.12.1 All Budget documents are presented to the towards formation of statutory PDMA and initiated many Parliament in Hindi and English. Besides Budget necessary steps in this regard, namely, building an documents, Hindi translation Branch has also prepared independent debt database, increased role in planning Hindi versions of Supplementary Demands, Economic the borrowing of Govt., increased interaction with various Classification Report, Reports on Public Statistics and market participants etc. It has also endeavoured to build Status Report of External Debt, FRBM Quarterly Reports expertise in the sphere of debt management, in order to which were laid before the Parliament. ensure smooth transition to PDMA. Also, IDMS 2.12.2 The translation of other Official Documents as (Integrated Debt Management System), which is a three- envisaged in the Official Languages Act, 1963 and Rules staged project for development of a centralized database of public debt for PDMC, is hitherto in its development made there under was also under taken by the Hindi stage. Branch during the year under report. These include agreements with Foreign Governments and International 2.10.5 Towards ensuring the enhanced transparency in Agencies, Cabinet Notes, Parliament Questions/ public debt management operations, the Government of Assurances, Notifications, Standing Committee Papers, India has been publishing a number of documents detailing overall debt position of the country, consolidated Action Taken Reports, Monthly Summary for the Cabinet, debt data relating to public debt, debt management Official letters and External Funding Report. 7Annual Report 2019-2020 3. Financial Market Division 3.1. Market Performance 2. In spite of a weak global and domestic A. Global Economic Situation and Broad Trends macroeconomic environment, domestic equity markets in Indian Stock Market touched all-time high with Nifty 50 generating 12.02% return and Sensex 30 generating return of 14.37% during 1. As per the IMF’s World Economic Outlook the past calendar year (January 2019 - December 2019). (October 2019), the global economy is in a synchronized As on 31st December, 2019, Sensex and Nifty closed at slowdown, with growth for 2019 downgraded again—to 41253.74 and 12168.45 as compared to 31st December, 3 per cent—its slowest pace since the global financial 2018 on which Sensex and Nifty closed at 36,068.33 and crisis. The Domestic GDP growth in India fell further to 10,862.55 respectively. Figure 1, shows the movement 4.5% in Q2 of current fiscal year and for 2019-20 the of Domestic Broad Market indices (Nifty 50 and Sensex National Statistical Office and RBI have estimated India’s 30) in the last calendar year vis-à-vis the previous years. real growth of GDP at 5.0 per cent. Figure 1 3. A comparative analysis with other global developed percent. (Major US indices viz. Nasdaq Composite and markets indicates that there were other stock markets Dow Jones clocked a return of around 37% and 23% that performed better than ours in the past year. Amongst respectively during the calendar year 2019) as shown in developed markets, US stock market (Nasdaq Composite) topped the charts with gains of over 30 Figure 2 below: Figure 2 8Department of Economic Affairs I Performance of Major Markets in the World Performance Performance in Calendar in FY 2018-19 Year 2019 (% Last Day of Last Day of Last Day of (% change as change for Index 2017-18 2018-19 the on 29.03.2019 the calendar (29.03.2018) (29.03.2019) calendar over last year 2019) year 2019 closing of FY (31.12.2019) 2017-18) Indian Markets SENSEX, India 32968.68* 38,672.91 41,253.74 17.3% 14.37 NIFTY, India 10113.7 11623.9 12,168.45 14.9% 12.02 Emerging Markets KOSPI, South 2197.67 7.67 2445.85 2140.67 Korea -12.5% TAIWAN TAIEX, 12009.02 23.99 10919.49 10641.04 Taiwan -2.6% Developed Markets 2460.87 3221.29 28.5 S&P 500, US 2834.40 15.2% DAX, Germany 12096.73 11526.04 13249.01 -4.7% 25.48 FTSE 100, UK 7056.61 7279.19 7542.44 3.2% 12.1 CAC-40, France 5167.3 5350.53 5980.32 3.5% 26.42 NIKKEI 225, 23656.62 18.2 21454.3 21205.81 Japan -1.2% HANG SENG, 28189.75 -3.5% 9.07 30093.38 29051.36 Hong Kong (*) Data given for 31.12.2019 C: Extent of Capital Raised 4. As on 31st December, 2019, the Market Capitalization i. Funds raised through Primary market (Equity Rights Issue and IPO) (Rs crore) of BSE and NSE stood at Rs. 1,55,53,829 and 1,54,31,967 crores respectively. And the number of listed Year Funds raised through Primary companies stood at 5344 and 1951 for BSE and NSE market (equity) respectively as on 30th November, 2019. (Rs. Crore) B. Major reasons and factors for uptrend in Indian 2014-15 21464 Stock Markets 2015-16 24055  Net FPI Inflows of around Rs. 1,35,995 crores during 2016-17 32520 the calendar year 2019 as against the net outflow of 2017-18 105187 Rs. 80,919 crores during the year 2018 2018-19 18235  Mutual Funds’ Assets under Management (AUM) 2019-20 (Nov. 19) 60887 witnessed an increase in AUM by 16.2% in the ii. Asset Under Management (AUM) by Mutual Funds calendar year 2019, reaching to Rs. 26,54,074 crores; (Rs. Crore) the contribution amount through SIP increased by around 11% on a year-on-year basis in the last Year AUM of MFs calendar year, reaching to around Rs. 98,612 crores 2014-15 945320.55  Various measures like corporate-tax rate cuts, 2015-16 1232823.53 withdrawal of surcharge on capital gains, improving 2016-17 1754619.08 ease of access for FPIs etc. 2017-18 2136035.75  Likely increase in India’s weightage in the MSCI 2018-19 2379584.13 Emerging Market Index from May 2020. 2019-20 (Nov. 19) 2704699.41 9Annual Report 2019-2020 iii. Fund raising in Corporate Bonds Market been significantly rising in the country, while the number The thriving Corporate Bond Market in the country is of issuances has not seen proportionate increase. This essential to ease the pressure on banks for financing reflects greater size of issuances coming in the market investment needs of the enterprises. As seen in the table primarily through private placement route accounting for below, the quantum of corporate bond issuances has over 95% of total issuances of corporate debt. Issue Type 2011-12 2012-13 2013-14 2014-15 No. Amount No. Amount No. Amount No. Amount (Rs Cr) (Rs Cr) (Rs Cr) (Rs Cr) Public Issue (Debt) 20 35610.71 20 16982 35 42,383 25 9,713 Pvt. Placement of 1953 261283 2489 361462 1924 276,054 2611 404,136 Corporate Bonds Total Debt 1973 296,893.71 2509 378,444 1959 318,437 2636 413,849 (Public &Pvt.) Issue Type 2015-16 2016-17 2017-18 2018-19 2019-20 (Till November 30, 2019) No. Amount No. Amount No. Amount No. Amount No. Amount (Rs Cr) (Rs Cr) (Rs Cr) (Rs Cr) (Rs Cr) Public Issue 20 33,812 16 29,547 7 4953 25 36, 679 23 8766.41 (Debt) Pvt. 2,975 458,073 3,377 640,716 2,706 599,147 2,358 610,318 1160 393808.00 Placement of Corporate Bonds Total Debt 2,995 491,885 3,393 670,263 2,713 604,100 2,379 646,997 1183 402574.41 (Public & Pvt.) D. Participation of Foreign Portfolio Investors (FPIs) in Securities Market FPI/FII Investment in India from 2012-13 to 2019-20 Financial Year Equity Debt Hybrid Total 2012-13 140033 28334 0 168367 2013-14 79709 -28060 0 51649 2014-15 111333 166127 0 277461 2015-16 -14172 -4004 0 -18176 2016-17 55703 -7292 0 48411 2017-18 25635 119036 11 144682 2018-19 -88 -42357 3515 -38930 2019-20** 52570 20672 5341 78583 Source: NSDL, ** Up to 2nd January 2020 10Department of Economic Affairs I The above data shows that FPI investments have been b) The actual inflows have increased for ECBs in positive in the FY 2019-20 to the tune of 78,583 crores the last two financial years. out of which FPI investments in equity stood at 52,570 c) The net inflows for ECBs were negative for the crores, FPI investments in debt stood at 20,672 crores FY 2016-17. However, the last two years have whereas investments in Hybrid stood at 5,341 crores. seen the net inflows turn positive and there has E. External Commercial Borrowing in India been a substantial increase in FY 2018-19. Liberalization and rationalization of External Commercial ii. The substantial increase in ECB agreements and Borrowings (ECB) Policy is a continuous exercise done flows in 2018-19 may be attributed to the following by Reserve Bank of India in consultation with DEA, MoF reasons: taking into consideration emerging financing needs of the Indian entities and the macroeconomic scenario. a) Various liberalization and streamlining measures Substantial revision of the ECB Policy framework was with regard to the ECB framework including done in November, 2015 and since then steady and calibrated expansion of the list of eligible progressive rounds of liberalization have been done in borrowers to all entities eligible to receive FDI, the policy framework with the latest round being in decreasing the minimum average maturity period January, 2019. for all ECBs to 3 years, relaxing the hedging ECB net inflows from FY 2016-17- till date is presented requirements for companies in the infrastructure as under to capture the trends and patterns: space, introduction of uniform all-in-cost ceiling and concise, uniform negative end-uses list have USD Million been undertaken 2016-17 2017-18 2018-19 2019-20 (up to the b) Opening an ECB facility for PSU OMCs to avail end of November, ECBs for working capital purposes with an overall 2019) limit of USD 10 billion. (-) 4,526 2,245 13,349 13,521 c) Permitting Resolution Applicants under the * Data for latest month are as per the scheduled drawdown Corporate Insolvency Resolution Process to avail (indicated by borrowers in Form-ECB) in absence of ECB-2 ECBs for repayment of domestic Rupee debt of Return. the target companies. i. The following broad trends emerge out the data: iii. The soft limit for outstanding stock of ECB is USD a) There has been an increase in the ECB 160 billion. As on end of August, 2019, the outstanding agreements in the last two financial years. stock of ECB is USD 150.8 billion. F. FDI Flows Year Net FDI Flows (in Net FDI Flows % growth over Rs. Crores) (in USD Million) previous year 2010-11 97,320 21,383 ( - ) 17 % 2011-12 165,146 35,121 (+) 64 % 2012-13 121,907 22,423 (-) 36 % 2013-14 147,518 24,299 (+) 8% 2014-15 181,682 29,737 (+) 22% 2015-16 262,322 40,001 (+) 35% 2016-17 291,696 43,478 (+) 9% 2017-18 288,889 44,857 (+) 3% 2018-19 309,867 44,366 (+) 1% 2019-20* 182,000 26,096 (+) 15% *upto September, 2019 Source: DPIIT - FDI Statistics 11Annual Report 2019-2020 G. International Financial Services Centre at GIFT City Sr Players Key business activities and Volume and No. of players No features 1 Stock exchanges • Dollar denominated • India INX and NSE IFSC products stock exchange • No transaction cost (other • Daily volume crossed than brokerage) USD 4 Bn+ • Trading - 22 hours 2 IFSC banking units • ECB Lending • 13 IBUs • Loan syndication and • Business - USD 24 Bn+ trade finance 3 Brokers • Broking services • 100+ Broking firms and 40 • Proprietary trading broking firms operational 4 Insurance players • Reinsurance business • 19+ players • Insurance intermediaries • Sum insured - USD 30 Bn+ 5 IT &ITeS • Legal & consultancy firm • 30+ entities • IT companies H. Co mmodity Derivatives Market non-agri commodities traded on commodity derivatives i. The commodities eligible for derivatives trading are platform in India are metals (Zinc, Aluminum, Copper, notified by DEA, MoF in consultation with SEBI. At Gold, Silver) and energy commodities (Crude Oil, Natural present, major agricultural commodities trading on Gas). The total turnover in commodity derivatives derivatives platform include Barley, Chana, Castor Seed, Coriander, Mustard, Soybean, Cotton, Guar Seed. Major segment is distributed across exchanges as follows: Total Turnover 2016-17 2017-18 2018-19 % variation of 2019-20 (as at the 2018-19 over end of Nov 2019) (in Rs. Crore) 2017-18 All-India 6,499,637 6,022,530 7,377,945 22.50 58,64,115 MCX 5,865,661 5,393,350 67,72,373 25.57 54,82,521.14 NCDEX 596,852 589,497 531,588 -9.82 3,15,155.52 NMCE* 28,442 34,591 0.00 NA ICEX NA 2,158 37,736 1649 25,130.28 Hapur Commodity 7,923 2,934 NA NA NA Exchange** Rajkot Commodity 759 NA NA NA NA Exchange Ltd** NSE NA NA 3,444 NA 5,880.73 BSE NA NA 32,804 NA 35,427.78 Source : SEBI Bulletin - Dec 2019 12Department of Economic Affairs I II. POLICY DEVELOPMENTS: 9. SEBI, vide its circular dated November 29, 2019, PRIMARY MARKET has prescribed norms for Debt ETFs/Index Funds to be adopted by all AMCs. Government (DEA) also 1. SEBI Board in consultation with Government has amended its Investment Guidelines for Non approved the framework to allow technology intensive Government Provident Funds, Superannuation entities which are listed or wish to be listed to issue shares Funds and Gratuity Funds vide notification dated with superior voting rights (DVR). Following it up, MCA 11.12.2019 to facilitate the participation of domestic has amended the relevant rules [Companies (Share Capital & Debentures) Rules] on 16 August 2019 by institutional investors in such funds. bringing in an enhancement in the previously existing cap 10. SEBI, in consultation with Government, has of 26% of the total post issue paid up equity share capital strengthened the prudential norms to be followed by to a revised cap of 74% of total voting power in respect Mutual Funds (MFs) in order to enhance the safeguards of shares with Differential Voting Rights of a company. available for investors and maintain the orderliness and 2. Initial Public Offering (IPO) process has been robustness of MFs. In order to deal with sudden streamlined with introduction of Unified Payment unplanned redemptions in liquid schemes, it had been Interface (UPI) as a payment mechanism in IPOs. Further, mandated for MFs to invest a minimum 20 % of AUM in the time period for listing after an initial public offering has been reduced to three days from the ‘liquid instruments’ like Cash, Government securities, etc. current T + six days. With this, issuers will have faster SECONDARY MARKET access to the capital raised and investors will have early 11. Suitable amendments to the Indian Stamp Act, liquidity. 1899 were made a part of the Finance Bill, 2019 and 3. SEBI Board on 20 November 2019 approved the were notified in the Gazette of India on 21.2.2019. The streamlining of process of issue of Rights in securities by listed entities while reducing the time period corresponding rules were framed and finalized during involved in the entire process from around 55 days to 31 2019. The relevant provisions of the Finance Act, 2019 days. amending the Indian Stamp Act, 1899 and the Indian 4. Pursuant to a budget announcement, vide Gazette Stamp (Collection of Stamp-Duty through Stock Notification dated August 16, 2019 namely Companies Exchanges, Clearing Corporations and Depositories) (Share Capital and Debentures) Amendment Rules, 2019, Rules, 2019 have been notified on 10th December, Government has removed Debenture Redemption 2019 and these will also come into force simultaneously Reserve (DRR) requirements for listed companies, after 30 days from the date of notification i.e. w.e.f. 9th NBFCs (Non-Banking Financial Company) and HFCs January, 2020. (Housing Finance Company) and also reduced DRR requirements for unlisted companies from the earlier 25% 12. In the Union Budget 2019-20, Government has to 10% as measures to reduce cost of issuances and proposed to initiate steps towards creating a Social Stock deepen the bond market. Exchange, under the regulatory ambit of Securities and 5. Pursuant to the Budget Speech of 2019, AA rated Exchange Board of India (SEBI) for listing social bonds have been allowed as collaterals in the enterprises and voluntary organizations working for the corporate tri-party repo platform at stock exchanges realization of a social welfare objective so that they can on October 1, 2019 to deepen the repo market. raise capital as equity, debt or as units like a mutual fund. 6. On 20 November, 2019 SEBI Board in consultation Consultations are on with the regulator SEBI to establish with Government of India made it mandatory for listed and operationalise the Exchange. companies to disclose their default on loans if the default continues beyond 30 days. This is w.e.f January, External Market 2020 and reduces the arbitrage with corporate bond 13. RBI has allowed Rupee Derivatives (with settlement market which follows a “one day one rupee” default in foreign currency) to be traded in International Financial disclosure norm. Services Centres (IFSCs). 7. SEBI vide circulars dated 13th June 2019, 23 September 2019 and 4 November 2019, has introduced 14. RBI, in consultation with DEA, has notified a revised measures to improve the functioning of Credit Rating External Commercial Borrowing (ECB) Framework on Agencies in India, by way of mandating enhanced 16th January 2019 which expands the list of eligible governance and accountability standards, enhanced borrowers to include all entities eligible to receive Foreign disclosure standards and by revising rating review Direct Investment (FDI) and the eligible lenders to include process / criteria. any entity from an FATF/IOSCO compliant jurisdiction. 8. With the objective to help improving the regulation of 15. RBI, in consultation with DEA, has introduced a capital and financial markets to protect interest of separate scheme called ‘Voluntary Retention Route’ investors, amendments in certain penalty provisions of the Securities Contract Regulation Act, 1956 and (VRR) on 1st March 2019 to encourage FPIs to undertake the Securities Exchange Board of India (SEBI) Act, long-term investments in Indian debt markets. DEA has 1992 have been carried out through Finance (No. II) Act, agreed to increase the investment limit under the VRR 2019. from Rs 75,000 crores to Rs. 1.50 lac crores. 13Annual Report 2019-2020 16. SEBI, in consultation with DEA, has notified the COMMODITY DERIVATIVES MARKET (Foreign Portfolio Investors) Regulations, 2019 on 19. In October 2019, Ministry of Finance (Dept. of 23rd September 2019 with a view to simplify and Economic Affairs) notified “option in commodities” as rationalize the existing regulatory framework for foreign a derivative under the Securities Contracts (Regulation) portfolio investors (FPIs) in terms of easing the Act, 1956. With this enablement, the plain vanilla options, operational constraints and compliance requirements. structured directly on commodities would become 17. SEBI, in consultation with DEA, has brought out a tradable on exchange platforms. These commodity new framework for issuance of Depository Receipts derivatives are much simpler and hedger-centric than the on 10th October 2019. This will give Indian companies “options on commodity futures” which are being traded increased access to foreign funds through ADR/GDR. at present and can be used to avail price risk insurance in the commodity derivatives market. 18. Ministry of Finance has notified the Foreign Exchange Management (Non Debt Instrument) Rules, III. Sovereign Credit Rating of India 2019 on 17th October 2019 with a view to streamline the India’s sovereign debt is rated by 5 Sovereign Credit legal framework for foreign investment into India. Vide Rating Agencies (SCRAs). These are Fitch Ratings, FEMA (NDI) Rules, the statutory limit for Foreign Portfolio Moody’s Investors Service, Standard and Poor’s (S&P), Investment in an Indian company has been increased Japanese Credit Rating Agency (JCRA) and Rating and from 24% to the sectoral FDI cap w.e.f 01.04.2020. This Investment Information Inc., Tokyo (R&I). The latest is expected to increase FPI flows to India and also sovereign ratings issued by these rating agencies are improve India’s weight in global equity indices. given below: Rating Date of Foreign Currency Local Currency Agency affirmation of ratings Ratings Outlook Ratings Outlook Moody’s 07.11.2019 Baa2 Negative Baa2 Negative Fitch 20.12.2019 BBB- (LT)* Stable BBB- Stable F3 (ST)# F3(ST) S&P 03.12.2019 BBB- (LT) Stable No ratings were given for local A-3 (ST) currency JCRA 22.08.2019 BBB+ Stable BBB+ Stable R&I 29.10.2018 BBB (LT) Stable No ratings were given for local A-2 (ST) currency * LT-Lo ng Term # ST-Short Term 3. In November 2019, Moody’s Investors Service under the PFRDA Act, 2013, Insurance Regulatory (“Moody’s”) has changed the outlook on the rating to Development Authority of India (IRDAI) under the Negative from Stable while keeping the foreign – currency Insurance Act, 1938, the General Insurance Business and local – currency long – term issuer rating unchanged (Nationalization) Act, 1972 and the Insurance Regulatory at Baa2. The decision to change the outlook to negative and Development Authority Act, 1999 and the Rules and is basically due to their assessment about India’s Regulations framed thereunder. economic growth, risk of rising fiscal deficit and debt. Under Rule 15L of the Securities and Exchange Board of India Act, 1992 the composition of the SAT will be as IV. Securities Appellate Tribunal (SAT): follows: Securities Appellate Tribunal is a statutory body (i) Presiding Officer established under the provisions of Section 15K of the (ii) Judicial Member Securities and Exchange Board of India Act, 1992 to hear and dispose of appeals against orders passed by the (iii) Technical Member – 2 Nos. Securities and Exchange Board of India or by an Presiding Officer may constitute the Benches and may adjudicating officer under the Act. It also hears and also function as the Judicial Member. As on December, disposes of appeals against orders passed by the Pension 2019, total 533 Cases are pending before SAT. The Fund Regulatory and Development Authority (PFRDA) details are as tabulated below: Category Opening Cases filed Total Cases Disposed Pending Balance Cases Cases SEBI 506 41 547 21 526 IRDAI 4 0 4 0 4 PFRDA 3 0 3 0 3 TOTAL 513 41 554 21 533 14Department of Economic Affairs I 4. Financial Stability and Cyber Security Financial Stability Unit (FSU) of RBI is the Secretariat for Division the Sub-Committee. The Sub-Committee has met 23 times till 31st December, 2019. 4.1. Financial Stability and Development Council 4.2.2 During the year 2019-20, FSDC-SC held one 4.1.1 The Financial Stability and Development Council meeting, i.e., the 23rd meeting which was held on 27th (FSDC) was set up by the Government of India as the September, 2019. In this meeting, the Sub-Committee apex level forum in December 2010 with a view to reviewed the major developments in global and domestic strengthening and institutionalizing the mechanism economy and financial markets that impinge on the for,inter-alia maintaining financial stability, enhancing financial stability. The Sub-Committee discussed about inter-regulatory coordination and promoting financial measures to promote interest and competition in stressed sector development. The Chairperson of the Council is asset markets, enhancing the scope of Legal Entity the Finance Minister of India. Members include Minister Identifier (LEI) to more effectively monitor group of State for Finance, the heads of the financial sector exposures, issues relating to credit rating agencies and regulators and Secretaries of the relevant ministries/ audit quality. The Sub-Committee also discussed about departments of the Government of India. measures to strengthen the systems against frauds. 4.1.2 The Council monitors macro-prudential Besides, the Sub-Committee deliberated on revisiting the supervision of the economy and deliberates on contextual framework for early warning signals. issues covering financial stability, financial sector 4.3. Financial Stability Board (FSB) development, inter-regulatory coordination, financial literacy, financial inclusion, co-ordinating India’s 4.3.1 FSB is an international body established in April, international interfaces with financial sector bodies like 2009 under the aegis of G20 by bringing together the the Financial Action Task Force (FATF) and the Financial national authorities, standard setting bodies and Stability Board (FSB). The Financial Stability and Cyber international financial institutions. FSB is responsible for Security(FS&CS) Division in the Department of Economic undertaking vulnerabilities assessment, policy Affairs provides secretarial assistance to the FSDC. development and coordination, implementation Adviser (FS&CS), Department of Economic Affairs, monitoring, and to act as a compendium of standards for Ministry of Finance is the Secretary of the Council. financial sector regulation and reforms in members’ jurisdictions. 4.1.3 Till 31st December, 2019, FSDC held 21 meetings. In 2019-20, the 20th and 21st meetings were 4.3.2 India, as a member of the FSB, remains held on 19th June, 2019 and 7th November, 2019 committed to adoption of the priority and other areas of respectively. In these meetings, the Council discussed financial sector reforms and international standards in a global and domestic economic situation and financial phased manner, calibrated to local conditions wherever stability issues including, inter-alia, those concerning necessary. Department of Economic Affairs is the nodal banking and NBFCs, the progress made towards setting point for India to coordinate with the FSB and all India- up of the Financial Data Management Centre (FDMC) specific information are regularly provided in consultation as also a Computer Emergency Response Team(CERT- with the financial sector Regulators (namely, RBI, SEBI, Fin) for strengthening the cyber security framework for IRDAI and PFRDA) while responding to various FSB the financial sector. The Council also had its pre-budget questionnaires, surveys and reports. India also consultations meeting, reviewed activities undertaken by participates in the peer reviews, meetings and conference the FSDC Sub-Committee chaired by the Governor, RBI, calls of FSB and presents its views and comments as a and the action taken by Members on the decisions taken member. in earlier Meetings of the Council. 4.3.3 The Plenary is the sole decision-making body of 4.2. FSDC Sub-Committee (FSDC-SC) the FSB, SCSI is responsible for monitoring the 4.2.1 The FSDC is supported by a Sub-Committee implementation of agreed FSB policy initiatives and (FSDC-SC), chaired by the Governor RBI. Excluding the international standards, and the SCBR is responsible for Chair of the FSDC and the MoS (Finance), all members assessments of the resource needs of the FSB of the FSDC are also the members of the Sub-Committee. Secretariat taking into account the current mandate, the Additionally, all four Deputy Governors (DG) of RBI, and work programme and emerging demands. The RCG Asia Secretary (FSDC), are also the members of the Sub- is one of the 6 regional groups established by FSB in Committee. Executive Director of RBI who is in-charge- 2011 to expand upon and formalise the FSB’s outreach of Financial Stability is the Member Secretary, and the activities beyond the membership of the G20 and to reflect 15Annual Report 2019-2020 the global nature of the financial system through on December 21, 2017 on their respective websites, interaction with the non-members. Secretary of the followed by a few Detailed Assessment Reports (DARs) Department of Economic Affairs represents India in the and Technical Notes on selected topics. Department of FSB Plenary, and in the two out of the four FSB standing Economic Affairs has been following up with the Committees, namely, the Standing Committee on Ministries/ Departments/ Regulators concerned for Standards Implementation(SCSI) and the Standing examination and suitable implementation of the Committee on Budget and Resources(SCBR). DG (RBI) recommendations. represents as a member from India in the other two 4.5. Macro Financial Monitoring Group (MFMG) Standing Committees of FSB, namely, Standing 4.5.1 The Macro Financial Monitoring Group has been Committee on Assessment of Vulnerabilities (SCAV) and set up in 2012 under the Chairmanship of the Chief Standing Committee on Supervisory and Regulatory Economic Adviser. The Group aims at keeping track of Cooperation (SRC). Besides, Secretary (Economic the macroeconomic and financial developments, Affairs) also represents India in the Regional Consultative identifying vulnerabilities, and providing early warning Group on Asia (RCG Asia). Chairman (SEBI), and DG signals. The Group has held 22 meetings till December (RBI) are the other two members from India in the FSB 31, 2019. During the year 2019-20, one meeting of MFMG Plenary as well as in the RCG Asia. was held on May 28, 2019. 4.3.4 During the year 2019-20, two meetings of the 4.6. Financial Data Management Centre (FDMC) FSB Plenary were held on 26th April, 2019 in New York 4.6.1 It has been decided to set up a Financial Data and on 6th November, 2019 in Paris, and one meeting of Management Centre (FDMC) to facilitate integrated data the Standing Committee on Standards Implementation aggregation and analysis in the financial sector. During (SCSI) was held on 4th December, 2019 in Paris. Besides, the year under review, progress has been made towards one meeting of the Regional Consultative Group for Asia finalization of the draft Cabinet Note and the draft FDMC was held on 14th June, 2019 at Kuala Lumpur. All these Bill to set up FDMC as a statutory body, in consultation meetings were attended by representatives of DEA at with financial sector Regulators, Ministry of Law & Justice, suitable levels. Apart from these, as part of its programme and Departments concerned. The draft Cabinet note was to examine the effects of post-crisis financial reforms that circulated to various stakeholders and is under process. were agreed by the G20, FSB launched an evaluation of 4.7. Computer Emergency Response Team for “too-big-to-fail” (TBTF) reforms for banks. DEA, as a Financial Sector (CERT-Fin) member in this working group also attended these meetings. In addition to physical meetings at various 4.7.1 With the objective of setting up of a Computer levels of FSB’s functioning, continuous engagement was Emergency Response Team for the financial Sector maintained through various Conference calls of Plenary, (CERT-Fin), a Working Group (WG) under the Chairmanship of Director General, Indian Computer SCSI, IMN, TBTF etc. and inputs on surveys and reports Emergency Response Team (ICERT), Ministry of circulated by FSB were provided in consultation with the Electronics & Information Technology (MeitY) with regulators. representation from all financial sector regulators, various 4.4. Financial Sector Assessment Programme departments / organisations was formed which had (FSAP) submitted its report. Subsequent to this, a series of 4.4.1 FSAP is a quinquennial exercise jointly meetings and consultations were held and it was inter- conducted by IMF and World Bank (WB) and involves a alia decided to expand the scope of CERT-Fin by bringing comprehensive and in-depth analysis of a country’s under its ambit apart from financial sector regulators, financial sector to assess financial stability and financial other financial sector agencies. A number of meetings sector development. India underwent its first FSAP have been held in 2019-20 to discuss the modalities of exercise in 2011-12 and the second FSAP in 2017. CERT-Fin. It has been proposed to set up a strong and Department of Economic Affairs, in close coordination powerful CERT-Fin with statutory powers. It has been with financial sector Regulators and Ministries/ decided to carry out the preparatory work on Departments concerned, facilitates and coordinates all operationalising CERT-Fin, pending constitution of a matters related to FSAP undertaken for India, including statutory CERT-Fin. following up on the recommendations of FSAP. Subsequent to the FSAP exercise in 2017, the IMF and 1 http://www.imf.org/en/Publications/CR/Issues/ the WB published their reports, including the Financial 2017/12/21/India-Financial-System-Stability-Assessment- System Stability Assessment Report (FSSA)1 (along with Press-Release-and-Statement-by-the-Executive-45497 IMF Press Release, Supplement on Bank Recapitalization 2 http://documents.worldbank.org/curat measures and Buff statement of India’s ED in IMF) and ed/en/704231513810603813/India-Financial-Sector- Financial Sector Assessment (FSA) report2 respectively Assessment 16Department of Economic Affairs I 5. Financial Sector Reforms and Financial Code to replace a number of existing laws. The Legislation Division non-legislative aspects of the FSLRC recommendations are broadly of the nature of governance enhancing 5.1 Introduction principles for stronger consumer protection and greater 5.1.1 The Financial Sector Legislative Reforms transparency in the functioning of financial sector Commission (FSLRC), set up on 24th March, 2011 for re- regulators. It features following set of changes, which writing the financial sector laws to bring them in harmony renders it implementable: with the current requirements, submitted its Report to the i. The RBI will continue to exist, although with Government on 22nd March, 2013. The Report is in two modified functions; parts: Volume I titled “Analysis and Recommendations” and Volume II titled “Draft Law” consisting of the draft ii. The existing SEBI, FMC, IRDA, and PFRDA will Indian Financial Code (IFC). The Commission, inter be merged into a new UFA; alia,recommended a non-sectoral, principle-based iii. The existing SAT will be subsumed into the FSAT; legislative architecture for the financial sector, by iv. The existing DICGC will be subsumed into the restructuring existing regulatory agencies and creating Resolution Corporation; new agencies, wherever needed, for better governance and accountability. v. A new FRA will be created; 5.1.2 A new Division, namely, FSLRC Cell was created vi. A new PDMA will be created; and in the year 2013 to process the implementation of the vii. The existing FSDC will become a full-fledged FSLRC Report with the following mandate: statutory agency, with modified functions. a. To firm up the views of the Government on the 5.4. Implementation Status of the recommendations of the FSLRC following due recommendations of the FSLRC consultative process with all the concerned stakeholders, Regulators/Ministries/State 5.4.1 The status and next steps on the implementation Governments/Union Territories and public at of the recommendations of the FSLRC are as follows:- large; i. As has been agreed to in the meetings of the b. To implement the recommendations of the FSDC, the financial sector regulatory agencies FSLRC, duly approved by the Government; and are implementing the governance enhancing, non-legislative recommendations of the FSLRC c. To deal with administrative and establishment on voluntary basis. A MIS Portal was developed matters relating to FSLRC. and inaugurated by FM in May, 2015 to put in 5.1.3 In September, 2017, it was decided to rename place an appropriate mechanism to measure the the FSLRC Division as Financial Sector Reforms and benchmark compliance for each Regulator/ Legislation (FSRL) Division with (i) Legislative Reforms Board. The MIS Portal has been modified in and (ii) Financial Sector Reforms Sub-Divisions. consultation with the Regulators to remove 5.2 Financial Sector Legislative Reforms several difficulties faced by the Regulators in Commission- Main recommendations updating the compliance status on the Portal. The Regulators have started submitting their 5.2.1 The Report of FSLRC was placed in the public responses on the MIS Portal. domain on 28th March, 2013. The same was examined and discussed in various meetings of the Financial ii. A Financial Sector Regulatory Appointment Stability and Development Council (FSDC) chaired by the Search Committee (FSRASC) has been created Finance Minister. The recommendations of the FSLRC for recommending names of suitable persons for can broadly be divided into two parts - Legislative and appointment to board level positions of financial Non-Legislative. The legislative aspects of the sector regulatory bodies with the approval of the recommendations relate to revamping the legislative ACC on 24th November, 2015. The FSRASC has framework of the financial sector regulatory architecture been reconstituted on 9th June, 2017. This would by a non-sectoral, principle-based approach and by bring about uniformity in the selection of board restructuring existing regulatory agencies and creating members of financial sector regulators, which new agencies wherever needed. was one of the recommendations of the FSLRC 5.3. Recommendations on the Financial on the broad structure of such regulators. Regulatory Architecture iii. As regards the establishment of a unified financial 5.3.1 The Commission has recommended a seven agency for the organised trading, by way of an agency regulatory architecture namely, Reserve Bank of incremental reform effort, the Forward Markets India, Unified Financial Agency, Financial Sector Appellate Commission (FMC) has been merged with the Tribunal, Resolution Corporation, Financial Redress Securities and Exchange Board of India (SEBI) Agency, Public Debt Management Agency and Financial with effect from 28thSeptember, 2015 to achieve Stability and Development Council in the draft law- Indian the convergence of regulations of the securities 17Annual Report 2019-2020 market and the commodity derivatives markets. the Lok Sabha on 10th August 2017 and referred to a FMC stands abolished and the Forward Joint Committee of Parliament for making a Report to Contracts (Regulation) Act, 1952 has been the Parliament. The Bill provided for establishment of a repealed. However, there is no consensus on specialized Resolution Regime for financial sector merging the existing financial sector regulators entities. The enactment of the Bill would have empowered into a single Unified Financial Agency. the Resolution Authority to contribute to the stability and resilience of the financial system by carrying out speedy iv. The Task Forces for transforming the existing and efficient resolution of financial firms in distress, Securities Appellate Tribunal (SAT) into the providing deposit insurance to consumers of certain Financial Sector Appellate Tribunal (FSAT) and categories of financial services, monitoring the for establishing new agencies namely, Resolution Systemically Important Financial Institutions and Corporation (RC), Public Debt Management protecting the consumers of financial institutions and Agency (PDMA) and Financial Data Management public funds to the extent possible. The FRDI Bill was Centre (FDMC) were set up on 30th September, withdrawn from the Parliament on 7th August, 2018, owing 2014. These Task Forces submitted their reports to concerns raised by the stakeholders’ on certain during June 2015. Another Task Force for provisions of the FRDI Bill for comprehensive re- creating a sector-neutral Financial Redress consideration and re-examination. Agency (FRA) that was set up on 5th June, 2015 as announced in the Budget Speech 2015-16 Accordingly, work on consolidating all the laws relating submitted its Report on 30th June, 2016. Its to resolution of financial sector entities in one law and Report is under examination. provide a specialised resolution mechanism to deal with v. Apart from inviting comments on the FSLRC bankruptcy situations in most of the financial sector Report and the Draft IFC, the Department of entities, such as, banks, insurance companies, FMIs and Economic Affairs in collaboration with the Institute select financial sector entities is under consideration of of Company Secretaries of India (ICSI) organised the Government. a number of workshops and seminars on specific areas of the IFC for building consensus on the c. Establishment of an independent Financial Draft. Work on fine tuning the Draft IFC with Data Management Centre: comments of stakeholders suitably incorporated A centralised data centre named as Financial to make it legally flawless was initiated and the Data Management Centre (FDMC) is proposed to be set Draft IFC was revised in the light of the comments up under the aegis of the Financial Stability and received and hosted on the website of the Ministry of Finance on 23rd July, 2015, inviting Development Council (FSDC) that will be used for comments of stakeholders by 8th August 2015. analysis of financial stability and related issues. Moving the Indian Financial Code (IFC) Subsequent to the FSLRC recommendation on creation recommended by the FSLRC in totality, after due of a statutory Financial Data Management Centre consideration, is likely to take time. Key aspects (FDMC), Government constituted a Task Force on FDMC of the IFC being fast-tracked are as follows:- under the chairmanship of Dr. Subir Gokarn, which, inter a. Financial Sector Appellate Tribunal: alia, recommended a non-statutory FDMC. FS&CS Division, DEA has been assigned the task to initiate The Securities and Exchange Board of India Act, 1992 was amended through the Finance Act 2017, for necessary steps for the setting up of FDMC. upgrading / enhancing the capacity of the Securities d. Establishment of an independent Public Debt Appellate Tribunal (SAT) to hear appeals relating to the Management Agency: Insurance and Pension sectors also and for providing for An independent Public Debt Management Agency multiple benches. This would facilitate in moving towards (PDMA) is proposed to be set up for managing a Financial Sector Appellate Tribunal, which was Government‘s debt and cash balance, etc. To this effect, recommended to be the Appellate Tribunal for the entire financial sector. FM Division, DEA has been assigned the Government set up a Public Debt Management Cell the task to initiate necessary steps for the setting up of (PDMC) on 4th October, 2016, as an interim arrangement FSAT. before setting up of an independent and statutory debt management Agency namely, Public Debt Management b. Establishment of a comprehensive resolution framework for the financial sector: Agency (PDMA) of India, in due course. This interim arrangement will allow separation of debt management An announcement was made in the Budget Speech functions from RBI to PDMA in a gradual and seamless of 2016-17 to frame a comprehensive Code on Resolution manner, without causing market disruptions. Budget of Financial Firms and introduce it as a Bill in the Parliament during 2016-17. The Financial Resolution and Division, DEA has been assigned the task to initiate Deposit Insurance Bill, 2017 (the Bill) was introduced in necessary steps for the setting up of PDMA. 18Department of Economic Affairs I e. Institutionalised and Statutory Monetary referred to in sub paragraphs (d) to (f) above would hold Policy Framework: office for a period of four years or until further orders, whichever is earlier. The Monetary Policy Committee is i. FSLRC has recommended establishment of a now functional. statutory and an institutionalized framework to conduct monetary policy, including the creation of a Monetary v. The Reserve Bank of India Monetary Policy Policy Committee that would determine the policy interest Committee and Monetary Policy Process Regulations rate. The Reserve Bank of India Act, 1934 (RBI Act) has were framed and notified on 14th July, 2017 for ensuring accordingly been amended by the Finance Act, 2016, to full operationalisation of the MPC. The Regulations were provide for a statutory and an institutionalized framework subsequently laid in the Lok Sabha on August 4, 2017 for a Monetary Policy Committee, for maintaining price and in the Rajya Sabha on August 8, 2017. stability, while keeping in mind the objective of growth. 5.5 Other Legislative Reforms The Monetary Policy Committee would be entrusted with 55.1 Providing a Legal Framework for Bilateral Netting the task of fixing the benchmark policy rate (repo rate) of Financial Contracts required to contain inflation within the specified target level. A Committee-based approach for determining the 5.5.2 An unambiguous legal framework for Monetary Policy will add value and transparency to enforceability of close-out netting reduces credit exposure monetary policy decisions. The meetings of the Monetary of banks and other financial institutions from gross to net Policy Committee shall be held at least 4 times a year exposure, results in substantial capital saving on such and it shall publish its decisions after each such meeting. exposure and reduces the overall systemic risks ii. Provisions of the RBI Act relating to the chapter contributing to the financial stability. That is why many on Monetary Policy have been brought into force through international standard setting bodies have recommended a Notification in the Gazette of India Extraordinary on that a legal basis for close-out netting may be provided 27thJune, 2016. The Rules governing the Procedure for in law. Selection of Members of Monetary Policy Committee and 5.5.3 In the absence of any legally unambiguous basis Terms and Conditions of their Appointment and factors for finality of bilateral netting for certain entities, bilateral constituting failure to meet inflation target under the MPC netting of mark-to-market values arising on account of Framework have also been notified in the Gazette of India, OTC derivatives is not permitted, forcing the banks to Extraordinary on 27th June, 2016. The Government, in provide capital on gross exposure basis for such consultation with the RBI, has notified the inflation target derivatives. Further, the emerging global consensus (in in the Gazette of India Extraordinary dated 5th August, G20 and Bank for International Settlement) of imposing 2016, for the five years ending on the 31st March, 2021, higher margins for non-centrally cleared OTC derivatives as under: (NCCDs) might lead India to also adopt the global norms Inflation Target : Four per cent. of risk mitigation and also to strengthen the resilience of Upper tolerance level : Six per cent. the financial system. The exchange of margin for NCCDs on gross basis would be very inefficient and would Lower tolerance level : Two per cent. seriously disrupt the OTC derivatives market, which account for about 40% of the total derivatives market. iii. As per the provision of section 45ZB of the RBI 5.5.4 The netting law for bilateral financial contracts Act, 1934, out of the six Members of Monetary Policy would result in substantial capital saving for banks, which, Committee, three Members will be from the RBI and the in turn, would enable banks to provide price efficiency in other three Members of Monetary Policy Committee will offering hedging instruments to business in India, catalyse be appointed by the Central Government. The the corporate bond market (through developing the credit composition of the Monetary Policy Committee of the default swap market), promote ease of doing business Reserve Bank of India constituted and notified in the and provide equal cost advantage to Indian financial Gazette of India Extraordinary dated 29th September, sector. The market participants also expect that a bilateral 2016 is as follows: netting law would further develop the financial market in a. Governor of the Bank—Chairperson, ex officio; India. b. Deputy Governor of the Bank, in charge of 5.5.5 Thus, with a view to address the inadequacies Monetary Policy—Member, ex officio; in the present legal framework, the Government has c. One officer of the Bank to be nominated by the formulated a Bill, namely, ‘The Bilateral Netting of Central Board—Member, ex officio; Financial Contracts Bill’ to lay down the mechanism for close-out netting of the financial contracts. The Bill is d. Professor Chetan Ghate, Professor, Indian proposed to be soon introduced in the Parliament, as Statistical Institute (ISI) —Member per the procedure. The proposed law will enable India to e. Professor Pami Dua, Director, Delhi School of become one of the major markets for the Over-The- Economics (DSE) — Member Counter (OTC) Derivatives products. It will contribute f. Dr. Ravindra H. Dholakia, Professor, Indian significantly to strengthening the financial stability of the Institute of Management (IIM), Ahmedabad — country and would facilitate in further developing the Member financial market, especially the financial derivatives iv. The Members of the Monetary Policy Committee market and corporate bond market. 19Annual Report 2019-2020 6. Infrastructure Policy & Finance (IPF) for Credit Enhancement of Infrastructure Division Projects;  All international interfaces on infrastructure Infrastructure Policy & Finance (IPF) Division is headed financing (other than PPPs); by Dr. Kumar V. Pratap, Joint Secretary. The Division has the following Units: Infrastructure Finance (Infra-Fin),  Matters relating to Municipal Bonds by ULBs; Infrastructure Policy & Programme (IPP), Energy Sector  Model Tripartite Agreements (MTA) for sectors Policies & Programmes (ESPP) and Public Private such as Road, Ports, Airports, etc.; Partnerships (PPP). Each Unit is headed by Adviser/  External Territorial charge- GCC Countries Director/Deputy Secretary and assisted by Under (United Arab Emirates, Bahrain, Saudi Arabia, Secretary/Deputy Director/Assistant Director. Oman, Qatar and Kuwait, and Yemen), Turkey, E-Governance initiatives of the Division: All the Sections Cyprus, Lebanon, Jordan; of IPF Division have migrated to e-office mode (e-files,  Matters relating to G20 Infrastructure Working leave, advances, etc). Group (IWG); 6.1 Infrastructure Finance (Infra-Fin) Unit  All policy matters relating to Project Monitoring 6.1.1 Major Functions: Group (PMG) and its coordination within DEA; Infrastructure Finance Unit deals with financing  Matters relating to meetings of Board of Directors requirements of infrastructure including conceiving new of IIFCL as JS (IPF) is Government nominee on initiatives related to infrastructure financing and promotion its Board of Directors; of investment in infrastructure sectors. The unit deals with:  Coordination and general matters pertaining to  Matters related to infrastructure financing and the Division. promotion of investment in infrastructure sectors; 6.1.2 Major Policy Initiatives/Achievements:  Matters relating to Infrastructure Debt Funds 6.1.2.1 Infrastructure Debt Funds (IDFs) (IDFs), Real Estate Investment Trusts (REITs)/ Infrastructure Investment Trusts (InvITs), Tax Government of India has conceptualized Infrastructure Free Bonds, Municipal Bonds and other Debt Funds (IDFs) to accelerate and enhance the flow instruments meant for infrastructure financing; of long-term debt into infrastructure projects to help in the migration of project loans for operating assets from  Matters relating to New Credit Rating System for banks to the fixed income markets. IDFs, through Infrastructure; innovative credit enhancement, are expected to provide  Matters relating to Special Purpose Vehicle (SPV) low cost long-term debt for infrastructure projects. ORGANISATIONAL CHART OF IPF DIVISION Joint Secretary (Infrastructure Policy & Finance) Dr. Kumar V Pratap Tel No : 23092154 IC : 5034 Director (IPP) Deputy Secretary Vacant Adviser (ESPP & Director (PPP) (Infra-Finance) (Additional Charge) Coord) Shri Mukesh Kumar Shri Poojan Rana Shri Poojan Rana Shri Pawan Kumar Gupta Tel No : 23095261 Tel No : 23095261 Tel No : 23092912 Tel No : 23095037 IC : 5261 IC : 5261 IC : 5088 IC : 5037 20Department of Economic Affairs I Potential investors under IDFs include off-shore documents were endorsed at the 2018 G20 Buenos Aires’ institutional investors, off-shore High Net Worth Leaders’ Summit. During the 2019 G20 Japanese Individuals and other institutional investors (Insurance Presidency, India extensively contributed to the finalization Funds, Pension Funds, Sovereign Wealth Funds, etc). of G20 Quality Infrastructure Investment (QII) Principles. IDFs are set up by sponsoring entities either as Non- The G20 QII Principles set out voluntary and non-binding Banking Finance Companies (NBFCs) or as Trusts/ principles that reflect G20 Members’ common strategic Mutual Funds (MF). As on date, four IDFs under NBFC direction and aspiration for achieving quality infrastructure route and three under MFs route are in operation. investment. The Principles Document was extensively deliberated by the G20 IWG Delegates and India 6.1.2.1.1 Model Tripartite Agreement (MTA) for IDFs extensively contributed in finalizing the content and the (Airport and Road Sectors) language of the QII Principles. India’s key policy This Unit is in the process of formulating a Model Tripartite interventions at the G20 IWG include: Agreement (MTA) for IDFs to undertake refinancing refinancing in the Airports and Roads (Toll-Operate- i. Developing Brownfield Assets as a Separate Transfer) Sector. The draft MTA after incorporating the Asset Class considering their relatively de-risked comments from stakeholders is in process for being nature as compared to greenfield projects since brownfield assets are past the construction stage. submitted to Empowered Inter-Ministerial Group (E-IMG) India’s interventions elucidate ways in which for consideration. countries may benefit from exploring brownfield 6.1.2.2 Real Estate Investment Trusts (REITs)/ asset monetization in view of the acute Infrastructure Investment Trust (InvITs) infrastructure financing deficit and the REITs/ InvITs are trust-based structures that maximize advantages of unlocking potential improvements returns through efficient tax pass-through and improved in operational efficiency and service quality that may arise from transferring management governance structures. Guidelines/Regulations for InvITs responsibility to a specialized third party asset and REITs were notified by SEBI on 26 September, 2014. operator. As on date, five InvITs have been successfully launched ii. Highlighting the role of contractual and have collectively raised more than Rs.20,000 crore. standardization/ standardized documents in In March 2019, India’s first REIT was launched and raised providing transparency, consistency and about Rs.4,750 crore through an IPO, and was listed on predictability to infrastructure procurement. the Indian Stock Exchanges. iii. Advocating the need for bringing synergies 6.1.2.3 Creation of a Dedicated Fund to provide among data initiatives and of avoiding duplication credit enhancement to infrastructure projects in the area of infrastructure data collection, Pursuant to Budget Announcements in 2019-20 and analysis and dissemination while aiming at 2016-17, a Credit Enhancement Company is proposed creation of information useful to investors. to be set up to provide credit enhancement to 6.2. Energy Sector Polices & Programmes (ESPP) infrastructure and housing projects through raising the Unit credit rating of bonds floated by such companies. A draft 6.2.1 The major functions of ESPP Unit, inter alia, CCEA Note in this regard is under process. include the following:  All policy related issues pertaining to energy 6.1.2.4 Public Sector Asset Monetization (PSAM) sector, viz. Petroleum and Natural Gas, Coal, strategy to monetize Brownfield assets Power, Atomic Energy and New & Renewable The Cabinet has approved the mechanism for asset Energy; monetization of CPSEs, enemy property and land as  Ministries/ Department: MoPNG, MNRE, Atomic prepared by DIPAM. This Unit has provided inputs on Energy, Space, Coal, Power, Mines; how brownfield asset monetization by CPSEs can help  Examination of the investment proposals in Greenfield infrastructure investment. energy sector requiring the approval of Cabinet/ CCEA/ CoS/ PIB/ EFC for their viability and 6.1.2.5 G20 Infrastructure Working Group justification; The G20 Infrastructure Working Group (G20 IWG) was  Matters relating to ONGC Videsh Ltd. (OVL) and revived under the 2018 Argentinian Presidency and has International Solar Alliance (ISA); continued to play a major role in shaping the G20  Matters related to Committee on Allocation of members’ views on infrastructure issues under the 2019 Natural Resources (CANR); Japanese Presidency. In 2018, the G20 IWG  Matters relating to OPEC Fund for International conceptualized the pathway to developing infrastructure Development (OFID); as a separate asset class by finalizing the ‘Roadmap to Infrastructure as an Asset Class’ and G20 ‘Principles for  International Territorial Charge: Iran, Iraq, Israel; the Infrastructure Project Preparation Phase’. Both these  States: Maharashtra, Gujarat. 21Annual Report 2019-2020 6.2.2 Major Policy Initiatives/Achievements: Committee. The HLEC submitted its report on 12.11.2018. HLEC made recommendations relating to 6.2.2.1 ESPP Unit is the Secretariat of the Monitoring coal allocation, sale of power of stressed assets, Committee (MC) set up to review the implementation regulatory and DISCOM payment issues and other status of the recommendations of the Committee on recommendations. The Group of Ministers (GoM) to Allocation of Natural Resources (CANR). Monitoring examine recommendations of HLEC was constituted on Committee is chaired by Cabinet Secretary. Out of 81 07.12.2018. Most recommendations of HLEC were recommendations of CANR, 66 recommendations as it accepted by the GoM. CCEA in its meeting held on is and three recommendations with reformulations were 07.3.2019 approved the recommendations of the GoM. accepted for implementation by respective Ministries/ Departments. One recommendation was not accepted. 6.2.2.5 A High Level Committee (HLC) on Mines, Minerals and Coal Sectors has been constituted under 6.2.2.2 Action on remaining 11 recommendations was the chairmanship of Vice Chairman, NITI Aayog on decided by the Department in consultation with concerned 19.03.2019. Secretary (Economic Affairs) is member of Ministries/ Departments. For implementation of the Committee. The mandate of the Committee is recommendations pertaining to Land, following two enhancing exploration, enhancing domestic production committees under the Chairmanship of Secretary, and value addition, reducing imports and achieving rapid Department of Economic Affairs were constituted – growth in exports. Stakeholder consultations including i. Working Committee to create a centralized with State Governments were held. The Committee’s databank of inventory of all Govt. land including report is under finalization. that belonging to Government controlled 6.3. Infrastructure Policy & Programme (IPP) Unit Statutory Authorities and CPSUs: The 6.3.1 Major Functions: Government Land Information System (GLIS) has been created by Ministry of Electronics and  Analyzing investment proposals concerning Information Technology (MeiTy) and Ministry of Road Transport & Highways, Ports, Shipping, Housing and Urban Affairs (MoHUA). Inland Water Transport, Railways, Telecommunications, Civil Aviation & Urban ii. Committee for suggesting Broad Guidelines on Development sectors; the issues relating to Procedures for Exchange,  Matters relating to Projects (non-PPP) of Ministry Transfer, Leasing, Licensing and Sale of land of Road Transport and Highways; held by Govt. and Govt. Controlled Statutory Authorities and CPSUs. The Report of the  Servicing Steering Committee, Inter-Ministerial Committee has been sent to the Cabinet Committees, High Level Committees, Group of Secretariat for consideration. Secretaries, Institutional Mechanism on the Harmonized Master List of Infrastructure Sub- 6.2.2.3 The Committee headed by Vice Chairman, NITI sectors; Aayog and comprising of Cabinet Secretary, CEO, NITI  Matters related to Evaluation Committee for Aayog, Secretary, MoPNG, Secretary, Department of finalization of PIM/EOI in respect of strategic Economic Affairs and CMD, ONGC, on “Enhancing disinvestment of CPSEs to Division holding the Domestic Oil & Gas Exploration and Production” submitted Sectoral Charge of relevant Ministry; its final report in January, 2019. Cabinet Secretariat constituted a Group of Ministers (GoM) under the  Providing comments on DCNs received from MI chairmanship of Finance Minister comprising Minister of Division; Commerce & Industry, Minister of Petroleum & Natural  Institutions: DMICDC/NICDIT, NHAI, IRFC, Gas, Minister of Coal and Minister of State in the Ministry Digital Communications Commission; of Power (Independent Charge) as members, to look into  External Territorial Charge: Nil; the report of the Committee and make its  Ministries/Departments: Ministry of Road recommendations. GoM in its meeting held on 18.2.2019 Transport and Highways, Shipping (including recommended the recommendations made in the final Ports & Inland Water Transport), Civil Aviation, report of the Committee. The Cabinet in its meeting held Railways, Ministry of Housing and Urban Affairs, on 19.2.2019 approved the policy framework on reforms Telecommunications, Posts; in exploration and licensing sector for enhancing domestic exploration and production of oil and gas.  States: Madhya Pradesh, Chhattisgarh. 6.2.2.4 High Level Empowered Committee (HLEC) to 6.3.2 Major Policy Initiatives/Achievements: address issues of Stressed Thermal Power Projects was Three CCEA Notes, fourteen Cabinet Notes and four PIB constituted under the chairmanship of Cabinet Secretary. Notes received from line Ministries/ Departments have Secretary (Economic Affairs) was member of the been examined during the year. 22Department of Economic Affairs I 6.4 Public Private Partnerships (PPP) Unit  To suggest measures to monitor the projects so 6.4.1 Major Functions : that cost and time overrun is minimized.  Appraisal & approval of Central Sector PPP PPP unit is working as Secretariat for the Task Force. Till Projects as per Cabinet approved guidelines and date, more than 50 meetings of the Task Force have been orders for delegation of powers; held with 28 Departments/ Ministries engaged in  Scheme for financial support to PPPs in infrastructure development, representatives of corporates Infrastructure-Viability Gap Funding (VGF) engaged in infrastructure development & construction, Scheme; representatives of Banks/ Financial Institutions, Private  Scheme for India Infrastructure Project Equity funds and Industry Associations. Finance Minister Development Fund (IIPDF); released the summary of the report of the Task Force on  PPP Policy & Programmes; 31st December, 2019. On the basis of information compliled, total infrastructure investment in India during  PPP Capacity Building programmes; the fiscals 2020 to 2025 is projected at over Rs. 102 lakh  Innovative PPP interventions and PPP Pilot crore. project initiative; 6.4.3.2 Public Private Partnership Appraisal  Mainstreaming PPPs including technical Committee assistance and programmes from bilateral/ multilateral agencies and support to State and The Public Private Partnership Appraisal Committee local governments; (PPPAC) was setup to streamline the procedure for  International interface on PPPs and other matters approval of PPP projects, ensure speedy appraisal of concerning PPPs; projects, eliminate delays, adopt international best  Matters relating to management of PPP related practices and have uniformity in appraisal mechanisms information. and guidelines. The PPPAC is chaired by Secretary, Economic Affairs with Secretaries of Department of 6.4.2 Government of India has systematically rolled out the Public Private Partnerships (PPP) program to bridge Expenditure, Department of Legal Affairs, NITI Aayog and the infrastructure gap, augment resources and efficiency the Sponsoring Ministry/ Department as members to in service delivery. The objective is to create an enabling consider and approve the proposals of Central Sector environment for private sector investment in infrastructure PPP Projects. During the period from April 2019 till date, through PPPs for the delivery of high-priority public 8 projects with total project cost (TPC) of Rs.27,514 crore infrastructure and services. The PPP Cell acts as the have been recommended by PPPAC. Out of these 8 Secretariat for Public Private Partnership Appraisal projects, 2 are for Eco-tourism, 1 is for Port Sector, 4 are Committee and Empowered Institution (EI)/ Empowered for Railway Stations and 1 is for passenger trains. Committee (EC) for the projects posed for financial support through DEA’s Scheme for Financial Support to 6.4.3.3 Financial Support to Public Private PPPs in Infrastructure [Viability Gap Funding (VGF)]. Partnerships in Infrastructure (Viability Gap Funding Scheme) 6.4.3 Major Policy Initiatives/Achievements: 6.4.3.1 Task Force to draw up the National Infrastructure projects are often not commercially viable Infrastructure Pipeline from FY 2019-20 to FY 2024-25 on account of their public good nature, having substantial sunk investment and low returns. However, they continue In pursuance of the Budget Announcement of Rs.100 to be economically essential. Accordingly, the Scheme lakh crore infrastructure investments in 5 years, a Task Force to draw up the National Infrastructure Pipeline for for Financial Support to Public Private Partnership in each of the years from FY 2019-20 to FY 2024-25 has Infrastructure (Viability Gap Funding Scheme) was been set up under the chairmanship of Secretary (DEA) formulated to provide financial support in the form of in September 2019. The mandate of the Task Force is grants, one time or deferred, to infrastructure projects as under: undertaken through PPPs with a view to make them  To identify technically feasible & financially/ commercially viable. The Scheme provides Viability Gap economically viable infrastructure projects that Funding up to 20% of the Total Project Cost (TPC). The can be initiated in FY 2019-20 to FY 2024-25. Government or statutory entity that owns the project may,  To estimate annual infrastructure investment/ if it so decides, provide additional grants out of its budget capital cost. up to further 20% of the TPC. Viability Gap Funding under  To guide ministries in identifying appropriate the Scheme is normally in the form of a capital grant at sources of financing. the stage of project construction. 23Annual Report 2019-2020 6.4.3.4 India Infrastructure Project Development 6.4.3.7 Post-Award Contract Management Guidelines Fund (IIPDF) Guidelines, Manuals and Online Toolkits have been While quality advisory services are fundamental to developed to guide Project Authorities during the Post- developing well-structured, value-for-money PPPs, the Award implementation phase of the PPP project. The costs of procuring PPPs, and particularly the costs of Guidelines / Manual have been designed to deal with the transaction advisors, are significant. Development of changing contexts over the concession period, robust projects with a sound financial structure and uncertainties and effectively handle disputes which are optimal risk allocation is critical for evincing a market critical for the overall success of the PPP projects. While response in respect of the projects. The scheme for ‘India the Guidelines provide key principles of Contract Infrastructure Project Development Fund’ (IIPDF) had Management during the Post-Award phase, these have been launched to finance the cost incurred towards been further adapted to sector specific Manuals based development of PPP projects. The IIPDF supports up to on the contractual obligations enshrined in the 75% of the project development expenses. Concession Agreements. These are further supported 6.4.3.5 PPP Structuring Toolkits by an interactive web-based toolkit, easily accessible through DEA’s PPP Unit website, i.e. PPP Toolkits have been designed to assist PPP www.pppinindia.gov.in, and have been designed to practitioners to strengthen decision-making at all key stages of the PPP project cycle and also improve the provide practical application-oriented assistance to quality of the PPPs that are being developed. It is a web- Project Authorities in undertaking project management based on-line Toolkit that facilitates identification, 6.4.3.8 Contingent Liability Management Tool assessment, development, procurement and monitoring of PPP projects. The Toolkit is structured to cover the full An Application Tool has been developed for estimation life cycle of PPP projects. While the general structure and management of contingent liabilities arising from has incorporated international best practices, the Toolkit PPPs sponsored by Line Ministries, Departments and has been built on specific approaches for project State Owned Enterprises of the Central and State procurement, approval etc. currently in place in India to Governments. The Tool is a browser based application ensure that it forms a relevant resource for practitioners designed to estimate contingent liabilities of PPP projects in India. The on-line nature of the Toolkit ensures updating at different stages of their implementation using an inbuilt of resource quickly as the approaches in place develop contingent liability framework that is aligned to various and change. The toolkit covers four sectors, viz. provisions relating to termination risks and termination highways, ports, solid waste management and urban payments provided in the concession agreements. This transport. The toolkit is available to practitioners through Toolkit is easily accessible through DEA’s PPP Unit DEA PPP Unit’s website, www.pppinindia.gov.in. website, i.e. www.pppinindia.gov.in. 6.4.3.6 PPP Practitioners Guide 6.4.3.9 Guidance on use of Municipal Bond A comprehensive guidance for PPP practitioners titled Financing for Infrastructure projects “PPP Guide for Practitioners” has been developed to PPP Unit, DEA has prepared a Guidance Manual which provide step-by-step guidance on various processes in serves as a handy reference to practitioners and policy the PPP project life cycle including the pre-award phase. makers on the use of Municipal Bond Financing for It highlights best practices that could be adopted by Infrastructure projects and is available at DEA’s PPP Unit practitioners, to ensure transparency, fairness and accountability in the development and implementation of website (www.pppinindia.gov.in). The initiative has been PPPs. The Guide, available on DEA’s PPP Unit website, taken to build capacities of Urban Local Bodies (ULBs) i.e.www. pppinindia.gov.in, is divided into 17 modules to raise financing through the Capital Market for financing which discusses stages and concepts in the PPP project infrastructure projects. The Guidance Manual provides development process. The Guide is interspersed with actionable step-wise inputs on preparatory actions, the examples, key takeaways, web links and case studies. regulatory framework and process of bond issuance. 24Department of Economic Affairs I 7. Investment and Digital Economy route, applications for FDI proposals are considered and approved by the respective subject matter Ministries on Division the Foreign Investment Facilitation Portal (FIFP), the new 7.1 INVESTMENT DIVISION: Investment Division online single point interface of the Government of India comprises of four different sections. The major functions for investors to facilitate Foreign Direct Investment. of the Investment Division are as under: Department of Economic Affairs has approved nine FDI proposals of an aggregate foreign Direct Investment of 1. To provide policy support on Foreign/Domestic Rs. 78.75 crore during the period 1st April, 2019 to 30th Investment policies including new policy November, 2019. initiatives in Foreign Direct Investment (FDI)/ Government of India has reviewed the extant FDI policy Domestic Investment (DI) Policy besides FDI/DI on various sectors and has made following amendments policy clarifications & related matters. (in the year 2019) in the Consolidated FDI Policy Circular 2. To coordinate with M/o Steel, MSME, M/o of 2017 (FDI Policy), effective from August 28, 2017, and Textiles, Department of Chemical and Petro as amended from time to time: Chemicals, DIPAM, DIPP, DFS, RBI and SEBI,  Single Brand Retail Trading: 100% FDI is Department of Commerce and Department of allowed under automatic route and local sourcing norms Heavy Industry on investment issues and also was relaxed for up to 3 years from commencement of offering them comments / suggestions on various business for entities undertaking SBRT of products having matters as per need of the Indian economy. ‘state of art’ and ‘cutting edge’ technology and where local 3. To negotiate and conclude Bilateral Investment sourcing is not possible. The recent reforms vide Press Treaties (BITs) and Investment Chapter of FTAs/ Note 4 of 2019 has further relaxed the local sourcing requirements. As per the liberalized norms, for the CECA/CEPA with other countries and regional purpose of meeting local sourcing requirements, all blocks on the basis of the revised Model Bilateral procurements made from India by the SBRT entity for Investment Treaty (BIT) Text which was approved that single brand shall be counted towards local sourcing, by the Cabinet on 16th December, 2015. irrespective of whether the goods procured are sold in 4. Matter related to equity investments from both India or exported. The SBRT entity is also permitted to domestic and international sources for set off sourcing of goods from India for global operations infrastructure development in commercially against the mandatory sourcing requirement of 30%. The viable projects, both greenfield and brownfield, Press Note also clarifies that, ‘sourcing of goods from including stalled projects through NIIF. India for global operations’ shall mean value of goods sourced from India for global operations for that single 5. Matters pertaining to the Evaluation Committee brand (in INR terms) in a particular financial year directly meeting, IMG, ECGC, EXIM BANK, NEIA etc. by the entity undertaking SBRT or its group companies 6. Matter related to Gold and other precious (resident or non-resident), or indirectly by them through minerals. a third party under a legally tenable agreement. Additionally, under the earlier FDI policy provisions, an 7.2 SECTION- WISE ALLOCATION OF WORK entity undertaking SBRT could only under take retail trade A) FDI AND ODI (FOREIGN DIRECT through e-commerce after opening a brick and mortar INVESTMENT & OVERSEAS DIRECT INVESTMENT) store. This requirement has been relaxed under Press The main function of this section is to provide policy Note 4 of 2019 which provides that online retail trading support on Foreign Investment policies including new can be undertaken prior to opening a brick and mortar policy initiatives in Foreign Direct Investment (FDI) Policy store provided the brick and mortar store is opened within besides FDI policy clarifications & related matters. This two years from the date of start of online retail trading. Section primarily co-ordinates with DPIIT, DFS, RBI and  Coal and Lignite Mining: As per the existing SEBI on foreign investment issues and also offers them FDI Policy amended vide Press Note 4 of 2019 dated comments / suggestions on any amendment in FDI policy 18.09.2019, 100% FDI under the automatic route has as per the need of the Indian economy. It also suggests been permitted in coal and lignite mining for captive measures for improving investment environment in India consumption for power projects, iron and steel and with respect to FDI policy. cement units and for other activities permitted under and To promote Foreign Direct Investment (FDI), the subject to the provisions of the Coal Mines (Special Government has put in place an investor-friendly policy Provisions) Act, 2015 and the Mines and Minerals which is transparent, predictable and easily (Development and Regulation) Act, 1957. 100% FDI comprehensible. Except for a small negative list, most under the automatic route is also permitted for sale of sectors have been made open for 100% FDI under the coal, coal mining activities including associated Automatic route. FDI under the automatic route does not processing infrastructure subject to the provisions of the require prior approval either by the Government of India Coal Mines (Special Provisions) Act, 2015 and the Mines or the Reserve Bank of India (RBI). Investors are only and Minerals (Development and Regulation) Act, 1957 required to notify and file documents with the concerned and other relevant Acts on the subject matter. It been regional offices of RBI. Under the Government approval provided that “ associated processing infrastructure” 25Annual Report 2019-2020 includes coal washing, crushing, coal handling and Foreign Exchange Management (Non-debt separation (both magnetic and non-magnetic). Instruments) Rules, 2019  Contract Manufacturing sector: FDI in Further, Department of Economic Affairs, Government manufacturing has been under the 100% automatic route of India vide Notification No. 3392 dated 17th October, under the FDI Policy. Press Note 4 of 2019 dated 2019 has notified Foreign Exchange Management (Non- 18.09.2019, however has expanded the scope of debt Instruments) Rules, 2019 and further amendments ‘Manufacturing’ by including ‘Contract manufacturing’. FDI vide Notification No. 3910 dated 5th December, 2019. in Indian entities engaged in contract manufacturing The said rules have repealed the Foreign Exchange through a legally tenable contract whether on a principle Management (Transfer or Issue of Security by a Person to principle basis or on a principle to agent basis is also Resident outside India) Regulations, 2017 (“TISPRO permitted under the 100% automatic route. Further, a Regulations”) and the Foreign Exchange Management manufacturer is permitted to sell its product manufactured (Acquisition and Transfer of Immovable Property in India) in India through wholesale and/or retail, including through e-commerce, without Government approval. Regulations, 2018. These rules aim to ensure an aligned and consistent foreign investment policy and to enable  Digital Media: The activity/sector of ‘Digital the central government to exercise greater control over media’ has been introduced in the FDI policy vide Press capital flows as equity instruments. Note 4 of 2019 dated 18.09.2019, allowing 26% FDI under Government approved route in uploading/streaming of Consequently, FDI inflows have increased manifold in news & Current Affairs through Digital Media. the past five years as shown in data: S. Financial Year FOREIGN DIRECT INVESTMENT INFLOWS No. (April-March) (Amount in US$ Billion) Equity Inflows Reinvested Other Total FDI FIPB unincorporated Earnings capital bodies 1 2014-15 30.93 0.98 9.99 3.25 45.15 2 2015-16 40.01 1.11 10.41 4.03 55.56 3 2016-17 43.48 1.23 12.34 3.17 60.22 4 2017-18 (P) 44.86 0.67 12.54 2.91 60.98 5 2018-19 (P) 44.37 0.69 13.67 3.27 62.00 6 2019-20 (P) 16.33 0.16 3.23 1.59 21.31 upto June 2019 Cumulative FDI 439.23 15.62 143.35 30.58 628.77 inflows in India since 2000 (upto June 2019) Steps taken for improving business environment to attract FDIs Indicator Reforms implemented Starting a Business  Simplified Pro-forma for Incorporating Company Electronically (SPICe) - to make incorporation of companies possible within one working day by encapsulating 5 services viz. Name reservation, DIN, Incorporation, PAN and TAN  Value Added Tax (VAT) Registration is processed online.  In Mumbai, registration under Shops and Establishments -made online.  Registration with ESIC and EPFO -made fully online by eliminating all physical touch-points Dealing with Construction  Time taken in giving various approvals during the construction cycle of a building Permit has been brought down to 60 days  Risk based classification has been introduced for fast-pacing building plan approval, inspection and grant of occupancy-cum-completion certificate Getting Electricity  Number of procedures for obtaining an electricity connection reduced from 5 to 3. 26Department of Economic Affairs I  Time taken for obtaining an electricity connection has been reduced to 15 days  Application for connections above 100 kVA has been made mandatorily online in Mumbai and Delhi. Enforcing Contracts  The Arbitration and Conciliation Act, 2015 has been amended to reduce the time taken in arbitration proceedings.  National Judicial Data Grid (NJDG) was opened to general public on 19th September, 2015. NJDG is a national data warehouse for case data including case registration, cause list, case status and orders/judgments of courts across the country till District Level Courts. Paying Taxes  Mandatory online payments of contribution payment for ESIC and EPFO  Administrative charges for Provident Fund reduced from 1.10% to 0.65%  E-Assessment, e-proceeding and mandated e-filing of appeal has been introduced.  Reduction in corporate tax rate from 30% to 25% for domestic companies having turnover of below INR 500 Million in FY 2015-16  Goods and Service Tax (GST) has been rolled out on 1 July 2017, thereby subsuming all the indirect taxes  Time limit of completing the scrutiny reduced to from 2 years to 1 year Getting Credit  The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016 amended SARFAESI Act, 2002 to expand the scope of security interest and extend the coverage to all types of creditors.  Introduced provision whereby secured creditors are given priority over all other debts and revenues, taxes, cesses and other rates payable to the Central Government or State Government or local authority  Secured creditors’ rights are protected by providing clear grounds of relief and moratorium period of maximum 180 days to the secured creditors once the restructuring application has been admitted by NCLT  Two way integration of Ministry of Corporate Affairs (MCA21) database and CERSAI database Protecting Minority Investors Amended threshold for approving transactions with interested parties. Now, for transactions representing 10% or more of a company’s assets approval of shareholders would be required  With constitution of NCLT, several amendments as provided below have been brought in for Protecting Minority Investors. Trading Across Borders  Filing of import and export declarations and manifests has been made online with mandatory digital signature  Infrastructure development at the JNPT port by creation of parking plaza at all 4 Terminals. In addition to this improvement in the inter-terminal process has reduced pollution, fuel saving, TAT of trucks and cost of handling  24x7 Customs clearance facility is available at 19 seaports and 17 Air Cargo Complexes. Since January, 2017, the officials are working at the port 24x7 in shifts.  Mate Receipt for containerized cargo as been abolished. B) International Investment Treaties and Government obligations. The new Indian Model BIT text Framework (IITF) : is the base text for replacing the existing BIPA with and for having new agreements. The following steps/initiatives The main function of IITF Section is to negotiate and conclude Bilateral Investment Treaties (BITs) with taken by IITF Section are as under: other countries on the basis of the revised Model Bilateral Bilateral Investment Treaty (BIT) between the Republic Investment Treaty (BIT) Text which was approved by the of India and the Kyrgyz Republic has been signed on 14th Cabinet on 16th December, 2015. The new BIT text aims June, 2019 in Bishkek. to provide appropriate protection to foreign investors in India and Indian investors in the foreign country, in the Investment Cooperation and Facilitation Treaty (ICFT) light of relevant international precedents and practices, between Republic of India and Federative Republic of while maintain a balance between investor’s rights and Brazil has been signed on 25th January, 2020 in New Delhi. 27Annual Report 2019-2020 DEA represented India in Working Group on Investment Current Account Balance Monitoring Cell (WGI) in Regional Comprehensive Economic Partnership To monitor the impact of imports and exports having a (RCEP) Agreement in all the meeting (TNC, Ministerial, direct bearing on Current Account Balance, a Cell has Intersessional, Leaders Summit) till final round during been constituted in the Foreign Trade Section of 2019. Department of Economic Affairs, Ministry of Finance. The India is currently discussing and negotiating Bilateral Cell monitors trade and services data for identification of Investment Treaties through Video Conferences/face-to any sudden upsurge or reduction in imports and exports face meetings with Switzerland, UAE, Morocco, Mexico, in any tariff line of significance, including services. Ukraine, Russia, Mauritius, Argentina, Canada, Gold Monetization Scheme: With a view to mobilize Cambodia, Israel, Kuwait Oman and Saudi Arabia. the idle gold held by households and institutions in the C) FOREIGN TRADE & SERVICES (FT) country; and put this gold to productive use, e.g., by making available gold for the gems and jewellery sector; The main function of Foreign Trade (FT) section of and, over time to reduce the country’s dependence on Investment Division is dealing with the Policy matters the import of gold, Government launched the Gold related to Gold including Gold Monetisation Scheme Monetisation Scheme on 5th November, 2015. (GMS) & and Indian Gold Coin (IGC), drafting Policy for The Gold Monetization Scheme comprise of the promotion of Gold as a Financial Asset Class, Negotiation ‘Revamped Gold Deposit Scheme’ and the ‘Revamped of Investment Chapter under Comprehensive Economic Gold Metal Loan’ scheme, linked together. The minimum Cooperation Agreements (CECA)/ Comprehensive deposit at any one time shall be 30 grams of raw gold Economic Partnership Agreements (CEPA)/ Free Trade (bars, coins, jewellery excluding stones and other metals). Agreements (FTAs)/ Preferential Trade Agreement There is no maximum limit for deposit under the Scheme. (PTAs), and other multilateral agreements like APTA, Depositors may avail two options for deposit : BIMSTEC etc. negotiated under the aegis of Ministry of Short term bank deposit (1-3 years) and Commerce & Industry with various countries and regional  blocs, matters relating to EXIM Bank, ECGC and NEIA,  Medium and Long Term deposit (5-15 year) providing advice on references received from Ministry of Schemes GMS is running successfully. Till January 2020, Commerce and Heavy Industries, Coordination within approximately 20547 kilograms of gold have been Investment Division and CABMC Cell. mobilised under GMS. The details are as under: Details of Gold Mobilized under GMS (5th Nov, 2015 to 31st January, 2020 Sl.No. Types of Deposit Deposited gold as on 31.01.2020(in grams) 1 Cumulative Quantity of Gold (in grams) 20546628.929 a Short Term Gold Deposit 6938141.452 b Medium Term Gold Deposit 4941944.220 c Long Term Gold Deposit 8666543.257 2 Number of participating Banks 11 3 Number of depositors 2952 Indian Gold Coin domestically manufactured (Make in India) standard gold coins/bars in different denominations which may The Indian Gold Coin (IGC) promotes both Gold eventually replace the imported coins. Till January, 2020, Monetization Scheme & Make in India. It is manufactured 779.050 Kgs of Indian Gold Coin has been sold out as out of domestic gold (received under GMS) and it is per summary placed below: IGC SALES Details (5th Nov 2015 to 31st January 2020) Turnover Weight Qty. Sold Denomination-wise details ( in number) (In crores) Sold (In (in Nos.) Kgs) 5 GM 10 GM 20 GM Grand 257.569 779.050 85679 36542 38640 10497 Total 28Department of Economic Affairs I Investment ChapterNegotiations under CEPA/ the Trustee of NIIF and National Investment and CECA/FTAs- For the promotion of trade and investment Infrastructure Fund Ltd. (“NIIF Ltd.”) is the Investment relations with potential partner countries, a number of Manager, company, with GOI equity of 49% at present. CEPA/CECA/FTAs with Investment Chapter are being As on date, three funds i.e. National Investment and negotiated by the Government. DEA participated in India- Infrastructure Fund or Master Fund, NIIF Fund of Funds- Peru 5th Round of Negotiations, India-Korea CEPA 8th I and National Investment and Infrastructure Fund-II (or round of Upgrade Negotiations, India-APTA Third, Fourth Strategic Opportunities Fund) have been established and Fifth Meeting of Working Groups held during the year. under the NIIF platform and registered with SEBI as D) DOMESTIC INVESTMENT (DI) Category II Alternative Investment Funds. A trusteeship company NIIF Trustee limited (NIIFTL) monitors the A. National Investment and Infrastructure Fund functioning of the funds. NIIF Funds are managed on a (NIIF) - day-to-day basis by NIIF Limited, a company registered 1. Background: under the Companies Act, 2013 and regulated by SEBI as a fund manager of the three SEBI-registered AIFs in The establishment of the NIIF was announced vide para NIIF. Government of India has made a commitment of 47 of the Budget Speech, on 28th February 2015 and INR ~20,000 crore across three funds established under approved by the Union Cabinet on 28.7.2015. It was umbrella of NIIF. envisaged that the NIIF would attract equity investments from both domestic and international sources for MD & CEO, NIIF, recently met PMO on December 18, infrastructure development in commercially viable 2019, to give an update on the activities undertaken by projects, both greenfield and brownfield, including stalled NIIF and the proposed Global Investor Summit, 2020. projects. NIIF has been registered as a Category II 2. CURRENT STATUS OF NIIF: COMMITMENTS Alternate Investment Funds (AIF) under SEBI AND RECEIPTS OF FUNDS Regulations. National Investment and Infrastructure Fund Trustee Ltd. 2.1 Commitments and Investments by ALL (“NIIF Trustee Ltd.”), which is a 100% Govt. company, is Investors (as on 30.11.2019)* Capital Actual Funds Commitments in Received Fund Co-Investment Total 30.11.2019 (INR Fund (INR Crores) Commitments Commitments Crores) Master Fund 12,371 17,248 29,619 2,159 GoI 6,060 - 6,060 1,058 ADIA 1,625 4,875 6,500 284 Temasek 687 2,061 2,748 120 OTPP 1,719 5,156 6,875 300 Australian Super 1,719 5,156 6,875 300 DFI (Indian Investors) 561 - 561 97 Fund of Funds 3,938 - 3,938 634 GoI 3,250 - 3,250 600 AIIB 687 - 687 34 Others 1 1 0 Strategic Opportunities Fund 10,691 - 10,691 666 GoI 10,690 - 10,690 666 Others 1 - 1 0 Total 27,000 17,248 44,248 3,459 *Post No vember 2019, Master Fund achieved it’s fourth close with CPPIB on 18th December 2019. This has resulted in Master Fund achieving a fund raiseof INR 14,450 crore vis-à-vis its initial target size of INR 14,000 crore. CPPIB has committed INR equivalent of USD 150 million in the Master Fund with co-investment rights of USD 450 million. Accordingly, corresponding to CPPIB commitment, the 49% GoI commitment have also increased. 29Annual Report 2019-2020 2.2 Actual Status of Commitments and Investments made by Funds All amounts are in INR crores Commitment Total Capital Commitment by platform Commitment invested by Master Fund by Fund partners Fund* 30.11.2019 Hindustan Infra Log Private 1,240 2,300 3,540 984 Limited Ayana 629 1,790 2,420 172 Roads** 1,240 1,240 700 - Smart Meters 1,050 1,009 2,059 - EESL JV*** Mumbai 2,728 5,455 725 Airport**** Total 6,887 11,794 18,622 1,881 * Amount invested excludes any management fees and operating expenses ** Of which INR700 Crores is expected to be committed towards acquisition of first 2 assets *** Proposed capital allocation from the Master Fund **** Definitive documentation has been completed for the investment; Deal under arbitration; Amount drawn down of INR 725 crore for supporting Escrow arrangement required under arbitration. Actual Funds Capital Total Capital committed Released by Fund of Fund committed by commitments by Fund FOF other investors 31.10.2019 Green Growth 1,080 1,304 2,384 142 Equity Fund HDFC Capital Affordable Real 660 3,630 4,299 423 Estate Fund-2 Multiples Private 8,780* 2,492 11,272 - Equity Fund III Total 10,520 7,426 17,955 565 *Committed on October 2019. Fund is expected to start drawing only in Q4FY20 Strategic Opportunities Fund Capital committed by Fund Capital invested by Fund* Infra Debt Platform 800 519 Total 800 519 * : Amount invested excludes any management fees and operating expenses 30Department of Economic Affairs I 3. OTHER SIGNIFICANT DEVELOPMENTS meter implementation contracts for various state electricity distribution companies (“discoms”). NIIF will 3.1 The first fund registered by SEBI is National own 51% stake in the SPV while EESL will own the Investment and Infrastructure Fund, or Master Fund, remaining 49% stake. This will be an exclusive which aims to focus on investing in companies and arrangement wherein EESL will procure contracts from projects in core infrastructure sectors such as various discoms and bring each such contract to the SPV transportation, energy, telecom, urban infra, etc. The for funding and implementation. SPV will also have the Master Fund investors currently include Government of right to bid for any smart meter related contract/tender India, Abu Dhabi Investment Authority (ADIA), Ontario floated by any discom. The definitive documentation for Teachers, Australian Super, Temasek, Axis Bank Ltd, this partnership were signed in Aug 2019; incorporation HDFC Asset Management Company Ltd, HDFC Standard of the company and recruitment of key management Life Insurance Company Ltd, Housing Development personnel for the SPV is currently underway and is Finance Company Ltd, ICICI Bank Ltd, and Kotak expected to be completed by end of Q1 CY2020. Mahindra Life Insurance Company Limited. Target size for Master Fund is INR 14,000 crore and it has raised Investment pipeline: NIIF Master Fund is actively 12,370 crore as on November 30,2019. evaluating opportunities in the airports, mid/downstream oil and gas and telecom sector. The Fund recently 3.2 Master Fund Investments completed definitive documentation for acquisition of a Ports and logistics platform: NIIF Master Fund created controlling stake in Mumbai International Airport Limited Hindustan Infralog Private Limited (HIPL), a joint venture in partnership with Abu Dhabi Investment Authority (ADIA) with DP World, a global ports operator. HIPL’s current and PSP Investments. portfolio includes: a) controlling stake in Continental 3.3 NIIF Fund of Funds-I: In March 2019, the Fund of Warehousing Corporation (CWC), leading multi-modal Funds (‘FoF’) admitted Asian Infrastructure Investment logistics company; b) 60-year concession to develop and Bank (AIIB) as the anchor investor with a US$100 million operate an 18 hectare free trade warehousing zone commitment and a potential US$100 million prior to the (FTWZ) in Mumbai at an estimated cost of $78m; c) final closing of the FoF. With this closing, the FoF capital controlling stake in a cold chain business. In addition, HIPL has recently acquired 76% stake in KRIBHCO commitment is now US$600 million (including GOI’s Infrastructure Limited (KRIL), a logistics company commitment of US$500 million). Target size of FoF is operating PFTs-cum-ICDs along with container train INR 6500 crore (~USD 1 billion) operations, this transaction expected to be closed in Q4 3.4 Renewables Platform: CY2019. The Green Growth Equity Fund (GGEF) is the first Renewables platform: NIIF Master Fund alongside investment of NIIF’s Fund of Funds-I. FoF and the UK Green Growth Equity Fund (GGEF) has acquired 51% Government through DFID (Department of International stake (25.5% stake each) in Ayana India. Ayana is focused Development), as Anchor investors have committed INR on developing and operating renewable power projects 10,800 million (~GBP 120 million) each into the Fund. It in India. It was created by CDC-UK in March 2017 and is managed by EverSource Capital, an equal joint venture CDC-UK continues to own 49% stake in Ayana post the between Everstone Group and Lightsource BP. transaction. NIIF Master Fund has committed to invest GGEF will invest in scalable green and sustainable $85m into Ayana in the first tranche. Ayana currently has businesses across the themes of renewable energy, a portfolio of 800MW of solar power projects which are energy efficiency, e-mobility and resource conservation. in different stages of development. GGEF has set up 4 platforms and overall has committed Roads platform: NIIF Master Fund has signed definitive ~59% of the current fund size to the various platforms. documents to create the roads platform in partnership  Ayana India, a utility scale renewables platform: with Roadis, a wholly owned subsidiary of PSP GGEF has committed ~INR 6,290 million to this Investments. The platform will target to jointly invest equity platform, along with an equivalent amount of co- of up to USD 2.1 billion to create one of the largest roads investment from the NIIF Master Fund. Ayana platform in India. NIIF is conducting diligence for India currently has a portfolio of 800MW of solar acquisition on 3 large portfolios of operating roads power projects which are in different stages of projects. It also recently submitted a binding bid for development. acquisition of operational road projects of ITNL as well as TOT-3 assets. NIIF has also entered into an MOU  Radiance Renewables, a commercial and with NHAI for financing of the expressway projects. industrial distributed energy platform: GGEF is incubating this platform and has committed ~INR Energy Efficiency Platform: NIIF and Energy Efficiency 2,830 million to this platform. Services Limited (EESL) have created a new platform SPV which will be engaged in funding, implementing and  EverEnviro Resource Management, an maintaining the smart meter infrastructure for the smart integrated waste management platform: This 31Annual Report 2019-2020 platform will look at opportunities in the across (‘IFL’), a Non-Banking Finance Company (‘NBFC’) Municipal Solid Waste (C&D, C&T and WtE), registered with the Reserve Bank of India (‘RBI’) as an Industrial / Hazardous / E-waste and Effluent Infrastructure Debt Fund (‘NBFC-IDF’), for a consideration treatment. GGEF is incubating this platform and of INR ~517 crores. HDFC Limited, an 11% existing has committed ~INR 2,050 million. shareholder, will continue to remain invested in the IDF. The Strategic Opportunities Fund intends to create an  GreenCell Mobility, a e-mobility platform: This infrastructure debt financing platform to address the platform will provide mobility as a service by shortage of long-term debt for infrastructure projects. The owning and operating e-buses. GGEF has acquisition of the IDFC Infrastructure Debt Fund is the committed ~INR 2,800 million to this platform. first step in the execution of this strategy. Following the GGEF continues to evaluate investment opportunities acquisition, the name of the Company has now been within the platforms and other sectors within their changed to NIIF Infrastructure Finance Limited (‘NIIF investment mandate. IFL’). 3.5 Affordable Housing Fund Investment: FoF has The IDF has a current loan book of 60+ assets amounting made its second investment in HDFC Capital Affordable to INR 4,800+ crores and zero gross NPAs. Post the Real Estate Fund-2 (HCARE-2). NIIF has committed INR firstclosing, NIIF has been actively involved in a number 660 crores to HCARE2 in October 2018, while the other of key initiatives to ensure a smooth transition of the investor is ADIA has joined with an INR 3,300 crore business and to support its continued growth. These commitments. This fund is managed by HDFC Capital include: Advisors. The target sectors of this fund are urban Mid-  Debt Funding: Leading discussions for arranging income and affordable housing in key large cities. debt funding from large Indian institutions (e.g. LIC, HCARE2 has already committed to invest >80% of the SBI) and international institutions (e.g. IFC, ADB, fund; >60% of NIIF’s commitment has been funded. Projects underlying these investments collectively CDPQ, SMBC and select other investors) to facilitate comprise of ~ 52.5 million sqft of saleable area. HCARE2 debt funding raising for continued growth of the has also started payment of distributions to FoF. As on business; LIC and SBI have recently sanctioned debt September 2019, ~INR 16.7 crore has been received as funding of INR 500 crore each to IFL. distributions.  Loan Book: Discussions with the State Bank of 3.6 Growth Equity:FoF’s third commitment is to India (‘SBI’) and certain private sector banks to take Multiples Private Equity Fund III (Fund III), a mid-market over infrastructure loans on a selective basis; growth equity fund. The fund is currently being raised  Governance: (i) Undertaken a detailed review of and it is managed by Multiples Alternate Asset policies to strengthen the governance framework Management. NIIF has committed INR 8,780 million including enhancing the quality of credit committee (~USD 125 million) at first close of Fund III, which has with addition of nominees on the credit committee also seen participation from some of the leading with extensive underwriting experience. (ii)Transition multilaterals and pension funds. of relevant business and support functions out of Multiples is one of the leading managers in the mid- IDFC to enable IFL to operate as a stand-alone entity market space in the country with previous track record of successfully raising and deploying 2 funds and USD ~ 1 As part of the transaction structure, to acquire the balance billion in a similar strategy, over the last decade. This 30% equity stake, NIIF-II has incorporated Aseem fund will enable provision of equity capital into the Indian Infrastructure Finance Limited (‘AIFL’). AIFL has received mid-market segment allowing them to scale-up over a an in-principle approval from RBI for registration as a period of time. A large portion of the capital is expected NBFC-Infrastructure Finance Company (NBFC-IFC). to be channeled into sectors that have strong returns AIFL at incorporation has been capitalized with INR 2 potential as well as high direct and indirect development crores and is expected to be capitalized further to comply impact. with the RBI regulations on Net Owned Funds for NBFC- 3.7 NIIF Strategic Opportunities Fund or NIIF -II IFCs. The third fund i.e NIIF-II has been established to invest largely in equity and equity-linked The second tranche (acquisition of balance 30% equity instruments. The Strategic Opportunities Fund will stake by AIFL from IDFC) is expected to close in Q4 FY20. focus on securing minority or majority stakes in growth It is expected that the IFL and AIFL will capitalize on the companies /assets whose products and services cater synergies and work in a complimentary manner to to the domestic India market and are likely to enjoy stable become a significant player in the Indian infrastructure growth over the next decade. debt financing segment. 3.8 Infra Debt Platform: It is also expected that the NIIF debt financing platform NIIF-II has acquired a controlling interest (~59% equity will attract further international capital (equity and debt) shareholding) in IDFC Infrastructure Finance Limited into the Indian infrastructure sector. 32Department of Economic Affairs I 3.9 Fund Raising: steering committee under the chairmanship of Secretary Economic Affairs, to consider various issues relating to Master Fund: development of FinTech space in India with a view to As of November 2019, the Master Fund had reached a make FinTech related regulations more flexible and size of INR 12,370 crore. In addition, Master Fund has a generate enhanced entrepreneurship in an area where co-investment pool of INR 17,250 crore. Investors in the India has distinctive comparative strengths vis-à-vis other Fund include Ontario Teachers’, AustralianSuper, Abu emerging economies. The other Members of the Dhabi Investment Authority, Temasek, Kotak Life, Axis Committee were MSME, MeitY, DFS, CBEC, UIDAI, RBI, bank, HDFC Group and ICICI Bank. SEBI and Invest India. The Committee deliberated on Note: –Master Fund achieved it’s fourth close with CPPIB how FinTech can be leveraged to enhance financial on 18th December 2019. This has resulted in Master Fund inclusion of MSMEs. A sub group under this committee achieving a fund raiseof INR 14,450 crore vis-à-vis its was also formed with a view to enable flow based lending, initial target size of INR 14,000 crore. CPPIB has using the Goods and Services Tax Network (GSTN) data committed INR equivalent of USD 150 million in the base for creating a repository of ‘trusted invoices’, to be Master Fund with co-investment rights of USD 450 million. made available to lenders through an Open Application Fund of Funds: Programming Interface (API) system. The committee submitted its report to the Hon’ble Finance Minister ADB has received board approval of USD 100 mn (INR on 2nd September. The report was circulated to the equivalent) investment in the Fund of Funds. Negotiations concerned Ministries/Departments for taking on key terms is underway. necessary action on the recommendations made in NIIF has engaged with NDB who has expressed interest the report. Further, an Inter Ministerial Steering in investing into the FoF. NDB has completed its due- Committee (IMSC) has been set up in Department of diligence and will present it in their upcoming board Economic Affairs for implementation of meeting. recommendations made in the report. Other discussions: B. SWAMIH: Sanabil, Saudi Arabia – Sanabil, an entity of PIF has A “Special window” Fund has been launched to provide completed due-diligence on NIIF Funds. Next steps are last mile funding to stressed affordable and middle- awaited from Sanabil. income housing projects, which would in turn provide relief 4. Strategy and Policy: to developers that require funding to complete unfinished projects and consequently ensure delivery of homes to NIIF has been working closely with government and other stakeholders to develop and refine investment ideas in the home-buyers. The Special window Fund is in the form infrastructure. NIIF has conceptualised newer financing of one or more Alternate Investment Funds (“AIFs”). structures for large highway/expressway projects under Contributor to the fund will be Government of India, banks NHAI and logisitics projects under DMICDC. The Fund and other financial institutions. is working with the Indian Railways on an investment The”Special Window” will be managed by one or more approach for developing and modernising railway professional asset or investment management stations. companies; or through any other suitable structure or In parallel, NIIF has also been providing assistance to arrangement as may be approved by the Department of help strengthen the investment environment for the Economic Affairs in consultation with the stakeholders. infrastructure sector. For instance, NIIF is contributing to The total commitment of funds to be infused by the the working group on the National Infrastructure Pipeline Government in the affordable and middle-income group for conceptualising the INR 100 trillion infrastructure housing sector through the AIFs under the Special investments. NIIF worked with GOI to deliberate and Window would be up to INR 10,000 crores, which may resolve outstanding investors’ concerns relating to InvITs be released when required, through appropriate budget and Infrastructure Debt Funds. The team also played a allocations. Government’s contribution towards the role in the working group on the NABH Nirman Airports Special Window would not be allowed to fall under 10% Policy and actively contributed to the recent airports of the total contributions made under Special Window, concessioning process. unless an approval in this regard is taken from the Hon’ble A. FinTech - Finance Minister. Steering Committee on Fintech: In pursuance of the Budget Announcement of 2018-19 regarding the need to The first fund/AIF formed/funded under the Special promote FinTech ecosystem in India to help growth of Window has made its first closing with investment amount MSMEs, Department of Economic Affairs constituted a of INR 10,530 crores on 6.12.2019. 33Annual Report 2019-2020 8. FB & ADB Division to approximately USD 23.4 billion with an undisbursed balance of USD 14 billion. The World Bank projects are 8.1 Introduction spread across sectors like Urban Development, Transport, Education, Health, Rural Development, 8.1.1 The FB & ADB Division is concerned with policy Panchayati Raj Institutions, Irrigation, Water Supply matters of Multilateral Institutions like World Bank, Power, Tourism, Governance, Environment & Forest etc. International Monetary Fund (IMF), Asian Development Major World Bank assisted projects are Swachh Bharat Bank (ADB), IFC, MIGA and related Institutions. FB & Mission Support Operation, National Ganga River Basin ADB Division is also the nodal point for facilitating and Project, Dam Rehabilitation & Improvement Project, monitoring Externally Aided Projects (Central & State PMGSY Rural Roads Project, National Rural Livelihoods Projects all over India) which are being implemented Project, Skill India Mission Operation etc. through Multilateral Development Banks and other related Trust Funds / Loans / Grants. In addition, it also deals 8.5 Major activities pertaining to the World Bank with Global Development Network (GDN), Global Alliance in 2019-20 for Vaccines and Immunization (GAVI), The Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM) and 8.5.1 Loan Signed & Disbursement: Nine World Global Facility for Disaster Reduction and Recovery Bank assisted (IBRD) projects were signed during April- (GFDRR). November 2019, amounting to USD 2.26 billion of assistance. The projects signed during year 2019 included 8.2 World Bank Group The First Resilient Kerala Program Development Policy 8.2.1 The World Bank is among the world's leading Operation, Jharkhand Municipal Development Project, development institutions with a mission to fight poverty Rajasthan State Highway Development Project Phase- and improve living standards for people in the developing II, UP Core Road Network Development Project, Odisha world by promoting sustainable development through Integrated Irrigation Project for Climate Resilient loans, guarantees, risk management products and (non- Agriculture, Tamil Nadu Health System Reform Program, lending) analytic and advisory services. The World Bank Program towards Elimination of Tuberculosis, Andhra is one of the United Nations' specialized agencies. The Pradesh Health Systems Strengthening Project and the World Bank concentrates its efforts on reaching the Uttarakhand Public Financial Management Strengthening Millennium Development Goals aimed at sustainable Project. Total Disbursement for the period April to poverty reduction. November 2019 was approximately USD 2.43 billion (IBRD approximately USD 1.81 billion). 8.2.2 India is member of four institutions of the World Bank Group viz., International Bank for Reconstruction 8.5.2 Monitoring of the World Bank Portfolio: and Development (IBRD); International Development Portfolio performance has improved over the years as a Association (IDA); International Finance Corporation result of regular review meetings such as Tri-partite (IFC) and Multilateral Investment Guarantee Agency Review Meetings for ongoing projects and Pipeline (MIGA). India has been accessing funds from the World Review Meetings for pipeline projects. The meetings are Bank (mainly through IBRD) for various developmental organised jointly by Government of India and World Bank projects. Fund Bank & ADB Division, DEA is the focal and attended by officials from Department of Economic point for India being represented in the WBG meetings Affairs (DEA), World Bank and Implementing Agencies for international level deliberations to discuss policy issues of World Bank assisted projects. During April - November, pertaining to the World Bank Group as also to undertake 2019, two Pipeline Review Meetings were held on August projects with assistance from the World Bank (IBRD). 22, 2019 and November 18, 2019 and one Tri-Partite Portfolio Review Meeting was held on May 30-31, 2019 8.3 India and World Bank Group for reviewing World Bank assisted projects of various 8.3.1 In the Resolution of Capital Increase of the sectors. Another TPRM for ongoing projects is being held International Bank for Reconstruction and Development in Bhopal from 4-6 December, 2019. (IBRD) (adopted on October 1, 2018) India was allocated 8.5.3 India as donor to IDA: During the IDA 18 additional 15,252 shares (through General Capital Replenishment Meetings, it was announced by India that Increase and Selective Capital Increase). India became it would prefer the Word Bank Group to meet its needs the 7th largest shareholder in IBRD with a total through IBRD resources and hence, part of the IDA subscription of 3.11%. The Resolution provides that resources offered to India as transition support be made members will have 5 years from the date of adoption of available to meet the needs of other IDA clients. Thus, the Resolutions to subscribe their allocated shares. India would no longer be a borrower from IDA. As a commitment to India's shared objective of eliminating 8.4 World Bank India Portfolio extreme poverty, reducing vulnerability and increasing 8.4.1 The World Bank India portfolio as of November resilience across countries, India decided to become 30, 2019 comprises approximately 96 projects amounting donor to IDA with a contribution of USD 200 million to 34Department of Economic Affairs I IDA 17 replenishment. In furtherance of its commitment Roundtable organized by the USIBC and CII. The Hon'ble towards the IDA countries, India announced a pledge of Finance Minister also held bilateral meetings with Mr.Sajid INR 12.25 billion as its contribution towards IDA 18 Javid, Chancellor of Exchequer United Kingdom, Rt. Hon. replenishment. Payment of the third and final instalment Alok Sharma, Secretary of State for Development of the of INR 4,083,340,000 towards India's contribution to IDA United Kingdom, Mr. Hong Nam Ki, Finance Minister and 18 is due in January 2020. Discussions around the Deputy Prime Minister of South Korea, Mr. Anton Siluanov, Nineteenth Replenishment of IDA have begun. The first First Deputy Prime Minister and Finance Minister of replenishment meeting of IDA 19 was held in Washington Russia, Ms. Baktygul Jeenbaeva, Finance Minister of the DC during 14-15 April 2019. The second replenishment Kyrgyz Republic, Mr.Ulei Maurer, Finance Minister of meeting was held during 17-20 June 2019 in Ethiopia. Switzerland, Mr. Josh Frydenberg, Australian Treasurer, The third replenishment meeting was held from October Mr. Ibrahim Ameer, Finance Minister of Maldives, Steven 21-22, 2019 in Washington DC. The fourth and final Mnuchin, US Treasury Secretary, Mr. Roberto Gualtieri, meeting will take place on December 12-13, 2019 in Italian Minister of Economy and Finance, Mr.Tharman Stockholm, Sweden. Shanmugaratnam, Senior Minister and Coordinating Minister for Social Policies of Singapore, Mr. David 8.6 Meetings of Fund Bank Malpass, President of the World Bank Group, 8.6.1 The Spring Meetings of the IMF/World Bank Mr.Masatsugu Asakawa, Special Advisor to Japanese meetings of G-20, BRICS and investor/ other associated Prime Minister and Candidate for the post of President ADB, Mr. Tadashi Maeda, Governor of JBIC, Mr. Bill meetings were held in New York and Washington DC, Winters, Global CEO of Standard Chartered. The USA from April 9-13, 2019. The Finance Ministry Secretary, Economic Affairs addressed a group of delegation led by the Hon'ble Finance Minister comprised investors in a seminar organized by JP Morgan. The Secretary (DEA), CEA, Director (IMF) and Director (WB). Secretary, Economic Affairs also held bilateral meetings The Hon'ble Finance Minister held investor meetings viz. with Mr. Brent McIntosh, Under Secretary of the US Business Roundtable organized by CII-USIBC and Treasury, Ms. Odile Renaud-Basso, Director General of Financial Sector Business Roundtable organized by the French Treasury, Ms. Anshula Kant, MD and CFO of FICCI-USISPF. The Secretary (DEA) held investor the WBG, Mr. Akihiko Nishio, VP (Development Finance), meetings viz. FPI Roundtable organized by HSBC and WB, Ms. Ceyla Pazarbasioglu-Dutz, VP (EFI), WB, Senior USIBC, closed door Dinner Roundtable with management and analysts of Moody's. representatives of the US Industry hosted by USISPF. The Secretary (DEA) also held bilateral meetings with 8.7 International Finance Corporation (IFC) Mr. Nicholas Stern, former Member of the G20 EPG , Mr. Mark Bowman, DG of International Finance, UK , Her 8.7.1 International Finance Corporation (IFC), a Majesty Queen Maxima of Netherlands, as UN Secretary member of the World Bank Group, focuses exclusively General's Special Advocate on inclusive Finance for on investing in the private sector in developing countries. Development, Mr. Luis Alberto Moreno, President IDB, Established in 1956, IFC has 184 members. India is Dr. Mohammad Humayon Qayoumi, Afghan Finance founding member of IFC. IFC is an important Minister, Mr Takehiko Nakao, President ADB, Mr. Marco development partner for India with its operations of Buti, DG ECFIN, Ms. Odile Renaud Basso, Head of the financing and advising the private sector in the country. French Treasury, Mr Alexander De Croo, Finance Minister India has a shareholding of 4.01%, the sixth largest along of Belgium, CEO - World Bank, CEO - IFC and MIGA with that of the Russian Federation. India holds 3.82% of and Mr. David Lipton, First Deputy MD of IMF. the voting power. India's Executive Director represents a constituency equal to 4.61% voting power. There are three 8.6.2 The Annual Meetings of the IMF/ World Bank, other countries in India's constituency at the IFC, viz. meetings of G-20, BRICS and investor/ bilateral and other Bangladesh, Bhutan and Sri Lanka. IFC has committed associated meetings were held in New York, Washington over USD 20 billion in India since the first investment in DC and Chicago, USA from October 15-20, 2019. The 1958. Currently, IFC investments are spread over 200 Finance Ministry delegation led by the Hon'ble Finance clients in India. As of June 2019, IFC's own account Minister comprised Secretary (DEA), Additional Secretary committed portfolio in India stood at approximately USD (FB and ADB), PS to FM, Director (IMF), Director (WB), 6.9 billion, making India IFC's largest portfolio exposure Director (IER) and Deputy Secretary (Investment). The accounting for about 12% of its global portfolio. India is Hon'ble Finance Minister addressed the Columbia also one of IFC's largest advisory client, as well as the University's School of International and Public Affairs and IFC regional hub for South Asia. The IFC's investments met with a group of economists organized by the CII at in India are spread across priority sectors like the Indian Embassy. The Hon. FM also held investor infrastructure, manufacturing, financial markets and meetings viz. Roundtable organized by USISPF and SMEs, affordable housing, renewable energy, low-income FICCI, in collaboration with Bank of America, global states, gender development and climate change. Keeping investors' meet organized by FICCI and USISPF, in alignment with the Country Partnership Strategy (CPS) 35Annual Report 2019-2020 of the World Bank Group, IFC uses its private sector a). India’s Quota and Ranking: The 2010 IMF expertise to support the economic growth that is inclusive, Quota and Governance Reforms (including the 14th productive and sustainable. IFC continued to deliver over General Reforms of Quotas) came into effect on January USD 2.0 billion in FY19 (July 2018-June 2019) with a 26, 2016. Consequently, India's quota in the IMF is SDR commitment of USD 2.3 billion (including mobilised 13,114.40 million with a shareholding of 2.75%. India financing) in India. Under its Five-Year Country Strategy ranks 8th in terms of quota holding in IMF. Consequent that covers the period of FY17 through FY21, IFC is to this Quota Increase in IMF, India has provided for the aiming to invest USD 2-3 billion (including mobilization) Quota increase of SDR 7292.9 million under the 14th per annum. During FY19, DEA has approved a total of General Review of Quotas as SDR 1,823,225,000 31 Article III Notifications; further, DEA has granted through India's SDR holdings for Reserve Asset Portion approval for five advisory engagements of IFC between (25% of quota increase) and SDR 5,469,675,000 for Local July 2017 and June 2018 and six since July 2018. Currency Portion (75% of quota increase) through issuance of non-interest bearing, non-negotiable 8.8 International Monetary Fund (IMF) Government of India Rupee Securities. 8.8.1 India is a founder member of the International b). India’s contribution to New Arrangements Monetary Fund, which was established to promote a to Borrow (NAB): In April 2009, the G-20 agreed to cooperative and stable global monetary framework. At increase the resources available to the IMF by up to $500 present, 189 nations are members of the IMF. Since the billion (which would triple the total pre-crisis lending IMF was established, its purposes have remained resources of about $250 billion) to support growth in unchanged but its operations - which involve surveillance, emerging market and developing countries, viz. through financial assistance and technical assistance - have bilateral financing from IMF member countries; and by developed to meet the changing needs of its member incorporating this financing into an expanded and more countries in an evolving world economy. The Board of flexible New Arrangements to Borrow (NAB). As part of Governors of the IMF consists of one Governor and one efforts to overcome the global financial crisis, in April Alternate Governor from each member country. For India, 2009, G-20 economies agreed to increase the resources the Finance Minister is the ex-officio Governor on the available to the IMF by up to $500 billion to support growth Board of Governors of the IMF. There are three other in emerging market and developing countries. The countries in India's constituency at the IMF, viz. increase was made through (i) increase in bilateral Bangladesh, Bhutan and Sri Lanka. Governor, Reserve financing from IMF members and (ii) by incorporation of Bank of India (RBI) is India's Alternate Governor. this financing into an expanded and more flexible NAB. 8.8.2 Meetings of Board of Governors: The Board The amended NAB, which became effective on March of Governors usually meets twice a year viz. the Spring 11, 2011 increased the maximum amount of resources Meetings and the Annual Meetings of the IMF and World available under NAB to SDR 370 billion from SDR 34 Bank to discuss the work of the respective institutions. billion. At the heart of the gathering are meetings of the IMF's The NAB was rolled back from SDR 370 billion International Monetary and Financial Committee (India to SDR 182 billion, pursuant to the effectiveness of the is represented by the Finance Minister in IMFC) and the 14th Review quota increase resulting in a decline in the joint World Bank-IMF Development Committee (DC), financing ratio (NAB: quota) from 3:1 to 1:1. However, which discusses progress on the work of the IMF and the NAB continues as a standing facility and the rolled World Bank. The 2019 Spring Meeting of the International back NAB resources continue to be counted toward the Monetary Fund and World Bank Group was held in New Fund's overall lending capacity. As NAB arrangement York and Washington DC, USA from April 9-13, 2019. expired on November 16, 2017, India had already The Annual Meetings of the IMF and World Bank was concurred to the proposal to renew the NAB for a period held in New York, Washington DC and Chicago, USA of five more years upto November 2022. during from October 15-20, 2019. c). India’s contribution to Bilateral Borrowing 8.8.3 India and IMF: The membership of the Fund is Arrangements (BBA): BBAs are used as a third line of committed to maintain a strong, quota-based, and defense after quota and NAB resources are exhausted adequately resourced IMF. IMF's total resources presently substantially. At the Los Cabos G20 Summit in 2012, the include the following: IMFC and G20 jointly called for further enhancement of a. Quotas: Primary source of financing for IMF resources for crisis prevention and resolution through lending; temporary bilateral loans. This included BRICS countries b. New Arrangements to Borrow (NAB) acts wherein USD 10 billion was contributed each by India, as the second line of defence i.e. after quota Brazil and Russia. India's commitment of contributing resources are exhausted substantially; and USD 10 billion is implemented through the mechanism c. Bilateral Borrowing Agreements (BBAs) of Note Purchase Agreement (NPA) between Reserve provide a third line of defence. Bank of India (RBI) and the IMF. 36Department of Economic Affairs I India has agreed to commit USD 10 billion to the subscription is US$10.3 billion. India is holding 6.317% BBA 2016 as on August 10, 2017, which was to expire in of shares, totalling 672,030 shares {@US $ 12063.5 per December 2019. However, India has consented to a one- share), in ADB. India has 5.347% voting rights. Japan year extension of term through December 31, 2020 of and the US represent the largest shareholders with the Note Purchase Agreement to effect the BBA 2016 15.571% each of shares. China and India are the third between IMF and RBI. (6.429%) and fourth (6.317%) largest shareholders respectively. 8.8.4 South Asia Regional Training and Technical Assistance Center (SARTTAC) : A Memorandum of 8.9.3 ADF is a special fund of ADB, which is utilized Understanding was signed between India and for extending financial support to Group A (and selectively International Monetary Fund for setting up of South Asia Group B) member countries, which have lesser credit Regional Training and Technical Assistance Centre worthiness and are prone to debt distress and other (SARTTAC) in India by the International Monetary Fund vulnerabilities. India became a donor to Asian on March 11, 2016. The Centre has been officially Development Fund (ADF) since July 2014 and contributed inaugurated on February 13, 2017. SARTTAC serves US$ 30 million for the 11th Replenishment of ADF. For six member countries of Bangladesh, Bhutan, India, ADF-XII, India has pledged an amount of US$40 million. Maldives, Nepal & Sri Lanka. It provides training to ADB provides concessional finance through ADF to the government & public sector employees, enhance their Developing member countries based on the agreed technical and analytical skills and improve the quality of yardsticks. their inputs into policy. It also provides technical 8.9.4 Asian Development Bank has a Board of assistance to governments and public institutes in various Governors (BoG), a Board of Directors (BoD), a areas such as macroeconomic policy, macro & micro President, six Vice Presidents and other necessary prudential regulation, financial sector supervision as well officers & staff. Like other members, India is also as national accounts statistics and forecasting. represented on the BoG. The Finance Minister of India India has contributed USD 32.8 million of which is the designated Governor for India. All the powers of the first installment of USD 15.0 million to SARTTAC was the Bank vest in the BoG. The BoG exercises its powers paid in August, 2016 and the balance USD 17.8 million and functions with the assistance of the BoD, to whom was paid in November, 2017. powers are delegated for specific functions. India is represented in the BoD by a nominee of the GOI as 8.8.5 Article IV Consultations : Under Article IV of Executive Director (ED). ED is supported by officers from the IMF's Articles of Agreement, the IMF holds bilateral India (two Advisers and one Executive Assistant). discussions with members, usually every year, to review 8.9.5 Annual Meetings of BoG is held in a member the economic status of the member countries. Article IV country in early May every year. Annual meetings are consultations are generally held in two phases. During occasions for Governors of ADB members to provide this exercise the IMF mission holds discussions with the guidance on ADB administrative, financial, and RBI and various line Ministries / Departments of Central operational directions. The meetings provide Government. The Article IV Consultations are concluded opportunities for member governments to interact with with a meeting of IMF Executive Board at Washington ADB staff, non-government organizations (NGOs), media, DC which discusses the Article IV Report. The Annual and representatives of observer countries, international Article IV Mission with International Monetary Fund was organizations, academia and the private sector. 46th held during Aug 20 - Sep 3, 2019. Annual Meeting of ADB was hosted by India during 2-5 8.9 Asian Development Bank May, 2013 in New Delhi. The 52nd Annual Meeting of ADB was held in Fiji during May 1-4, 2019. Bilateral 8.9.1 Membership of ADB: India became a founding meetings were held with a number of countries on the member of the Asian Development Bank (ADB) in 1966. sidelines of the Annual Meeting. The Bank is engaged in promoting economic and social progress of its developing member countries (DMCs) in 8.9.6 ADB assistance to India commenced in 1986. ADB's annual sovereign lending in India increased to an the Asia Pacific Region. The main instruments that it uses all-time high of US$3.03 billion in the calendar year 2018. to do this are making loans and equity investments, The disbursement and contract awards also rose to an providing technical assistance for the preparation and all-time high figure of US$2.19 billion and US$2.46 billion execution of development projects and programs and other respectively. During the year 2019, sovereign lending is advisory services, guarantees, grants and policy dialogues. expected to go even higher to US$3.18 billion. The 8.9.2 ADB has 68 members (including 49 regional and ongoing portfolio of ADB projects in India (sovereign 19 non-regional members), with its headquarters at lending) consists of 77 loans for US$13.8 billion (on Manila, Philippines. ADB's authorized & subscribed commitment basis). On approval basis, the portfolio capital stock is US$163.12 billion of which India's consists of 79 sovereign loans for US$14.5 billion. ADB's 37Annual Report 2019-2020 private sector investments in India include projects in 8.9.9 South Asia Sub-regional Economic Cooperation renewable energy, financial inclusion, railways, health etc. (SASEC) Program brings together Bangladesh, Bhutan, ADB committed US$ 809 million in 2019 for its private India, Maldives, Myanmar, Nepal, and Sri Lanka in a sector investments in India. Portfolio performance has project-based partnership. Under this flagship Program, improved over the years as a result of regular review ADB has been working with the SASEC member meetings such as Tripartite Portfolio Review Meetings countries to build cross-border power lines, introduce for ongoing and pipeline projects. During January- policy measures to facilitate regional trade, and connect December 2019, three such Tripartite Portfolio Review roads for movement of goods and people. SASEC Meetings were held. countries share a common vision of boosting intraregional trade and cooperation in South Asia, while also developing 8.9.7 ADB assistance to India supports the connectivity and trade with Southeast Asia through Government's development priorities, evolving focus Myanmar, to the East Asia, and the global market. The areas, and flagship initiatives. The India country SASEC Vision was launched in April 2017 during the partnership strategy (CPS) of ADB provides the SASEC Finance Ministers Meeting in New Delhi. A 10 overarching framework for ADB's operations in India. In year Operational Plan 2016-25 contains the pipeline of line with the Government of India's guiding principle that projects across transport, energy, and trade facilitation. multilateral development partners add value beyond tangible investments, ADB leverages knowledge, During the annual meeting of SASEC Nodal Officials held supports capacity development, and incorporates in March 2019, ADB also shared the contours of SASEC innovation and best practice into its operations. The maritime cooperation programme and developing tourism Country Partnership Strategy (CPS) of ADB for India for in SASEC countries. the period 2018-22 was approved in September, 2017. 8.9.10 Building the capacity of various executing 8.9.8 ADB interventions in India span six sectors of agencies has been an important element of ADB's operation: transport; energy; urban infrastructure and assistance to India. The Capacity Development Resource services; finance; skills; and agriculture and natural Center was established at ADB's India Resident Mission; resources. it collaborates with leading experts and national training institutes to develop and deliver training courses for  The ADB transport sector program aims to improve connectivity and accessibility, promote executing agencies on operational matters as well as safe and environment-friendly practices, and technical and substantive issues relating to ADB enhance in-country and sub-regional trade operations in India. corridors and facilities. 8.9.11 Technical Assistance (TA) program has also  Energy sector initiatives contribute to the evolved in line with the loan program. TA support is being strengthening of power transmission and used to build capacity, improve project preparedness and distribution networks in India. ADB supported implementation, and undertake scoping studies and initiatives aim to provide uninterrupted power knowledge products. supply to all, while promoting low-carbon solutions, renewable—including solar energy, 8.9.12 ADB has a Technical Assistance Special Fund and energy efficiency. (TASF) for providing technical assistance to Developing Member Countries (DMCs) for capacity building  The urban sector program focuses on expanding the coverage, quality, and continuity of basic development in the formulation, design and services to improve the urban quality of life. It is implementation of projects to facilitate effective use of aligned to support the three GoI urban flagship external financing. India has been voluntarily contributing initiatives. to TASF since 1970.  The finance sector program endeavors to support 8.10 Global Alliance for Vaccines and leveraging of finance for infrastructure through Immunizations (GAVI Alliance) loans and equity finance, investment funds, credit 8.10.1 The GAVI Alliance (formerly the Global Alliance lines, and guarantees. for Vaccines and Immunization) was founded in 2000 to  ADB’s agriculture and natural resources sector reduce the historical gap in access to life saving vaccines interventions provide assistance in the key areas and reduce child mortalities. GAVI's mission is to save of water use efficiency and climate resilience. children's lives and protect people's health by increasing  ADB’s skills development program endeavors to access to immunization in poor countries.India is not only contribute to an increase in the supply of qualified a recipient, but also a contributor to GAVI Alliance. As labor to industries and services essential to per 'Contribution Agreement' signed between growth. The program includes support to State- Government of India and GAVI, India committed to level efforts in skills development with a focus contribute USD 1 million per annum to the GAVI Alliance on quality and outcomes. for the years 2013-14 to 2016-17. 38Department of Economic Affairs I 8.10.2 A proposal of MoHFW was received in 2017 for 8.11.2 As per the 'Multi-Year Contribution Agreement' enhancement of India's contribution to the GAVI in the signed between Government of India, GFATM and IBRD next replenishment cycle 2017-21. The proposal was (as Trustee of the Trust Fund for Global Fund) on 27th examined in DEA and it was decided with the approval of January, 2014, India committed USD 16.50 million to Hon'ble Finance Minister that the Govt. of India will make GFATM for the fourth replenishment period 2013-16. a contribution of US$ two million per annum to GAVI, i.e., a cumulative contribution of US$ 8 million for the 8.11.3 With the approval of the Finance Minister, a 'Multi- next replenishment cycle of GAVI of four years. Year Contribution Agreement' has been signed between Government of India and the GFATM on 05.12.2016 for 8.10.3 India's contribution to the GAVI for 2017-18 (USD India's contribution of US$ 20 million to the Global Fund 2 million) was paid in March 2018. The second installment during the Fifth Voluntary Replenishment cycle 2017-19 towards Govt. of India's contribution to the GAVI for 2018- 19 (USD 2 million) has been paid in January 2019. The as per following schedule (i) US$ 6 million in 2017 and third installment towards Govt. of India's contribution to (ii) @US$ 7 million in 2018 & 2019. India's contribution the GAVI for 2019-20 (USD 2 million) has been paid in for the year 2018 (USD 7 million) has been paid in June, November 2019. 2018.Last contribution for the year 2019 (USD 7 million) was paid in the month of June 2019. 8.11 Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM) 8.11.4 A proposal of MoHFW was received in 2019 for enhancement of India's contribution to the GFATM in the 8.11.1 The Global Fund to Fight AIDS, Tuberculosis Sixth Voluntary Replenishment cycle 2020-22. The and Malaria (The Global Fund / GFATM) is an proposal was examined in DEA and it was decided with international financing organization that aims to attract the approval of Hon'ble Finance Minister that the Govt. and disburse additional resources to prevent and treat of India will make a contribution of US$ 22 million over 3 HIV and AIDS, Tuberculosis and Malaria. The organization is public-private partnership with Secretariat years to the Global Fund during the Sixth Voluntary at Geneva, Switzerland. The organization began Replenishment Cycle 2020-22 as per the following operations in January 2002. GFATM supported programs schedule (i) US$ 7 million in 2020 and (ii) US$ 7 million have estimated to have saved 17 million lives since 2002. in 2021 & (iii) US$ 8 million in 2022. Position of ATNs – IMF Section (FB & ADB Division, DEA) Sl. Year No. of Paras/ PA reports on Details of the Paras/PA reports on which ATNs are No. which ATNs have been pending submitted to PAC after vetting No. of ATNs No. of ATNs sent No. of ATNs which by Audit not sent by but returned with have been finally the Ministry observations and vetted by Audit but even for the Audit is awaiting have not been first time their resubmission submitted by the by the Ministry Ministry to PAC 1 2014 Report 1 of 2014, Demand No.32, Para 3.16 (Annexure - - Submitted 3.14, Item 23 to 25) 2 2014 Report No. 1 of 2014, Demand No. 32, Para 3.16 - - Submitted (Annexure 3.14) 3 2015 Report No. 1 of 2015, Demand No. 33, Para 3.12 - - Submitted (Annexure 3.10 & 3.15, Annexure 3.13) 4 2016 Report No. 34 of 2016, Demand No. 34, Para 3.16 (Annexure 3.13, Item 21), - - Submitted Para 3.17 (Annexure 3.14, Item 6) 5 2016 Report No. 34 of 2016, Demand No. 34, Para 3.18 - - Submitted (Table 3.9, Item 3) 6 2017 Reports No. 44 of 2017, Demand No. 29, Para 3.15 (Annexure 3.12, Item No: - - Submitted 13), Para 3.17 (Annexure 3.14, Item 4) 7 2019 Reports No. 2, Demand No. 29, Para No. 3.3, Table 3.2, - - Submitted Item No. 9 39Annual Report 2019-2020 9. International Economic Relations 10. Asia Europe Meeting (ASEM) Division 11. External Charges- 9.1. IER Division is one of the important Division of a) South Asia (Afghanistan, Bangladesh, Department of Economic Affairs which deals with Bhutan, Maldives, Nepal, Pakistan, Sri International Economic Relations. The major functions Lanka), South East Asia (Brunei, Burma, of IER Division are dealing with the matters related to :- Cambodia, East Timor, Indonesia, Laos, 1. G-20, Malaysia, Philippines, Singapore, Thailand, 2. G-7 Vietnam), East Asia (Mongolia, Hong Kong, Taiwan), Central Asia (Turkey) 3. G-24, 4. BRICS b) Matter relating to CIS countries (Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, 5. SAARC,SDF, Kyrgyzstan, Moldova, Tajikistan, 6. ASEAN, Caribbean Union Turkmenistan, Ukraine, Uzbekistan). 7. World Economic Forum (WEF) 12. Sectoral Charge - 8. Work related to Foreign Trade, GATT,WTO, TPP etc. a) Ministry of Defence, 9. OECD, SCO b) Ministry of Tribal Affairs Organization Structure of IER Division 40Department of Economic Affairs I E- Governance: issues, growth strategies and structural reforms. India is a co-chair of this Working As far as e-governance is concerned, IER Group. division is processing all the files in electronic mode from December 2016. All the physical files have been b. International Financial Architecture (IFA) converted into Electronic files in December 2018. Working Group that deals with issues related to international financial architecture I. G-20 such as quota reforms of IMF and debt 1. The G20 was formed in 1999, as a forum of sustainability among others. Finance Ministers and Central Bank Governors, in c. Infrastructure Working Group (IWG) which recognition of the fact that there was a major shift in the deliberates on quality infrastructure global economic weight from the advanced economies investments particularly innovation in to emerging market economies. However, G20 rose into mobilizing financial resources for prominence in 2008 when it was elevated from a forum infrastructure investment. of Finance Ministers and Central Bank Governors to that of G20 Heads of Nations in order to effectively respond d. Global Partnership for Financial Inclusion to the global financial crisis of 2008 and insulate the world (GPFI) that works for advancing financial from major economic collapse. inclusion globally. 2. The first G20 Summit was held in November Outcomes of Osaka Summit 2019 2008 in Washington DC under the shadow of the greatest 6. Strong, sustainable, balanced and inclusive financial crisis in the post-war era. This was followed by growth—G20 Leaders reaffirmed their commitment to thirteen summits held in London (April, 2009), Pittsburg use all policy tools to achieve strong, sustainable, (September, 2009), Toronto (June, 2010), Seoul balanced and inclusive growth, and safeguard against (November, 2010), Cannes (November, 2011), Los Cabos downside risks, by stepping up their dialogue and actions (June, 2012), St. Petersburg (September, 2013), Brisbane to enhance confidence. Leaders also agreed that fiscal (November, 2014), Antalya (November, 2015), Hangzhou policy should be flexible and growth-friendly while (September, 2016), Hamburg (2017) and Buenos Aires rebuilding buffers where needed and ensuring debt as a (2018) and Osaka (2019). The 15th G20 Summit will be share of GDP is on a sustainable path and that monetary held under Saudi Arabian Presidency in Riyadh, Saudi policy will continue to support economic activity and Arabia on 21st - 22nd November, 2020. ensure price stability, consistent with central banks' 3. India will take over the G20 Presidency in 2022 mandates. which will coincide with 75th year of India's independence. 7. Quality Infrastructure Investment — G20 The Presidency of G20 is usually held for a year with Leaders stressed upon the importance of maximizing the various meetings taking place (across a range of policy positive impact of infrastructure to achieve sustainable issues) culminating with a Leaders' Summit. growth and development while preserving the 4. The G20 issues are discussed through two sustainability of public finances, raising economic parallel tracks, viz., Finance Track and Sherpa Track. efficiency in view of life-cycle cost, integrating Under Finance Track, issues such as international environmental and social considerations, including women's economic empowerment, building resilience financial architecture, infrastructure financing, sustainable against natural disasters and other risks, and and inclusive growth, international taxation and financial strengthening infrastructure governance. They agreed to sector regulations are deliberated. The highest level of continue advancing the elements to develop infrastructure meeting under Finance Track is G20 Finance Ministers as an asset class, including by exploring possible and Central Bank Governors (FMCBG) Meeting which is indicators on quality infrastructure investment. Leaders held twice or thrice in a year. G-20 member countries are also endorsed the G20 Principles for Quality Infrastructure represented by their Finance Ministers and Central Bank Investment which sets out a set of voluntary, non-binding Governors. Preceding every FMCBG Meeting, Finance principles that reflect the common strategic direction and and Central Bank Deputies Meetings are held to prepare aspiration for quality infrastructure investment for G20 for FMCBG Meeting. Secretary (Economic Affairs) is members. India's Finance Deputy. Technical level discussions are held through meetings of Working Groups. 8. Universal Health Coverage —Recognizing the importance of sustainable financing for health, G20 5. Finance Track issues are discussed broadly in Leaders called for greater collaboration between health four Working Groups which are as follows: and finance authorities in accordance with the G20 a. Framework Working Group (FWG) which Shared Understanding on the Importance of UHC discusses ongoing global macroeconomic Financing in Developing Countries. 41Annual Report 2019-2020 9. Debt Transparency and Sustainability — 15. India contributed actively during the restructuring Leaders reiterated the importance of joint efforts process of Global Partnership for Financial Inclusion undertaken by both borrowers and creditors, official and (GPFI) and the proposed new structure of GPFI is in line private, to improve debt transparency and secure debt with India's suggestion of merging all the four sub-groups sustainability and called on the IMF and WBG to continue of GPFI in order to make its work more focused. their efforts to strengthen borrowers' capacity in the areas 16. On addressing the tax challenges of digitalization, of debt recording, monitoring, and reporting, debt India's proposal based on Significant Economic management, public financial management, and Presence, put forward through G24, was considered domestic resource mobilization, including under their during the Presidency's work on the issue. India is multi-pronged approach. continuously making all efforts in the G20 forum to ensure 10. Technological Innovation —Leaders agreed that the long term solution to be finalized in 2020 is one that technological innovations can deliver significant that addresses the concerns, in particular, of developing benefits to the financial system and the broader economy, countries. but there is a need to remain vigilant to existing and Priorities of the G-20 in 2020 under Saudi Arabian emerging risks. In this regard, the Leaders welcomed Presidency the on-going work of the Financial Stability Board (FSB) and other standard setting bodies and asked them to 17. The 2020, G20 Saudi Arabian Presidency advise on additional multilateral responses as needed. focuses on Realizing Opportunities of the 21st Century for All. The three key aims of the 2020 G20 Presidency 11. Open and resilient financial system—Leaders are: agreed to continue to monitor and tackle emerging risks and vulnerabilities in financial system and to address i. Empowering People, by creating the conditions unintended, negative effects of market fragmentation, in which all people - especially women and youth including through regulatory and supervisory cooperation. - can live, work and thrive. Leaders also reaffirmed their commitment to apply amended FATF standards to virtual assets and related ii. Safeguarding the Planet, by fostering collective providers for anti?money laundering and countering the efforts to protect our global commons. financing of terrorism. iii. Shaping New Frontiers, by adopting long-term 12. Fair, sustainable and modern taxation and bold strategies to share benefits of innovation system— Leaders agreed to continue their cooperation and technological advancement for a globally fair, sustainable, and modern international 18. Under G20 Saudi Arabian presidency, key tax system, and welcomed international cooperation to Finance Track priorities are as follows: advance pro-growth tax policies. They reaffirmed the importance of the worldwide implementation of the G20/ i. Enhancing Access to Opportunities for All OECD Base Erosion and Profit Shifting (BEPS) package ii. Advancing Digital Financial Inclusion for Women, and enhanced tax certainty. Youth and SMEs Contribution of India for the Summit iii. Utilizing the Benefit of Technology for 13. India made significant contributions to the Infrastructure discussions and deliberation of the priority issues under iv. Framing Supervisory and Regulatory Issues for the Japanese Presidency. India successfully negotiated the Digital Era the key deliverable documents as well as the communiqué, particularly on Ageing, Universal Health v. Addressing the Tax Challenges Arising from the Coverage, Infrastructure and International taxation, to Digitalization of the Economy make them in line with the logical reasoning/principles/ philosophy of developing countries. G20 Sherpa Track 14. As a co-chair of the Framework Working Group, Outcomes of the Buenos Aires Summit: India led the discussions on Global Imbalances, Risk The G20 Japanese Presidency deliberated on and Ageing. On Global Imbalances, India strongly myriad issues facing the international community across advocated the need to qualify the reference on narrowing various work streams. Some of the important outcomes of global imbalance so the narrative clearly reflects that as reflected in the Osaka Leaders Declaration are as it is true only for EMEs; as there has been significant under: narrowing of global imbalances in EMEs, while it has increasingly concentrated in the AEs in the aftermath of 19. Under the employment agenda, Japanese global financial crisis. Presidency focused on promoting healthy and active 42Department of Economic Affairs I ageing, fostering employment opportunities for ageing 22. On Trade and Investment, Leaders reaffirmed workforce as well as developing adequate policy their support for the necessary reform of the World Trade response to new forms of work. Focus was also laid on Organization (WTO) and also agreed that action is the agenda of Women Empowerment wherein the necessary regarding the functioning of the dispute Presidency aimed to take a stock of the progress settlement system consistent with the rules as negotiated achieved by G20 members on the Brisbane Goal of by WTO members. reducing the gap in labour force participation between men and women by 25 per cent by 2025. In this regard, 23. Under Health agenda, Leaders called for greater they took note of the progress report Women at Work collaboration between health and finance authorities in in G20 Countries prepared by the ILO and OECD. accordance with the G20 Shared Understanding on the Furthermore, the Leaders also welcomed the launch of Importance of Universal Health Care Financing in the private sector alliance for the 'Empowerment and Developing Countries. Further to that, the Leaders Progression of Women's Economic Representation (EMPOWER)' to advocate for the advancement of reiterated their commitment to improving public health women in the private sector. Leaders' Side Event on preparedness and response and also reaffirmed their Women's Empowerment was also held under the commitment to eradicate polio as well as to end the Japanese Presidency which was attended by all G20 epidemics of AIDS, tuberculosis and malaria and looked members including India. forward to the success of the sixth replenishment of the Global Fund to fight AIDS, Tuberculosis, and Malaria. 20. On Digitalisation, Japan shared the notion of human centered future society under the aegis of Society Contribution of India for the Summit 5.0. Recognizing responsible development and use of Artificial Intelligence (AI) as the driving force to achieve India successfully negotiated and pursued its inclusiveness, Leaders' welcomed the non-binding G20 interests on the priorities shared by the Japanese AI Principles, drawn from the OECD Recommendation Presidency across all work-streams. Some of these areas on Artificial Intelligence (AI). On the Japanese proposal are as under: of Data Free Flow of Trust (DFFT), Leaders noted the ongoing discussion under the Joint Statement Initiative 24. Japan accorded high priority to the issue of Data on electronic commerce in WTO, and reaffirmed the Free Flow with Trust (DFFT) which required great deal importance of the Work Programme on electronic of consultations and negotiations due to potentially varied commerce at the WTO. Leaders Side event on Digital positions of the G20 members. India took a broad view Economy was also held during the Summit which resulted on the matter without any concrete commitment. India in the launch of the Osaka Track on the digital economy. This event was attended by all G20 members except was not a party to the Leaders' side event on Digital India, South Africa and Indonesia. Economy which predominantly aimed to accelerate international policy discussions on worldwide data 21. Under Climate agenda, Leaders shared that they governance, on principled grounds. would look into a wide range of clean technologies and approaches, including smart cities, ecosystem and 25. India's persistent focus on the principle of community based approaches, nature based solutions common but differentiated responsibilities and respective and traditional and indigenous knowledge. Furthermore, capabilities and on the importance of providing financial the Leaders also emphasized the importance of providing assistance for adaptation and mitigation efforts as per financial resources to assist developing countries with the Paris Agreement was successfully negotiated. The respect to both mitigation and adaptation in accordance with the Paris Agreement. On the issue of Energy and language reflected in the Declaration is as follows: Environment, Leaders acknowledged the opportunities "Signatories to the Paris Agreement who confirmed at offered by development of innovative, clean and efficient Buenos Aires its irreversibility and are determined to technologies for energy transitions, including hydrogen implement it, reaffirm their commitment to its full as well as, depending on national circumstances, the implementation, reflecting common but differentiated Carbon Capture, Utilization and Storage (CCUS) taking responsibilities and respective capabilities, in the light of note of work on "Carbon Recycling" and "Emissions to different national circumstances. By 2020 we aim to Value". Furthermore, they called on other members of communicate, update or maintain our NDCs, taking into the international community to share, the "Osaka Blue account that further global efforts are needed. We Ocean Vision" that aims to reduce additional pollution by emphasize the importance of providing financial marine plastic litter to zero by 2050 through a resources to assist developing countries with respect to comprehensive life-cycle and endorsed the G20 Implementation Framework for Actions on Marine Plastic both mitigation and adaptation in accordance with the Litter. Paris Agreement." 43Annual Report 2019-2020 26. On the issue of fugitive economic offenders, India Boosting MSMEs' international competitiveness, shared the progress made on the commitment1 agreed Pathways to economic diversification, strengthening during Buenos Aires Summit. On India's insistence the international investment language on 'recovery of stolen assets' was reflected in Digital Economy Task Force (DETF): Trustworthy the final declaration as -"We look forward to the scoping Artificial Intelligence, Data flows, Smart cities, measuring paper on international cooperation dealing with serious the digital economy, Cyber resilience in global economic economic offenders and recovery of stolen assets in systems relation to corruption to be prepared by relevant international organizations. Climate Sustainability Working Group(CSWG): Managing emissions for sustainable development, 27. Regarding the Brisbane commitment to reduce Adaptation - local contributions to global solutions, the gap in labour force participation between men and Sustainable mobility, Combating land degradation and women by 25 per cent by 2025, India shared that each country has its own policy on employment and monitoring habitat loss, Improving coral reef resilience and is the domain of individual country. India further clarified conservation. that each country will monitor respective progress and Energy Transitions Working Group (ETWG): Cleaner will 'apprise' the G20 of the status in this regard. The Energy systems for a new era, Universal access to final language of the Declaration reads as “Building on affordable energy, secure energy markets, Institutional the continued efforts by Labour and Employment frameworks for energy market stability Ministers, we will exchange our respective progress and actions taken in the G20 towards the Brisbane Goal, Development Working Group (DWG): Efficient including the quality of women’s employment, on the basis Financing for sustainable development, Infrastructure for of the annual report”. regional connectivity, Update on G20 action plan on the 2030 agenda for sustainable development, Accountability 28. During G20 Osaka Summit, Hon'ble PM announced India's decision to host G20 Presidency in Anti-Corruption Working Group (ACWG): Using 2022. Accordingly, this decision was also reflected in the Information and Communications Technologies (ICT) to Final Leaders' Declaration which reads as: "We thank promote integrity, Promoting Integrity in Privatization and Japan for its Presidency and for hosting a successful Public-Private Partnerships (PPPs), Pursuing the Osaka Summit and its contribution to the G20 process, development and implementation of national anti- and we look forward to meeting again in Saudi Arabia in corruption policies or strategies 2020, in Italy in 2021 and in India in 2022." Agriculture Deputies Meeting: Responsible agricultural Saudi Arabian Presidency (2020) investment, Food loss and waste, fostering sustainable and resilient water management globally 29. Under the system of rotating Presidencies among the G20 members, Saudi Arabia has assumed the G20 Education Working Group (EdWG): Early Childhood Presidency from December 2019. The priorities outlined Education (ECE) as a foundation for developing global under each work stream of the Sherpa track under the competence and 21st century skills, Internationalization Saudi Arabian Presidency are as under: in education Employment Working Group (EWG): Better preparing Tourism: Tourism as means of sustainable youth for the transitions to work, Adapting social protection socioeconomic development. for the changing patterns of work, Exploring the application of behavioural insights policy for a transitioning II BRICS labor market, Women employment, Progress on gender 30. DEA co-ordiantes the work in India on BRICS equality in a changing world of work, Enhancing access Economic and Financial Co-operation. The to opportunities, Advancing digital financial inclusion Presidency of BRICS was taken over by Brazil from South Health Working Group (HWG): Value-Based Health Africa on 1 January 2019. In 2019, under the Brazilian Care (VBHC), Digital health, Patient safety, Managing Chairmanship, three meetings of the BRICS Finance and public health emergencies(with a focus on influenza), Central Bank Deputies and two meetings of the BRICS combating the growing antimicrobial resistance (AMR) Finance and Central Bank Governors were held. threat 31. Under BRICS Economic and Financial Co- Trade and Investment Working Group(TIWG): Current operation, the following were the agenda items discussed international trade developments, including WTO reform, under the 2019 Brazilian Chairmanship2 : 1Buenos Aires Leaders’ Declaration: We will further explore the 2The work under BRICS Economic & Financial Co-operation has links between corruption and other economic crimes and ways to areas identified for Ministry of Finance as well as Central Bank. tackle them, including through cooperation on the return of persons The work is carried out by BRICS Finance and Central Bank sought for such offences and stolen assets, consistent with Deputies who then report to BRICS Finance Ministers and Central international obligations and domestic legal systems. We ask relevant Bank Governors who then eventually report to BRICS Leaders. In international organizations to report back to us on those issues during India, the BRICS Finance Deputy is Secretary, Economic Affairs the next presidency. and BRICS Central Bank Deputy is Deputy Governor, RBI. 44Department of Economic Affairs I Issues under Ministry of Finance inclusive growth. They called on major advanced and emerging market economies to continue a. New Development Bank issues, namely, policy dialogue and coordination in the context membership expansion and effective utilization of the G20 and other fora to advance these of NDB Project Preparation Facility objectives and to address potential risks. b. IMF Resources b. Strong, quota-based and adequately c. Authorised Economic Operators (AEO) resourced IMF: Leaders called upon the IMF to start work on quota and governance reform on Issues under Central Bank the basis of the principles agreed in 2010 under a. Test runs of BRICS Contingent Reserve the 16th GRQ in right earnest and within a tight Arrangement timeframe. b. System to Pay Internationally (SPIN) c. NDB Regional Offices: Leaders welcomed the establishment of the Americas Regional Office c. BRICS Bond Fund in Sao Paulo, along with its sub-office in Brasilia, 32. The two new agenda items that the Brazilian and looked forward to the opening of the two Chair introduced for discussion in 2019 were System to remaining NDB Regional Offices in Russia and Pay Internationally (SPIN) and Authorised Economic India in 2020. Operators. The SPIN is an innovative payments and d. NDB membership expansion: Leaders settlement method that would eliminate intermediaries, acknowledged the progress made by the New provide transparency for transactions, reduce costs and Development Bank towards expanding its speed up settlements. A technical working group has been membership which is in accordance with its set up, made up of experts in payments systems and/or Articles of Agreement of the Bank and looked risk management, as well as in international affairs, to forward to the Board of Governors concluding analyze the establishment of the SPIN and to deepen the preparatory work with the aim of taking the understanding of the initiative and its related risks. A timely and considered decisions on the report from the technical group is under preparation. India expansion of the membership in due course. is represented by RBI in the expert group. Under, Additionally, the BRICS members have agreed Authorized Economic Operator (AEO), the Brazilian to initiate consultations with prospective new Presidency proposed AEO implementation among members of NDB followed by NDB management member countries. AEOs can be an important initial step action. to establish uniform requirements and benefits to Mutual e. Infrastructure initiatives: Leaders Recognition Agreements. Currently, BRICS Customs emphasized upon the importance to key Cooperation Committee is working on the definition of cooperation initiatives, encompassing the common and clear objectives for the BRICS MMRA and BRICS Task Force on PPP and Infrastructure, the development of a Joint Work Plan, with procedures which facilitates dialogue on infrastructure, and a timeline for implementation. The Brazilian including the G20 infrastructure agenda, the Presidency has suggested that these elements should NDB's Project Preparation Facility, the constitute a letter of intention to be signed by the BRICS effectiveness of which will be enhanced by countries. launching its first set of projects at the earliest, Outcome of the BRICS Summit, 2019 along with a view to enhancing the representation of developing countries and 33. The 11th BRICS Summit was held on 11-12 emerging economies in the Multilateral November 2019 in Brasilia, Brazil. Key outcomes of the Development Banks. Summit in the area of BRICS Economic and Financial 34. The Chairmanship of BRICS will be taken over Cooperation are the following: by Russia from Brazil from January 1st, 2020. a. Strong, sustainable, balanced and inclusive III G-24 growth: Leaders advocated for continued use of fiscal, monetary and structural policies to 35. G-24 was established in 1971 by the Group of achieve strong, sustainable, balanced and 77 (G-77). The Intergovernmental Group of Twenty Four 45Annual Report 2019-2020 on International Monetary Affairs and Development (G24) related bodies and global fora. Additionally, India and coordinates the position of developing countries on OECD engage in bilateral activities, periodic reviews and monetary and development issues in the deliberations sector- specific publications. One such prominent and and decisions of the Bretton Woods Institutions (BWI). regular publication is OECD Economic Survey of India. In particular, the G-24 focuses on issues on the agendas OECD Economic Surveys are periodic reviews of of the International Monetary and Financial Committee members and some selected non-members of OECD, (IMFC) and the Development Committee (DC) as well typically done on a two-year cycle. as in other relevant International fora. Though originally 40. OECD released their 2019 Economic Survey of named after the number of founding Member States, it India on 5th December 2019. The Survey was launched now has 28 Members3 (plus China, which acts as a by the Chief Economist of OECD Ms. Laurence Boone in Special Invitee since 1981). New Delhi. 36. The governing body of the G-24 meets twice a V SAARC & SDF: year, preceding the Spring and Fall meetings of the International Monetary and Financial Committee and the Framework on Currency Swap Arrangement Joint Development Committee of the World Bank and for SAARC Member Countries: the International Monetary Fund (IMF). The plenary G- 41. "Framework on Currency Swap Arrangement for 24 meetings are addressed by the heads of the IMF SAARC Countries" was approved by the Government and the World Bank Group as well as by senior officials of India on March 1st, 2012. The Framework was of the United Nation (UN) System. Issues are first formulated with the intention to provide a line of funding discussed by the Deputies and culminate at the for short term foreign exchange requirements or to meet Ministerial level by the approval of a document that sets balance of payments crises till longer term arrangements out the consensus view of member countries. The are made. Under the facility, RBI offers swaps of varying Ministerial document is released as a public sizes to each SAARC member country (Afghanistan, Communiqué at a press conference held at the end of Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri the meetings. Decision making within the G-24 is by Lanka) depending on their two months import consensus. requirement and not exceeding US$ 2 billion in total, in 37. The last G-24 Ministerial meeting was held on US$, Euro or INR subject to a floor of USD 100 Million October 17, 2019 in Washington D.C. The issues and a maximum of USD 400 million. Apart from the discussed during the Ministerial included navigating the country specific limits, there is also a provision of challenges to global growth and stability; and mobilizing 'Standby Swap' of USD 400 Million within the approved financing for growth and development. A call was made Framework to be operated from the unutilized balance to the World Bank and other MDBs to support country- available, within the overall size of the Facility of USD 2 led and country-owned strategies for job creation and billion. The 'Standby Swap' facility was incorporated with economic transformation for growth and development the approval of the Union Cabinet in January, 2019 to in developing countries. address the additional Swap request of SAARC Member States that exceeds their country specific limit. IV OECD 42. Earlier, the validity of the framework was 38. The Organization for Economic Cooperation extended in 2015 by the Union Cabinet and in 2017 by and Development (OECD), founded in 1961, is a global Hon'ble Finance Minister and the validity of the think tank that works on a host of economic and Framework was scheduled to expire after 13th development issues. Today, there are 36 OECD November, 2019. The 'Framework on Currency Swap members4 spanning from South America to Europe and Arrangement for SAARC Countries' along with some Asia Pacific including several advanced economies and modifications has been further extended by Hon'ble three emerging market economies (Mexico, Chile, Finance Minister for a period of three years i.e. till 13th Turkey). All OECD members are signatories to 1960 November, 2022.Till date Bhutan, Sri Lanka and Convention on the OECD5 and are committed to Maldives have availed this facility. democracy and market economy. 39. India engages with some of the key OECD bodies 4The membership of OECD is constituted by 25 European countries through participation in the meetings of committees, their (Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lithuania, Luxembourg, the Netherlands, Norway, Poland, Portugal, 3G-24 member countries are: Algeria, Argentina, Brazil, Colombia, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey and Congo (Democratic Republic of), Cote D’Ivoire, Ecuador, Egypt, United Kingdom), 2 from North America (United States and Canada), Ethiopia, Gabon, Ghana, Guatemala, Haiti, India, Iran, Kenya, 1 from Central America (Mexico), 1 from South America (Chile), 1 Lebanon, Mexico, Morocco, Nigeria, Pakistan, Peru, Philippines, from West Asia (Israel), 2 from East Asia (Japan and South Korea), South Africa, Sri Lanka, Syria, Trinidad and Tobago and Venezuela. 2 from Asia Pacific (New Zealand and Australia) 46Department of Economic Affairs I 10. Aid Accounts & Audit (AAA) Division: 10.2 Performance/Achievements During Financial 10.1 AAAD under Department of Economic Affairs year 2019-20 (as on 10th Jan 2020) implements the financial covenants of external Loans/ 10.2.1 Total of 1349 live loan/accounts are being Grants received by Government of India from various handled by AAAD. Out of these, 433 loan/Grants accounts Multilateral and Bilateral donors. Main functions handled are in disbursement mode. Rest of the loans are live from by this Division are processing the claims received from Project Implementing Authorities of externally aided debt servicing point of view. projects, to draw down the funds from various external 10.2.2 External receipts on Government Account during funding agencies and timely debt servicing liability of financial year 2019-20 ( upto 10th Jan. 2020) is `47,421/ Government of India in respect of availed external loans. Besides, this Division is also responsible for maintaining - crore. In addition to loan receipts, a sum of `3.00 Crore loan records, external debt statistics, publication of has been received as Cash Grant. external assistance brochure on annual basis, and A comparative position of receipts and framing of estimates of external aid receipts and debt repayment/payment in the current year as compared to servicing. In addition, audit of import licenses issued by previous financial year and upto 10th Jan 2019 is as DGFT offices for Export Promotion is also conducted by this Division. under. In ` crore Sl. Description 2018-19 2018-19 2019-20 No (as on 10th Jan 2019) (as on 10th Jan 2020) 1 Receipts 47,667 33,932 47,424 (Loans and Grants) 2 Payments 38,888 29,047 32,549 (Principal and Interest) 3. Net Transfer (1-2) 8,779 4,885 14,875 10.3 E-Governance from time to time. In 2019-20 till now 51 officers/staff members of different PIAs have been imparted trainings. 10.3.1 The Activities of AAAD have been fully As a result of initiatives taken by this Division more claims computerized since April 1999. A software known as are being received in e-claim forms. "Integrated Computerised System" (ICS) is working. This covers all the activities in the loan cycle i.e. preparation 10.4.2 In order to increase the capacity of the officers of Estimates for External Assistance for receipt as well and staff of this division frequently officers are being as repayment, preparation of Annual External Assistance nominated to ISTM and other training centres for training. Brochure, processing of claims, repayment of debt and The areas covered under the trainings comprises of ethics maintenance of Debt Records. All the Officers/Staff in Governance and Administration, O&M, Cash and Budget and financial management. This office has members of this Division are well versed with the developed; over a period of time; an excellent centre of functioning of this system. cross learning as a result of continuous interactions of 10.3.2 IT-application is being promoted by way of the officers and staff at international, national and state accepting and processing/forwarding of the draw down level conference/ workshops. claims from various PIAs. PIAs have been provided 10.4.3 This office facilitates other ministries, state software support for processing the e-claims. Such officials; CPSUs in understanding the fund flow software is being utilized by the PIAs to maximum extent. mechanism in case of externally aided projects. The data E-claims in the form of SOE/Interim unaudited Financial maintained by this division is shared with other ministries Report (IUFR) ensure faster disbursals. In case of World to be used in different reports and analysis. Bank, claims are processed in E-disbursement mode through the World Bank's software client connection from 10.5 Standards & Improvements in service this Division to World Bank. deliveries 10.3.3 The customized software of this division (ICS) is 10.5.1 All the activities of this division have been being upgraded with a Technical Assistance (TA) from. organised hierarchically and standards in terms of time Asian Development Bank (ADB). span at each level for their accomplishment have been defined. The standards set out are being adhered to by 10.4 Trainings & Facilitation close monitoring. Stakeholders of this division are well 10.4.1 In order to familiarise the officers/staff of the PIAs, defined consisting of three broad groups i.e. PIAs, training on E-submissions are organized by this Division external funding agencies and others. Service to be 47Annual Report 2019-2020 rendered to these groups is also well defined i.e. smooth complaints of sexual harassment of women employees and quick disbursal of the Loans/Grants, timely debt in Department of Economic Affairs is in existence in the servicing and to provide management information as and Department. when required. 11.4 Training of Staff Members 10.5.2 To ensure continuous improvement in the 11.4.1 Department of Economic Affairs deputes its performance standards, quarterly Management Review officials for training to ISTM and other institutes to Meeting (MRMs) are being held. In MRMs performance increase their efficiency and improvement in the quality is critically reviewed and methods/suggestions for of their work. During the period 1.1.2019 to 31.12.2019 a maintenance/improvement of the service delivery total of 70 officials/officers of this Department were standards are discussed by the management. deputed to Institute of Secretariat Training and 10.5.3 This division is ISO 9001:2015 certified division. Management (ISTM), New Delhi and other Institutes for This certification provides additional assurance to all the undergoing various trainings programmes. stakeholders with respect to the stated standards of this 11.5 Redressal Of Public Grievances: division. The terms and conditions of the certification are ensured through annual surveillance audit. 11.5.1 A Centralized Public Grievances Redressal and Monitoring System (CPGRAM) is operational within the 10.6 Audit under Export Promotion Government which attends to all the Public Grievances 10.6.1 AAAD carries out audit of Import Licenses issued related to various Ministries/Departments. During the year by licensing offices of the Director General of Foreign 2019, a total of 1933 fresh public grievance cases were Trade located at 23 stations for promotion of Export. received in the Department besides 73 brought forward During the financial year 2019-20 a sum of ` 2050 lakh from the previous year. Out of these 2006 cases, 1796 cases were disposed off during the year. has been recovered till January, 2020 as compared to `2159 lakh as a follow up action on the audit observations 11.5.2 Additional Secretary (Admin) has been made by this division. nominated as the Public Grievances Officer of Department of Economic Affairs. His contact details have 11. Administration Division been displayed on the PGRM portal (http:pgportal.gov.in). 11.6 Right To Information Act, 2005 11.1 Functions 11.6.1 In order to facilitate dissemination of information 11.1.1 Administration Division is responsible for under the provisions of the Right to information Act, 2005, personnel and office administration, implementation of Department of Economic Affairs has taken the following Official Language policy of the Government, actions: implementation of the Right to Information Act, 2005 Grants-in-aid, redressal of public grievances, training of (i) An RTI Section is in operation on DEA to collect, officials, Record Retention Schedule, Complaints transfer the applications under the RTI Act, 2005 Committee on Sexual Harassment of Women Employees to the Central Public Information Officers/ etc. Appellate Authorities/Public Authorities concerned and to submit the quarterly returns 11.2 Staff Strength regarding receipt and disposal of the RTI 11.2.1 The staff strength in Department of Economic applications/ appeals to the Central Information Affairs and its attached/sub-ordinate offices/statutory Commission. bodies along with the representation of Scheduled (ii) Details of the Department's functions along with Castes (SCs), Scheduled Tribes (STs), Other Backward its functionaries etc. have been placed on the Classes (OBCs) and persons with Disabilities therein is RTI portal of the Departments official website given in Annex. I & II respectively. The information (www.dea.gov.in) as required under section 4(1) regarding Pending ATN on PAC in respect of Admn.III (b) of the RTI Act. is NIL. (iii) All Under Secretaries/Deputy Directors/ 11.3 Complaints Committee on Sexual Assistant Directors, Sr. Accounts Officers and Harassment of Women Employees Economic Officers level officers have been 11.3.1 In compliance with the Supreme Court's designated as Central Public Information Judgment dated 13 August, 1997 in the Visakha Case Officers (CPIOs) under section 5 (1) of the relating to prevention of sexual harassment of women Act, 2005 in respect of subject being handled at work place, a Complaints Committee for considering by them. 48Department of Economic Affairs I (iv) All Deputy Secretaries/ Directors/ Addl. and to acquaint them with the rules and other Economic Advisers have been designated instructions regarding the Official Language as First Appellate Authorities in terms of policy of the Government, 01 Hindi workshop was Section 19 (1) of the Act, 2005, to deal with the organized on 06.09.2019; Appeals preferred by any person who, does not receive a decision within the time specified in iii. Hon'ble Finance Minister in his "Message" on the the RTI Act or is aggrieved by a decision of the auspicious occasion of Hindi day on 14th Central Public Information Officer (CPIO), as September, 2019 appealed to the officers and the case may be, staff of the Ministry of Finance as well as the Offices under its control to do their official work (v) The list of CPIOs and First Appellate Authorities in Hindi; is updated and uploaded from time to time in the website of DEA for the information of Public. iv. To create a conducive atmosphere in the To facilitate the public, the RTI Cell is now Department regarding the progressive use of functioning at Gate No.8 outside the North Block Hindi, Hindi Month was celebrated during 1st to receive the RTI applications.The applications September, 2019 to 30th September 2019. received are further forwarded to the CPIOs/ v. A Scheme of incentives on Original Book writing Public Authorities concerned. in Hindi on Economic subjects has been (vi) The RTI application can be filed through online introduced in this Department. The authors www.rtionline.gov.in The RTI applicants can see under this Scheme are awarded the first, second their application status including reply of their and third prizes of `50,000/-, `40,000/- and question through the website. Further, transfer `30,000/- respectively. The new Scheme is of application can also be done online. These all under process; process have resulted significant reduction in processing RTI application. vi The website of the Department is bilingual. Besides other material, all Budget documents, (vii) During the year 2019 from January 1, 2019 to Economic Survey and other publications and December 31, 2019, 3773 RTI applications important circulars are uploaded simultaneously (including 2936 online applications) and 575 in Hindi and English; appeals, were received in the Department. An amount of `4260/- (Rupees Four Thousand Two vii To see the extent upto which the Official Hundred and Sixty only) was received as RTI Languages Act, the rules made thereunder, the fees and Documents fee under the RTI Act. Annual Programme and the orders and instructions etc. relating to Official Language are 11.7 Use of Hindi in Official work being complied with inspection of some of the 11.7.1 During the year under report, progress made in subordinate offices of the Department as Bank the implementation of various provisions under the Official Note Press Dewas, Securities Paper Mill Language Policy of the Government continues to be Hoshangabaad, Unit of SEBI Bengaluru, reviewed. Government of India Mill Noida, Currency Note Press and India Security Press Nasik was done 11.7.2 All documents in Parliament were provided on dated10 and 11 may, 2019, 6 and7 June, 2019, bilingually. Section 3(3) of the Official Languages Act, 11 November, 2019, 13 November, 2019 and10 1963, and Rule 5 of Official Languages Rules, 1976 January, 2019 respectively; made thereunder and other instructions issued by the Department of Official Language were fully complied viii Meetings of the Official Language with. A number of steps were taken in the Department Implementation Committee of the Department to promote the use of Hindi in official work during the were held regularly in which the progress of year: implementation of Official Language policy was reviewed and appropriate action was taken on i. Annual Programme for the year 2019-20 issued the decisions taken in the meetings; and by the Department of Official Language was circulated to all the attached/subordinate offices/ ix. 41st meeting of Central Official Language divisions/sections under the Department and all Implementation Committee was held on 11 efforts were made to achieve the targets fixed October, 2019. The meeting was headed by therein; Secretary, Department of Official Languages ii In order to remove the hesitation amongst which was attended by Joint Secretary (admin) officials to do their official work on e-office in Hindi and Asst. Director (OL). 49Annual Report 2019-2020 11.7.3 Material for Hindi Budget Translation reference service, current awareness service through "WEEKLY BULLETIN" as well as providing services 11.7.3.1 All Budget documents are presented to through e-mail and also extended the services of e- Parliament in Hindi and English. Besides Budget governance. The Finance Library also undertakes the documents, Hindi Translation Branch has also prepared work of distribution of publications of Ministry of Finance Hindi versions of Supplementary Demands, Economic and Reserve Bank of India to State Governments, Foreign Classification Report, Reports on Public Statistics and Governments and renowned institutions in India as well Status Report of External Debt, FRBM quarterly Reports as abroad. which were laid before the Parliament . 11.8.5.2 A useful links is also provided on intranet by 11.7.3.2 The translation of the official documents as the Library which helps the readers in search and envisaged in the official Language Act, 1963 and Rules download full text of national and international reports made there under was also undertaken by the Hindi and data. Branch during the year under report. These include agreements with Foreign governments and International 11.8.6 Publications Agencies, Cabinet Notes, Parliament questions/ 11.8.6.1 Finance Library brings out two (print + online) assurances, notifications, Standing Committee papers, publications i.e. “Weekly Bulletin” and “Current contents. Action Taken reports, monthly summary for the Cabinet, Official letters and External funding Report. 11.8.7 Digital Records: 11.8 Finance Library & Publication Section 11.8.7.1 Indian Official Documents relating to Economic and Finance Subject (Center and State since 11.8.1 Finance Library & Publication Section was independence) and Ministry of Finance Gazette established in 1945. Finance Library functions as the Notifications published in the Pt. 2 Sec. 3 Sub-section (i) Central Research and Reference Library in the Ministry (ordinary) for the year 1955 to 1990 has been digitized. and caters to the needs of Officials of all the So far around 02 TB Data has been digitized and available Departments of the Ministry of Finance, Ad-hoc in digital format. Committees and Commissions set from time to time and research scholars from the various Universities in India 11.8.8 Computerisation as well as abroad. This Library also serves as the 11.8.8.1 The Library is fully automated. The Library uses Publications Section of the Ministry, coordinating in the LIBSYS Library package for database management, procurement and distribution of official documents with retrieval, Library automation and other in-house jobs. The the various institutions/individuals on demand in India internet facility is also available in the Library through and abroad. which information is provided to the Officers of Ministry 11.8.2 A Publication Cell vide O.M. No.F.1 (1) - Ly/59 of Finance. dated the 2nd April, 1959 was created and later integrated 11.8.8.2 As far as accessibility of the online data is with the Library forming the Finance Library and concerned, e-governance has been extended to the Publication Section. Ministry of Finance. A link from intranet site 11.8.3 Finance Library has been categorized as Grade “finance.nic.in” is made available to access the library III Library on the basis of Department of Expenditure's information. O.M. No. 19(1)/IC/85 dated 24.07.1990. All the posts in 11.8.9 Other Works: the Library are ex cadre posts. i. Modernization and infrastructure improvement 11.8.4 Collection was undertaken by the Library and 95% work has 11.8.4.1 Finance Library has specialized collection of been completed. around two lakh documents on Economic and Financial ii. The work of reimbursement of newspapers and matters and subscribe to more than 800 periodicals/ magazines of DEA is also undertaken by the newspapers annually and databases like Agriwatch, Finance Library. CMIE, and Indiastate. Access to e-journals and back- filed collection through JSTOR is also available. iii. This Library also serves specifically as the Publications Section of the Ministry; 11.8.5 Services coordinating in the procurement and distribution 11.8.5.1 Finance Library provides different kinds of of official documents with the various services viz. lending, inter-library loan, consultation, institutions/individuals on demand in India and reprographic, circulation of newspapers and magazines, abroad. 50Department of Economic Affairs I 12. Bilateral Cooperation Division (ii) Sectors: 12.1 Bilateral Official Development Assistance (a) Transport Sector, including projects using Policy: information and communication technology (ICT) and road projects with slope protection 12.1.1 India has been accepting external assistance from bilateral partners in the form of loans, grants and measures (potential line ministries could technical assistance for development of infrastructure, include Ministry of Road Transport and social sector and for enhancement of knowledge/skills of Highways, Ministry of Housing and Urban Indian nationals at both Centre and States level. As per Affairs etc.) the guidelines issued by this Department in 2005, bilateral (b) Power Sector, including small-scale hydro development assistance can be accepted from all G-8 power projects and solar power projects countries, namely USA, UK, Japan, Germany, France, Italy, (potential line ministries could include Canada and the Russian Federation as well as from the Ministry of Power, Ministry of New and European Commission. European Union countries outside Renewable Energy, etc.). the G-8 can also provide bilateral development assistance to India provided they commit a minimum annual 12.3.2 There are two (2) ongoing Grant-in-Aid projects development assistance of USD 25 million. viz. a) The Project for Implementation of Advanced 12.1.2 A revised set of guidelines on Official Information and Management System in Core Bengaluru Development Assistance for Development Cooperation and b) Construction of the International Cooperation and with bilateral partners were issued in December, 2015. Convention Centre in Varanasi. After issuance of revised guidelines, the Republic of South 12.4 Technical Cooperation Programme Korea has been recognized as bilateral partner country for accepting Official Development Assistance from them. 12.4.1 Technical Cooperation aims at transfer of technology and knowledge in a bid to develop and 12.2 Bilateral Development Cooperation with Japan improve human resources and thus contribute to the 12.2.1 Japan-Official Development Assistance: Socio-Economic Development of India. The Technical 12.2.1.1 Japan has been extending Official Development Cooperation covers a broad spectrum of fields ranging Assistance (ODA) to India since 1958. Japanese ODA in from basic human needs to Agriculture and Industrial the form of loan assistance, grant aid and technical Development. assistance to India is received through Japan International 12.4.2 The main components of Technical Cooperation Cooperation Agency (JICA). Japan is the largest bilateral are (i) Technical Cooperation Projects, (ii) Technical donor to India. Cooperation by Experts, (iii) Technical Cooperation by 12.2.1.2 Government of Japan has committed JPY Training, (iv) Technical Cooperation by Development 91.273 billion (`5800 crore approx.) for 3 projects to India Planning. from January to December 2019. As on 31st December, 12.4.3 There are 16 ongoing projects under Technical 2019, 70 loan projects are under implementation with Cooperation Programme. Japanese loan assistance. The loan amount committed for these projects is JPY 2551.80 billion (`1,50,500 crore 12.5 Japan Overseas Cooperation Volunteer approx.). The cumulative commitment of ODA loan to Programme: India has reached JPY 5906.451 billion on commitment 12.5.1 JICA’s volunteer programs, such as Japan basis till 31st December 2019. Overseas Cooperation Volunteer (JOCV) and Senior 12.2.1.3 The ODA loan disbursement to India from Volunteer (SV), support a wide range of local activities January 1, 2019 to November 30, 2019 was JPY 261.80 by Japanese citizens who intend to cooperate in the billion (`16,764.36 crore), which is higher than the economic and social development as well as in the previous year for the same period. reconstruction of emerging countries. Through these 12.3 Grant Aid cooperation activities, participating volunteers can, not 12.3.1 The Government of Japan provides Grant Aid only contribute to the development of partner countries to India under the following sectors and criteria: but also gain valuable experience in terms of international goodwill, mutual understanding and an expansion in their (i) Criteria: international perspectives. (a) Development impacts; (b) Utilization of Japanese technology/Know- 12.5.2 During January 2019 to December 2019, 6 how and likelihood of its dissemination to proposals were posed to Embassy of Japan and No- other areas. objection to 11 Volunteers was issued. 51Annual Report 2019-2020 12.6 JICA Partnership Programme: Affairs leading the Japanese side. So far 9 dialogues have been held. The last dialogue was held in India on 12.6.1 Recognizing the growing importance of NGOs 21.12.2018. in international cooperation, the JICA Partnership Programme (JPP) was introduced in 2002. JPP is a 12.10 Bilateral Development Cooperation between technical cooperation program implemented by JICA to India and Germany contribute to the social and economic development of 12.10.1 Germany through their Ministry for Economic developing countries at the grass-roots level, in Cooperation & Development (BMZ) has been providing collaboration with partners in Japan, such as NGOs, both financial and technical assistance to India since universities, local governments and public interest 1958. In 2008, the German Ministry for the Environment, corporations while applying for JPP Indian NGOs are Nature Conservation and Nuclear Safety (BMUB) also advised to seek a Japanese partner to take part in the initiated assistance under German Government's scheme. This has two components:- 'International Climate Protection Initiative (IKI)', which is  Japanese NGO / Institution / Local Government an additional instrument of the German Government over through JICA will support Indian organization with and above and without undermining the existing sources Japanese expert personnel, equipment provision of Official Development Assistance. Priority areas of and Financial support through FCRA route; Cooperation includes: Energy, Sustainable Urban Development as well as Environment and Management  Japanese NGO / Institution / Local Government of Natural Resources. through JICA will provide training of Indian personnel in Japan. Some of the major areas of cooperation are the 12.7 Grassroots Funding following:- 12.7.1 The Government of Japan also provides small (a) Indo-German Solar Partnership for assistance to Indian NGOs under its Grassroots Funding transformation of energy generation through Programme through FCRA route on receipt of no stronger utilization of solar energy. objection from DEA. (b) Indo-German Energy Forum: Green Energy 12.7.2 During January 2019 to December 2019, 2 Corridors for financing transmission proposals were cleared. infrastructure for integrating additional renewable energy capacities into the grid and ensuring grid 12.8 Green Aid Plan stability. 12.8.1 The Government of Japan (Ministry of (c) Sustainability Development to address the Economy, Trade and Industry) provides technical challenges and transform cities into sustainable assistance under Green Aid Plan through agencies like living environment. The Smart City Mission New Energy and Industrial Development Organization envisages providing green, modern infrastructure (NEDO), an organization of METI. The areas of services to Indian cities and their population. cooperation are prevention of water pollution, air pollution, treatment of wastes and recycling and energy 12.10.2 Under bilateral development cooperation conservation and alternative energy source. Model programme, apart from high-level visits, two annual meetings at the level of Joint Secretary (Bilateral projects are carried out by NEDO on the basis of the Cooperation) i.e. Indo-German Annual Consultations and MoU signed by NEDO with Department of Economic Indo-German Annual Negotiations are held, generally Affairs, the concerned line ministry and the implementing during 2nd quarter and 4th quarter of the year respectively. agency. NEDO sends Japanese experts to Indian In the Annual Consultations, apart from the policy issues, organizations to impart training and conducts training the discussion on ongoing projects and new projects are programmes in Japan. held. In Annual Negotiations, the Government of 12.8.2 There are two on-going Demonstration projects Germany makes commitments for the new projects as with NEDO and a new project is under consideration. well as for the additional funding for ongoing projects. 12.9 Strategic Dialogue on Economic Issues with The last Indo-German Annual Consultation Meeting was Japan held on 13th June, 2019. The last Indo-German Annual Negotiation Meeting was held on 27th December, 2019 12.9.1 The India- Japan Strategic Dialogue on Economic in New Delhi. Issues was launched in 2007. The first meeting was held in New Delhi on 18th July 2007. This dialogue is held 12.10.3 Indo-German Finance Ministry Senior Officer's under co-chairmanship of Secretary (Economic Affairs) Meeting 2019 was held on 24th October, 2019 to discuss leading the Indian side and Deputy Minister of Foreign the current economic condition of both countries. 52Department of Economic Affairs I 12.10.4 Germany implements its financial assistance discussion on the ongoing projects and new projects and programmes through KfW, the German Government's review of the ongoing projects are held. In Annual Development Bank. The technical assistance Negotiation Meeting, AFD makes commitment of funds programmes are mainly implemented through GIZ (earlier for the new projects. GTZ) - a fully-owned corporation of German Government. 12.11.5 Till date, AFD has committed Euro 1.65 billion Financial Assistance is provided as Reduced Interest under Indo-French Development Cooperation. Under the Loan (EURIBOR-based loan) as well as Financing grants. Development Cooperation, agreements for Euro 1.59 The technical assistance is provided in the form of grant billion have been signed till date so far. In 2019, loan and services by project experts. agreement for 3 projects for Euro 322 million have been 12.10.5 Under Indo-German Bilateral Development signed. Cooperation, Govt. of Germany has committed Euro 12.11.6 Apart from the Development Cooperation, 19.36 billion for both Financial Cooperation and Technical French Government also provides technical assistance Cooperation since 1958. During 2019, German has made in the form of FASEP facility Scheme. FASEP facility is commitment of Euro 1.61 billion. Agreements for 8 managed by the Treasury and Economic Policy General projects worth Euro 1.26 billion have been signed in 2019. Directorate of the French Ministry of Economy, Finance As on 31st December, 2019, 37 loan projects for Euro and Industry. Under this facility, grants are provided to 4.64 billion are under implementation with German finance technical cooperation in the area of infrastructure assistance. Also, 30 technical assistance grant projects projects (water, sanitation, solid waste, environment, for Euro 134.61 million are under implementation under transport, energy). Indo-German Bilateral Development Cooperation. 12.12 Bilateral Economic and Financial Dialogue 12.11 Bilateral Development Cooperation with AFD, between India and France France 12.12.1 The Indo-French Bilateral Dialogue on Economic 12.11.1 The Government of France has been extending and Financial Issues was established between the finance development assistance to India since 1968. However, ministries as it was enshrined in the Joint Statement the major drawback of French assistance was that it was issued during the visit of the Hon'ble French President to tied to supply of goods and services from France. India on 14-15th February 2013. The first meeting of EFD Moreover, French development assistance was not was held at the level of Additional Secretary in France on significant in amount. In fact, the average annual 29th October, 2013 at Paris. The EFD is held on alternate disbursement since 2001-02 had been very low at Rs. basis, both in India and France. The 2nd meeting for EFD 28 crores only. was held at New Delhi on 27th March 2015. Issues 12.11.2 In 2006, Government of France proposed to discussed in the meeting were Macro-economic situation provide untied development assistance to India through in India, France and Europe; Global Economic and the French Agency for Development (AFD). In this regard, Financial Governance and other issues including an inter-governmental Agreement was signed between measures to enhance bilateral trade and investment & the two Governments on 25.01.2008 during the State visit financing of long term investments in infrastructure and of French President Mr. Nicholas Sarkozy to India. In Indian banking operation in France. The level of the pursuance of the inter-governmental Agreement, a meeting has been raised to Finance Minister Level at the Memorandum of Understanding (MoU) between the request of the French government. Department of Economic Affairs and AFD was signed on 12.13 Bilateral Development Cooperation with 29.09.2008. The MoU had been amended with revised Republic of Korea: terms & conditions in the year 2012. 12.13.1 In the Joint Statement for Special Partnership 12.11.3 The priority areas for AFD financing in India are: signed during the Prime Minister's visit to Republic of Energy efficiency and renewable energy, Urban Korea (RoK) during May 18-19, 2015, it was agreed to infrastructure (public transport, water, etc.) and upgrade the bilateral relationship between the two preservation of biodiversity countries to a 'Special Strategic Partnership' and to 12.11.4 Under the development cooperation programme expand it into a wide range of areas. Accordingly, RoK two annual level meetings at the level of Joint Secretary was accepted as bilateral partner for development / Additional Secretary (Bilateral Cooperation) i.e. DEA- cooperation during October, 2016. In the 5th India-Korea AFD Annual Consultation Meeting and DEA-AFD Annual Finance Ministers' Meeting held in Seoul during June 14- Negotiation, are held during the second quarter and fourth 16, 2017, an Economic Development Cooperation Fund quarter of the calendar year respectively. In the Annual (EDCF) Agreement was signed between the two Consultation meeting, apart from the policy issues, the Governments for US$ 1 billion Official Development 53Annual Report 2019-2020 Assistance (ODA) to India. Two projects viz. (i) Mumbai- 12.17 International Platform on Sustainable Finance Nagpur Super Communication Expressway ITS Project; 12.17.1 In September 2019, India joined International and (ii) Re-development of Bandra (E) Government Platform on Sustainable Finance (IPSF) as a founding Colony Project are under consideration for external member along with seven (7) other member countries funding through EDCF. including European Union. IPSF is an initiative taken by 12.14 India-Korea Working Group Meeting the European Commission in the year 2019 and was formally launched on 18th October 2019 at the 12.14.1 India-Korea Working Group Meeting (WGM) International Monetary Fund Headquarters, Washington serves as a platform for discussing all the issues DC. IPSF would acts as place of exchange for best pertaining to the financial package offered by Republic practices on Sustainable Finance initiatives. This will of Korea and progress of candidate projects etc. The enable India to participate in the process of global 5th India-Korea WGM Meeting was held on 08.01.2019 deliberations on the evolution of Sustainable Finance as in New Delhi and the 6th India-Korea WGM was held major line of financing for the future in India, in the crucial on 21.11.2019 in Seoul under the co-chairmanship of climate change management sector. IPSF will also be Additional Secretary, DEA from Indian side and Director, relevant for India's journey towards $ 5 trillion economy Ministry of Economy and Finance from Korean side. by 2024-25. 12.15 Development Cooperation with European 12.18 European Investment Bank (EIB) Union (EU) 12.18.1 The European Investment bank is the European 12.15.1 The European Union (EU) provides development Union's financing institution which was established in assistance (financial/technical) to India in the form of 1958 under the treaty of Rome (1957) to provide financing Grants. The priority areas include environment, public for capital investment. The members of the EIB are the health and education. member States of the European Union, who have all subscribed to the Bank's capital. Outside the European 12.15.2 Since 2014, the financial component of grant Union, EIB financing operations are conducted principally from EU has been discontinued, however technical from the Bank's own resource but also, under mandate, cooperation and exchange of best practices still remains from Union or Member States' budgetary resources. active in three lines (i) in areas of mutual interest (ii) in Under these arrangements, the EIB's funds are utilized areas relevant to the Sustainable Development Goals to finance investments in countries signatory to with civil society organizations and (iii) at a regional level Cooperation Agreement with the EU. to address global challenges. At present, there are two 12.18.2 EIB's activities in India emanate from the Joint technical assistance projects namely (i) Support to Action Plan (JAP) of the Strategic Partnership between Renewable Energy, Clean Technologies and Energy the EU and India. EIB intends to increase its lending Efficiency in India and (ii) Capacity-building Initiative for activities focusing mainly on environmental sustainability Trade Development in India which are running in last and large infrastructure project through FDI, transfer of phase and will end by 2022 and 2020 respectively. technology and know-how. EIB investments in India are 12.16 India-EU Macro-economic Dialogue governed by the Framework Agreement for Financial Cooperation. This agreement was signed between India 12.16.1 Under the Joint Action Plan for India-EU and EIB on 25th November 1993 by the Charge d' Affairs Strategic Partnership adopted during the India-EU of India at Brussels. The Framework Agreement was Summit in New Delhi in 2005, it was agreed to 'Establish initially valid for a period of three years and later it was a regular Macro Economic Dialogue' on matters of extended sine die vide amendment dated 24th November common interest, to exchange information and 1998. DEA signed two loan agreements with EIB in 2019. experience on economic developments in respective These include Finance Contract of Euro 200 million economies as well as policy context and global signed on 18 July 2019 for Pune Metro Rail Project and challenges. Accordingly, India-EU Macro Economic Finance Contract of Euro 250 million signed on 20th Dialogue has been held annually since 2007 with venues December, 2019 for Bhopal Metro Rail Project. alternating between New Delhi and Brussels. The first dialogue was held in New Delhi. So far 10 Macro- 12.19 Bilateral Development Cooperation with United Kingdom Economic Dialogues have been held. The last dialogue was held on 21st March 2019 in Brussels and was co- 12.19.1 The United Kingdom (UK) has been providing chaired by Finance Secretary & Secretary (EA) from development assistance to India since 1958. The Indian side and Director General, Directorate General assistance from the UK, through its Department for for Economic and Financial Affairs, from the EU side. International Development (DFID), flows to mutually 54Department of Economic Affairs I agreed government projects and programmes in the form Government have been either Technical Assistance (TA) of financial and technical assistance. The Development programmes focused on sharing skills and expertise, assistance is received mainly for achieving the or in investments in private sector under PSDI (Private Sustainable Development Goals (SDGs). Presently, Sector Development Initiative) projects focused on Odisha, Madhya Pradesh and Bihar are the three focus states of DFID. helping the poor. The 4 new agreements signed in the year 2019 between Government of India and DfID/FCO 12.19.2 With effect from January 2016, all new development cooperation programmes by the UK are : S.no Programme/Project Date of Signing Time period of Amount of MoU Programme (in £ million) 1 India-UK Financial Services 10.01.2019 January 2019 to 6 – 8 Technical Assistance Programme December 2023 2 Sustainable Cities for Shared 10.01.2019 January 2019 to 9.5-10.5 Prosperity (SCSP) March 2023 3 UK-India Fast Track Start-up 10.01.2019 January 2019 to DCI 28 + TA 10 Fund (FSF) -Technical assistance March 2032 to be provided 4 India-UK Technical Assistance 18.04.2019 2019 to 2022 3 - 5 programme on Ease of Doing Business DCI – Development Capital Investment TA – Technical Assistance 12.20 India-UK Economic & Financial Dialogue iii. Partnership Agreement for Water, Sanitation and Hygiene (WASH); 12.20.1 An agreement was signed between India and UK on Feb 05, 2005 establishing 'Indo-British Economic iv. Partnership Agreement for Renewable Energy & Financial Dialogue' at the Ministerial level to be held Technology Commercialization & Innovation; on alternate basis between India and UK. India-UK v. Partnership Agreement for Health Project; Economic and Financial dialogue (EFD) is co-chaired by Finance Minister of India and Chancellor of vi. Disaster Management Support Project; and Exchequer, UK. The first dialogue was held in 2007. So vii. Partnership Agreement for the Energy Efficiency far 9 dialogues have been held and the 9th EFD was Technology Commercialization and Innovation held in India on 4th April, 2017. The 10th EFD is due to Project. be held in London, UK. 12.21.2United States Trade and Development Agency 12.21 Bilateral Development Cooperation with USA (USTDA) 12.21.1 U.S. Agency for International Development 12.21.2.1 USTDA promotes economic growth in (USAID) emerging economies by facilitating the participation of 12.21.1.1 The United States of America bilateral U.S. businesses in the planning and execution of priority development assistance to India started in 1951 and it is development projects in host countries. Since 1992, the mainly administered through the USAID. Since its U.S. Trade and Development Agency has supported commencement, USAID has provided economic over 100 priority development projects in India with assistance to India in various sectors. Currently, following public and private sector sponsors. During the year seven projects are being implemented by USAID in 2019, DEA granted approvals for two proposals for the partnership with Govt. of India: signing of agreements by Petroleum and Natural Gas i. Partnership Agreement for Agri. & Food Security Board and Bharat Petroleum Corporation Limited with Program; USTDA for feasibility study assistance in the sector of ii. Partnership Agreement for Sustainable Forests petroleum worth USD 0.97 million and USD 0.73 million, and Climate Adaptation Program; respectively. 55Annual Report 2019-2020 12.21.3 India-US Economic and Financial Partnership 12.24 Bilateral Cooperation with New Zealand 12.21.3.1 The seventh Cabinet level meeting of India- 12.24.1 India-New Zealand Economic Policy dialogue US Economic and Financial Partnership (EFP) was held in New Delhi on 01st November, 2019 under the co- 12.24.1.1 India-New Zealand Economic Policy Dialogue was chairpersonship of Finance Minister of India and established in the year 2009. The Economic Policy Dialogue Secretary of the US Treasury. During this meeting of the between India and New Zealand provides a platform for EFP, both sides had in-depth exchanges of views on a collaboration on bilateral issues of mutual concern, including range of issues such as the global, US, and Indian macroeconomic policies, foreign investment and pension economic outlooks, global debt sustainability, financial funds, tax reforms, possibilities of future engagement and sector reforms, leveraging of capital flows and investment. cooperation between both the countries. So far, seven They also took stock of the efforts undertaken to further dialogues have been held between India-New Zealand on improve mutual cooperation on a wide range of alternate basis. The 7th India-New Zealand Economic Policy multilateral subjects including anti-money laundering and Dialogue was held on 28th November, 2019 in New Delhi under combating financing of terrorism (AML/CFT). Both sides the co-chairmanship of Additional Secretary, DEA from Indian expressed commitment towards greater economic side and Additional Secretary, Treasury from New Zealand side. cooperation on global economic issues, both bilaterally and multilaterally in the G20 and other fora. The two sides 12.25 Lines of Credit extended to developing countries also hoped for continued engagement to strengthen the under Indian Development and Economic relationship between the two countries, as well as, Assistance Scheme (IDEAS): strengthening their economies and economic security. A 12.25.1 Lines of Credit (LoCs) form an important component Joint Statement in this regard was issued at the of India's diplomatic strategy and have been very useful in conclusion of the dialogue. generating goodwill and building long term partnerships. The 12.22 Bilateral Development Cooperation with Canada Scheme also attempts to promote India's strategic political and economic interest abroad by positioning it as an emerging 12.22.1 International Development Research Centre power, investor country and partner for developing countries. (IDRC) of Canada Indian Development and Economic Assistance Scheme 12.22.1.1 International Development Research Centre (IDEAS), initially known as "India Development Initiative (IDI)" (IDRC) - a Crown Corporation of Canada, extends grant flows from the announcement made by the Finance Minister assistance to various Governments and Non-Government in the Union Budget for FY 2003-04. Initially proposed to be organizations for projects in the field of agriculture, health operated for five years from 2005-06 to 2009-10, the scheme and family welfare etc. was granted first extension in 2010 from 2010-11 to 2014-15. Second extension to the scheme has been granted in 2015 2.22.1.2 Since 1972, IDRC has funded 551 research for another five years i.e. 2015-16 to 2019-20, with the revised activities worth CAD 159 million in India through set of guidelines with a view to improve efficiency and make institutions, researchers and NGOs. For FY 2018-19, DEA the system robust and transparent. The rate of interest and granted approval for 2 Grant Proposals from IDRC tenor offered to developing countries has also been made more involving grants assistance worth CAD 1 million. attractive. 12.23 Bilateral Cooperation with China 12.25.2 Under the IDEA Scheme, MEA selects specific 12.23.1 India-China Financial Dialogue projects keeping in view diplomatic considerations and requests received from various developing countries. The 12.23.1.1 The 9th India-China Financial Dialogue was held in proposals are discussed and deliberated upon by a Standing New Delhi on 25.9.2019. The Chinese delegation led by Vice Committee comprising officers of MEA and DEA. After Minister, Ministry of Finance interacted with the Indian delegation obtaining the approval of External Affairs Minister, MEA led by Secretary, Department of Economic Affairs on wide- recommends the proposal to DEA for approval of Finance ranging issues of mutual interest. Both sides had in-depth Minister. DEA then issues a formal letter conveying approval exchange of views on macroeconomic situation & policy, of the Line of Credit. cooperation in multilateral framework, bilateral investment and financial cooperation. Two sides also committed to promote a 12.25.3 LoCs are being operated through Export-Import Bank favorable environment to enable continuous growth of bilateral of India, which raises resources from the market and provides trade and investment, strengthen their efforts to promote more LoCs to recipient Governments at concessional rates. GoI balanced and healthier development of trade and economic backs the LoCs through a Deed of Guarantee in favour of cooperation and further enhance the closer development the lending bank to guard against any default by the borrowing partnership between two countries. A Joint Statement was Government in payment of interest and principal to the lending issued at the conclusion of the Financial Dialogue reflecting bank. GoI also extends Interest Equalization Support (IES) the mutual understanding and shared vision of both the countries to the lending bank for enabling it to lend on concessional to further strengthen cooperation in the financial sector. terms. 56Department of Economic Affairs I 12.25.4 During the FY 2019-20 (i.e. from April 1, 2019 to of USD 732.9 million (these include both national projects as January 15, 2020), 17 LoCs worth USD 1,538.408 million have well as global/regional projects of which India is a part). Under been extended to African countries and 6 LoCs worth USD GEF-7, India has received a total allocation of USD 85.61 1811.80 million have been extended to Non-African countries, million for three focal areas namely biodiversity, climate change details of which are at Annexure -I. and land degradation. 12.26 United Nations Development Programme (UNDP) 12.28 Green Climate Fund (GCF) in India 12.28.1 GCF was established in 2010 by 194 countries who 12.26.1 UNDP is an agency of the United Nations working in are parties to the UN Framework Convention for Climate Change the areas of human development, systems and institutional (UNFCCC). UNFCCC, which was adopted at the Rio Earth strengthening, inclusive growth and sustainable livelihoods, Summit held in 1992, currently serves as the main framework sustainable energy, environment and resilience. Currently, for international cooperation to combat climate change and its India is a member of the Board where Permanent impacts. The Convention puts the onus on developed countries Representative of India to the United Nations represents India. to lead the way in combating climate change. The idea is that, India's annual contribution to the UNDP has been to the extent as they are the source of most past and current greenhouse of USD 4.5 million. Besides this contribution, India pays the gas emissions, industrialized countries are expected to do the local office expense to UNDP towards Government Local Office most to cut emissions at home and also provide technical and Contributions (GLOC). This amount is calculated based on financial assistance to support climate change activities in the categorization of India on income group. developing countries. The operation of the Financial Mechanism is entrusted with Global Environmental Facility and GCF. While 12.26.2 DEA is the point of interface between UNDP and any GEF has served as an operating entity of the financial other national or sub-national authorities and agencies in India. mechanism since the Convention's entry into force in 1994, DEA decides on voluntary contribution to UNDP and makes GCF was designated as an operating entity in 2011.GCF Board local office contribution. All projects implemented by UNDP in comprises 24 members (each with an alternate member) with India are cleared by the DEA. equal representation from developing and developed nations. 12.27 Global Environment Facility (GEF) GCF considers application of national entities for accreditation after the focal point in the country recommends the same. 12.27.1 It was established on the eve of the 1992 Rio Earth Ministry of Environment, Forest and Climate Change is the Summit to help tackle our planet's most pressing environmental National Designated Authority (focal point) from India and serves problems. The GEF Secretariat is based in Washington, D.C. as the main point of contact with the GCF. GCF has approved The GEF unites 183 countries in partnership with international three projects involving financial assistance of USD 177.8 million institutions, civil society organizations (CSOs), and the private related to climate change mitigation and adaptation activities. sector to address global environmental issues while supporting India does not contribute to GCF's kitty because the national sustainable development initiatives. GEF provides responsibility to fund GCF lies primarily with developed grants for projects related to biodiversity, climate change, countries. chemical waste, international waters and land degradation. India is a founder member of GEF. India, in GEF, is represented 12.29 Foreign Training Courses/Programmes by DEA and Ministry of Environment, Forest and Climate 12.29.1 Department of Economic Affairs is the nodal point for Change, being the Political Focal Point (PFP) and Operational administering short term foreign training courses offered by Focal Point (OFP) respectively. The PFP deals with the some bilateral partner countries under bilateral cooperation financing framework of GEF as per which the funds are programme and some multilateral agencies. These courses contributed by the member countries to the GEF kitty. The are intended for capacity building of the officers in various OFP coordinates all GEF-related activities within a country. spheres/fields of activities including sectors such as Education, The OFP reviews project ideas, checks against eligibility Health, Water Resources, Disaster Management, Governance, criteria and ensures that new project ideas will not duplicate Natural Resources and Energy, Agriculture, Nature an existing project. In the Board of GEF, DEA represent India Conservation, Environmental Management, etc. Nominations through India's Executive Director in World Bank. India leads are invited from all Ministries /Departments, State the South Asian constituency which includes Bangladesh, Governments/Union Territories. The nominations are screened Bhutan, Maldives, Nepal and Sri Lanka. by a Selection Committee in DEA and thereafter recommended 12.27.2 India is a donor as well as recipient member of GEF. to the sponsoring Government/Agency for acceptance. During Being Political Focal Point for GEF, DEA decides voluntary 2019-20 (upto December, 2019), DEA has processed trainings contribution to GEF. India has contributed around USD 78 for 69 Short Term Foreign Training Programmes (less than million to GEF since its inception in 1991. Under the current four weeks) from Singapore Cooperation Programme Training replenishment cycle i.e., GEF-7 that runs from 2018-2022, Award (SCPTA), Japan International Cooperation Agency India has pledged USD 15 million to GEF. So far, GEF has (JICA) and Malaysian Government as received and suitable financed 102 projects in India with a total GEF grant support applicants have been recommended for the purpose. 57Annual Report 2019-2020 Bilateral Cooperation & Sustainable Finance Division Annexure-I LoCs extended to various African & Non-African countries during the Financial Year 2019-20 Sl. No. Country Amount Purpose Date of (in USD communication million) from DEA African Countries 1. Madagascar 80.72 For ‘Agriculture Development in Madagascar through 4-Jun-19 Irrigation, Farm Mechanization and Food Processing Plant in Bongolava, Betsiboka, Menabe and Analamanga regions’ 2. Nigeria 100.00 For the project ‘Establishment of a National Rural 18-Jun-19 Broadband Network (NRBN)’. 3. Zimbabwe 310.00 For re-powering of Hwange Thermal Power Station. 18-Jun-19 4. DR Congo 56.824 For 15 MW Photovoltaic power plant and electrical 12-Jul-19 network solar project at Tshilenge. 5. DR Congo 56.824 For 15 MW Photovoltaic power plant and electrical 12-Jul-19 network solar project at Gemena. 6. DR Congo 26.68 For 10 MW Photovoltaic power plant and electrical 12-Jul-19 network solar project at Manono. 7. Mali 22.00 For setting up a sustainable village & use of solar photo- 7-Aug-19 voltaic technology for irrigation of 2500 hectare of agriculture land in Mali. 8. Mozambique 250.00 For improving of quality of power supply in Mozambique. 26-Aug-19 9. Ghana 2.01 Additional LoC for completion of the construction of 6-Sep-19 Foreign Policy Training Institute. 10. Nigeria 50.48 For acquisition of Training Ship from Goa Shipyard 6-Sep-19 Limited (GSL). 11. Nigeria 70.00 For procurement of Landing Ship Tanks (LST) from Goa 6-Sep-19 Shipyard Limited (GSL). 12. Mali 60.65 For 50 MW Solar Photovoltaic Power Plant at Fana, Mali. 7-Nov-19 13. Guinea 20.22 For two solar projects. 7-Nov-19 14. Guinea 170.00 For strengthening the drinking water supply of grand 13-Nov-19 Conakry Horizon 2040. 15. Rwanda 122.00 For two solar projects. 14-Nov-19 16. Seychelles 100.00 For procurement, up-gradation, maintenance of defence 29-Nov-19 related equipment and vehicles and implementation of defence projects. 17. Togo 40.00 For electrification of 350 villages through solar 17-Dec-19 photovoltaic systems. Sub Total (A) 1,538.408 Non African Countries 1. Uzbekistan 40.00 For procurement of defence equipment. 16-Jul-19 2. Mongolia 236.00 Additional LoC to supplement the USD 1 billion LoC for 6-Sep-19 the Petrochemical Refinery project in Mongolia. 3. Sri Lanka 400.00 For undertaking ‘Development and infrastructure project’. 13-Nov-19 4. Suriname 35.80 For undertaking the project ‘Rural Electrification through 14-Nov-19 solar DG hybrid PV systems in 50 remote villages of Suriname’. 5. Bolivia 100.00 For undertaking development projects in Bolivia. 14-Nov-19 6. Russian Far 1000.00 For infrastructure and other Development projects in the 6-Jan-20 East Region Russian Far East Region. Sub Total (B) 1,811.80 Grand Total (A+B) 3,350.208 58Department of Economic Affairs I 13. Integrated Finance Division Affairs and Grant No.29-Department of Financial Services. This involves finalizing the Budget 13.1 The Division is responsible for the following Estimates/ the Revised Estimates/estimating final functions: requirements/ surrender of savings, re- (i) Tendering financial advice & concurrence to appropriations and vetting of Head wise proposals involving expenditure in respect of DEA Appropriation Accounts. and DFS as well as their attached and subordinate offices e.g. Security Appellate Tribunal (SAT)/ (iv) Coordination, Compilation, Printing and laying of the National Savings Institute/G-20 Secretariat/Fifteenth 'Detailed Demand for Grants (DDG)' of the Ministry Finance Commission/Office of Special Court, of Finance in Parliament. Mumbai/ Office of Custodian/ Debt Recovery Tribunals, Pension Fund Regulatory and (v) Coordination of all matters relating to the Development Authority and Office of Court examination of the DDG by the Parliamentary Liquidator, Kolkata. Standing Committee on Finance. (ii) Exercising expenditure control and management, (vi) Monitoring of pending PAC/C&AG Audit Paras. ensuring rationalization of expenditure and compliance of economy measures in accordance (vii) Coordination, Compilation, Printing and with the instructions of the Department of Presentation of Statements to be made by Hon'ble Expenditure including regular monitoring of Finance Minister as required in terms of Rule 73- expenditure through monthly/quarterly reviews A, in Lok Sabha/Rajya Sabha in respect of and submission of reports to the concerned implementation of Reports of the Standing Secretaries. Committee. (iii) The Division also administers two Detailed Demands (viii) Budgetary position regarding the Grants for Grants i.e. Grant No.27-Department of Economic administered by the Division is given below: 13.2 Budgetary allocation of the Grants (on net basis) ( ` in crore) Grant BE 2019-20 RE 2019-20 BE 2020-21 27- Department of Economic Affairs Revenue 2727.69 3308.53 3262.57 Capital 11583.96 12643.62 26045.70 Total 14311.65 15952.15 29308.27 29- Department of Financial Services Revenue 1305.15 1378.99 1474.96 Capital 3385.04 6355.01 9650.04 Total 4690.19 7734.00 11125.00 The best practices followed for effective expenditure (c) Strengthening of internal control mechanism by control includes: getting internal audits undertaken. (a) Expenditure progress reviewed quarterly with Major (d) Monthly monitoring of Major Schemes/Programmes Head/Scheme wise details with concerned of Department included in the Outcome Budget. Secretaries. (e) Regular and close monitoring resulted in finalization (b) The Major Head wise and Scheme wise expenditure of substantial number of cases of Action Taken progress as compared to BE figures, posted on the Notes (ATNs) in respect of C&AG audit para during web-site of the Ministry of Finance. the year. 59Annual Report 2019-2020 PARAS OF AUDIT REPORTS OF C&AG - Details of ATNs Audit paras pending with different Ministries/Departments and their disposal status – Name of the Ministry/Department : Ministry of Finance (Department of Economic Affairs) Sl. No & Year No. of paras/PA Details of the Paras/PA reports on which ATNs are pending. No. of the reports on which No of ATN not No of ATNs Sent No of ATNs which Report ATNs have been sent by the but returned with have been finally submitted to PAC Ministry even the observations & vetted by audit but after vetting by Audit for the first time Audit is awaiting their have not been re-submission submitted by the by the Ministry. Ministry to PAC 1. 44 of 2017 07 01 - 02 (2017-18) 2. 20 of 2018 Full Report - - - (Compliance (31.10.2019) Audit on FRBM) (2018-19) 3. 2 of 2019 04 01 - 01 (2018-19) 14. Currency & Coin Division new security features is expected to render the currency notes practically counterfeit free. 14.1 Currency Section (ii) Commemorative Coins: During the last 1 year, 14.1.1 The Currency and Coin Division is concerned with the Government issued Gazette Notifications for policy matters relating to production and designs of release of 8 Commemorative Coins viz. 125th banknotes and coins, introduction of new banknotes and Birth Anniversary of Yogananda Paramhansa, coins, demonetisation of any existing banknotes and 100 years of Jallianwala Bagh Massacre, 200th coins, currency and coin related legislations, etc. Further, Birth Anniversary of Satguru Ram Singh ji, 550th the matter relating to security features of Banknotes are Parkash Purab of Sri Guru Nanak Dev ji, 100th handled by C&C Division. Security Printing and Minting Birth Anniversary of Smt. Vijaya Raje Scindia , Corporation of India Ltd. (SPMCIL) is under the 100th Anniversary of Vikram Sarabhai, 150th administrative control of this Division. In recent years, Birth Anniversary of Mahatma Gandhi and 250th certain issues with regard to legislation on virtual Session of Rajya Sabha. currencies, digital payments, blockchain technology and (iii) New Series of Coins which are friendly to payments systems are also looked after by this Division. visually impaired people: This Department 14.1.2 Over the years, this Division has been making vide Gazette notification dated 6th March 2019, signification contribution in terms of appropriate availability has notified new series coins of One Rupee, Two of currency notes and coins for circulation, thereby helping Rupees, Five Rupees, Ten Rupees and Twenty in the growth and development of our economy. Some of Rupees easily identifiable to the visually the major achievements of this Department during the impaired. Hon’ble Prime Minister on 7th March financial year 2019-20 are given below: 2019 released the new series coins. The new prototypes of coins which are friendly to visually (i) New security features of the banknotes:In impaired people are minted through SPMCIL. order to stay ahead of the counterfeiting, GoI, in RBI has commenced distribution of new design consultation with RBI, has initiated the process coins over RBI counters and is supplying them for introduction of new security features in Indian to all RBI ROs and currency chests for wider banknotes. The revised denomination-wise new/ distribution among public. advance security features of bank notes were decided in the meeting dated 18.7.2019 under (iv) Draft Report and Bill on Cryptocurrencies: the chairmanship of the then Secretary (EA) and For examining the issues of cryptocurrencies, the recommendations of the Central Board of the Government has constituted an Inter- RBI in this regard have been received on Ministerial Committee (IMC) under the 25.11.2019. The revised denomination-wise Chairmanship of Secy (EA) with Members of new/advance security features as recommen- MeiTY, SEBI and RBI. The Report of the IMC on ded by RBI’s Board are being processed for VCs has since been submitted by its Members, approval of the Government. The finalisation of but is awaiting approval of the Government. The 60Department of Economic Affairs I Report and Banning of Crypto currency & launched by Government of India. SPMCIL Regulation of Official Digital Currency Bill, 2019 Mints have started manufacturing of will now be examined by the Government circulation coins as per new design. through inter-ministerial consultation. (f) Augmentation in machineries (v) SPMCIL: The major initiatives taken by SPMCIL  SPMCIL has placed order for are as below: installation and commissioning of two (a) Zero Import of CWBN paper: SPMCIL has state-of-the-art CWBN banknote not imported any quantity of CWBN paper printing line one each for CNP, Nashik from last two years for Bank Note printing and BNP, Dewas. from overseas suppliers. All banknote paper  SPMCIL has placed order for two Intaglio requirements are meet by in-house machines for banknote printing one each production facility at Security Paper Mill for CNP, Nashik and BNP, Dewas. (SPM), Hoshangabad and Bank Note  New State-of-the-art automatic coin Printing Mill India Pvt. Ltd. (BNPMIPL), feeding line has been installed at India Mysuru. Government Mint Mumbai. (b) Export of Inks: In a major initiative for export (g) Technology up-gradation: SPMCIL orders, SPMCIL has supplied offset inks retrofitted printing machines at Security samples to M/s Oberthur, France for testing. Printing Press, Hyderabad for printing stamps (c) Commemorative Postal Stamps: SPMCIL of different theme with varnish coating and has printed and supplied Commemorative fragrance. 1st time ever Commemorative Postal Stamps of Mahatma Gandhi with Postal Stamps of Eight sides produced specialized tools to all Indian embassies including selected fragrance stamps. globally on the occasion of 150th Birth (h) Initiative of Quarterly Limited review of Anniversary of Mahatma Gandhi. Accounts has been taken. (Even though it (d) Printing of Commemorative Stamps for is not mandatory by SPMCIL since it is an International Market: SPMCIL has printed unlisted company). Commemorative Stamps for the (i) Dividend paid for FY 2018-19 `218.48 Crore Government of Afghanistan and Government to the Ministry of Finance. of Ghana and Seychelles on the theme of 150th Birth Anniversary of Mahatma Gandhi. (j) Policy of costing of commemorative coins has been brought out under guidance of (e) New Series of Coins: New series visually MoF. impaired friendly coins-2019 has been 14.1.3 Currency section deals with all policy issues and 14.1.4 The production of banknotes by BRBNMPL and matters relating to design, form and material of currency SPMCIL is strictly and regularly monitored by this section. notes/banknotes including security features, production The Meetings of Strategic Planning Group (SPG) and planning of printing of currency notes and other security Production Planning Committee (PPC) are also held documents. Others include currency related legislation, regularly under the Chairmanship of Secy(EA) and indigenization of bank notes production items in respect JS(C&C). During 2019-20, several Meetings of SPG and of supply of material of printing of bank notes and other PPC were held to review the indent and production of security products, expansion, up-gradation and modernization of Presses, Paper Mills, Ink factory, Postal banknotes. The cumulative production of notes by Stamp; Revenue Stamp, NJSP, Passports, fair price BRBNMPL and SPMCIL during 2019-20 upto 30.11.2019 determination of Bank Notes and Postal Stamps, etc. is given below: Cumulative production Press 01.04.2019 to 01.04.2018 to 01.04.2018 to 01.04.2017 to 30.11.2019 31.03.2019 30.11.2018 31.03.2018 Quantity in million pcs. BRBNMPL 11366.40 19014.20 12638.09 16982.00 SPMCIL 6477.28 10482.34 6685.83 9219.27 Total 17843.68 29496.54 19323.91 26201.27 Face value (in Rs`. Crore) SPMCIL 169192.03 305976.00 152227.45 230355.66 BRBNMPL 320077.71 434194.00 506582.48 387319.00 Total 489269.74 740170.00 658809.93 617674.66 61Annual Report 2019-2020 14.1.5 Notes in Circulation (NICs): The trends in NICs 29.11.2019 was `22,29,849 crore. NICs has risen by are strictly monitored. The NICs at the time of Demonetization `2,58,576 crore as compared to NIC as on 29.11.2018 (i.e. 1 (4th November,2016) were `17,74,200 crore. NIC as on year ago). Denomination-wise breakup of NIC is given below: Break-up of NICs As on 28.11.2019 `2 `5 `10 `20 `50 `100 `200 `500 `2000 Total Pieces in millions 4,264 6,982 30,797 8,322 8,503 19,246 4,701 24,778 3,056 1,10,651 ` in crores 853 3,491 30,797 16,644 42,517 1,92,459 94,026 12,38,921 6,11,260 22,30,967 Source: RBI 14.2 Coin Section and regularly monitored by this section through the Meetings of Strategic Planning Committee (SPC) and 14.2.1 The work profile of this section inter alia include Production Planning Committee (PPC). policy formulation regarding design, shape and size of circulation coins including fixation of fair prices of coins, 14.2.2 Coins in Circulations (CICs): The trends in coins related legislations and issuance of Commemorative CICs are strictly monitored. As compared to 1 year ago, Coins. Others include production planning of coins and on 28.11.2019, the CICs has risen by `3,780 crore. The determination of indent of coins. Like in the case of details of CICs are given below and its break-up are as banknotes, the production and indent of coins is also strictly below: Coins in Circulation (CICs) in (cid:0)` crore 1 week ago: 21.11.2019 29,470 1 month ago: 28.10.2019 29,111 As on date 29,735 As on 31.03.2018 24,909 (28.11.2019): 1 year ago: 28.11.2018 25,955 As on 31.03.2017 24,342 Source: RBI Break-up of CICs As on 28.11.2019 ` 1 Coins & Grand ` 2 coins ` 5 coins `10 coins smaller coins) Total Pieces in millions 24,283 12,982 9,401 20,009 66,676 ` in crores 2,428 2,596 4,701 20,009 29,735 14.2.3 Guidelines and Costing Policy for 14.2.5 The Old Guidelines for issue of commemorative Commemorative Coins: As per the Coinage Act, 2011, coins/currency dt.29.03.1991was revised on 06.01.2017 "commemorative coin" means any coin stamped by the by making the Guidelines more specific to coins but Government or any other authority empowered by the elaborate in nature. The Guidelines were further revised Government in this behalf to commemorate any specific on 25.02.2019 to incorporate a Proforma/Format for occasion or event and expressed in Indian currency. submission of proposal for commemorative coin, as we Accordingly, the Government issues commemorative coins received lots of proposals which were not as per our to mark occasion of great personalities with unique, durable Guidelines. The last revision of the Guidelines was and outstanding contribution towards society, etc. and to made on 27.03.2019 to incorporate "Commiserative remember events which had great historical significance, Coins" viz. Commemorative Coins to be issued on as per Guidelines approved by the Government. occasion to express sympathy/grief/exhibit respect for 14.2.4 The Guidelines being followed for issue of a the sacrifice. This change was made while examining commemorative is not static, but a dynamic one. Changes the proposal for issue of a commemorative coin to mark were made in the Guidelines to address emerging issues 100th Anniversary of the Jallianwala Massacre on April or incorporate new elements, which could not be foreseen 13, 2019, which was received from the Ministry of in the past. The revision of Guidelines was also carried Culture. The existing Guidelines are further re-examined out on the basis of lessons learnt from our examination in consultation with the Ministry of Culture to make it of proposals received. more comprehensive. 62Department of Economic Affairs I 14.2.6 Since 2014, the Government has issued 42 commemorative coins. The details of commemorative coins issued in 2019 are given below: COMMEMORATIVE COINS AND COINS ISSUED BY GOVERNMENT OF INDIA AS PER GAZETTE NOTIFICATION in 2019 SI. No. Name of Denomination Notification No. & Commemorative Coin Date Year 2019 1. 125th Birth Anniversary of `125 G.S. R. 150 (E) Yogananda Paramhansa Dated 26/02/2019 2. New Series of Coins `1, `2, `5, `10, `20 G.S.R.184(E) dated 06.03.2019 3. 100 years of Jallianwala `100 G.S.R. 293(E) Bagh Massacre Dated 09/04/2019 4. 200th Birth Anniversary of `200 , `10 G.S.R. 401(E) Satguru Ram Singh ji Dated 03.06.2019 5. 550 Parkash Purab of `550 G.S.R.407(E) Sri Guru Nanak Dev ji Dated 03.06.2019 6. 100th Birth Anniversary of `100 G.S.R. 405 (E) Smt. Vijaya Raje Scindia Dated 03.06.2019 7. 100th Anniversary of Vikram `100 G.S.R. No. 406(E) Sarabhai. dated 03.06.2019 8. 150th Birth Anniversary of `150 G.S.R. No. 592(E) Mahatma Gandhi dated 22.08.2019 9. 250th Session of Rajya `250 G.S.R. No. 829(E) Sabha dated 08.11.2019 14.2.7 Minting Capacity and Utilization: To meet the pcs per annum.Over last 5 years, on an average, SPMCIL indent of coins from RBI, the minting capacity of SPMCIL manufactured approximately 1, 50,000 commemorative was enhanced to 7750 mpcs in 2016-17 from 5954 mpcs coins and medallions (per annum) for fulfilling domestic in 2010-11. However, in recent years, there has been a demand. This leaves sufficient spare capacity for catering glut of coins since 2016-17 owing to reverse flow of to global demand. coins.In case of commemorative coins, SPMCIL has a combined installed capacity of manufacturing 14.2.8 The details of production capacity, utilization, cost commemorative coins in the range of 3,00,000-5,00,000 incurred and revenue earned are given below: i) Production capacity of circulation coins and utilization of SPMCIL and lifting by RBI for the last 5 years and 2019-20, up to 30.11.2019 along with details cost of production and revenue earned. Period Production Utilisation (In Lifting by Cost of Revenue Capacity (In Mpcs) RBI (In Production Earned (` In cr.) Mpcs) Mpcs) (`In cr.) 2014-15 7400 7929 7907 1795.04 1340.99 2015-16 7400 9254 9257 1847.86 1672.60 2016-17 7400 9681 9691 2181.16 1304.36 2017-18 7750 6703 6703 1351.09 1142.47 2018-19 7750 5331 5331 1813.57 1273.65 2019-20 7750 2110 320 686.851 44.04 (Up to 30.11.2019) 63Annual Report 2019-2020 ii) Production capacity of commemorative coins and utilization of SPMCIL and sale of commemorative coins for the last 5 years and 2019-20, up to 30.11.2019 along with details of cost of production and revenue earned. Period Production Utilisation Sale of Cost of Revenue Capacity (in Commemorative Commemorative Production Earned Pcs). Coins/Medals/Me Coins/Medals/ (in `Cr) (in `Cr) dallion/ Souvenir Medallion/ Souvenir (in Pcs). (In Pcs). 2014-15 4,00,000 165441 72844 23.84 19.54 2015-16 4,00,000 249434 143187 28.80 21.21 2016-17 4,00,000 222813 155666 29.66 22.78 2017-18 4,00,000 232934 181575 31.71 30.95 2018-19 4,00,000 193906 166220 22.83 27.66 2019-20 (Up to 4,00,000 140186 164894 22.17 19.40 30.11.2019) 14.2.9 Policy for Costing of Commemorative Coins: 14.2.13 Other important Issues relating to coins: In In the past, the Government through SPMCIL had been recent years, mints and presses are diversifying their selling commemorative coins on the basis of 10% Profit business across the globe from traditional trade of Margin of the Total Cost Plus Postal Charges and circulation coins and banknotes to medals, medallions, Applicable GST Rate of the Total Cost. There was no numismatic coins, bullions, security papers and policy as such for costing of commemorative coins and documents, security inks, etc. Accordingly, SPMCIL also recovery of actual costs plus profits. To bring more clarity on the costing of commemorative coins, the Government needs to diversify its business activities to counter the has come out with a Policy for Costing of Commemorative uncertainty of the domestic demand for coins, banknotes Coins on 18.10.2019. This policy has been prepared in and security documents. consultation with SPMCIL. 14.2.14 As per the data available in the Table below 14.2.10 The Proforma Guidelines, for Issue of compiled from RBI, during 2012-13, there was a Commemorative Coins and the Costing Policy for significant hike in indent of coins by RBI and SPMCIL Commemorative Coins are placed below at Annexure-I, could supply only 6,878 mpcs of the 9,554 mpcs, and in Annexure-II and Annexure-III respectively. 2017-18, there was a sharp fall in indent of coins from 14.2.11 New Series of Coins which are friendly to RBI to 7,712 mpcs from 15,000 mpcs in 2016-17. The visually impaired people: This Department vide Gazette installed capacity of coins since 2010-11 is also shown in notification dated 6th March 2019, has notified new series the Table. coins of One Rupee, Two Rupees, Five Rupees, Ten Rupees and Twenty Rupees easily identifiable to the in million pieces (mpcs) visually impaired. Hon'ble Prime Minister on 7th March Year Installed Capacity 2019 released the new series coins. This has also been Indent Supply/Lifting of SPMCIL included in the Budget Announcements of 2019-20 under 2010-11 6670 6140 5954 Para 104. 2011-12 6370 6094 5954 14.2.12 The new prototypes of coins which are friendly 2012-13 9554 6878 5954 to visually impaired people are minted through SPMCIL. 2013-14 12033 7677 7400 The difficulties being faced by visually impaired persons with the 2011 series of circulation coins include no definite 2014-15 13840 7912 7400 pattern of shape or size in this coin series for easy 2015-16 14240 9258 7400 differentiation by visually challenged among different 2016-17 15000 9691 7750 denominations. The new features incorporated in the new 2017-18 7712 5852 7750 series of coins include pattern of increasing size (i.e. 2018-19 6132 6132 7750 diameter) from lower to higher denominations and weight 2019-20 3,400* 320 7750 in increasing order from lower to higher denomination. Source: Annual Reports of RBI & SPMCIL The them of new series coins is 'Agriculture', represented with crop grains on the reverse side of the coins. RBI *: Provided SPMCIL create/provide space for storing has commenced distribution of new design coins over of coins RBI counters and are supplying them to all RBI ROs and **: As on 28.11.2019, RBI lifted 320 mpcs while currency chests for wider distribution among public. SPMCIL minted 2111 mpcs 64Department of Economic Affairs I 14.2.15 As already mentioned above, to meet the indent issues involved, this Department will explore the use of of coins from RBI, the minting capacity of SPMCIL was the BBCT/DLT, especially in the financial sector, and enhanced to 7750 mpcs in 2016-17 from 5954 mpcs in the same has been incorporated in the Report of the JMC 2010-11. However, in recent years, there has been a glut on virtual currencies mentioned in Para 14.3.3. However, of coins since 2016-17 owing to reverse flow of coins. on the wider uses of BCT for promoting digital economy, The indent of coins by RBI has also fallen significantly MeiTY being the Nodal Ministry on the technology aspect on account of lack of demand for coins from the public. of BCT/DLT, has been asked to take appropriate action. For FY2019-20, RBI's indent for circulation coins amounts Currently, various States are experimenting or working to 3400 Mpcs, which is only 1/3rd of the installed capacity the application of blockchain technology in various of India Government Mints. sectors of the economy. It has been reported that West Bengal is exploring the use of block chain in issuance 14.2.16 As per the Annual Report,2018-19, SPMCIL, the of birth certificates while Karnataka is working on e- revenue from sale of products during 2018-19 was around Goverance. States like Andhra Pradesh and Telangana `5,609 crore. Of this, banknotes constituted `2,419 crore are also exploring to us the same in land record, road (43%); circulation coins constituted `1,846 crore (33%); transport, etc. and others (24%). The revenue from sale of circulation coins may fall drastically during 2019-20. The revenue 14.3.3 Policy and Regulation of Crypto Assets in from Medals & Commemorative coins constituted only India: At present, Government doesn't maintain data 1% in 2018-19. Therefore, there is a huge scope related to trading of Virtual Currencies/ Bit coins. potentially for augmenting revenue from sale of However, taking cognizance of concerns raised at commemorative coins, especially by promoting exports various fora from time to time on increasing use of Virtual of commemorative coins. Currencies (VCs) and the regulatory challenges around, the Department of Economic Affairs had constituted, on 14.2.17 However, to reduce the adverse impacts of fall March 15th 2017, an Inter Disciplinary Committee (IDC) in Coin indents by RBI, SPMCIL has also been exploring chaired by the Special Secretary (Economic Affairs) to various measures. These include explore opportunities examine the framework with regard to Virtual for export of circulation coins, commemorative coins, Currency.The IDC had representatives from Department bullion Products and Medallions. of Economic Affairs, Department of Financial Services, 14.3 Other important activities Department of Revenue (CBDT), Ministry of Home Affairs, Ministry of Electronics and Information 14.3.1 Payment and Settlement Systems Act: A Technology, Reserve Bank of India, NITI Aayog and Committee has been constituted under the Chairmanship State Bank of India. of Secretary (EA), with representatives from MeiTy, RBI, UIDAI to suitably amend the Payment and Settlement 14.3.4 The Government examined the report submitted Systems Act, 2007. The Report of Inter-Ministerial by Special Secretary (DEA) and felt that more work and Committee for amendment to Payment & Settlement more specific recommendations needed to be made to Systems Act 2007 has been approved by Hon'ble Finance deal with this phenomenon of Crypto Currencies. Minister. Accordingly, a high-level Inter-ministerial Committee (IMC) was constituted on 2nd November, 2017 under the 14.3.2 Uses of Block-chain technology: The Finance Chairmanship of Secretary (EA) to study the issues Minister made a policy statement about virtual currencies related to virtual currencies and propose specific actions and distributed ledger technology at Para 112, of his to be taken in this matter. The Committee has Budget Speech for 2018-19. The Finance Minister stated representation from MeiTy, RBI, SEBI, Ministry of that "The Government does not consider crypto- Corporate Affairs and CBDT. The Report of the IMC on currencies legal tender or coin and will take all measures VCs has since been submitted by its Members, but is to eliminate use of these crypto-assets in financing awaiting approval of the Government. The Report and illegitimate activities or as part of the payment system. Banning of Crypto currency & Regulation of Official Digital The Government will explore use of block chain Currency Bill, 2019 will now be examined by the technology proactively for ushering in digital Government through inter-ministerial consultation by economy."As far as the Central Government is moving a Cabinet Note in due course. concerned, a Committee under Joint Secretary (C&C) with Members from SPMCIL and MeiTY was set up on 14.3.5 Further, the Government and the RBI had been 15.02.2018. Subsequently, Niti Aayog and NIC were warning the users of crypto-currencies of the dangers also invited in meetings of BCT. Given the technical posed by such virtual currencies. The Reserve Bank of 65Annual Report 2019-2020 India issued warning in December 2017 about the duty seamless, and also help in improving the Ease of potential financial, operational, legal, customer Doing Business not only for the States/UTs, but for the protection and security related risks that they are country as well. exposing themselves to by investing in Bitcoin and/or 14.4 Security Printing and Minting Corporation of other Virtual currencies. The Reserve Bank of India has India Limited (SPMCIL) also clarified that it has not given any license/ authorization to any entity/company to operate such 14.4.1 The Department of Economic Affairs is the schemes or deal with Bitcoins or any virtual currency. Administrative Department of SPMCIL and look into all Before this, RBI had also warned in December, 2013 issues relating to appointment to Board Level posts in and February 2017 risks and dangers with Virtual SPMCIL and Residual establishment matters of the nine currencies. Further, RBI in its letter dated 6.4.2018 to Units of SPMCIL. Others include, SPMCIL Pension Fund all banks/ financial establishments has advised that with Trust,;MoU with SPMCIL; Preparation of Annual Report immediate effect, entities regulated by the Reserve Bank of SPMCIL; Modernization of mints and security paper shall not deal in VCs or provide services for facilitating mill; etc. any person or entity in dealing with or settling VCs. 14.4.2 SPMCIL, a Mini-ratna Category-I, Schedule-'A' Accordingly, this ban came into force w.e.f. 6th July, Central Public Sector Enterprise (CPSE) was 2018. The Government of India also issued a incorporated on 13th January 2006 to manage four India comprehensive Press Release dated 29.12.2017, where Government Mints, two Currency Presses, two Security the Ministry of Finance outlined the concerns about Presses and one Security Paper Mill, which were earlier virtual currencies. being managed by the Government of India (Ministry of 14.3.6 Collection of Stamp duty and how to improve Finance) directly. The Company is wholly owned by the the existing systems: The Government has constituted Central Government with Authorized Share Capital of on 28.12.2018 a Group to examine the present system `2,500 crores and paid-up Share Capital of `1,064.24 of physical stamp and e-Stamping under the crores as on 31.03.2019. Chairmanship of Finance Secretary, and the Group has 14.4.3 The Reserve Bank of India (RBI) is the customer been tasked with the objectives: (i) To examine the for currency notes supplied by two Currency Presses of present system of physical stamp papers and e-Stamping, the Company, i.e. Bank Note Press (BNP), Dewas and and the limitations/lacunae; (ii) To consider means to Currency Note Press (CNP), Nashik. The Ministry of reform the present system of physical stamp papers and External Affairs (MEA) and Ministry of Home Affairs e-Stamping, including through use of block chain (MHA) are customers for passports and visa stickers technology;(iii) To study the latest systems used in respectively and the State Governments are customers collection of taxes by Government of India and various for Non-Judicial Stamp Papers and allied stamps and States so as to put in place a robust, modern and the Postal Department is the customer for postal transparent system for collection of stamp duty. The 1st stationery, stamps, etc. supplied by the two Security Meeting of the Group was held on 22.08.2019. Presses of the Company, i.e. Security Printing Press 14.3.7 As collection of stamp duty is mainly under the (SPP), Hyderabad and India Security Press (ISP). These domain of the States/UTs, the purpose of the Group is to Security Presses also produce various security items give make recommendations for improvement of the like cheques, railway warrants, income tax return order existing system of collection systems. The States/UTs forms, saving instruments, commemorative stamps, has been asked to share the requisite data necessary certificates etc. for various customers. DEA, Ministry of for making the detailed analysis of the revenue collected Finance is the customer for circulating coins supplied and costs incurred by the States/UTs before the adoption by the four India Govt. Mints (IGMs) of the Company at of the e-Stamping model and after the adoption of the e- Mumbai, Kolkata, Hyderabad and Noida. The Company Stamping model. has one Security Paper Mill (SPM) at Hoshangabad which manufactures Security Paper for use by Currency 14.3.8 At present, there is no uniformity across the / Security Presses. The Company also has an Ink States/UTs in the collection mechanism for stamp duty. Factory at Dewas which manufactures Offset Ink, UV Most of the States/UTs are making efforts to phase out Ink and Quickset Intaglio Ink for use by the presses of the paper based physical stamp collection system or the SPMCIL and BRBNMPL. franking system or both, so that the collection of stamp duty is wholly through appropriate e-Stamping. The shift 14.4.4 The Company had achieved the targets in the to e-Stamping is expected to make the collection of stamp production of Bank Notes, Coins, Security Paper, 66Department of Economic Affairs I Passports, Security Inks and other Security Products Hyderabad. Total expenditure for the year 2018-19 is during the year 2018-19. While achieving the production `5010.04 crores as compared to `4,028.43 crores for targets, the Company had also increased productivity per the year 2017-18. Profit before Tax (PBT) from continuing employee considerably. operations for the year 2018-19 is `815.18 crores as compared to `570.61 crores for the year 2017-18 14.4.5 The Company had produced 10482 million pieces registering a growth of 42.86% over previous year. The of the Bank Notes and supplied 10306 million pieces of Company had achieved a Total Comprehensive Income Bank Notes to Reserve Bank of India (RBI) during the (TCI) of `531.61 crores in the year 2018-19 as compared year 2018-19. This was 13.70% higher than the to `652.03 crores in the year 2017-18. The consolidated production of 9219 million pieces of the Bank Notes during TCI after taking into account the 50% share of Joint the year 2017-18. Production of the Bank Notes per Venture Company, Bank Note Paper Mill India Pvt. Ltd employee had increased to 3.29 million pieces in 2018- (BNPMIPL) is `620.48 crores in the year 2018-19 as 19 as against 2.72 million pieces achieved during the compared to the Consolidated TCI of `767.90 crores in year 2017-18. the year 2017-18. 14.4.6 The Company had produced 5331 million pieces 14.4.10 In the year 2019, the mints of the Company have of the Circulating Coins and supplied 6133 million pieces started the production of visually impaired friendly new of the Circulating Coins to RBI during the year 2018-19. series circulation coins 2019 released by Hon'ble Prime This was 20.47% lower than the production of 6703 Minister of India on 7th March 2019. The new series million pieces of Circulating Coins achieved during the includes coins of `1, `2, `5, `10 and `20 denominations. year 2017-18. Production of Coins per Employee had These coins are characterized by the increasing size and also decreased to 2.24 million pieces in 2018-19 as weight from lower to higher denominations. against 2.55 million pieces achieved in 2017-18. The decrease in the production/productivity of Circulating 14.4.11 The Company had paid Final Dividend @ 5% of Coins in the year 2018-19 is due to huge reduction in the Net-worth of the Company for the year 2018-19 the indent of Circulating Coins by RBI during the year aggregating to `218.48 crores plus applicable Dividend 2018-19. Distribution Tax to the Government of India in accordance with the guidelines on Capital Restructuring of CPSEs 14.4.7 The Company had produced 6003 Metric Ton issued by DIPAM. (MT) Security Paper and supplied 6837 MT of Security Paper to the printing presses during the year 2018-19. 14.4.12 The Company had taken-up many This was 3.88% higher than the production of 5779 MT modernization and capacity augmentation initiatives. of Security Paper during the year 2017-18. Production of For modernization and capacity up-gradation of Security Paper per Employee had increased to 5.68 MT currency presses, Board of Directors of the Company in 2018-19 as against 5.16 MT achieved during the has approved the placement of Purchase Order for previous year. procurement of two Bank Note Printing and Finishing 14.4.8 The Company has produced 752 Metric Ton (MT) Machine lines one each for CNP, Nasik and BNP, of Security Inks in 2018-19 at Ink Factory, Dewas. This Dewas at the total financial implication of `470 Crores production includes the complete requirement of all four (approx.) SPMCIL Board has also approved the SPMCIL presses and the excess ink was supplied to the placement of Purchase Order for procurement of two Currency Presses of Bharatiya Reserve Bank Note intaglio printing machines one each for CNP, Nashik Mudran Private Limited (BRBNMPL) at Mysuru and and BNP, Dewas at the total financial implication of Salboni. `125.24 crores (approx.). Recently, SPMCIL Board has approved the procurement of three banknote finishing 14.4.9 Despite 20.47% reduction in production of machines and two Intaglio printing machines for CNP, Circulating Coins in the year 2018-19 compared to the Nashik on replacement basis at the total estimated cost year 2017-18, the total Revenue from Operations of the of `225 crore. Company had increased to `5,711.34 crores in 2018-19 from `4,402.30 crores in the previous year 2017-18 due 14.4.13 The state-of-the-art Corporate R&D Centre has to increase in revenues from Banknotes and from other been setup at CNP, Nashik to carry out research and security products manufactured by ISP, Nashik and SPP, development activities on currency, passport and 67Annual Report 2019-2020 security documents etc. at par with international for giving preference to aspirational districts, SPMCIL standards. Infrastructure such as counterfeit deterrence has adopted Barwani District of Madhya Pradesh as the technology laboratory, material characterization aspirational District. laboratory (optics, spectroscopy & microscopy), 14.4.16 SPMCIL is also in the process of setting up State- chemical analysis laboratory, pilot plant has been of-the-Art Mint Museum at Old Silver Mint, Kolkata and developed for in-house R&D activities. A full-fledged at Saifabad, Hyderabad. The site survey has been done R&D Centre for Paper, Pulp etc. has been established along with the experts to plan a detailed road-map for at SPM, Hoshangabad. Latest testing equipment and setting up the museums.The historical coins and medals machinery have been procured and installed along with other items of historical importance may be successfully in the said R&D Centre. IGM, Mumbai has displayed in the aforesaid museums. designed and started supplying to the State Governments Volumetric Test Measure of 10 liters for 14.4.17 Indigenization: One new Security Paper line fuel dispensing unit in coordination with FCRI. IGM of 6000 MT capacity at SPM, Hoshangabad was started Mumbai has got orders for 2000 nos. of FSTM from in May, 2015. The Company had also setup a 50:50 Joint Ministry of Consumer Affairs for supplying to all the Venture in October, 2010 with Bhartiya Reserve Bank States. IGM, Mumbai has integrated facility of gold Note Mudran Private Ltd. (BRBNMPL) in the name of refining, processing and testing (assaying). Bank Note Paper Mill India Private Limited (BNPMIPL) to implement a Green-Field project of a bank note paper 14.4.14 The Manpower Strength in the Company had mill with capacity of 12000 MT per annum to bring two come down to 8918 as on 31.03.2019 which includes state of the art technology paper lines of capacity of 6000 339 Executives, 1048 Supervisors and 7531 Workers MT per annum each. The commercial production from working in 9 Units and Corporate office in comparison all the aforesaid paper lines had commenced and India to previous year's employee strength of 9638. Training becomes self-reliant in indigenous production of CWBN and retraining of employees to upgrade their functional paper requirement, import substitution thereby saving skills and expertise along with development of their soft valuable foreign exchange. The JV Company, BNPMIPL skills and group dynamics are thrust areas for the has produced 15163 MT of Security Paper during the Company. The Industrial Relations remained peaceful year 2018-19. The ink factory at BNP, Dewas is and cordial during the year 2018-19 in all the units of manufacturing Offset ink, UV ink and Quickset Intaglio SPMCIL. The details of representation of SCs, STs, and ink to meet the requirement of currency/security presses OBCs as well as representation of the Persons with of the Company. Disabilities in the manpower strength of SPMCIL are at Annexure-IV. 14.4.18 The Security Presses of the Company have printed commemorative postage stamps in the year 14.4.15 SPMCIL has taken-up many CSR projects in 2019 on various themes i.e. 100 years of Jallianwala the areas of education, healthcare, rural development, Bagh Massacre, India - Republic of Korea Joint Issue, skill development, providing drinking water facility etc. Indians in First World War, Gandhian Heritage in Modern in the year 2019. The CSR budget of the Company for India, 150th Birth Anniversary of Mahatma Gandhi, 550th the year 2019-20 is `15.73 crores and the CSR projects Birth Anniversary of Guru Nanak Dev Ji etc. and for the amount of `11.46 crores have been approved International Stamps for Ghana Post, Seychells Post by SPMCIL Board till date. Under the Gram Uday and Afghan Post. Scheme, BNP, Dewas has adopted Kawaria village and SPM, Hoshangabad has adopted Chatua village for 14.4.19 RTI Act: SPMCIL has taken various steps implementing projects under CSR. As per the towards implementation of the RTI Act, 2005. The desired instructions of Department of Public Enterprises (DPE) information is provided to the applicant on time. 68Department of Economic Affairs I Annexure-I Proforma for Commemorative Coin 1. Name of the individual/organisation/Event/Institution/any other (tick the appropnate title and provide name): .. 2. Occasion for Commemoration 3. Whether the event has been approved by Ministry of Culture: ................... ... 4. The life sketch/history of the individual/organization/Event/Institution (details to be annexed - not more than one page): .. .. 5. Achievements/Contribution/Stature/Importance of individual organization/Event/ Institution (details to be annexed-not more than one page): ............. . 6. Whether any coin has been issued related to the same individual/ organization/Event/Institution:............ 7. Authenticated image* for depiction on the Commemorative Coin: 8. Denominations of Commemorative Coin to be released: .............. 9. Tentative Date for release function of Coin: ............... 10. How many coins are sought to be minted?..................... 11. Name of the organizer for Commemoration of Event: ................ 12. Name and details of the Coordinator for the release function: 13. Name of the Sponsor, if any. .............. 14. Who will pay for the minted coins?.................... * In case authenticated image is not available, a proposed image may be furnished which will be authenticated and approved in consultation with the Ministry of Culture. Note: (i) The proposal should normally be received at least 6 months prior to Commemoration and (ii) Proposal should conform to the Guidelines for Issue of Commemorative Coins, given at Annexure-II. Proforma was issued on 25.02.2019 69Annual Report 2019-2020 Annexure-II F.No.02/18/2018-Coin Government of India Ministry of Finance Department of Economic Affairs Currency & Coin Division Room No.241-F, North Block, New Delhi Dated the 27th March, 2019 ORDER Subject : Issue of Commemorative Coins with the portrait of eminent personInational leader, an InstitutionIOrganisation of national Importance and Commemorative coin on prominent programmeIevent-Revised Guidelines-reg. In supersession of the Department’s Order No. 011101/2013 Coin, dated the 6th January, 2017 regarding guidelines for issue of commemorative coin with the portrait of eminent personsInational leaders in the future, the following guidelines/procedures have been approved by the Government on the subject cited above:- 2. The Central Government may issue commemorative coins of appropriate den-ominations by notification on eminent personsIpersonalitiesIinstitutionsIeventsIprogrammes that have a national or international nature or have made lasting contribution or impact or reflect nationalIinternational contributionIimpact. The contribution made by the individual organisationsIinstitutionIprogrammeIevent should have transcended the barriers of partisan politics, region, community, language or religion. 3. However, on an occasion to express sympathy/grief/exhibit respect for the sacrifice, ‘Commiserative Coins’ would be issued. a. In case of an individual Proposal for commemorative coins shall be considered and approved subject to following guidelines:- i. The individual should be an Indian citizen or a person belonging to the Indian diaspora. The Government may commemorate an occasion related to a foreign individual, only where his or her contribution for the Indian society or humanity at large has been exceptional. ii. The occasion related to the individual should be commemorated only posthumously. iii. The individual should have attained excellence in public life, in areas such as science, literature, arts including performing arts of must have made intellectual contribution of an exceptional order iv. The individual’s contribution should be a lasting and durable nature. A test of such durability should normally be the observance of the anniversary or birth centenary of the individual as a national occasion. b. In case of an Organization/Institution/ProgrammeIEvent i The occasion should normally relate to a specificIsignificant day of the OrganizationIInstitutionIProgrammeI Event. ii. The institutionIorganizationIprogrammeIevent should have national or international stature with significant and well recognized contribution in their field or to the Nation’s social-economic development. 70Department of Economic Affairs I c. Procedure i After examining the proposals in the light of above guidelines, a final decision in each case would be taken by the Finance Minister in consultation with the Prime Minister. ii. The Government shall normally issue commemorative coins selectively and will try to issue only a minimum number of Commemorative Coins in a calendar year. iii. Commemorative Coins shall conform to the dimension, designs, composition, standard weight and remedy allowed as may be specified in the notification issued by the Government prior to the release of the Commemorative Coin. iv. Security Printing and Minting Corporation of India Ltd. (SPMCIL)Ispecified agency will mint and supply within 1 year at least 100 million pieces (mpcs) of circulation commemorative coins after release of the commemorative coin by the Govt. of India. v. Minting and distribution of Commemorative Coin will be done by SPMCIL/specified agency within a period of 1 year from the date of release. 71Annual Report 2019-2020 Annexure-III F.No. 300406483/2019-Coin Government of India Ministry of Finance Department of Economic Affairs (C & C Division) Room No.241-F, North Block, New Delhi Dated the 10th October, 2019 Subject : Policy for Costing of a Commemorative Coin 1. Once the gazette notification for issuance of a commemorative coin is issued, SPMCIL starts the production of the same and also simultaneously fixes their selling price. 2. The sale price of a commemorative coin shall be worked out as under: (a) General Principle: The cost incurred on minting of commemorative coins shall be recovered on cost plus principle. A profit margin shall be added depending on type of commemorative coin. The price shall be finalised before commencing the sale. (b) Price Calculation: (1) Metal Cost (A): Metal cost, as per metal composition and weight of each metal component in the coin is recovered as per market rates. Metal rates are based on London Metal Exchange (LME) prices or any other neutral and fair sources of Indices. (2) Labour Cost (B): Labour cost is calculated on the basis of actual labour hours put in by workers in concerned sections of coin production by applying the actual per hour rate of labour. Design cost is also included in labour cost as per the standard costing practices. (3) Direct Expenses/Overheads (C): Direct expenses/overheads consisting of the following are directly allocated to cost, as per the standard costing practices, being direct expense of commemorative coins: a. Die cost b. Electricity cost c. Packing Material cost There are three types of sets for packaging - Executive, Proof and UNC (Uncirculated coin). In terms of cost, Executive is at the top followed by Proof and UNC. (4) Indirect Expenses/Overheads (D): Indirect expenses/overheads consisting of following is apportioned to cost of commemorative coins on the basis of total cost of production and units of production: a. Administration Expenses b. Security Expenses (5) Incidental Charges (E): Incidental charges @ 20% of total cost, equalling (A+B+C+D) is also charged to cover the expenses such as marketing expenses, including advertisement expenses and sales promotion expenses, process losses, depreciation on machinery etc. Increase in any of cost components, namely Metal rates, labour charges, direct/indirect expenses is also covered through incidental charges. Further, incidental charges would also cover other costs not explicitly covered in the cost sheet e.g. capital cost, opportunity cost of own funds, process losses and contingent expenses, etc. 72Department of Economic Affairs I (6) Total Cost (F) = Metal Cost (A) + Labour cost (B) + Direct Expenses (C) + Indirect Expenses/Overheads (D) + Incidental charges (E) (7) Profit Margin (G) = X% of Total Cost (F) Where X= (i) 10 for the commemorative coins minted for public personalities/events (sponsored by Ministry of Culture) (ii) 50 for the Commemorative coins minted for public sector entities/other public autonomous bodies (iii) 100 for private charitable sponsoring organisation (iv) 200 for private commercial sponsoring organisation. (8) Postal Charges (H) = Actual postal charges (9) GST (1) = 3% of (F + G + H) (2) Selling Price = Total Cost (C) + Profit Margin (G) + Postal Charges (H) + GST (1). (c) Minting of additional commemorative coins: Additional cost refers to the cost of production of additional lot over and above the initial planned quantity. There may not be any additional cost for minting of second and subsequent lots of commemorative coins and these coins are minted at essentially the same cost. However, to absorb the ramp up costs, and some other incidentals as well as to encourage single-go orders, each additional coin will be billed at 1.10 times the cost of initial lot. 3. The following shall be the terms and conditions for payment i. The PSUs/ autonomous bodies/private trusts, etc. will be required to pay the entire expected amount in advance. The Government Government Departments/State/UTs will be allowed to pay in 15 calendar days from date of delivery. Failure to make the payment within due date will lead to imposition of a penalty @ 15% per annum. Alternatively, they could choose to pay in advance. ii. In case DEA asks SPMCIL not to charge for a coin, the price would be made good by DEA to SPMCIL, on same basis as is currently done for circulation coins. iii. If the physical delivery coins are to be made by SPMCIL, all delivery related charges would be paid on actual basis. iv. If the private trusts/organisations intendto lift the coins on their own, it should be lifted within 15 days from the date of receipt of the delivery order. If lifting is not completed within the stipulated time, the concerned private trusts/organisations should bear the additional demurrage charges costs @ 10% of the product cost per month. v. The Ministries/Departments, including Ministry of Culture, would accordingly budget expenditures on getting a coin minted from SPMCIL in their Demand for Grants. vi. Payment should be made only through NEFT/RTGS/Credit Card/Debit Card/Demand Draft. However, for purchase of coin by an individual, he should ensure that payment is made through NEFT/RTGS/Credit Card/ Debit Card/Demand Draft. 4. The disputes, if any, shall be settled as follows: i. Amicable settlement: The parties shall use their best efforts to settle amicably all disputes arising out of or in connection with this Policy or the interpretation thereof. ii. Dispute resolution: Any dispute, difference or controversy of whatever nature howsoever arising under or out of or in relation to this Policy (including its interpretation) between the Parties, shall be settled through mediation at the level of Secretary Economic Affairs, whose decision shall be final and binding on all parties. 73Annual Report 2019-2020 Annexure-IV Representation of SCs, STs, and OBCs Groups Representatiion of SCs/Sts/ Number of Appointments made during the Financial Year 2018-19 OBCs (As on 31.3.2019) By Direct Recruitment By Promotion By Other Methods (Internal Recuritment) Total No. of SCs STs OBCs Total SCs STs OBCs Total SCs STs Total SCs STs Employees 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Group ‘A’ 339 55 20 62 11 4 0 3 63 0 0 3 0 1 Group ‘B’ 1048 157 86 153 34 5 3 8 95 15 7 0 0 0 Group ‘C’ 7531 1488 664 941 13 1 1 2 1273 361 124 3 0 0 TOTAL 8918 1700 770 1156 58 10 4 13 1431 376 131 6 0 1 Representation of Persons With Disabilities Number of Appointments made during the Financial Year 2018-19 Representatiion DIRECT RECRUITMENT PROMOTION (As on 31.3.2019) Groups 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 No. of Employees 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Group A 339 0 1 3 0 0 1 11 0 0 1 0 0 0 0 0 0 0 Group B 1048 1 0 12 0 0 2 0 0 0 0 0 0 0 50 0 0 1 Group C 7531 26 58 144 7 0 9 0 0 0 0 0 0 0 679 1 0 3 Total 8918 27 59 159 7 0 12 11 0 0 1 0 0 0 729 1 0 4 74Department of Economic Affairs I Annexure-I DEPARTMENT OF ECONOMIC AFFAIRS (MAIN) Representation of SCs, STs, and OBCs (As on 31/12/2019) Groups Number of Employees Number of appointments made during the previous year i.e. 2019 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 184 25 4 19 7 0 0 2 15 1 0 24 2 0 Group B 243 34 28 35 0 0 0 0 22 3 2 0 0 0 Group C 287 84 7 29 0 0 0 0 9 6 0 0 0 0 TOTAL 714 143 39 83 7 0 0 2 46 10 2 24 2 0 Annexure-II DEPARTMENT OF ECONOMIC AFFAIRS (MAIN) Representation of Persons With Disabilities (PWD) SCs, STs, and OBCs (As on 31/12/2019) BY DIRECT RECRUITMENT PROMOTION Groups Number of Employees 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 184 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Group B 243 0 2 4 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Group C 287 0 0 4 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Total 714 0 2 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 75Annual Report 2019-2020 Annexure-I NATIONAL SAVINGS INSTITUTE, NEW DELHI Representation of SCs, STs, and OBCs (As on 31/12/2019) Groups Number of Employees Number of appointments made during the previous year i.e. 2019 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 6 2 0 0 0 0 0 0 0 0 0 0 0 0 Group B 19 2 1 4 0 0 0 0 0 0 0 0 0 0 Group C 36 10 4 11 4 1 0 0 0 0 0 0 0 0 Total 61 14 5 15 4 1 0 0 0 0 0 0 0 0 Annexure-II NATIONAL SAVINGS INSTITUTE, NEW DELHI Representation of Persons With Disability (PWD) SCs, STs, and OBCs (As on 31/12/2019) DIRECT RECRUITMENT PROMOTION Groups Number of Employees 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 6 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Group B 19 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Group C 36 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Total 61 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 76Department of Economic Affairs I Annexure-I SECURITIES APPELLATE TRIBUNAL, MUMBAI Representation of SCs, STs, and OBCs (As on 31/12/2019) Groups Number of Employees Number of appointments made during the previous year i.e. 2019 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 0 0 2 0 0 0 0 1 0 0 1 0 0 Group B 10 1 0 0 0 0 0 0 2 0 0 0 0 0 Group C 15 2 0 4 2 0 0 0 0 0 0 0 0 0 TOTAL 32 3 0 6 2 0 0 0 3 0 0 1 0 0 Annexure-II SECURITIES APPELLATE TRIBUNAL, MUMBAI Representation of Persons With Disabilities (PWD) SCs, STs, and OBCs (As on 31/12/2019) BY DIRECT RECRUITMENT PROMOTION Groups Number of Employees 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 7 0 0 0 - - - - - - - - - - - - - - Group B 10 0 0 1 - - - - - - - - - - - - - - Group C 15 0 0 0 - - - - - - - - - - - - - - Total 32 0 0 1 - - - - - - - - - - - - - - 77Annual Report 2019-2020 Annexure-I SECURITIES EXCHANGE BOARD OF INDIA Representation of SCs, STs, and OBCs (As on 31/12/2019) Groups Number of Employees Number of appointments made during the previous year i.e. 2019 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 OFFICERS 795 104 42 213 94 10 1 25 226 35 17 0 0 0 SECRETARIES 73 2 0 4 0 0 0 0 0 0 0 0 0 0 JUNIOR ASST. 2 0 0 1 0 0 0 0 0 0 0 0 0 0 MESSENGER/ COOK 2 1 0 0 0 0 0 0 0 0 0 0 0 0 TOTAL 872 107 42 218 94 10 1 25 226 35 17 0 0 0 Annexure-II SECURITIES EXCHANGE BOARD OF INDIA Representation of Persons With Disability(PWD) SCs, STs, and OBCs (As on 31/12/2019) PROMOTION Groups Number of Employees No. of No. of Vacancies reserved Appointments Total VH HH OH VH HH OH Total VH HH OH 1 2 3 4 5 6 7 8 9 10 11 12 OFFICERS 795 10 5 11 0 0 0 0 5 0 4 SECRETA- RIES 73 1 0 0 0 0 0 0 0 0 0 JUNIOR ASST. 2 0 0 0 0 0 0 0 0 0 0 MSNGR/ 2 0 0 0 0 0 0 0 0 0 0 COOK TOTAL 872 11 5 11 0 0 0 0 5 0 4 78Department of Economic Affairs I Annexure-I SECURITY PRINTING & MINTING CORPORATION OF INDIA LIMITED (SPMCIL) Representation of SCs, STs, and OBCs (As on 31/12/2019) Groups Number of Employees Number of appointments made during the previous year i.e. 2019 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 344 57 21 63 16 2 1 5 0 0 0 2 0 1 Group B 1037 160 87 163 52 7 4 14 80 7 8 0 0 0 Group C 7112 1383 626 963 90 13 6 24 825 125 70 1 0 0 TOTAL 8493 1600 734 1189 158 22 11 43 905 132 78 3 0 1 Annexure-II SECURITY PRINTING & MINTING CORPORATION OF INDIA LTD., (SPMCIL) Representation of Persons with Disabilities (PWD)SCs, STs and OBCs (As on 31/12/2019) DIRECT RECRUITMENT PROMOTION Groups Number of Employees 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 344 0 0 4 0 - 1 16 - - 1 - - - 0 0 - 0 Group B 1037 1 0 13 0 - 3 0 - - - - - - 80 0 - 2 Group C 7112 28 57 140 0 - 4 0 - - 1 - - - 825 1 3 2 Total 8493 29 57 157 0 - 8 16 - - 2 - - - 905 1 3 4 79Annual Report 2019-2020 80Chapter - II Department of Expenditure II Department of Expenditure 1. Personnel Division expenditure, review major areas of Central Government expenditure and suggest ways of creating fiscal space 1.1 The Personnel Division works under the required to meet development expenditure needs, without Additional Secretary (Personnel) and is responsible for compromising fiscal discipline. The Commission administration of various financial rules and regulations submitted its Report in four parts by March 2016. Majority like General Financial Rules (GFRs), Delegation of of the recommendations of EMC have been implemented. Financial Power Rules (DFPRs) etc. including those The remaining recommendations have been taken up relating to personnel matters of Central Government for implementation by the concerned Ministries/ Employees such as regulation of pay and allowances, Departments and implementation is going on. policy matters on pension, and staffing of Government establishments by creation and upgradation of posts, as 1.6.2 As recommended by EMC, a data base of also cadre reviews. Autonomous Bodies (ABs) has been set up in the website of Department of Expenditure and all Ministries/ 1.2 The Division also deals with proposals seeking Departments have uploaded data relating to ABs under to alter service conditions and other benefits to their administrative control. NITI Aayog has set up a Government employees with significant recurring financial Committee for comprehensive review of all ABs under implication. Broad instructions on Expenditure the Central Government. In the first instance, the Management, including economy measures and Committee is reviewing ABs incorporated under Societies measures for improving quality of expenditure such as Registration Act (SRA), 1860 in consultation with through Utilisation Certificates (UC) are issued by the Ministries/Departments. Personnel Division. 1.7 Pay Related Issues : The 7th CPC on Pay & 1.3 This Division administers the General Financial Pension have been implemented w.e.f 01.01.2016 vide Rules and the Delegation of Financial Powers Rules notification dated 25th July, 2016 and various allowances including issue of clarifications/amendments thereto, and have been implemented w.e.f 01.07.2017 vide notification coordinates with Financial Advisors of all Ministries/ dated 6th July, 2017. During the year 2019-20, various Departments of the Central Government. All legislative problems relating to pay matters, arising out of proposals with general financial implications are implementation of the recommendations of the 7th scrutinized in the Personnel Division. Central Pay Commission or otherwise for Central Government Employees and out of its extension to the 1.4 Service matters pertaining to the Indian Audit and employees of Autonomous Bodies and legal/court matters Accounts Service(IA&AS), Indian Civil Accounts Service thereon, which were referred from time to time by various (ICAS) and Indian Cost Accounts Service (ICoAS) are Ministries/Departments/Organisations, were addressed dealt with by this Division. Administrative assistance to in an appropriate manner. the Finance Ministers' Office is also provided by this Division. 1.8 Staff Inspection unit (SIU): 1.5 The Division also handles the overall administration 1.8.1 The Staff Inspection Unit (SIU) was set up in 1964 of the Department of Expenditure and also controls the with the objective of securing economy in the staffing of cadre for all Central Secretariat Service(CSS)/Central Government Organizations consistent with administrative Secretariat Stenographer Service (CSSS)/Central efficiency and evolving performance standards and work Secretariat Clerical Service (CSCS) upto the level of norms in Government offices and institutions wholly or Section Officers/Private Secretaries in the Ministry of substantially dependent on Government Grants. The Finance, apart from coordinating Parliament work as well Scientific and Technical Organisations are not within the as Right to Information Act (RTI) matters for the Ministry purview of the SIU but a Committee constituted by the of Finance as a whole. 'Head' of the Respective Department, with a representative from SIU as 'Core Member', conducts a 1.6 Expenditure Management Commission study of such organisations. (EMC) 1.8.2 The Financial Advisers (FAs) are main links 1.6.1 Expenditure Management Commission (EMC) between the SIU in the D/o Expenditure and other was constituted on 04.09.2014 with a mandate to Ministries/Departments/Offices/Organisations. All recommend ways to increase efficiency of public requests for staffing studies by the SIU are routed through 81Annual Report 2019-2020 the concerned FAs in the Departments. The 'Study 1.10.1.2 During the year 2019-20 under RTI Act 2005, Reports' are issued after 'on the spot' work measurement 836 Nos of of RTI Applications and 41 Nos of Appeals studies are conducted by the SIU Study Team after received in physical form, 2367 Nos of RTI Applications discussions with the senior officials of these organisations and 153 Nos of Appeals received online, were disposed and finalizations of the provisional assessment report of off in a time bound manner. the SIU. The final report of the SIU is required to be implemented by the concerned Department within the 1.10.2 Legal Cell stipulated period of 3 months as per the instructions in 1.10.2.1 The Legal Cell coordinated 118 ongoing Court this regard. Cases out of which Department of Expenditure is 1.8.3 The SIU conducts physical inspection/study of Respondent No.1 in 39 Court cases and other than the various Central Government Organisations, Respondent No.1 in 79 Court Cases, pertaining to Other autonomous bodies working under the Ministries/ Ministries/Departments. Departments of Central Government on a request from the 'Financial Adviser' of the concerned Ministry/ 2. Public Finance-States Division Department. The studies are taken up after inclusion in the Annual Programme after following laid down 2.1 Special Assistance : Budgetary allocation of procedures. Rs. 15,000 crore has been provided under the head 'Special assistance' in Demand No. 38 (Transfers to 1.9 Pay Research Unit (PRU): States) of Ministry of Finance in the Ministry of Finance in the Union Budget 2019-20(BE). Out of this, Rs. 558.70 1.9.1 The Pay Research Unit was established in 1968 crore has been released during 2019-20 (till November, and is mainly responsible for collection, compilation and 2019) to the States. This includes releases of Rs. 200.00 analysis of data on actual expenditure incurred on pay crore to the erstwhile State Government of Jammu & and various types of allowances as well as data pertaining Kashmir for implementation of 624 MW Kiru HE Project to the strength of the Central Government Civilian on river Chenab (Indus Basin) and Rs. 358.70 crore to Employees and Employees of Union Territory the State Government of Tripura for completion of the 81 Administration. This unit brings out an annual publication ongoing projects. titled "Annual Report on Pay and Allowances of Central Government Civilian Employees". The 2.2 Additional Central Assistance for Externally brochure provides statistical information regarding Aided Projects: Additional Central Assistance for expenditure incurred by the different Ministries/ Externally Aided Projects (EAPs) is passed on to the Departments of the Central Government on pay & various General Category States on back to back basis on the types of allowances such as Dearness Allowance, House same terms and conditions on which these loans are Rent Allowance, Transport Allowance, Overtime received by the Central Government from donor agencies. Allowance, Compensatory Allowance etc. in respect of However, in case of Northern Eastern and Himalayan its regular civilian employees. It also provides information States, special dispensation has been made whereby they on Ministry-wise/Department-wise and Group-wise receive the assistance for Externally Aided Projects in number of sanctioned posts and numbers of incumbents grant : loan ratio of 90:10. Based on the recommendations in position. of Office of Controller of Aid, Account and Audit, an amount of Rs.18,987 crore was released to the State 1.10 The Right to Information Act, 2005 : Governments during 2019-20 (till 30.11.2019) as against 1.10.1 RTI Cell Budgeted Estimates (2019-20) of Rs. 24,223 crore. 1.10.1.1 The Right to Information Act, 2005 is 2.3 Borrowings: The methodology for determining implemented in its true spirit and the information required annual borrowing ceilings to States during the period to be disclosed under the RTI Act has been uploaded on 2015-20 has been devised in line with the the website of the Department. The Central Public recommendations of Fourteenth Finance Commission Information Officers (CPIOs) ensure timely supply of (14th FC). The borrowing limits of States are worked out information to applicants and prompt action is taken on by Ministry of Finance (MoF) in accordance with the appeals by Appellate Authorities. The quarterly returns prescribed fiscal reform path of each State. Annual are submitted to the Central Information Commission by borrowing limits of the States including additional the RTI Cell. Suo-Moto disclosure has been made borrowings recommended by FFC have been raised from mandatory as per orders of the Department of Personnel Rs. 5.58 lakh crore in 2018-19 to Rs. 6.15 lakh crore in & Training. 2019-20 (till November 2019). 82Department of Expenditure II 2.4 Finance Commission Grants to States 2.5.2 FFC has worked out a revised fiscal roadmap for the States to have zero revenue deficits and the fiscal 2.4.1 Finance Commission Division (FCD) undertakes deficit within 3% of Gross State Domestic Product processing of and follow up action on the various (GSDP). Additional borrowing options to the States up to recommendations and suggestions of the Central Finance 0.5% of GSDP, over and above normal 3% limit have Commission including Release of grants recommended been allowed subject to States maintain their Debt to by the successive Central Finance Commissions. Besides GSDP ratio within 25% and Interest Payment to Revenue share of central taxes, FFC has recommended grant-in- Receipts ratio within 10% and also to have zero revenue aid to cover Revenue Deficit of States, local body grants deficit. (both to rural and urban local bodies) and grants for augmenting the State's Disaster Response Fund (SDRF). 2.5.3 Aggregate fiscal position of the States is as follows: 2.4.2 Total Grant in-Aid recommended by the FFC work Item 2017-18 2018-19 2019-20 out to approximately Rs.5.4 lakh crore for the period (FA) (RE) (BE) 2015-20 as per details given below: As % of GDP (Rs. in crore) i Post-Devolution Revenue Deficit Grant 194821 Revenue Deficit* 0.14 0.09 -0.01 ii Local Bodies 287436 Fiscal Deficit 2.40 2.94 2.60 iii Disaster Management 55097 Outstanding Debt and Total 537354 Other Liabilities 20.14 24.96 24.96 2.4.3 Year 2019-20, happens to be the last year of the *(-) sign indicates revenue surplus. 14th F.C. award period 2015-2020. During the period Source: RBI publication "State Finances: A Study of under reference i.e. 2019-20, recommendations of the Budgets of 2019-20". 14th Finance Commission (FFC) were implemented. Total Grant-in-Aid recommended by the FFC for the award year 2019-20 is Rs. 1,31,903.24 crore as per details given 3. Public Finance Central Division below: (Rs. in crore) 3.1 Public Finance (Central) Division is primarily engaged with all issues relating to the Central Plan of the i Post-Devolution Revenue Deficit Grant 34207.00 Government of India. This Division is handled in two ii Local Bodies (for ULBs Rs.26,665.26 units:- Public Finance (Central-I) and Public Finance crore & for RLBs Rs.60,687.13 crore) 87352.39 (Central-II). iii Disaster Management (Central Share of SDRF) 10343.85 3.2. This division is entrusted with the appraisal and approval of all public funded schemes and projects of Total 131903.24 the Central Ministries/PSUs. In respect of development schemes and projects, the focus has been on improving 2.4.4 Out of a total allocation of Rs.1,31,903.24 crore the quality of public expenditure though better scheme/ for the year 2019-20, so far as on 12.12.2019, project formulation, emphasis on outputs, deliverables, Rs.97,014.68 crore have been released in total. Besides, impact assessment and convergence approach. financial assistance to disaster affected States amounting to Rs. 11,000.00 crore have also been released out of 3.3. A continuous endeavour is made to rationalize National Disaster Relief Fund (NDRF). the Centrally Sponsored Schemes (CSSs) and Central Sector Schemes (CSs) for optimal and focused use of 2.5 Fiscal Performance of States public resources. 2.5.1 The Fourteenth Finance Commission (FFC) for the award period 2015-20 has made far-reaching changes 3.4. Various issues relating to Food, Fertilizers and to strengthen fiscal federalism in the country. Petroleum subsidy, including their quantification and Consequently, States have obtained larger fund transfers extension of assistance to the stake holders are also dealt as well as greater autonomy to utilise funds as per their within this division. This Division is actively involved along needs. Total transfers to States have increased from Rs. with the concerned Department/Ministry, in shaping 10.8 lakh crore in 2017-18 to Rs. 12.4 lakh crore in 2018- subsidy policy of the government as to ensure effective 19 (RE) and further to Rs. 13.2 lakh crore in 2019-20 targeting coupled with minimum burden on the (BE). Government. 83Annual Report 2019-2020 3.5. The PFC division also deals with various issues (i) Public Procurement legislation and rules, of Direct Benefit Transfer (DBT) in coordination with the notifications, orders thereunder; DBT Mission, Aadhaar seeding of beneficiaries data base (ii) Policies relating to Public Procurement and use of the Public Financial Management System including administration of General (PFMS) in order to have end to end digitized information Financial Rules 2017 on procurement of on all central expenditures encompassing CSSs, CSs, goods and services and contract subsidies and other expenditure. management; policies relating to 3.6. It maintains the Swachh Bharat Kosh (SBK) to mandatory or preferential procurement; attract Corporate Social Responsibility (CSR) funds from (iii) Matters relating to standardization of corporate sector and contributions from individuals and procurement related documents; philanthropists for achieving the objective of Clean India (Swachh Bharat) by the year 2020. (iv) All matters related to Central Public Procurement Portal set up for publishing 3.7. This division is responsible for preparation of information relating to Public Procurement; outcome budgets for all Central Ministries/Departments (v) Matters relating to electronic procurement; in consultation with the NITI Aayog. This Output-Outcome Framework shall be for all CSSs, and CSs dealing with (vi) Professional standards to be achieved by identified measurable outcome in the relevant medium officials dealing with procurement and term framework and physical and financial outputs are suitable training and certification targeted on a year to year basis. A consolidated Outcome requirements for the same; Budget 2019-20 was presented in the Parliament as a part of the Budget Documents of 2019-20. (vii) Interface with International bodies on matters relating to Public Procurement. 3.8. During the period from 1st April, 2019 to 30th November, 2019, the Expenditure Finance Committee 4.3 Central Public Procurement Portal & e- (EFC) chaired by Secretary (Expenditure) recommended Procurement: 30 investment proposals/schemes of various Ministries/ Departments costing Rs.7,41,677.45 crore. (i) Pursuant to the recommendations of the Committee on Public Procurement (CoPP), 3.9. Also, during the period, Public investment Board a Central Public Procurement Portal (CPP (PIB) chaired by Secretary (Exp.) considered and Portal) has been set up for providing recommended 5 proposals involving an amount of Rs. comprehensive information and data 10,039.62 crore. relating to public procurement and is accessible at www.eprocure.gov.in. It is 3.10. In order to speed up the appraisal process, an being used at present by various Ministries/ online portal for uploading EFC/PIB/SFC/DIB proposals, Departments, CPSEs and autonomous/ marking proposals to relevant Ministries, receiving statutory bodies. e-Publishing of tender comments, fixing dates for the meetings and dispatching enquiries, corrigenda thereto and details of minutes after approval has been functional since August, contracts awarded thereon, on the Portal, 2017. has been made mandatory in a phased manner w.e.f 1st January 2012. 4. Public Procurement Division (ii) Further, it has also been decided to 4.1 A Public Procurement Cell (PPC) was set up in implement e-Procurement in Ministries/ this Department in June, 2011 to take follow up action on Departments of the Central Government the Report of the Committee on Public Procurement and instructions have also been issued to (CoPP) and for related matters such as drafting of rules all Ministries/Departments to commence and setting up of a Central Public Procurement Portal. e-procurement in respect of all The Cell was gradually strengthened and a Division called procurement with estimated value of Rs Procurement Policy Division (PPD) was created. 2.50 lakh or more in a phased manner. Use of e-procurement has enhanced 4.2 Functions of PPD: transparency and accountability and made Subsequently, the scope of work in PPD was procurement more efficient. This also helps enlarged. The Division now deals with the following items in monitoring delays and reducing the of work:- procurement cycle. 84Department of Expenditure II (iii) Currently, approximately more than one quarterly progress report for the quarter ended on lakh tenders with estimated value of more September 30, 2019, original correspondence in Hindi than Rs.One Lakh crore are floated per with Region "A", "B" and "C" is 63.06%, 56.94% and 48% month using facility of CPPP. Apart from it, respectively. many procurement organizations like Railways, PSUs like ONGC, BHEL etc. 5.3 Quarterly meetings of the Departmental Official have their own e-procurement portals. Language Implementation Committee are being held regularly. Last meeting of the Committee was held on July 31, 2019. Discussions are held on quarterly progress 4.4 Government e-Marketplace: reports received from various sections/divisions/offices of the Department. Quarterly Progress Reports regarding For ensuring prompt payment to suppliers/ progressive use of Hindi received from sections/offices vendors of GeM who supply Goods/Services to the non- of the department are reviewed in detail keeping in view PFMS organisations/Agencies/entities (NPAE) through the targets prescribed in the Annual Program. Wherever GeM, it has been decided that all NPAE who come on shortcomings were found, it is advised to rectify/improve board on GeM shall open & operate a special purpose usage of Hindi in official work. account namely GeM Pool Account. 5.4 Replies of letters received from members of 4.5 Capacity Building: Parliament and other VIPs were promptly sent and follow up action ensured. It is imperative that the executives/officers engaged in public procurement process have thorough 5.5 During the year 2019 "Hindi Fortnight" was knowledge of all the relevant rules regulations and organized in the Department from 02-15 September, procedures of public procurement. For the purpose one 2019. During "Hindi Fortnight" various Hindi competitions week training programme on Public Procurement and one were organized which included Hindi Essay Writing, week training programme on Advance Public Noting- Drafting, Official Language and General Procurement are being conducted through Arun Jaitley knowledge, Hindi Typing, Knowledge of Departmental National Institute of Financial Management (AJNIFM) Glossary, Hindi Dictation and Sulekh. In addition to these, with a view to educate and familiarize the concerned a campaign was launched for undertaking more and more executives/officers with all the relevant rules regulations work in Hindi (minimum 2000 words) during the period and procedures of public procurement. Around 2000 from September 01 to 30, 2019. As many as 105 officers officers are being trained every year. and employees took part in these competitions/campaign enthusiastically. 5. Official Language 5.6: Hindi translation of the documents falling under 5.1 Hindi Section of the Department of Expenditure section 3(3) of Official Language Act, 1963, replies to the is responsible for implementation of the provisions made applications/appeals received under RTI Act, 2005 along under Official Language Act, 1963 and Official Language with Brochure on Pay and Allowances by Pay and Rules, 1976 as amended from time to time. It is also Research Unit of the Department was carried out. Quality responsible for coordinating follow-up action on the Hindi and English translation, as required of the suggestions/directions given by Kendriya Hindi Samiti, documents including those received from the Office of Committee of Parliament on Official Language, Hindi the Finance Minister/MOS (Finance) was also rendered. Advisory Committee and Central Official Language Implementation Committee. Other responsibilities of the section include implementation of various incentive 6. Integrated Finance Unit (IFU) schemes to enhance use of Hindi in official work, facilitation in nomination of officers/employees for Hindi 6.1 The Integrated Finance Unit works under language training, Hindi stenography/typing training and Additional Secretary & Financial Adviser (Finance) and organization of Hindi day/week/fortnight. In addition to deals with the expenditure and Budget related proposals these, efforts for achieving annual targets set by under Grant No.28 - Department of Expenditure which Department of Official Language with regard to usage of includes (i) Secretariat General Services covering the Hindi in official work are made in association with the establishment budget for the Department of Expenditure sections/divisions/offices in the Department. (Main Secretariat), O/o Controller General of Accounts, O/o Central Pension Accounting Office, O/o Cost 5.2 To increase original correspondence with other Accounts Branch and O/o Chief Controller of Accounts; Offices/individuals in Hindi, circulars are issued to (ii) Other Administrative Services covering the budget for sections/divisions/offices from time to time. As per Institute of Government Accounts and Finance, National 85Annual Report 2019-2020 Institute for Financial Management, Contribution to 6.2 This Unit also monitors the expenditure under International Body (AGAOA) and the budget relating to Grant No.34 - Indian Audit & Accounts Department; and payment of service charges to the Central Recordkeeping Grant No.37 - Pensions. Agency for the New Pension Scheme; and (iii) Other The allocations under the respective Grants are General Economic Services covering the budget for O/o as under: Public Financial Management System (PFMS). (` in crore) Grant No. Budget Estimates 2019-20 *Revised Estimates 2019-20 Revenue Capital Total Revenue Capital Total 28 – Department of Expenditure 400.55 0.00 400.55 - - - 34 – Indian Audit & Accounts 5009.91 16.00 5025.91 - - - Department 37 – Pensions 49565.00 0.00 49565.00 - - - * Yet to be received. 7.3 Office of Chief Adviser Cost is also cadre controlling office for the Indian Cost Accounts Service 6.3 The Integrated Finance Unit expeditiously (ICoAS) and looks after recruitment, transfer/posting and examines and disposes the financial and expenditure timely promotions of ICoAS Officers. It also looks after proposals pertaining to the Department of Expenditure training requirements of the officers for continuous up- including the proposals for appointment of consultants, gradation of their knowledge and skills, in addition to deputation of officers abroad, payments towards Course rendering professional guidance to the ICoAS officers Fees (including grants-in-aid) to Arun Jaitley National working in different participating organizations. Institute of Financial Management etc duly observing austerity instructions issued by the Govt. from time to 7.4 The profile of activities of the office of the Chief time. Adviser Cost broadly encompass i) Vetting of claims under Price Support Scheme, Market Intervention 6.4 The expenditure trend of Grant Nos.28, 34 and 37 have consistently been monitored and strict control Scheme and Price Stabilisation Fund; ii) Determination / has been exercised over the Govt. expenditure. A report fixation of fair prices of the products and services of the review is regularly submitted to the Secretary supplied/rendered by PSUs to the Government. To name (Expenditure) on monthly basis. a few: Rails by SAIL, Traction Electric by BHEL, Bank Notes and Coins by SPMCIL, Uranium Concentrate by UCIL, Nuclear Grade Ammonium Diuranate by IREL, Tear 7. Chief Advisor Cost Smoke Munitions, Tear Gas Gun, Multi Barrel Launcher 7.1 Office of Chief Adviser Cost (CAC) is one of the by BSF, Storage charges payable by FCI to CWC, cost divisions functioning in the Department of Expenditure, analysis of different procedures & test undertaken by Ministry of Finance. This office advises the Ministries and Hospital (SreeChitraTirunal Institute for Medical Sciences Government Undertakings on cost accounts matters and and Technology) etc.; iii) Subsidy payable to Northern undertakes cost investigation work on their behalf. It is Railway for Catering Units functioning in Parliament staffed by Cost Accountants /Chartered Accountants. House and PMO; iv) Representing in Revised Cost Committee of the various Ministries and Departments to 7.2 Office of Chief Adviser Cost is dealing with matters identify the specific reasons behind time and cost overrun relating to costing and pricing, studies for determining of projects and schemes; v) Participating in EFC/PIB and fair prices, studies on user charges, cost-benefit analysis other Inter-Ministerial Committees; and vi) Examination of projects, studies on cost reduction, cost efficiency, profitability analysis and application of modern of cost estimates, evaluation of the financial feasibility management tools devising cost and commercial financial and other financial parameters of the High value accounting for Ministries/Departments of Government of Infrastructural Projects like Rail, Highways, Power, India. Education Sector etc. referred by DoE. 86Department of Expenditure II 7.5. During the period, January to November 2019, 50  Fixation of service charges for the services studies/reports were completed by the Office of Chief rendered by a Govt. Department/Agency on Adviser Cost. The studies completed during the year behalf of the other : Fixation of final prices of covers a wide spectrum of sectors/areas as detailed Traction electrics supplied by BHEL to Indian below: Railways during 2014-15. • System Study : Fixation of Common Hourly  Determination of subsidy: Vetting of claims of Rates and Overhead Percentage in respect of NAFED for reimbursement of losses and Government of India Presses at Mayapuri, New recovery of Gains under Price Support Scheme Delhi Minto Road,and Temple Street, Kolkata for (PSS) for various crops/commodities; and various years. Subsidy payable to Northern Railway catering  Fair selling price of products/service where units functioning in Parliament House Complex Government/Public Sector Undertaking is the and PMO for the year 2017-18. Producer/Service provider as well as the user: Fixation of Fair Price of rails supplied by  User Charges : Revision of rentals for Siri Fort Steel Authority of India Ltd. (SAIL) from Bhilai Auditorium Complex for the F.Y 2019-20; and Steel Plant to Indian Railways for the year Fixation of cost price for Catering Services to 2017-18; Fixation of Rates of Compensation for lock-in Staff of Budget Division during Union nuclear grade ammonium diuranate( NGADU) Budget 2020. supplied by Indian Rare Earths Limited to Bhabha  Other studies :Revaluation of compensation Atomic Research Centre for the year 2015-16; Fixation of Fair Selling Price of the year 2017-18 payable to the prior allottee of Coal Blocks for in respect of Tear Gas Gun and Multi Barrel ‘Mine Infrastructure Other than Land’ for various Launcher manufactured by CENWOSTO, BSF, coal blocks. Tekanpur Gwalior; Compensation payable to Uranium Corporation of India Ltd. (UCIL) for 7.6 Revised Cost Estimates Committees supplying Uranium Concentrate during the year Represented: In pursuance of Ministry of Finance, Department of Expenditure's Office Memorandum 2017-18; Fixation of Fair Price of Condoms No.24(35)/PF-II/2012 dated 05th August, 2016 of Office supplied by M/s HLL Lifecare Limited for the year of Chief Adviser Cost has represented in the Committees 2015-16 & 2016-17; Fixation of Fair Selling Price for Revision of Cost Estimates in various Ministries/ of the year 2018-19 in respect of Tear Smoke Departments. Proactive role of this Office in the Revised Munitions (TSMs) manufactured by Tear Smoke Cost Committee has facilitated rationalisation of revised Unit (TSU) BSF, Tekanpur Gwalior; Fixation of cost estimates. Fair Price of Coins supplied by India Govt. Mints at Kolkata, Hyderabad, Noida & Mumbai to RBI 7.7. Other Major Committees Represented: during the year 2015-16 & 2016-17 and by India Officers of Chief Adviser Cost Office owing to their Govt. Mint at Hyderabad for year 2017-18; expertise in costing/finance/commercial accounting have also served as Chairman/Members on the following major Fixation of Currency Notes produced by Currency multi-disciplinary Inter-Ministerial/Expert Committees Note Press (CNP) at Nashik to RBI during the such as National Pharmaceutical Pricing Authority year 2015-16; Fixation of Fair Price of Bank (NPPA), Department of Pharmaceuticals; Board of Notes supplied by Bank Note Press (BNP) Governors and the society of the Arun Jaitley National Dewas to RBI during the year 2016-17 & Institute of Financial Management (AJNIFM) , Faridabad; 2017-18; Vetting of Provisional Cost of Pulses Governing Body of Tear Smoke Unit, BSF, Tekanpur, transferred from Price Support Scheme to Price (Gwalior); Committee on "Modernization of Costing Stabilization Fund; Vetting of prices of Ayurvedic/ System in India Post" in Department of Post, Ministry of Unani Medicines supplied by M/s Indian Communications; Advisory Committee for consideration Medicines Pharmaceutical Corporation Limited of techno-economic viability of major/medium, flood (IMPCL) for the pricing period 2015-16 & control and multipurpose projects, coordinated by Central 2016-17; and Fixation of fair price of DDT 50% Water Commission; M/o Water Resources, RD&GR - supplied by HIL to NVBDCP for the year Special Committee for Interlinking of Rivers; Standing 2016-17 and provisional price for the year Committee of Experts under Drugs (Prices Control) Order 2017-18. 2013; Rate Structure Committee of Ministry of Information 87Annual Report 2019-2020 and Broadcasting for Bureau of Outreach and of various Accounts and Finance Services (six Communication advertisement rates for (1) Print Media months duration). (2) Private FM Radio Stations, (3) Private C&S TV b. A two-year AICTE approved Post-Graduate Channels & (4) Social Media; Committee on revisiting of Diploma in Financial Management for mid-level rentals of land, building and tower infrastructure of officers of Central and State Governments and PrasarBharati (PB) shared with Private FM radio the Armed Forces. broadcasters under FM Radio Phase-III- M/o Information c. PGDM (Financial Markets): This is a recent & Broadcasting; and EFC/PIB meetings in Ministry of program on Financial Markets and attracts Finance, Department of Expenditure for Projects/ participants primarily from the private sector. Till Schemes of various Ministries as per the request received last year this was a one year course. From year in this Office. 2019-20 onwards it is being run as a two-year course. 8. Arun Jaitley National Institute of d. DGAIA (Diploma in Government Accounts and Financial Management (AJNIFM) Internal Audit): A one-year programme to upgrade the technical skills of Group-B officers 8.1 Introduction about AJNIFM of the Civil Accounts Department. 8.1.1 AJNIFM was set up in 1993 as a Society. The e. Fellow Programme in Management: This is Union Finance Minister is the President of the AJNIFM AJNIFM’s programme of four years’ duration to Society and Secretary (Expenditure) is the Chairman of pursue research work and to produce competent the Board of Governors. researchers, teachers and consultants. This 8.1.2 The institute was set up with the core objective programme is approved by All India Council for of training Officer Trainees (Probationers) of the six Technical Education (AICTE) and was launched organised accounts and finance services. However, over by AJNIFM with the commencement of the the years, the Institute has expended its activities with academic session of 2009. the addition of four long term programs and a dynamic repertoire of short-term programmes. A brief of some of Short Term Programmes/Management the programmes is given below. In the process, AJNIFM has been able to carve a unique identity for itself as a Development Programmes (MDPs) premier Institute of Ministry of Finance in professionalizing Apart from its regular long term programmes, Public Financial Management. AJNIFM undertakes short term training programmes on various aspects of Finance and Public Financial 8.2 Key achievements: AJNIFM is among the few autonomous bodies that have become financially self- Management as also procurement. Participants include sufficient. From the year 2017-18 onwards no grant-in- government officials from the States and the Central, aid has been taken from the Administrative Ministry. Yet autonomous bodies, PSUs, Armed forces, university and the Institute posted a surplus of Rs.1.99 Cr in year 2017- college teachers, and specially tailored to the needs of 18 and Rs.5.75 Cr in year 2018-19. In year 2019-20 also the participants. The approach is multi-pronged. the Institute expects to have a clear surplus of revenue Some key areas in which we have conducted MDPs over expenditure, with zero grant. are as below : 8.3 Training Programmes  Of the 47 MDPs on Public Procurement scheduled to be held this year , AJNIFM has 8.3.1 Training programmes being run by AJNIFM are already done 29, of which a few were Advanced well received and more and more work is being assigned Procurement Courses. In the current year a new to the Institute. The vision is to make AJNIFM a premier course on Arbitration has also been started. It research and training institution as well as a think-tank in Public Financial Management through its research has drawn a good response. contribution in all areas of fiscal management, public  Another new initiative, at the behest of the DEA, expenditure and policy issues, both at the Central and is a course on Cash and Debt Management, with the State-Level. participants from State Governments. This has Long Term Programmes also received excellent feedback. AJNIFM conducts the following long term  Mid/career training programmes have been run programmes. These are :- for the Indian Cost Accounts Service as also the a. Professional Training Course for Officer Trainees Indian Civil Accounts Service. 88Department of Expenditure II  In the light of the success of the professional initiatives of the Government: Whenever there are new training program for Financial Advisers in the initiatives of the Central Government, AJNIFM has been various Ministries of GOI, conducted last year, mandated to launch special training drives to cover all the program is being continued this year as well. Government entities. In fulfilment of this mandate, One batch has already been trained. AJNIFM has run several training programmes on GeM.  A course of Project and Risk Management for 8.8.2 Digital Governance: AJNIFM is a partner 25 participants from various ITEC countries was Institute under NeGD, and is successfully delivering successfully carried out at the behest of MEA. capacity building and training programmes in e-  The DEA - AJNIFM Research Programme is Governance for all cadres of Government officials. proceeding smoothly. Of the work delineated for AJNIFM, final reports for four of the seven 9. Controller General of Accounts deliverables have already been submitted to DEA and for three areas draft reports have been 9.1 The Controller General of Accounts (CGA), in handed in. Once the comments of the DEA are the Department of Expenditure, Ministry of Finance, is available, these three would also be finalized and the Authority to administer, manage and supervise handed in. The programme was recently departmentalized accounts of Government of India. It also reviewed by Secretary, DEA and his team. provides advice to various Ministries/Departments of Government of India concerning Financial/Accounting 8.4 Mechanism for measuring outcomes: A ready matters and is responsible for establishing and measure for AJNIFM is (a) number of persons trained maintaining a technically sound Payment and Accounting and (b) revenues earned. Since year 2017-18 AJNIFM System. has not been receiving any grant whatsoever from the Ministry. This has continued in year 2019-20 as well. 9.2 The Office of CGA prepares monthly and annual analysis of expenditure, revenues, borrowings and 8.5 Initiatives taken with reference to the various fiscal indicators for the Union Government. Under Northeast region: The programmes run by AJNIFM draw Article 150 of the Constitution, the Annual Appropriation participants from all over the country, including the Accounts (Civil) and Union Finance Accounts are Northeast. submitted to Parliament. Along with these documents, 8.6 Initiatives undertaken for Disabled/ an M.I.S Report titled 'Accounts at a Glance' is prepared Handicapped and SC/ST as well as other weaker and circulated to Hon'ble Members of Parliament. sections of Society : The AJNIFM campus is disabled 9.3 Functions : Formulate policies relating to general friendly and any grievances received in respect of weaker principles, form and procedure of accounting for the sections are duly addressed to. Central and State Governments ; Administer the process 8.7 Gender Budgeting and Empowerment of of payments, receipts and accounting in Central Civil Women Ministries /Departments; Prepare, consolidate and submit the monthly and annual accounts of the Central 8.7.1 Arun Jaitley National Institute of Financial Government through a robust financial reporting system Management has been designated as the Central Nodal aimed at effective implementation of the Government Centre for Gender Budgeting by the Ministry of Women fiscal policies; Coordinate and assist in the introduction and Child Development for training on capacity building of Management Accounting Systems in Ministries / and research work. Gender Budgeting is a methodology Departments with a view to optimizing the utilization of which encompasses a gender perspective and sensitivity Government resources through efficient cash at all levels of development planning and implementation. management and an effective Financial Management AJNIFM has an ongoing MOU with UN Women, for taking Information System (FMIS); Administer banking concrete steps in advocacy and training of various stake arrangements for disbursements of Government holders for preparation of gender budgeting. expenditures and collection of government receipts and 8.7.2 For long term courses such as the PTC and the interact with the Central Bank for reconciliation of cash DGA&IA, as well as short term courses, sessions on balances of the Union Government; and Establish a Gender Budgeting are invariably included in the course sound Human Resource Management System for content. This is so as to introduce trainee officers to the recruitment, deployment and improve the career profile importance of Gender Budgeting as an emerging management of officers and staff, both at the supervisory concepts and tools towards women empowerment and level and at the operational level within the Indian Civil inclusion of marginalized sections in the national Accounts Service. mainstream. 9.4 Financial Reporting - Monthly and Annual:-The 8.8 Inputs on E-governance office of the Controller General of Accounts is responsible 8.8.1 Dissemination of knowledge on new for Monthly Consolidation of the Union Government 89Annual Report 2019-2020 Accounts. A detailed analysis of the monthly trends of Central Government for the year together with the receipts, payments, deficit and its sources of financing is financial results disclosed by different accounts and other presented to the Union Finance Minister every month. data coming under examination. These accounts include The document has over a period of time evolved into an the Revenue and Capital Account, Public Debt account extremely useful tool for monitoring budgetary compliance and other liabilities and assets worked out from the and a handy MIS reference for decision making. In balances in the accounts. It is supplemented by the consonance with the Government's policy towards accounts separately presented in the form of transparency in public functioning, an abstract of the Appropriation Accounts for Grants and charged Union Government accounts is released every month in Appropriations. compliance to India's agreement on SDDS protocol. The data can be accessed on the website http:// 9.5 Public Financial Management System(PFMS): www.cga.nic.in; This office is leveraging technology to The Public Financial Management System (PFMS) is a provide flash figures of receipts, payments, and deficit to web-based online software application designed, Ministry of Finance as a tool for quick management developed, owned and implemented by the O/o CGA. decision making. Daily flash figures are provided in the PFMS aims to provide a sound Public Financial month of March, to enable monitoring of various financial Management System for Government of India by parameters and targets; In tune with the development in establishing a comprehensive payment, receipt and best practices, CGA's office also prepares Provisional accounting network. It is aimed to achieve (i) "Just in Accounts of the Government of India within two months time" transfer of funds and (ii) complete tracking of of completion of the financial year. This year has realization of funds from its release to its credit into the witnessed 25th anniversary of publication of provisional bank account of intended beneficiaries. PFMS makes a Accounts; The Finance Accounts of the Union direct and significant contribution to the Digital India Government is submitted to Parliament under the Initiative of Government of India by enabling electronic provision of Article 151 of the Constitution of India; and payment and receipt for Ministries/Departments in The Finance Accounts of the Central Government Government of India. Presently, DBT payments in around comprises of the accounts of the Central Government 450 schemes including State schemes, are being made as a whole and includes transactions of Civil Ministries/ through PFMS. Almost all the CS & CSS Schemes are Departments, Ministries of Defence and Railways and on PFMS and all the major banks including RBI are the Departments of Posts & Telecommunication. It interfaced with PFMS. A status report upto November, presents the accounts of receipts and outflows of the 2019 is as below:- 1 Total no. of Schemes on boarded on PFMS 1198 2 Total no. of Agencies Registered on PFMS 29,88,511 3 04 Major DBT Schemes MGNREGA No. of Transactions 29,51,42,219 Amount Paid 47,192.61 Cr. PM-KISAN No. of Transactions 15,14,46,529 Amount Paid 30,289.39 Cr. NHM No. of Transactions 1,25,41,090 Amount Paid 1,938.75 Cr. Food Subsidy No. of Transactions 16,60,471 Amount Paid 188.91 Cr. 4 DBT (in which payment made) No. of Schemes 452 Total no. of Transactions 62,87,50,795 Amount Paid 1,57,528.77 Cr. Treasury Integration:- Treasury systems of 29 States and 2 UTs with legislature have been interfaced with PFMS. However, mapping of state schemes as per restructured CSS has to be completed. (UTs without legislature are not being integrated). 90Department of Expenditure II 9.6 Internal Audit and accordingly draws up its audit plan. Several circulars and publications laying down the principles and guidance 9.6.1 As per the provisions of the Chapter VII of the have been issued. Inspection Code, Internal Audit Division (IAD) set up in the office of Controller General of Accounts provides 9.6.3 During the period from 01.04.2019 to 30.11.2019, guidance and support to Internal Audit Wings of Civil the Internal Audit Division has conducted audit of 33 units Ministries to maintain the requisite technical standards based on risk based control points, against the target of of accounting in the Departmentalized Accounting Offices. 35 units. Apart from this, I.T audit of 16 PAOs of five This Division is structured in three sections i.e. i) Centre Ministries and 03 special audits have been conducted till of Excellence ii) Planning & Coordination and iii) the end of November 2019. 10 more units are planned Inspection Wing; meant to upgrade the knowledge, for audit during fourth quarter of 2019-20. adequate planning and execution of the programs respectively. The O/o CGA promotes and encourages 9.6.4 The Internal Audit Division at CGA's office application of best audit practices which are in line with provides guidance to enhance the quality of internal audit the International Standards such as Risk based Audit, in the Civil Ministries/Departments. Ministries/ Gender based Audit, Programme specific/Scheme Departments prepare Annual Review Reports on the specific audits. performance of their Internal Audit Wings, which are 9.6.2 Risk Based Auditing approach is being analyzed and summarized by the Internal Audit Division encouraged by the office of the Controller General of of CGA for the purpose of consistency and ease of Accounts so as to focus on the organizational response presentation. A consolidated "Annual Review" on the to the risks it faces in achieving its goals and objectives. performance of Internal Audit Wings and an "Annual The context for audits is thus provided by the Review At a Glance" are prepared and submitted to Department's objectives, the associated risks and the risk Secretary (Expenditure) and Addl. Secretary (Pers) management process rather than on "controls" and respectively. The annual review also provides the details deviations there-from. The role of the internal auditor too of units audited and indicates the status of outstanding shifts from an examination of compliance with controls internal audit paras at the end of financial year. The to a review of the risk management process. A pragmatic summarized information regarding outstanding audit approach requires that internal audit in conjunction with paras and units audited by the Internal Audit Wings of management undertakes the risk assessment exercise line Ministries/Departments is as under: Outstanding Internal Audit Paras: Financial Opening Balance Paras raised Paras dropped Closing Balance Year (As on 01.04.2018) during the year during the year (As on 31.3.2019) 2018-19 1,13,317 28,187 35,777 1,05,727 Units audited during 2018-19: Units due Target for Units audited Achievement Remarks 2018-19 6293 2237 1623 73% Staffing constraints was the main challenge in achieving 100% target. 9.7 Monitoring Cell Explanatory Notes is being done through the upgraded version of Audit Paras Monitoring System portal, which 9.7.1 Monitoring Cell, O/o CGA, D/o Expenditure, facilitates online submission and helps avoid scanning Ministry of Finance is entrusted with the work of co- ordination of timely submission of Action Taken Notes or physical submission of ATNs/ATRs/ENs. (ATNs) on C&AG paras, Action Taken Replies (ATRs) on 9.7.2 The number of CAG Audit paras/PAC paras/ PAC paras and Explanatory Notes (ENs) on excess Explanatory Notes that have been submitted/settled expenditure and savings of Rs. 100 crore and above as through the APMS portal to the Lok Sabha (PAC Branch) per direction of Public Accounts Committee. Submission of Action Taken Notes/Action Taken Replies and during 2019-20 are as under:- 91Annual Report 2019-2020 This will not only be a promotional avenue for ease of S.No. Subject Paras submitted to Lok business to the multinational stakeholders, but also Sabha Secretariat improve existing procedures in international payments During 01.04.2019 to for Visa Fee and other travel and tour related expenditure 30.11.2019. by tourists visiting India. 1. C&AG audit paras 128 9.8.5 Future Initiatives 2. PAC paras 117 9.8.5.1 Employees Pay Roll System (EPS): A 3. Explanatory Notes 29 comprehensive Employees Pay Roll System covering employee related activity in Central Government to complement the HRMIS developed by the Department 9.8 I T Initiatives has been conceptualized and its development is underway in the O/o Controller General of Accounts. A 9.8.1 The Office of the Controller General of Accounts significant feature of this application is the unique leverages Information Technology for developing robust, employee ID. Unique employee ID to be retained reliable, speedy financial payment, accounting, reporting throughout the service of the employee to help tracking and reconciliation processes for seamless flow of in the system irrespective of the Ministries/Department information from the executing level to the policy making he/she serves. level. 9.8.5.2 Treasury Single Account (TSA) through Letter of 9.8.2 In order to ensure implementation of projects in Credit Mode. is an initiative for efficient management line with the OM issued vide No. 49(7)/PF-I/2014 Dated and control of Government's cash resources using 02nd December 2014 by Plan Finance Division of the Government banking arrangements. This will also result Department of Expenditure regarding Digitization and in implementation of a recommendation of the reconciliation in Government Accounts and Integration Expenditure Management Commission (EMC) to of PFMS with various standalone systems of receipts and minimize the cost of Government borrowings and to payments, the conceptualization, development, testing enhance efficiency in fund flows to Autonomous Bodies. and implementation has started for different software applications for use not only by the Civil Accounts 9.8.5.3 Pension Payments-Centralized online Pension Organization, but also stakeholders across the Ministries/ Processing System: The system developed and Departments as well as the common public. implemented in the Civil Ministries/Departments of Government of India facilitates not only the retiring 9.8.3 Present Initiatives: In addition to the already employees to ensure their pension processing and developed and implemented software applications, like receiving the retirement benefits on due date, but also the Modules of Pay & Accounts Office (in 556 out of 710 the entire stakeholders beginning from the Pension current PAOs including Revenue PAOs and Delhi Govt. initiating Department to the Pension disbursing public PAOs), Cheque Drawing and Disbursing offices (in 1348 sector bank to integrate at appropriate levels in the cycle. out of 1148 current CDDOs to be on boarded), Employees Information System (in 5832 out of 9400 current Salary 9.8.5.4 Main Features processing DDOs), Non-Tax Receipt Portal (374 PAOs  Automated exchange of data with currently having Non-Tax Receipts), Integration of PFMS Bhavishya software of Department of with external software systems, wherever required etc., Administrative Reforms & Public the new software utilities on PFMS platform are also in Grievances (DPARG). hand and at different stages of development and to be rolled out on successful testing, pilot implementation etc.  Generation of Digitally Signed Pension 9.8.4 Debit & Credit Cards of International Banks Payment Order (e-PPO) for remittances to Government/NTRP: The one stop  Automated transmission of e-PPO along services of Non-Tax Receipt Portal (NTRP), which facilitates remittance of money into the Government with allied documents to Central Pension Account as a 24X7 online electronic service using internet Accounting Office (CPAO) based payment technologies to the users through the web  Generation of various payments authorities based portal is being scaled up for usage of Debit and and Reports Credit Cards of International banks in addition to the existing Nationalised Banks. This is envisaged to facilitate  Integration with PFMS-Sanction Module for easy international remittances to the Government of India Payments for goods and services being rendered by the Ministries/ Departments and offices under them across countries.  Intimation to Retiree/Pensioner via SMS 92Department of Expenditure II 9.9 Institute of Government Accounts And Finance with digital policy of Government of India a series of training videos on various modules of PFMS are being 9.9.1 The Institute of Government Accounts & Finance produced for enhancing outreach and access to multiple (INGAF) is the training arm of the Controller General of stakeholders. Accounts, Government of India. Initially known as the Staff Training Institute, it was set up in February, 1992 to train personnel in specific areas of accounting, administrative 10. Chief Controller of Accounts matters and financial management. In the years following its inception, the Institute has evolved to become a 10.1 The Chief Controller of Accounts (CCA) is in premier training centre in the sphere of Government overall charge of the payment and accounting set up of Accounting and Public Financial Management. The the Ministry, supported by three Controller of Accounts, Institute has Regional Training Centers (RTCs) at one Deputy Controller of Accounts, two Assistant Chennai, Kolkata, Aizwal and Mumbai. Controller of Accounts, 37 Senior Accounts Officers and approximately 300 other staff members at various levels. 9.9.2 Future Initiatives 1. To set up INGAF as a premier institute for 10.2 Function of the CCA organisation training of Gr. "A" & Gr. "B" Officers of • Budget related works for five Grants of departmentalised Accounting Organisations. Department of Economic Affairs, Department of 2. To provide need based training, on various Financial Services, Department of Expenditure, new technologies developed by CGA Department of Revenue and Department of organisation, to states and other Investment and Public Asset Management are organisation. integrated with O/o CCA. 9.9.3 International Cooperation • CCA oversees the payments and accounting INGAF is a premier institute in the field of functions of five Departments in Ministry of imparting training to participants from countries under Finance viz., Department of Economic Affairs, ITEC programme in collaboration with Ministry of External Department of Expenditure, Department of Affairs. Besides this, the participants of Sri Lanka Institute Revenue, Department of Investment and Public of Development Administration (SLIDA), Sri Lanka have Asset Management and Department of Financial been trained at INGAF on several occasions on Public Services. Financial Management. In addition, several programmes on Public Expenditure Management/Public Financial • Another important function of the CCA is financial Management as well as Internal Audit/Risk Audit have reporting to Chief Accounting Authority (i.e. the regularly been conducted for the participants from Royal Secretary of the respective Department) and to Government of Bhutan, the Governments of Afghanistan, the Controller General of Accounts. The monthly and Nepal. accounts and annual accounts of five Departments which comprise 8 Demands/ INGAF has been functioning as the Secretariat Appropriation of the Ministry of Finance are sent for The Association of Government Accounts to the office of the Controller General of Accounts Organization of Asia (AGAOA) since November 2007. for consolidation into the accounts of The purpose of AGAOA is to promote 'professional Government of India. understanding and technical cooperation among member institutions through exchange of ideas and experiences • The Scheme of Departmentalization of Accounts in the fields covered by Government Accounts envisaged a system of management accounts. Organization to ensure transparency, accountability, and CCA prepares monthly and quarterly reviews of good governance'. receipt and expenditure for the information of the INGAF has been nominated as the nodal institute Secretaries of the Departments. The summary for providing training to officers and officials of Central statements are also uploaded on the Ministry's Government, State Governments, implementing official website. agencies, and banks on various aspects, modules, and • Internal Audit is the responsibility of the CCA. In operational management of PFMS. Over the last four years (2015-16 to 2018-19), this Institute has trained the Ministry of Finance, the Internal Audit Wing participants in various modules of PFMS. To accelerate also undertakes the audit of all DDOs, attached the rollout of PFMS, more than 10,000 participants have and subordinate offices including Banks handling been trained in use of various PFMS modules. In line Government Schemes such as Public Provident 93Annual Report 2019-2020 Fund, Special Deposit Schemes; and Senior alia involves the reconciliation of loan balances Citizen Savings Scheme. There are about 132 as in the books of this office with those of the DDOs within the jurisdiction of internal audit. Reserve Bank of India and to prepare a Statement (14A) & further submitted to Finance • Providing support staff to Controller of Aid Account Section, CGA Office. Accounting of Accounts and Audit (CAAA). Buyback of Government Securities raised by • Pension authorization under the Pension Rules Government of India. to the officials retiring on superannuation, seeking c. Compilation of Consolidated Abstract of Rupee voluntary retirement and to the families of Loans (Transaction connected with the loans deceased employees/pensioners. dealt with in Internal Debt & Account Section are • Pension payment to foreign pensioners residing also brought to account through this abstract. in India on behalf of Sri Lanka, Singapore, UK d. Accounting of Securities, shares etc., purchased and Burma. or otherwise acquired held in the Cash Balances; • Accounting and monitoring of Loans advanced Interest or dividend thereon. to foreign countries. e. Watching the timely payment of principal and • Accounting of total receipts and payments in the payment of interest in respect of all loans entire central Government under the CGEGIS mentioned here. (Central Government Employees Group f. Accounting of all securities issued to International Insurance Scheme) and calculation & accounting Financial Institution like International Monetary of interest liability of GOI under both the savings Fund, International Bank for Reconstruction and fund and Insurance fund components of this Development etc. scheme. g. Accounting of Special Government of India • Oversee the settlement of C&AG audit Para. Securities issued against investment made by • Responsible for transfer of funds to and from CFI National Small Saving Fund (NSSF). to Public Account. There are 14 such Funds in h. Accounting of Special Govt. of India Securities/ the Department of Economic Affairs, 2 in Bonds issued to Nationalized Banks Special Department of Revenue, and one in Department Government of India Bonds issued to Oil of Expenditure. companies, FCI, Fertilizer Companies and • Formulation of detailed Accounting procedures Special Securities issue against Securitization of in respect of the Funds maintained under Public balances under Postal life Insurance which are Account of India. kept under Public Account. • Settlement of the cases relating to combined i. Accounting of different Saving Schemes of pension, pro-rata pension, leave encashment, Government of India leave salary and pension contributions, revision j. Preparation of the Quarterly and Annual of pre-2016 pension cases etc. of the absorbed Statement of Internal Debt balances for employees of SPMCIL, after the corporatization submission to the Finance Accounts Section of of Mints and Presses, in coordination with the the Controller General of Accounts. Corporate office of SPMCIL, field units and the k. Watching the timely payment of Principal and administrative division in the Ministry. payment of interest in respect of all Securities, 10.3 Highlights of important functions Loans, Special Securities, Compensation & Other Bonds etc. and further reconciliation with 10.3.1 Internal debt accounting and reporting: Quarterly Statement received from DGBA. a. Issue of New Loans bringing into account all Central office, Mumbai. transactions connected with the issue of New l. Reconciliation of all Treasury Bills & Cash Loans on the basis of detailed information Management Bills with Monthly and Quarterly supplied by the Reserve Bank of India. Statement received from Public Debt Office, b. Accounting of the discharged loans which inter- Mumbai and DGBA, Central Office, Mumbai. 94Department of Expenditure II m. Calculation of Average Rate of Interest faxed to RBI, Nagpur in respect of 28 States. chargeable on the Capital Outlay of the Central IGA advice in respect of State Government of Government. Sikkim and Delhi are sent to RBI, Delhi by special messenger. 10.3.2 Monitoring system for transfer of funds from c. Grants-in-aid amounting to Rs.173465.42 crore the Ministry of Finance to State Governments were released to state government through a. Under the system of Public Financial PFMS portal. Management System (PFMS), under the aegis d. During the Financial Year 2019-20 (up to of CGA, scheme wise plan funds released to the 25.11.2019) Rs.16893.4732 crore worth loans states are visible on the PFMS portal. Under this (Block loans & Back to Back Loans) were system, the sanctions are received from PF I released to state govt. Division on the "OCEAN" portal. Those sanctions e. The time gap between the processing of are accepted and settled on the OCEAN portal sanctions to the job of e-Lekha for PFMS portal from where the data get transmitted to Public has been reduced to one day and thus it has Financial Management system (PFMS) Portal. brought up the work closer to the real time basis. b. The sanctions (in hard copies) are received from f. In the case of any default made by State various departments including Public Finance Government in making repayment of Principal State I (PFS-I) Division. The sanctions are and Interest, the Consolidated Fund of State processed in the PFMS portal. The Inter maintained by RBI is debited on the advice of Government Advices (IGA) are generated and this office. 95Annual Report 2019-2020 10.3.3 Details of Loans advance to States during 2019-20 (upto 25th November 2019) (Rs. in Crore) Total Loan Principal Interest Closing Opening Closing given repaid repaid Balance S. Balance Balance Name of States w.e.f. upto25th upto25th upto 25th No. as on as on 01.04.2019 Nov. Nov. Nov. 01.01.2019 31.03.2019 to 2019. 2019. 2019. 25.11.2019 1 2 3 4 5 6 (3+4-5) 1 Andhra Pradesh 10144.64 10185.77 1465.83 307.12 118.01 11344.48 2 Arunachal Pradesh 164.56 136.59 0 14.48 6.36 122.11 3 Assam 1151.93 1116.57 67.43 87.07 55.55 1096.93 4 Bihar 11555.75 11773.71 810.24 276.14 110.71 12307.81 5 Chhattisgarh 2760.93 2702.43 119.52 96.52 53.05 2725.43 6 Goa 1073.89 1043.79 24.17 15.01 7.87 1052.95 7 Gujarat 7127.92 7408.17 205.11 392.08 179.32 7221.2 8 Haryana 2075.49 2023.25 79.73 73.69 35.97 2029.29 9 Himachal Pradesh 1066.62 1058.43 49.51 52.78 50.95 1055.16 10 Jammu & Kashmir 942.88 914.35 4.47 70.69 43.77 848.13 11 Jharkhand 2342.77 2329.85 328.31 82.33 43.96 2575.83 12 Karnataka 14770.59 14628.74 438.55 412.7 247.95 14654.59 13 Kerala 7363.6 7227.93 1977.71 203.27 108.97 9002.37 14 Madhya Pradesh 16905.51 17358.44 3486.55 367.97 219.73 20477.02 15 Maharashtra 6710.46 6448.78 740.14 311.83 164.61 6877.09 16 Manipur 292.03 279.25 6.81 25.55 11.73 260.51 17 Meghalaya 167.91 162.18 12.32 11.72 7.86 162.78 18 Mizoram 200.74 196.57 8.9 13.17 9.8 192.3 19 Nagaland 106.4 99.96 4.23 11.62 4.73 92.57 20 Orissa 7813.41 7801.82 647.23 286.45 103.85 8162.6 21 Punjab 4975.58 4937.48 68.3 106.64 47.31 4899.14 22 Rajasthan 13806.18 13886.69 3741.56 303.76 158.5 17324.49 23 Sikkim 95.96 93.79 0.39 5.27 4.54 88.91 24 Telangana 8243.77 8214.3 146.29 219.49 84.53 8141.1 25 Tamil Nadu 16651.28 17213.3 1083.76 251.87 129.91 18045.19 26 Tripura 178.48 168.61 0.06 17.18 8.12 151.49 27 Uttarakhand 787.52 779.46 48.43 27.97 39.87 799.92 28 Uttar Pradesh 12307.19 11891.17 648.8 804 349.62 11735.97 29 West Bengal 14313.83 14145.2 679.1 401.59 312.76 14422.71 Total 166097.82 166226.58 16893.45 5249.96 2719.91 177870.07 96Department of Expenditure II 10.3.4 Details of Grants in Aid to States released by Department of Expenditure during 2019-20 (w.e.f. 01.04.2019 - 25.11.2019) (Rs. in Crore) Grants in Aid to States/UTs by Department of Revenue (Compensation to State Government for Revenue Rs. 65250.49 (crore) Loss due to phasing out the Goods & Services Tax (GST) Total Grant in aid released to state Rs. 173465.42/- crore 97Annual Report 2019-2020 10.3.5 Balance under important component of internal Debt (including Major Small Saving & Special Deposits) Net Balance Net addition Balance Balance as on addition Jan 19 S.N. Name of scheme as on as on 01.01.201 Jan 18 to to 01.01.2019 31.10.2019 8 Dec -18 October 2019 2 (Rs. In Crore) A Internal Debt 1 Market Loan 5025476 366496 5391972 503744 5895716 Special Securities issued to 2 104124 -4487 99637 2099 101736 International Institutions Compensation and Other 3 40933 5514 46447 2583 49030 Bonds 4 14 day Treasury Bills 149602 -8226 141376 -31121 110255 5 91 day Treasury Bills 207464 -28753 178711 8711 187422 6 182 day Treasury Bills 73845 64419 138264 8769 147033 7 364 day Treasury Bills 134989 82107 217096 -14306 202790 Special Securities issued 8 against National Small 430568 97967 528535 159676 688211 Saving Fund Marketable Securities 9 issued in conversion of 59818 -12130 47688 -7000 40688 Special Securities Special Security issued 10 20894 0 20894 0 20894 against PLI Fund Sovereign Gold Bond 11 6548 576 7124 1585 8709 Scheme, 2015 Gold Monetisation 12 2450 2450 446 2896 Scheme,2015 Special Securities issued to 13 0 131533 131533 110224 241757 Public Sector Banks Special Securities issued to 14 0 4500 4500 EXIM Banks Special Securities issued to 15 0 4557 4557 IDBI Banks A Total Internal Debt 6254261 697466 6951727 754467 7706194 Major Small Savings B Schemes Balances under Senior Citizen Saving Scheme 1 47706 25426 73132 29345 102477 2004 (collection through Bank only) Sukanya Samriddhi 2 5856 4629 10485 5652 16137 Account 98Department of Expenditure II Collection of fund under PPF – 1968 Scheme 3 385994 58146 444140 64132 508272 (collection through bank only) Total Major Small Savings 439556 88201 527757 99129 626886 Scheme Special Deposits and C Accounts Balances under Special 1 Deposit Superannuation 102717 -556 102161 -374 101787 and Gratuity Fund - 1975 Special Securities issued to 2 9996 9996 9996 Nationalised Banks Petroleum Bonds 10.5% Oil 3 130923 130923 130923 Company G.O.I.S.B. 2006 Special Securities issued to 4 Stressed Assets 4346 -120 4226 -110 4116 Stabilisation Fund Special Securities issued to 5 16200 16200 16200 FCI Special Securities issued to Fertilizers Companies as 6 15705 15705 15705 Compensation towards Fertilizer Subsidy Special Securities issued to 7 1627 204 1831 163 1994 REC/UTI/IDBI & others Total Special Deposits C 281514 -472 281042 -321 280721 and Accounts TOTAL (A+B+C) 6975331 785195 7760526 853275 8613801 10.3.6 Internal Audit b. The penal interest is levied on all remittances, which are not credited to Government Account a. The Revised Charter of Financial Advisors at Central Accounts Section RBI, Nagpur within released by the Ministry of Finance envisages the prescribed time limits i.e. T+1 day(excluding the Roles and Responsibilities of the Chief holiday) for public sector banks and T+1 day Controller of Accounts. Accordingly, Internal Audit (including holidays for private banks). Banks are functions under the control and supervision of liable to pay penal interest for the entire period the CCA focuses on the Audit of all DDOs commencing from the date of receipt at receiving attached and subordinate offices including Banks Branch of the Bank to the date of settlement with handling Government Schemes such as Public RBI(CAS) Nagpur. Provident Fund, Special Deposit Scheme and Senior Citizen Deposit Scheme. This involves 10.3.7 Achievements appraisal, monitoring and evaluation of individual scheme,assessment of adequacy and 1) Enrolment of N.S.I. and Indian Economic Service effectiveness of internal controls in general, and into Employee Information System (EIS). soundness of financial systems and reliability of financial and accounting reports in particular. 2) Recovery of outstanding Penal Interest from Identification and monitoring of risk factors Banks (including those contained in the Outcome Budget). During the year 2019-20, Audits of 34 Audit of the banks handling PPF-1968 & SCSS- units were conducted up-to 26.11.2019 and 8 2004 scheme is conducted by Office of CCA more units will be audited upto 31.03.2020. (Finance) to check whether all banks are 99Annual Report 2019-2020 depositing the collections pertaining to PPF & sector banks and excluding holidays for public SCSS Schemes in CAS, Nagpur within sector banks), the penalty payable by accredited prescribed time limit. If banks are not following banks on such delayed remittances shall be the the time limit, penalty is levied on them, "In case applicable rate of interest payable to the depositor of delays beyond the permissible period (i.e. plus 0.5% in case of delays upto 30 days and within T+1 days including holidays for private plus 1% in case of delays beyond 30 days." Details of Delayed Penal Interest of all the Banks regarding PPF and SCSS (as on 27/11/2019) (Amount in Rs.) PPF SCSS Total Outstanding as on 31/03/2018 10501153.64 24553155.09 35054308.73 Levied during 2018-19 42937069 59990754 102927823 Recovered during 2018-19 -302892.17 66201320 65898427.83 Contested and dropped during 2018-19 1032122 536724 1568846 Total outstanding as on 31/03/2019 52708992.81 17805865.09 70514857.9 Levied during 2019-20 (upto 27/11/2019) 264181 52839248 53103429 outstanding as on 27/11/2019 52973173.81 70645113.09 123618286.9 Recovered during 2019-20 (upto 27/11/2019) 25829.19 319173 345002.19 Contested and dropped during 2019-20 (upto 0 0 0 27/11/2019) Net outstanding as on 27/11/2019 52947344.62 70325940.09 123273284.7 3) Authorization of bank branches for participation remarkably changed the procurement process in Small Saving Schemes for good. Now, the procurements are more streamlined, efficient and transparent. This All branches of Nationalised Public Sector Bank considerably reduced the hurdles in the and ICICI, HDFC and Axis Banks have been procurement process, providing the purchasing authorised for handling Small Saving Schemes department with more choices and better of Ministry of Finance. recordkeeping as the bills are in digital format. 4) During 2019-20 TD & C, SPREAD & TI program, 7) The entire pension cases of this department are an amount of Rs. 51.32 Crore was recovered in being processed through the "Bhavishya Portal" the financial year and efforts are being made to resulting which the fast processing of the pension recover the balance amount from ICICI Bank for related work. The check points in the "Bhavishya the scheme closed in the year 2010. Portal" ensure the procedural accuracy of the pension cases. Pension cases of Pre-2016 are 5) All of the Pay and Accounts offices of the Ministry being revised through electronically on the E- have implemented Public Financial Management portal eppo.nic.in/revision. System. All payments are being made through PFMS. Use of cheques as the mode of payment 8) All work related to feeding the budget, is considerably eliminated. E-payments are made supplementary, re-appropriation and surrender to concerned parties and now maximum orders for each grant along with mapping of payments are being made electronically. The heads to each scheme had been successfully implementation of PFMS coupled with extensive done in 2018-19. training to the concerned officials and peer to peer knowledge sharing has resulted in less 11. Central Pension Accounting adaptation time, more organisational efficiency, Office less response time in payments, improved record keeping/tracking through digital logs and more 11.1 The Central Pension Accounting Office (CPAO) transparency. was established w.e.f. 1st Jan, 1990 for Payment and 6) This Department has moved to Government e- Accounting of Central (Civil) Pensioners and Pension to Market Place for nearly all of the procurements. Freedom Fighters etc. CPAO is a subordinate office under Officials were provided training on GeM and the the Office of the Controller General of Accounts, procurements are being made through GeM. This Ministry of Finance, Department of Expenditure. It 100Department of Expenditure II has been entrusted with the responsibility of administering Pay & Accounts Offices to avoid paper based the scheme of payment of pension to Central Government allotment of PPO numbers. This has resulted in (Civil) Pensioners through authorized Banks. Its core less paperwork & the process has been faster functions are: than earlier. It has also resulted in saving time & • Issue of Special Seal Authorities(SSAs) postage cost. authorizing payment of pension in fresh as well 3. Grievance Mechanism- A fully functional as revision of pension cases to the Grievance Redressal Mechanism (GRM) is in CPPCs(Central Pension Processing Centers) of place where a pensioner can lodge grievance pension disbursing Banks; through telephone on Toll Free No, website, e- mail, letters or personal visit. The queries and • Preparation of Budget for the Pension Grant and grievances of pensioners are attended on highest accounting thereof; priority by qualified personnel. In the financial year • Audit of CPPCs of pension disbursing Banks; 2019-20 (as on 30th Nov, 2019); total 45,202 grievances received & settled. • Maintenance of Data Bank of Central Civil Projected or estimated for the remaining Pensioners containing all details indicated in the period is 23,000 (Approx.). PPOs and Revision Authorities; 4. Facility to download Special Seal Authority (PPO) • Handle the grievances of Central Civil Pensioners from CPAO’s website by using login and password provided by CPAO has been given to • As an interim arrangement, payment of pensioners. Consequently, they need not provisional pension to the pensioners/family separately approach CPAO to provide copies of pensioners covered under New Pension their SSAs issued to the banks. This facility Scheme as per orders of Ministry of Finance. ensures digital presence and availability of records for pensioners. 11.2 Achievements: CPAO issues SSAs to the 5. All Banks have confirmed payment of revision CPPCs of Banks in fresh and revision of pension cases. of pension & arrears of Pension for 7th CPC for In the financial year 2019-20 (as on 30th Nov, 2019), about 9.10 Lakhs pensioners. CPAO is also 38,535 and 83,858 authorities were issued in fresh and compiling the information separately based upon revision of pension cases respectively. the e-scrolls received from banks. Projection or estimate for the remaining 6. CPAO conducted internal audit of 19 units in the period:- financial year 2019-20(as on 30th Nov, 2019). 247 pending internal audit paras have been (i) Fresh Pension Case- 20,000 (Approx.) settled during the financial year and 343 fresh (ii) Revision of pension case- 42,000 (Approx.) audit paras have been raised during the same financial year. 11.3 Significant developments/policy decisions Projected or estimated for the remaining taken during the year for the development of a period is 5. particular sector, including initiatives for improving delivery of public services and for ensuring "inclusive 11.4 e-Governance Initiatives of CPAO growth" CPAO is a fully computerized office. A wide range 1. Electronic- Pension Payment Order (e-PPO) of software's/packages have been developed/ Project- Paperless movement of digitally signed implemented in this office for streamlining pension e-Special Seal Authority (e-SSA) from Central authorization, accounting, Grievance Redressal etc. Pension Accounting Office (CPAO) to 39 Central which include:- Pension Processing Centres (CPPCs) of 24 Authorized Banks for pension is in operation and (i) Pension Authorization Retrieval & all the CPPCs are getting digitally signed Special Accounting System (PARAS):- All the pension Seal Authority (SSA) in fresh as well as the processing activities from receipt to dispatch are revision pension cases directly into their SFTP managed through PARAS. The web interface of servers. PARAS provides the related information to 2. Online Allotment of 12 digits Pension pensioners; PAOs/Ministries & Banks. About 13 Payment Orders (PPOs) number: With effect lakhs Central Civil pension cases have been from 1st Jan, 2016, Central Pension Accounting processed by CPAO through this software Office (CPAO) has started facility of online thereby creating digital database of these allotment of PPO numbers on CPAO website to pensioners. Various MIS reports are also 101Annual Report 2019-2020 generated by this software for the purpose of to banks from CPAO, authorization of monitoring. payment of pension with details like PPO& SSA No. and date sent from CPAO to bank. (ii) Web Responsive Pensioners' Service (WRPS):- Digital India campaign of Government c) Download Facility of Pension/Revision of India emphasizes that Government services Orders Sent to Banks: Pensioners can should be made available to the citizens download the Pension/Revision Orders sent electronically by improving online infrastructure to Banks from CPAO. and by increasing internet connectivity or by d) Pension Processing Status Tracking: making the country digitally empowered in the Both retired and retiring pensioners can field of technology. Under Digital India campaign, track status of their pension cases both in Central Pension Accounting Office (CPAO), M/o fresh as well as revision cases like date of Finance took two important steps towards receipt of their cases in CPAO and date sent empowerment of Central Civil Pensioners and from CPAO to bank. other stakeholders. The then Hon'ble Union Minister for Finance & Corporate Affairs, Shri e) Monthly Details of Pension Payment: Arun Jaitley launched "Web Responsive Pensioners can view the details of monthly Pensioners' Service of CPAO on 14th Sep, 2016 payments of pension, which are credited to and electronic-Pension Payment Order (e-PPO) their accounts by the bank, i.e. their basic on 1st March, 2018. This is a milestone for CPAO pension, dearness relief, medical allowance, towards its commitment to efficiently & effectively arrear payments, etc. This information is serve the central civil pensioners. being made available from the monthly scrolls received from the banks. Previous WRPS provides various services including six months transactions payment details are Pension & Payment information, online Pension made available. Process Tracking & online Grievance Redressal and Tracking for the pensioners. Under Web f) Grievance Redressal: Apart from Responsive Pensioners' Service (WRPS), computers, Pensioners can now lodge their facilities for pensioners' grievance redressal and grievances from their mobile devices and uploading of list of retiring employees by view/track the status of their grievances. Ministries/Departments have been provided. It Besides lodging their grievances online on is an important Digital India initiative for improving CPAO website, facility to lodge grievance by transparency, accountability and responsiveness letter, fax, email, Toll free Number and in pension processing and disbursements. This personal visits and tracking the status is facility ensures digital presence and availability already provided. After receiving the of records for pensioner. An instruction video on grievances from pensioners; CPAO Web Responsive Pensioners Service (WRPS) forwards the same online to the banks and has been prepared and uploaded on CPAO field offices for redressal and status is Website to assist the pensioners. SMS on updated in its website for the information of revision of the pension is being sent to the pensioners. pensioners along with a link to download the revision authority. g) SMS Facility: Pensioners are now provided SMS facility for pension process status at  web link https://youtu.be/2yXIPZT8OqY CPAO and at the stage of grievance registration & disposal. Pensioners can now avail the following services by registering on CPAO website using their PPO h) Links to Jeevan Pramaan, Bhavishya and number and date of birth & date of retirement/ CPENGRAMS Portals: To facilitate the date of death: pensioners for submission of Digital Life Certificate (DLC) in the month of November, a) Pensioner Profile: Pensioners can view a link to Jeevan Pramaan Portal has been their basic details and also bank and PAO provided on CPAO website. For those details. They can update/provide their Government servants who are going to retire contact details like mobile number, email, soon, a link has been established with and Aadhaar number. Bhavishya Portal of DP&PW to enable them b) Digital Record of Pension & Revision to track the status of their pension cases Orders: Pensioners can view list of all even before it reaches CPAO. A link to Pension Payments & Revision Orders sent CPENGRAMS (Central Pension Grievance 102Department of Expenditure II Redress and Monitoring System) has also created to provide better services to the been provided so that if pensioners desire, pensioners/family pensioners and to lodge they can lodge and track their grievances in their grievances. This is over and above the CPENGRAM. latest modes available to the pensioners to contact and communicate with CPAO. i) Dashboards: For the purpose of monitoring, Various instructive videos have been made a dashboard facility with MIS reports has for the better use of the WRPS facility, e- been provided to following: Revision Utility for pensioners and other • Pensioners: In the pensioners' stakeholders. dashboard, facilities to view personal Twitter @ CPAO_Social and pension details, last six payments Facebook @ cpaosocial transactions, view and download of YouTube @ CPAO ONLINE Delhi SSA, registration and tracking of grievances have been provided. All these initiatives aim at establishing seamless processing and accounting of pension • Banks: In the banks dashboard, disbursement to enhance efficiency and detailed information on pensioners effectiveness of the pension delivery mechanism. grievances forwarded to the banks and their settlement status has been (A) e-PPO/e-revision:- This system has been provided to the heads of CPPCs and developed for sending online digitally signed Government Accounting Divisions/ authorities from CPAO to CPPCs of banks Government Business Units. for arranging payment to the pensioners. At present, under this project, digitally signed • Ministries/Departments: Dashboards revision authorities are being sent to CPPCs have been created for PAOs, Chief from CPAO. Controller of Accounts & Joint Secretaries (Administration) to track (B) Grievances Redressal Management the status of Grievances pertaining to Software:- NIC, CPAO has developed a their Ministries/Departments and take software for Grievance handling where timely action to dispose of the grievances received from pensioners are Grievances. Further, Dashboards are registered and processed. also provided on details of uploading (C) e-scroll software:- This software has been of quarterly lists of retiring government developed and introduced recently for employees so that they may keep processing of payment and receipt scrolls tracking of progress on providing these from CPPCs and 'put through statement' lists and pendency in processing of from Reserve Bank of India for speedy such cases. The status of list of retiring accounting and reconciliation at CPAO. employees is also provided in the (D) Database Management Software:- Dashboards for Financial Advisors. Software for comparison of bank's database j. Social Media Presence of CPAO - Official with CPAO's database of pensioners has Social Media Accounts of Central Pension been developed and exception reports are Accounting Office (CPAO) on platforms generated by it to clean up the database and Facebook, Twitter and YouTube have been establish a completely matching database. 103Annual Report 2019-2020 104Department of Expenditure II 105Annual Report 2019-2020 106 ERUTIDNEPXE FO TNEMTRAPED FO TRAHC LANOITASINAGRO )erutidnepxE( yraterceS nahtanamoS .V.T .rD yraterceS tnioJ yraterceS lanoitiddA yraterceS lanoitiddA yraterceS lanoitiddA - ecnaniF cilbuP( *)lennosreP( - ecnaniF cilbuP( )erutidnepxE( )lartneC G einnA .sM *)etatS dasarP yajnaS irhS wehtaM najnaR veejaR irhS tnacaV yraterceS lanoitiddA rotceriD fo lareneG rellortnoC rosivdA feihC *resivdA laicnaniF & )MFIN( stnuoccA )tsoC( purawS areeM .sM lawragA aneeM .sM yoR amoS .sM ihteS anurA .sM namruB .CCA yb leveL SA ot dedargpu yliraropmet neeb evah AF&SJ dna )etatS-FP(SJ ,)sreP(SJ fo stsop ehT :etoN*Department of Revenue III Chapter - III Department of Revenue 1. Organisation and Functions jurisdiction of the Union); 1.1 The Department of Revenue functions under the xvi. Conservation of Foreign Exchange and overall direction and control of the Secretary (Revenue). Prevention of Smuggling Activities Act, 1974; It exercises control in respect of matters relating to all xvii. Prevention of Money Laundering Act, 2002; and the Direct and Indirect Union Taxes through two statutory xviii. Foreign Exchange Management Act, 1999; Boards namely, the Central Board of Direct Taxes (CBDT) xix. Union Territory Goods & Services Tax Act, 2017; and the Central Board of Indirect Taxes and Customs (CBIC). Each Board is headed by a Chairman who is xx. Goods & Services Tax (compensation to States) also ex-officio Special Secretary to the Government of Act, 2017; India. Matters relating to the levy and collection of all xxi. Central Goods & Services Tax Act, 2017; Direct taxes are looked after by the CBDT whereas those xxii. State Goods & Services Tax Act, 2017; relating to levy and collection of Goods and Service Taxes xxiii. Integrated Goods & Services Tax Act, 2017 (GST), Customs and Central Excise duties, Service Tax and other Indirect taxes fall within the purview of the CBIC. 1.3 The Department looks after the matters relating to The two Boards were constituted under the Central Board the above-mentioned Acts through the following attached/ of Revenue Act, 1963. Each Board has a sanctioned subordinate offices: strength of 6 (six) members. i. Commissionerates/Directorates under Central 1. 2 The Department of Revenue administers the Board of Indirect Taxes and Customs; following Acts: ii. Commissionerates/Directorates under Central Board of Direct Taxes; i. Income Tax Act, 1961; iii. Central Economic Intelligence Bureau; ii. Black Money (Undisclosed Foreign Income & Assets) Imposition of Tax Act, 2015; iv. Directorate of Enforcement; iii. Benami Transactions (Prohibition) Act, 1988; v. Central Bureau of Narcotics; iv. Chapter-VII of Finance (No.2) Act, 2004 (Relating vi. Chief Controller of Factories; to Levy of Securities Transactions Tax); vii. Appellate Tribunal under SAFEMA; v. Chapter VII of Finance Act 2005 (Relating to viii. Income Tax Settlement Commission; Banking Cash Transaction Tax); ix. Customs and Central Excise Settlement vi. Chapter V of Finance Act, 1994 (relating to Commission; Service Tax); x. Customs, Excise and Service Tax Appellate vii. Central Excise Act, 1944 and related matters; Tribunal; viii. Customs Act, 1962 and related matters; xi. Authority for Advance Rulings (for Income Tax and Central Excise, Customs & Service Tax); ix. Central Sales Tax Act, 1956; xii. National Committee for Promotion of Social and x. Custom Tariff Act, 1975; Economic Welfare; xi. Central Excise Tariff Act 1985; xiii. Competent Authorities appointed under xii. Narcotic Drugs and Psychotropic Substances Smugglers and Foreign Exchange Manipulators Act, 1985; (Forfeiture of Property) Act, 1976 & Narcotic xiii. Prevention of Illicit Traffic in Narcotic Drugs and Drugs and Psychotropic Substances Act, 1985; Psychotropic Substances Act, 1988; xiv. Financial Intelligence Unit, India (FIU-IND); xiv. Smugglers and Foreign Exchange Manipulators xv. Adjudicating Authority under Prevention of Money (Forfeiture of Property) Act, 1976; Laundering Act; xv. Indian Stamp Act, 1899 (to the extent falling within xvi. Revision Application Unit; 107Annual Report 2019-2020 1.4 A comparison of the collection of Direct and Indirect taxes for the period 2018-19 and 2019-20 is as follows: (` in crore) Sl. Nature of Taxes Amount collected No. 2018-19 2019-20* %age of growth (Provisional) over last year 1. Corporate Income Tax 663572 369036 ** 2. Personal Income Tax 461652 314676 ** (excluding STT & WT) 3. Other Taxes (STT & WT) 12494 8953 ** 4. GST 5,81,563 4,44,009 ** (CGST, IGST & Comp. Cess) 5. Non-GST (Customs, Central Excise & 3,55,816 2,60,636 ** Service [Tax Arrears]) 6. Total 9,37,379 7,04,645 ** (GST & Non-GST) * Figures of 2019-20 are provisional and upto 31.12.2019 ** In the absence of full year Tax Collection for F.Y. 2019-20, percentage growth cannot be calculated. 1.5 The details of representation of SCs, STs and b. Central Economic Intelligence Bureau (CEIB) OBCs are at Annexure-I. c. Competent Authorities appointed under SAFEMA 1.6 The details of representation of persons with and NDPS disabilities are at Annexure-II. d. Chief Controller of Factories 1.7 The details of ATNs in respect of audit e. Central Bureau of Narcotics observations are at Annexure-III. f. Customs, Excise and Service Tax Appellate 1.8 An Organisation Chart of Department of Revenue Tribunal (CESTAT) is given at Annexure-IV. g. Appellate Tribunal under SAFEMA 2. Revenue Headquarters Administration h. Customs and Central Excise Settlement 2.1 Administration Commission (CCESC) The Department of Revenue looks after matters i. Income Tax Settlement Commission (ITSC) relating to all administration work pertaining to the j. Authority for Advance Ruling for Income Tax and Department, coordination between the two Boards (CBIC Central Excise, Customs & Service Tax and CBDT), the administration of the Indian Stamp Act k. National Committee for Promotion of Social and 1899 (to the extent falling within the jurisdiction of the Economic Welfare Union), the Central Sales Tax Act 1956, Goods and Services Tax (GST), the Narcotic Drugs and Psychotropic l. Financial Intelligence Unit, India (FIU-IND) Substances Act 1985 (NDPS), the Smugglers and m. Adjudicating Authority under Prevention of Money Foreign Exchange Manipulators (Forfeiture of Property) Laundering Act Act 1976 (SAFEMA), the Foreign Exchange Management n. National Institute of Public Finance and Policy Act 1999 (FEMA), the Conservation of Foreign Exchange (NIPFP) and Prevention of Smuggling Activities Act, 1974 (COFEPOSA), the Prevention of Money Laundering Act, The following items of works are also undertaken 2002 (PMLA) and matters relating to the following by the Headquarters: attached/ subordinate offices of the Department: Appointment of – a. Enforcement Directorate  Chairman and Members of CBIC and CBDT 108Department of Revenue III  Chairman, Vice Presidents and Members of 2.2.4 Financial Action Task Force (FATF) CESTAT 2.2.4.1 The Financial Action Task Force (FATF) is an  Chairman, Vice Chairman and Members of inter-governmental body which sets standards, and CCESC and ITSC develops and promotes policies to combat money  Chairman, Vice-Chairman and Members of AARs laundering and terrorist financing. for Customs / Central Excise and Income Tax 2.2.4.2 The forty recommendations of FATF provide  Director General of CEIB a complete set of counter-measures against money  Director of Enforcement laundering, counter financing of terrorism and its  Competent Authorities (SAFEMA and NDPS) proliferation covering the criminal justice system and law  Director (FIU-IND) enforcement, the financial system and its regulation, and  Chairperson and Member of Adjudicating international co-operation. These Recommendations Authority set up under PMLA have been recognized, endorsed, or adopted by many  Chairman and Members of “Appellate Tribunal” international bodies as the international standards for established under SAFEMA, 1976. combating money laundering and terrorist financing. India  Appointment of CVO, CBDT/ CBIC/ ED became the member of Financial Action Task Force (FATF) in June 2010. 2.2 Economic Security (ES) 2.2.5 Adjudicating Authority under Prevention of 2.2.1 Economic Security Cell is dealing with the Money Laundering Act, 2002 administration and implementation of the Prevention of Money Laundering Act, 2002. Based on PMLA, Economic 2.2.5.1 The Prevention of Money Laundering Act Security Cell is also looking after framing / amendment (PMLA), 2002 was enacted by the Parliament to prevent of PMLA Rules on matters relating to Know Your money laundering and connected activities, confiscation Customer (KYC norms), setting up of special Courts of proceeds of crime and setting up of agencies and under PMLA, Section 66 of PMLA – authorities to whom mechanism for coordinating measures for combating information to be disseminated etc. from time to time. money laundering. The ES Cell handles all issues related to Financial Action Task Force (FATF). 2.2.5.2 The Director, Directorate of Enforcement has been designated as the Director for exercising powers 2.2.2 Prevention of Money Laundering Act (PMLA) was under the PMLA, 2002 and is authorized to provisionally enacted on 17th January, 2003 and brought into force on attach the property allegedly involved in money 1st July 2005. The object of this Act is to prevent money laundering. The Adjudicating Authority is empowered to laundering and to provide for confiscation of property derived from, or involved in, money – laundering and for confirm/ retain the provisional Attachment after hearing matters connected therewith or incidental thereto. Two the aggrieved parties to ensure that property is not main objectives of the Act are: disposed of during the pendency of trial for scheduled offences of money laundering or proceeds of crime · Criminalize money laundering and provide for money laundered. attachment, seizure and confiscation of property involved in money laundering [Implemented by Enforcement 2.2.5.3 The Adjudicating Authority consists of a Directorate]; and chairperson and two Members. The post of Chairperson · Prescribe obligations on banks, financial & Member are tenure post after retirement from erstwhile Institutions and intermediaries relating to KYC, record job. The Adjudicating Authority received 174 Provisional keeping and furnishing reports [Implemented by Financial Attachments and 174 Original Complaints during the year. Intelligence Unit (FIU-IND)]. In addition, 99 Original Applications for retention of seized 2.2.3 PMLA was amended in 2005, 2009, 2012, 2015, documents from Directorate of Enforcement were 2016, 2018 and 2019 to overcome the deficiencies and to received during the year. 4 Miscellaneous Applications meet the international standards on Anti-Money Laundering were received during the year. Final orders in Original as prescribed by Financial Action Task Force (FATF). Complaint and Original Application have been 109Annual Report 2019-2020 pronounced in 300 cases except 76 cases where the passed by the Commissioner of Central Excise (Appeals). Hon’ble courts granted stay in respect of Provisional 2.3.1.2 On the Service Tax side the two provisos inserted attachment orders/ Original applications furnished by in sub-section (1) of Section 86 of the Finance Act Directorate of Enforcement. 1994 vide Section 117 of the Finance Act 2015 (with effect 2.2.5.4 The staff posted in the Authority is on deputation from 14.5.2015) stipulate that where an order, relating to basis and all the posts are ex cadre. No Appointment a service which is exported, has been passed under was made during the previous calendar year either by section 85 and the matter relating to grant of rebate of Direct recruitment or promotion. service tax as input service, or rebate of duty paid on inputs, used in providing such service, such order shall 2.3 Revision Application Unit be dealt with in accordance with the provisions of section 2.3.1 Formation, function and working of the 35EE of the Central Excise Act 1944. All appeals in such Revision Application Unit matters pending before the Appellate Tribunal shall also 2.3.1.1 The mandate of the Revision Application Unit is be transferred and dealt with in accordance with the to dispense justice. Under the scheme operative till provisions of Section 35 EE of the Central Excise Act 10.10.1982, the appeal against the orders of the 1944. Commissioners (then called Collectors), of Customs & 2.3.1.3 The Revision Applications filed either by parties Central Excise lay with the Central Board of Indirect Taxes or department against the orders of Commissioner & Customs. As far as the appeals against the orders (Appeals) are considered and decided by Additional passed by the authorities below the rank of the Collectors Secretary (RA). The Central Government is the highest (now called Commissioners), were concerned, the same authority in such revision and review matters and orders were to be filed before the appellate Collectors of thus passed by the Additional Secretary (RA) are final. Customs & Central Excise. Erstwhile Section 131 of the Petitioners, aggrieved with the revision order passed by Customs Act, 1962 and Section 36 of the Central Excise Additional Secretary (RA) may take re-course to writ & Salt Act, 1944, empowered the Central Government to petitions under Article 226 of Constitution of India. revise the orders passed by the CBIC and appellate 2.3.1.4 The Revision Application Unit is directly Collectors in exercise of their appellate jurisdiction. At responsible to Secretary (Revenue). the Government level, while Secretary (Revenue) or Special Secretary disposed of the Revision Applications 2.3.2 Jurisdiction against orders passed by the CBIC, the Addl. Secretary 2.3.2.1 Customs jurisdiction - Section 129 DD read or Joint Secretary disposed of the applications against with proviso to Section 129 A (1) of Customs Act, 1962 the orders passed by the appellate Collectors of Customs empowered the Central Government to revise or review & Central Excise and executive Collectors of Customs the appellate orders passed by Commissioner of Customs and Central Excise. The Finance (No. 2) Act, 1980 sought (Appeals) if such order related to: to introduce a new system by establishing appellate (a) Any goods imported or exported as baggage; Tribunal. The appellate jurisdiction of CBIC and Revisionary jurisdiction of the Central Government were (b) Any goods loaded in a conveyance for abolished with effect from 11.10.1982, except a few importation into India, but which are not unloaded residual transitional provisions and the Customs, Excise at their place of destination in India, or so much and Gold Appellate Tribunal (now CESTAT) was set up of the quantity of such goods as has not been with effect from 11.10.1982. The Finance Act, 1984, unloaded at any such destination if goods revived the Revisionary powers of the Central unloaded at such destination are short of the Government in specified type of cases. On the Customs quantity required to be unloaded at the side, Section 129 DD read with proviso to Section 129(A) destination; of the Act, empowered Central Government to revise the (c) Payment of drawback as provided in Chapter X appellate orders passed by the Commissioner of Customs and the rules made there under. (Appeals). On Central Excise side, Section 35EE read 2.3.2.2 Central Excise jurisdiction - Section 35 EE read with first proviso to sub-section (ii) of Section 35B of the with proviso to Section 35 B (1) of Central Excise Act, Central Excise Act, 1944 gave review and revisionary 1944 empowered the Central Government to revise or powers to Central Government to revise the orders review the appellate orders passed by Commissioner of 110Department of Revenue III Central Excise (Appeals) if such order related to: for filing counter reply. Thereafter, personal hearing is fixed / held in cases, in the order of seniority. Out of turn (a) A case of loss of goods, where the loss occurs in transit from a factory to a warehouse or to hearings are allowed only in deserving cases involving another factory, or from one warehouse to substantial revenue, recurring issue resulting into another or during the course of processing of the multiplicity of cases, interest liability, the issue is no longer goods in a warehouse or in storage, whether in res integra, passenger is going abroad and in cases of a factory or in a warehouse; financial hardship. After completion of hearing, final revision order is issued by Additional Secretary (RA). (b) A rebate of duty of excise on goods exported to any country or territory outside India or on 2.3.4 Latest Developments excisable materials used in the manufacture of The Revision Application unit was earlier headed goods which are exported to any country or by a Commissioner and ex-officio Joint Secretary. The territory outside India; working of this set-up was stayed by an order of Punjab (c) Goods exported outside India (except to Nepal & Haryana High Court, upheld by the Apex Court also, or Bhutan) without payment of duty. whereby it was directed that an officer of a higher rank 2.3.2.3 Service Tax jurisdiction – The provisions of than the Joint Secretary be posted here as the orders of Section 35EE of the Central Excise Act 1944, which dealt Commissioner (Appeals) are being revised and an officer with revision by the Central Government, have been made of the same rank cannot revise these orders. applicable to Chapter-V of the Finance Act, 1944 dealing Subsequently, an officer of the rank of Principal with Service Tax. In the Finance Act 2015, Section 86 Commissioner and ex-officio Additional Secretary was has been amended to prescribe that the remedy against posted in Aug, 2017 and an additional office of Additional the order passed by Commissioner (Appeals) in a matter Secretary (R.A.) was created at Mumbai to reduce the involving rebate of Service Tax, shall lie in terms of Section pending cases which got piled up during the period of 35EE of the Central Excise Act 1944. In such cases stay. The office at Delhi caters to Northern and Eastern against the order passed by the Commissioner (Appeals), regions while the Mumbai Unit takes up the cases revision application is required to be filed before AS (RA). pertaining to Southern and Western regions. 2.3.2.4 IATT jurisdiction - Rule 13 of Inland Air Travel 2.4 Narcotics Control (NC) Tax (IATT) Rules, 1989 empowered the Central Government to revise or review the appellate orders The Narcotics Control Division administers the Narcotic passed by Commissioner of Customs & Central Excise Drugs and Psychotropic Substances Act,1985 (61 of (Appeals) if such order related to payment of IATT. 1985), which prohibits, except for medical and scientific purposes, the manufacture, production, possession, sale, 2.3.2.5 FTT jurisdiction - Rule 15 of Foreign Travel Tax purchase, transport, warehouse, use, consumption, (FTT) Rules, 1979 empowered the Central Government import inter-state, export inter-state, import into India, to revise or review the appellate orders passed by Commissioner of Customs & Central Excise (Appeals) if export from India or transshipment of narcotic drugs and such order related to Payment of Foreign Travel Tax. psychotropic substances. The policy of the Governments has thus been to promote use of narcotic Drugs and 2.3.3 Process psychotropic substances for medical and scientific The Revision Application Unit receives the purposes while preventing their diversion from licit revision application in prescribed form EA-8/CA-8 filed sources, and prohibiting illicit traffic and abuse. The by department as well as parties. The stipulated time for Narcotic Drugs and Psychotropic Substances Act divides filing such applications is 90 days from the date of the powers and responsibility of regulation of licit activities. communication of order-in-appeal. The delay up to 90 Section 9 of the Act has listed various activities which days can be condoned by Central Government in the Central Government can, by rules, regulate while deserving cases. The Revision Application Unit on receipt Section 10 lists various activities which the State of revision applications issues the acknowledgement to Governments can, by rules, regulate. Accordingly, the applicant along with deficiency memo if any deficiency Narcotic Drugs and Psychotropic Substances Rules, 1985 is found. Simultaneously, a check-list in prescribed format have been framed by the Central Government, which is also prepared. Notice is issued to respondent party 111Annual Report 2019-2020 regulate cultivation of opium, manufacture, import/export investigation and prosecution of drug offenders of narcotic drugs and psychotropic substances. Further tracing and freezing of illegally acquired to prevent diversion of precursor chemicals, of wide properties of drug traffickers derived from illicit industrial use, for illicit manufacturing of, narcotic Drugs drug trafficking for forfeiture and confiscation. and psychotropic Substances, the Narcotic Drugs and iv. Issue of licenses for manufacture of synthetic Psychotropic Substances (Regulations of Controlled Narcotic Drugs. Substances) Order, 2013 has been framed under Section v. Performing the functions of Competent National 9A of the NDPS Act. Authority (CNA) for issue of Export Authorizations 2.4.1 Functions/ Working of the Central Bureau of and Import Certificate for Export/ Import of Narcotics Narcotic Drugs & Psychotropic Substances and 2.4.1.1 Organizational set up issue of ‘No Objection Certificate’ for import/ export of precursor chemicals under the 1961, The Narcotics Commissioner heads the Central Bureau 1971 and 1988 UN Conventions dealing with of Narcotics (CBN) with headquarters at Gwalior. The narcotic drugs, psychotropic substances and Narcotics Commissioner exercises control and chemicals/substances used for manufacture of supervision over opium poppy cultivation, which is these drugs. presently undertaken in select notified areas of the three states of Madhya Pradesh, Uttar Pradesh & Rajasthan. vi. 1988 Convention requires CNA of the countries In addition to the work relating to licensing of opium poppy to take all possible measures to prevent diversion cultivation, measurement and test measurement of fields from international trade of precursor chemicals used in illicit manufacture of narcotic drugs and and procurement of opium, the CBN also undertakes psychotropic substances in close cooperation preventive checks and exercises vigil to prevent diversion with INCB and competent authorities of the of opium into illicit channels as well as enforcement of countries concerned. Narcotic Drugs & Psychotropic Substances Act, 1985. CBN has combined sanction strength of 1200 post. vii. Liaison with the International Narcotics Control Board, United Nations Drug Control Programme 2.4.1.2 Responsibilities and Duties as well as with the Competent Authorities of other The broad outline of the functions and foreign countries on issues related to international responsibilities of CBN are as under: trade in narcotic drugs, psychotropic substances i. Performing the function of the National Opium and precursor chemicals. Agency for India under Single Convention on viii. Co-ordination with other enforcement agencies Narcotic Drugs 1961 to exercise supervision over such as Narcotics Control Bureau, Directorate licit cultivation of opium poppy in the country in of Revenue Intelligence, Central Excise, terms of Section 5(2) of the NDPS Act. Customs, State Police, State Excise and various ii. Survey, detection and eradication of illicit other enforcement agencies. cultivation of opium poppy throughout the country. 2.4.1.3 Performance and Achievements: - iii. Enforcement of provisions of the NDPS Act 1985 The performance/achievement with respect to to suppress illicit traffic in Narcotic Drugs, issuance of NOCs issued by Central Bureau of Narcotics Psychotropic Substances and notified Precursor during the year 2019-20 for the export/import of Precursor Chemicals including search, seizure, arrest, Chemicals is as under: Number of NOC issued From 01.04.2019 to From 01.12.2019 to 31.03.2020 30.11.2019 (Projected) For export of Controlled Substance 1225 650 (precursors Chemicals) For import of Controlled Substance 618 300 (precursors Chemicals) No. of Pre-export Notifications 1184 650 (PEN) issued No. of Pre-export Notification 707 350 received Number of Stop Shipments of 4 NA Precursors Chemical 112Department of Revenue III 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 1184 PEN’s (01.04.2019 to 30.11.2019 issuance of Export authorization and Import Certificate to the competent authority of various importing countries, by Central Bureau of Narcotics during the current financial for verifying the legitimacy of the transactions. On the year from for the export/import of narcotic drugs / initiative, taken by the CBN, through online PEN system, psychotropic substances is as under – CBN has identified and stopped suspicious transactions Particular Psychotropic Substances Narcotic Drugs From 01.04.2019 to From From From 30.11.2019 01.12.2019 to 01.04.2019 to 01.12.2019 to 31.03.2020 30.11.2019 31.03.2020 (Projected) (Projected) No. of Export 3684 2000 213 90 Authorization Issued No. of Import 381 210 124 46 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 during issued for import of poppy issued during 01.04.2019 to 01.04.2019 to 30.11.2019 seeds during 01.04.2019 to 30.11.2019 30.11.2019 249 5 277 Projected figures for the period from December 2019 to March 2020 is as under: No. of Registration certificates No. of Manufacturing license Quota Allocation for import of Poppy seeds 25 20 240 As per Rule 67 E of NDPS Rule 1985, CBN P’ besides other MIS report for monitoring the issues allocation of narcotic drugs, during this year 2019, manufacture and consumption of psychotropic mainly allocation was issued for Codeine Phosphate to substances in the country. 100 companies for quantity of 35783 kgs, whereas 71 The Government of India has decided to develop companies were issued allocation for 1590kgs of a web based online application for registration of medicinal opium. manufacturers and dealers of narcotic drugs with the The Government of India has developed web- Central Bureau of Narcotics (CBN) and submission of based software for online registration of manufacturers data on manufacture, utilization, stock trade and and wholesalers of psychotropic substances, for both bulk consumption of Narcotic Drugs in the country. The drugs and preparations, with the Central Bureau of objective of the online application is to collect required Narcotics (CBN), under the guidance of the National data on manufacture and consumption of narcotic drugs Informatics Centre, New Delhi. The system has been for generation of Form “C” in respect of India for made functional to facilitate submission of data on submission to the International Narcotics Control Board manufacture, utilization, stock, import, export, sale (INCB), Vienna. This office has taken up the matter with purchase and consumption of psychotropic substances National Informatics Centre (NIC), New Delhi. However, in the country. development of web based online application for registration of manufacturers and dealers of narcotic The data collected through the system, will drugs with the Central Bureau of Narcotics (CBN) is still facilitate generation of periodical, statistical report on under process. psychotropic substances like form ’P’ form ‘A/P, form ‘B/ 113Annual Report 2019-2020 2.4.1.4 Enforcement of NDPS Act, 1985- tracing and freezing of illegally acquired property of drug traffickers, derived from illicit drug trafficking, for forfeiture The Central Bureau of Narcotics undertakes and confiscation. action to prevent the illicit trafficking of Narcotic Drugs and Psychotropic Substances. It also undertakes Details of disposal of drugs during the period investigations and prosecution of drug related offences, April, 2019 to November, 2019 is as follows: S. No. Narcotics Drugs/Psychotropic No. of Cases Quantity (in kg) 1 Opium 29 993.795 2 Opium Mix water - 42.040 3 Heroin 08 55.81 4 Morphine 01 1.000 5 Charas 01 3.600 6 Poppy straw/Poppy Husk 04 2092.460 During the calendar year 2019, several seizures, under NDPS Act, were affected by Central Bureau of Narcotics and details thereof are as follows: Seizure affected by CBN during the year 2018 & 2019 (up to 11.12.2019) Type of Drug/ Substance 2018 2019 (up to 11.12.2019) Opium Quantity (In kgs.) 19.585 150.06 Cases 2 6 42.040 Op. Sol. Morphine Quantity (In kgs.) 1.620 0.65 Cases 2 1 Heroin Quantity (In Kgs) 2.860 1.01 Cases 5 3 Ganja Quantity (In kgs) - 8.5 Cases - 1 Charas Quantity (In kgs.) 3.67 3.6 Cases 1 1 Poppy Straw/ Husk Quantity (In kgs.) 308.630 2896.6 Cases 12 16 Diazepam Quantity (In kgs.) 1400 TABS & 380 Inj 20475 Inj Cases - - Buprenorphine Quantity (In kgs.) - - No. of Inj 6050 81528 Cases Pentazocine Quantity (In kgs.) 3194 73904 Inj Cases Codeine Phosphate Quantity 10402 bottles 9746 bottles Cough Syrup Cases - - Alrazolam Tab Quantity 207715 1098307 tablets Cases - - 114Department of Revenue III Zolpidem Tartrate Quantity 300 tabs 30600 tabs Tablets Cases - - Clonazepam Quantity 3190 tabs 5000 tabs Cases - - Nitrazepam Quantity 22055 tabs 12350 tabs Cases - - Tramadol Quantity 42600 tabs & 89914 840006 tabs & caps 352496 Caps Tramadol Inj Quantity - 5903 Cases - - Tramadol Quantity 0.490 Kg Lorazepam Quantity 31260 tabs Chlordiazepoxide Quantity 7800 tabs Illicit Poppy Cultn Quantity 1896 Sqm 750 Sqm Cases 2 1 Number of persons convicted/ acquitted in CBN cases, decided by various Courts, during the financial year 2019-20 are as under- Financial year Total no. of Total no. of Total no. of Conviction rate persons who persons persons (%) were facing convicted acquitted prosecution 2019-20 630+2* 10 0 100% *foreigners Number of cases, decided by various Courts, during the financial year 2019-20 are as under- Financial year Total no. of Total no. of Total no. of Conviction rate cases decided cases in which cases in which (%) conviction was accused were obtained acquitted 2019-20 8 8 - 100% 2.4.1.5 Activities undertaken for Disability Sector, welfare of OBC employees. SCs, & STs and Other weaker Sections of the Society. 2.4.1.6 Allotment of General Pool office As per Ministry’s instructions, reservation for SC/ Accommodation (GPA) & General Pool Residential ST and Physically Handicapped are being maintained in Accommodation (GPRA): the Central Bureau of Narcotics. During the period, Sh. Ministry of Urban Development, Directorate of Vikash Joshi, Deputy Narcotics Commissioner, Kota was Estates, New Delhi was requested for General Pool Office appointed as a Liaison Officer to look after the interest, Accommodation and General Pool Residential representation and welfare of ST/ SC, Ex- Servicemen Accommodation. Thus, the officers and staff of CBN and Person with Disabilities categories. Deputy Narcotics posted in the cells have become eligible for allotment of Commissioner, Gwalior was appointed as a Liaison General Pool Residential Accommodation. Officer to look after the interest, representation and 115Annual Report 2019-2020 2.4.1.7 Gender Issues/ Empowerment of Women: raising awareness of the masses regarding the growing menace of drug abuse, an awareness A Complaint Committee has been set up in the Campaign was organized at Gwalior Railway Headquarters of Madhya Pradesh, Rajasthan, Uttar Station on 26th June, 2019. Pradesh Unit and Headquarters office, Gwalior to look after the complaints of the working women in respect of iii. Health Check-up camps: - On 27-6-2019, free any type of harassment of women at work place. Health Check-up camp by the doctors of Birla Institute of Medical Research Centre, & Ratan 2.4.1.8 During the crop year 2018-19, a quantity of 401 Jyoti Netralaya, Gwalior was organized at the Metric Tons of opium at 70 consistency was procured. Office premises. The health check-up covered The average yield per hectare (in kgs) at 70 consistency the following areas: on the basis of provisional results received from Madhya Pradesh, Rajasthan and Uttar Pradesh for the crop year  Blood Pressure; 2018-19 was 65.26, 68.27 & 49.93 respectively. The All  Sugar testing; India average yield during 2018-19 was 66.48 kg/hectare  Eyes check-up at 70 consistency. The figures are for crop year 2018-19 as the crop cycle for the cultivation of opium is October The Doctors advised the patients on proper diet to September next year. and other aspects of leading a healthy life. 2.4.1.9 Payment to cultivators through e-payment since iv. Poster painting & Quiz competition: - An open crop year 2012-13, a new procedure for payment has poster painting & quiz competition was held at been adopted. There was high risk in drawing big amount the office premises on 27-6-2019. The theme of from Banks carrying it to weighment centers, disbursing the competition was “NASHA EK ABHISHAP”. A it to cultivators/ Lambardars concerned and carrying it to large number of persons including young boys villages by cultivators from weighment centers in late and girls participated in the competition and evening. Banking infrastructure has been improved in placed their thoughts on the canvas. opium growing areas and it is developing day by day. 2.4.2 GOVERNMENT OPIUM AND ALKAOLIDS Considering all these factors cost of opium/commission WORKS (GOAW) is being paid through e-payment directly in Bank Accounts 2.4.2.1 Chief Controller of Factories (CCF) of cultivators during weighment operation. After receipt of computed challans from govt. Opium Factories, final The Government Opium & Alkaloid Works payment to cultivators is being done without waiting for (GOAW) is engaged in the processing of raw opium for Settlement Operation. export and manufacturing opiate alkaloids through its two Factories viz Govt. Opium & Alkaloid Works (GOAW) at 2.4.1.10 Other highlights of performance and Ghazipur (U.P.) and Neemuch (M.P.). The Products achievements during the year 2018-19. manufactured at GOAWs are mainly used by World Drug Day, 2019 by Central Bureau of pharmaceutical industry of India for Preparation of cough Narcotics: On the International day against drug abuse syrup, pain relievers and tablets for terminally ill cancer and trafficking, Central Bureau of Narcotics organized a and HIV patients. The GOAW are administered by a High- series of events from 26th June, 2019 to 28th June, 2019. Powered Body called the “Committee of Management” The following events were organized: constituted and notified by the Government of India in i. Motor Cycle Rally: - A Road show/ Motor Cycle 1970. The Additional Secretary (Revenue), Department Rally of around 100 volunteers was organized of Revenue, Ministry of Finance is the Chairman of the on 26th June, 2019. The staff members Committee of Management. An officer of the rank of distributed attractive stickers on drug abuse to Commissioner/Joint Secretary is the Chief Controller of the Taxi drivers, Auto-rickshaw drivers and Factories who heads the Organization and each of the General Public throughout the day with a view to two factories at Neemuch and Ghazipur are managed by raise awareness among general public. Stickers a General Manager of the rank of Additional were also pasted and attractive banners were Commissioner/Director. The Chief Controller of Factories displayed at prominent places of the city. office is located at New Delhi. Each of the factories comprises two units – the Opium Factory and Alkaloid ii. Awareness Campaign at public place: - For Works. The Opium Factories undertake the work of 116Department of Revenue III receipt of opium from the fields, its storage and Central Board of Excise and Customs, Central Bureau processing for exports and domestic consumption. The of Narcotics, Central Revenues Control Laboratory, apart Alkaloid Works are engaged in processing raw opium from personnel selected by the Union Public Services Commission directly. The security aspects of these into alkaloids of pharmacopeial grades to meet the factories are looked after by Central Industrial Security domestic demand of the pharmaceutical industry. The Force (CISF), a paramilitary force of the Ministry of Home GOAWs have employed a total work force of about 650 Affairs. The overall performance / achievements of people at its two opium and alkaloid plants. The work Government Opium and Alkaloid Factories (GOAF) for force comprises of officials and staff drawn from the the Financial Year 2019-20 are as follows: I. PERFORMANCE OF GOAF FOR THE FINANCIAL YEAR 2019-20 (Provisional) Sl. Particulars Unit Actual Production from Estimated Production No. April to December, 2019 from January to March, 2020 A PRODUCTION 1 Drying of opium for KG. NIL NIL Export at 90°C 2 a) Morphine Sulphate KG. 211.550 388.450 b) Codeine Phosphate (C.P.) KG. 13946.800 7517.200 c) Pure Thebaine KG. 735.100 436.900 d) Noscapine BP KG. 2009.00 3443.000 e) Pholcodine KG. 0 245.000 f) IMO Powder KG. 7400.000 4600.000 g) IMO Cake KG. 0.200 4999.800 h) Papavarine S.R. KG. 2082.450 221.550 Total (2) (a to h) Kg. 26385.100 21851.900 3 Codeine Phosphate Import for KG. 0.000 20000.00 Domestic Market Sl. Particulars Sales Estimated Sales from No. April to November 2019 December 2019 to March 2020 Quantity (in Amount Quantity Amount Kg.) (` in Crore) (in Kg.) (` in Crore) B SALES 1 Export of opium for at 1295.399 0.68 900.000 0.47 90°C 2 a) Codeine Sulphate 0 0 0 0 b) Morphine Sulphate 194.475 0.80 305.525 1.26 c) Codeine Phosphate 18341.402 83.82 9534.598 43.58 (Ind. & Imp) d) Dionine 0 0 0 0 e) Pure Thebaine 857.700 3.89 492.000 2.24 f) Noscapine BP 275.001 0.99 1623.999 5.81 g) Pholcodine 63.000 0.46 200.000 1.47 h) IMO Powder (Dom. 4938.060 5.24 7061.940 7.48 Sales+Export) i) IMO Cake (Domestic 2845.340 2.90 2154.660 2.20 Sales+Export) j) Papavarine S.R. 0 0 260.000 0.08 Total 2 (a to j) 27514.278 98.10 21.632 64.12 Grand Total (1+2) 28809.678 98.78 22532.722 64.59 C. (a) COUNTRY WISE EXPORT OF OPIUM AT 90°C (excluding IMO Powder & Cake) FOR THE FINANCIAL YEAR 2019-20 (UPTO November, 2019) (Quantity in Kgs) Unit USA France Japan Iran Total 1 Ghazipur NIL NIL NIL NIL NIL 2 Neemuch 403.609 891.790 NIL NIL 1295.399 Total 403.609 891.790 NIL NIL 1295.399 117Annual Report 2019-2020 (b) COUNTRY WISE EXPORT OF OPIUM AT 90°C (excluding IMO Powder & Cake) FOR THE FINANCIAL YEAR 2019-20 (FROM December 2019 TO MARCH, 2020) (Quantity in Kgs) Unit USA France Japan Iran Total 1 Ghazipur NIL NIL NIL NIL NIL 2 Neemuch NIL 900.000 NIL NIL 900.000 Total NIL 900.000 NIL NIL 900.000 D. (a) REVENUE RECEIPTS (ON REALISATION BASIS) FOR THE FINANCIAL YEAR 2019-20 (UPTO NOVEMBER, 2019) (` in crore) Opium Factory Alkaloid Works Total 1 Ghazipur 0.08 35.43 35.51 2 Neemuch 0.07 70.97 71.04 Total 0.15 106.40 106.55 (b) REVENUE RECEIPTS (ON REALISATION BASIS) FOR THE FINANCIAL YEAR 2019-20 (FROM DECEMBER, 2019 TO MARCH, 2020) (` in crore) Opium Factory Alkaloid Works Total 1 Ghazipur 0.05 14.17 14.22 2 Neemuch 1.18 36.00 37.18 Total 1.23 50.17 51.40 II. ACHIEVEMENT OF CCF ORGANISATION UP TO THE MONTH OF NOVEMBER 2019 WITH COMPARATIVE DATA OF PREVIOUS YEAR i.e. 2018 FOR THE SIMILAR PERIOD Provisional Sl. Actual Production % age increase No. Particulars Unit April to November over previous year 2018-19 2019-20 (1) (2) (3) (4) (5) (6) A. PRODUCTION 1 Drying of opium for KG. NIL NIL NIL Export at 90°C 2 Manufacture of Drugs: a) Morphine Sulphate KG. 299.000 211.550 -29.25% b) Codeine Phosphate KG. 8615.000 13946.8000 61.89% c) Pure Thebaine KG. 463.800 735.100 58.50% d) Noscapine BP KG. 330.770 2136.600 546.08% e) IMO Powder KG. 8000.000 7400.000 -7.50% f) IMO Cake KG. 3000.000 0.200 -99.99% g) Papavarine S.R. KG. 194.100 2082.450 972.87% Total (2) KG. 20902.6 26502.700 26.79% 3. Import of Codeine Phosphate i) For Domestic Market KG. 12500 0 -100% 118Department of Revenue III B. SALES Provisional Sl. 2018-19 2019-20 No Particulars April to November April to November . Qty. (` in Qty. (Kgs) (` in (Kgs.) Crore) Crore) (1) (2) (3) (4) (5) (6) 1 Export of opium on accrual basis 0 0 1295.399 0.68 2 Domestic Sale of Drugs: (on actual basis) a) Codeine Sulphate 0 0 0 0 b) Morphine Sulphate 280.000 1.05 194.475 0.80 c) Codeine Phosphate 16412.000 69.76 18341.402 83.82 (Indigenous & Imported) d) Dionine 0 0 0 0 e) Pure Thebaine 895.000 3.39 857.000 3.89 f) Noscapine BP 345.000 1.24 275.001 0.99 g) Papavarine S.R. 103.000 0.04 0 0 h) Pholcodine 20.00 0.11 63.000 0.46 i) IMO Powder (Domestic sale + 6388.000 6.77 4938.060 5.24 Export) j) IMO Cake (Domestic sale + Export) 3448.000 30.21 2845.340 2.90 Total (2) 27891.000 85.57 27514.278 98.10 Grand Total (1+2) 27891.000 85.57 28809.677 98.78 C. COMPARATIVE COUNTRY WISE EXPORT OF OPIUM AT 90°C (up to November of each financial year) (Qty. in Kgs. at 90ºC) Unit USA FRANCE HUNGARY JAPAN IRAN TOTAL 2018-19 Ghazipur -- -- -- -- -- -- Neemuch Total 2019-20 Ghazipur Neemuch 403.609 891.790 1295.399 Total 403.609 891.790 1295.399 D. COMPARATIVE REVENUE RECEIPTS ON REALISATION BASIS (up to November of each financial year) (` in Crores) (Provisional) Unit Opium Alkaloid Total Factories Works 2018-19 Ghazipur 0.09 27.70 27.79 Neemuch 0.07 65.47 65.54 Total 0.16 93.17 93.33 2019-20 Ghazipur 0.08 35.43 35.51 Neemuch 0.07 70.97 71.04 Total 0.15 106.40 106.55 119Annual Report 2019-2020 2.4.2.2 Grievances Redressal Machinery: Public Illicit financial flows i.e Pillar II of the Vienna Grievances in the CCF’s Organization are dealt with Declaration (Detecting and Blocking Financial promptly. The labour grievances are also dealt with Flows Linked to Illicit Traffic in Opiates) was expeditiously and the relations between the Management hosted by Government of India in New Delhi on & workers during this period was harmonious and cordial. 27-28 June 2019. The event was attended by 60 participants representing 15 countries and 6 2.4.2.3 Gender Budgeting/Empowerment of Women: international organizations. Equal opportunity / status is enjoyed by women in CCF organization. In case of gender bias / harassment v. Government of India, Ministry of Finance has reported if any, it is ensured that appropriate action is amended Regulation of Controlled Substances taken against the erring official. Internal Complaint Order, 2013 vide notification no G.S.R 779(E) Committee has already been formed at CCF office, New dated 14.10.2019 to include activities of B2B Delhi, GOAW, Neemuch & Ghazipur for the purpose of intermediaries under the said order. dealing the complaints received regarding sexual vi. Government of India, Ministry of Finance has harassment at workplace. issued notification no S.O. 779(E) dated 2.4.2.4 Activities Undertaken for Disability Sector & 30.10.2019 for delegating powers to Junior SCs/STs & Other Weaker Sections of Society: The Intelligence Officer of Narcotics Control Bureau CCF organization is strictly adhering to the prescribed under Section 36A, 42, 53(1) and Section 67 of rules and regulations for the welfare and development of the Narcotic Drugs and Psychotropic Substances disabled, SCs, STs and other weaker sections. With an Act, 1985. objective to initiate prompt action on grievances of such sections, a committee has been formed with members 2.5 STATE TAXES drawn from such sections. Roster registers for this purpose are also being maintained. There are two State Taxes Sections in the Department of Revenue: 2.4.2.5 Other Achievements: a) State Taxes-I i. Government of India has been contributing voluntarily an amount of US $1,00,000 to UNODC b) State Taxes-II for General purpose since 2005 and US$ 4000 State Taxes - I Section as annual contribution for Drug Advisory State Taxes -I Section of the Department of Programme of Colombo Plan Bureau. Revenue deals with legislative work relating to Central Government of India will also make the voluntary Acts having significant interface with the States like the contribution for this financial year 2019-20. Indian Stamp Act, 1899 and the Constitution (One ii. Government of India vide notification G.S.R Hundred and First Amendment) Act, 2016 for 525(E) dated the 25th July, 2019 has mandated implementation of Goods and Services Tax (GST) as well Directorate of Forensic Sciences in Rule 67B of as administrative and budgetary matters in respect to Narcotic Drugs and Psychotropic Substances Goods and Services Tax Network (GSTN)- Special Rules 1985 to procure, import and supply narcotic Purpose Vehicle incorporated for providing IT platform drug and psychotropic substances as samples for the GST. Apart from the above, Union Territories for Central and State forensic science Goods and Services Tax (UTGST) Act, 2017 and GST laboratories in the country. Settlement of Funds Rules, 2017 are other subject iii. Government of India, Ministry of Finance has matters of the Section. Brief description of the same is issued notification no S.O. 1582(E) dated as under: 11.04.2019 for delegating powers to the rank of 2.5.1 Goods and Services Tax (GST): Assistant Sub-Inspectors and above of Railway The introduction of Goods and Services Tax Protection Force under Section 42 & 67 of the (GST) regime in the country was a very significant step Narcotic Drugs and Psychotropic Substances in the field of indirect tax reforms in India. By Act, 1985 amalgamating a large number of Central and State taxes iv. A Paris Pact Expert Working Group Meeting on into a single tax, the aim was to mitigate cascading or 120Department of Revenue III double taxation in a major way and pave the way for a of GST Council, GSTN has been converted into a fully common national market. Before implementation of the owned Government company. GST regime in the country, the issue was deliberated in 2.5.5 Indian Stamp Act, 1899: detail by the Empowered Committee of State Finance The Indian Stamp Act, 1899 (2 of 1899) is a fiscal Ministers, Select Committee of Rajya Sabha and statute laying down the law relating to tax levied in the Parliamentary Standing Committee on Finance. After form of stamps on instruments recording transactions. detailed and prolonged deliberation, the Constitution (One Briefly, the scheme relating to stamp duties, provided for Hundred and First Amendment) Act, after ratification by in the Constitution is as follows: - 50% of the States, was assented to by the President on 8th September, 2016. Thereafter, Central Goods and i. Under Article 246, stamp duties on documents Services Tax (CGST) Act, Integrated Goods and Services specified in Entry 91 of the Union List in Schedule Tax (IGST) Act, Union Territory Goods and Services Tax VII of the Constitution (viz. bills of exchange, (UTGST) Act, and Goods and Services Tax cheques, promissory notes, bills of lading, letters (Compensation to States) Act were enacted in order to of credit, policies of insurance, transfer of shares, achieve a successful roll-out of the GST regime in the debentures, proxies and receipts) are levied by country from 1st July, 2017. the Union but under Article 268, each State, in which they are levied, collects and retains the 2.5.2 Union Territories Goods and Services Tax proceeds (except in the case of Union Territories (UTGST): in which case the proceeds form part of the Like State Goods and Services Tax (SGST) Act, Consolidated Fund of India). At present duty is which is enacted by the respective States/ UTs with levied on all these documents except cheques. legislature to levy and collect on all transactions within ii. Stamp duties on documents other than those the respective State/ UT, Union Territories Goods and mentioned above are levied and collected by the Services Tax (UTGST) Act, 2017 is enacted to levy and States by virtue of Entry 63 in the State List in collect GST specifically in the Union Territories without the 7th Schedule of the Constitution. legislature i.e. Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli and Daman and iii. Provisions other than those relating to rates of Diu, Chandigarh and Ladakh. duty fall within the legislative power of both the Union and the States under Entry 44 of the 2.5.3 Goods and Services Tax Settlement of Funds Concurrent List in the Schedule-VII of the Rules, 2017: Constitution. The Goods and Services Tax Settlement of 2.5.6 Highlights of the performance and Funds Rules, 2017 have also been notified on 27th July, achievements during the year: 2017, which, provide the procedure to be followed for the settlement of funds between the Centre and the States i. Promoting digital transactions has been one of on account of cross-utilisation of input tax credit between the major policy objectives of the Government. IGST and SGST / UTGST, and apportionment of IGST. A Department is planning to incentivize cashless total amount of ` 3,06,011 crore have been settled from transactions in the GST regime by way of IGST between April, 2019 and November, 2019 and extending instant benefit to the customer who distributed among Centre and States/ UTs. This included opted for digital transactions. In this regard, DoR ` 1,28,653 crore IGST amount released to States/ UTs had held meetings with all the stakeholders and (SGST/UTGST) and ` 1,77,358 crore to Centre (CGST). a process is underway to develop protocol for dynamic QR code-based application system to 2.5.4 Special Purpose Vehicle for Goods & incentivize digital payments. In order to promote Services Tax Network (GSTN): digital payments, Section 31A has also been Goods and Services Tax Network (GSTN) was inserted in the CGST Act, 2017. This new section set up as a non-government, not-for-profit private limited mandates certain registered suppliers to give company on 28th March, 2013, in order to provide IT their recipients the option of prescribed modes infrastructure and services to the Centre and State of electronic payment. governments, tax payers and other stakeholders. With ii. Vide Finance Act, 2019 the Indian Stamp Act, the approval of Union Cabinet and the recommendations 121Annual Report 2019-2020 1899 has been amended and the Indian Stamp as per details given below: (Collection of Stamp-Duty through Stock 2.5.7 State Value Added Tax (VAT) Exchanges, Clearing Corporation and Under Entry 54 of List II (State List) of the Seventh Depositories) Rules, 2019 have been notified on Schedule of the Constitution of India, “tax on sale or 10.12.2019. The said amendments propose to purchase of goods within a State” is a State subject. create the legal and institutional mechanism to Introduction of State Value Added Tax (VAT) to replace enable states to collect stamp duty on securities the earlier Sales Tax systems of the States has been one market instruments at one place by one agency of the important tax reform measures taken on indirect (through the Stock Exchanges or Clearing tax side. VAT has been introduced by all the States/UTs, Corporations authorized by the stock exchange except the UTs of Andaman & Nicobar Islands and or by the Depositories) on one Instrument. A Lakshadweep. Further on implementation of GST, VAT mechanism for appropriately sharing the stamp has been subsumed into GST and VAT is now applicable duty with relevant State Governments based on on six goods i.e. petroleum crude, high speed diesel, state of domicile of the buying client is also motor spirit (Commonly known as petrol), natural gas, proposed. aviation turbine fuel and alcoholic liquor for human iii. Online module of disbursement of GST refund consumption. Sales Tax/VAT being a State subject, the by single authority has been implemented w.e.f. Central Government played the role of a facilitator for 26th September, 2019. This has been one of the successful implementation of VAT. As a part of our mandates of the Government of India to be endeavor to support institutional capacity building and fulfilled in first 100 days of the Government. their up-gradation into national level institutes of public Before introduction of online refund module, the finance and policy, two institutes namely, Centre for taxpayer had to approach two different authorities Taxation Studies, Kerala and Centre for Studies in Social namely the State Tax Authorities for SGST portion Sciences, Kolkata have been provided ` 22.00 crore and of the refund and the Central Tax Authorities for ` 14.00 crore respectively. During the FY 2014-15, the CGST portion of the refund. With the financial assistance of ` 4.00 crore has been provided to implementation of the online refund module, the Centre for Taxation Studies, Kerala and with joint financial taxpayer can file the GST refund application assistance of Central and Kerala State Govt, this institute online and the concerned Authority will sanction has become functional as one of the excellent taxation and credit the refund amount through PFMS in institutes known as Gulati Institute of Finance and the taxpayer’s account without any manual Taxation, Kerala in GST regime. interface. Further, it is informed that since the 2.5.8 Central Sales Tax (CST) SGST portion of the refund is also disbursed by the Central Government, the necessity of a) Entry 92A of List-I (Union List) empowers the taxpayer to approach two different tax authorities Central Government to impose tax on inter-State has been done away with. Accordingly, CGST sale of goods. Further, Article 269 (3) empowers Rules, 2017 have been amended and Central the Parliament to formulate principles for Government shall disburse the refund based on determining when a sale or purchase of goods the consolidated payment advice. takes place in the course of inter-State trade of commerce. Similarly, Article 286 (2) of State Taxes –II Section Constitution empowers the Parliament to State Taxes-II Section of the Department of formulate principles for determining when the sale Revenue handles legislative work relating to Central Acts or purchase of goods takes place outside a State having significant interface with the States like the or in the course of imports into or exports from Central Sales Tax Act, 1956, the Goods and Services India. Tax (Compensation to States) Act, 2017. Facilitation in b) The Central Sales Tax Act, 1956 imposes tax respect of State level Value Added Tax (VAT) in on inter-state sale of goods and formulates regulation and payment of GST compensation to States/ the principles and imposes restrictions as per UTs on account of revenue loss due to implementation the powers conferred by the Constitution. The of GST w.e.f. 01.07.2017 have been dealt by this division Government of India has also framed the 122Department of Revenue III Central Sales Tax (Registration and States for 2017-18, based upon AG certified Turnover) Rules,1957 in exercise of powers figures is as follows: conferred by section 13(1) of the Central S. No.State/ UTs GST compensation released Sales Tax Act, 1956. Though the Central (` In crore) Sales Tax Act 1956 is a Central Act, the States collect and appropriate the proceeds 1. Assam 980.39 of Central Sales Tax as per Article 269 of the 2. Odisha 2348.08 Constitution of India. 3. Puducherry 387.29 c) The Central Sales Tax however, being an 4. Tamil Nadu 1018 origin-based non-rebatable tax, is inconsistent with the proposed destination-based Goods & 5. Karnataka 20134.73* Services Tax (GST) and has been subsumed *for 2017-18 & 2018-19 into GST for all goods except goods defined in iii. In the FY 2019-20, no compensation has been Central Sales Tax Act, 1956 i.e. petroleum paid to State of Arunachal Pradesh, Manipur, crude, high speed diesel, motor spirit Mizoram, Nagaland and Sikkim, as the revenue (commonly known as petrol), natural gas, earned by these States are more than the aviation turbine fuel and alcoholic liquor for revenue protection guaranteed by GST human consumption. (Compensation to States) Act, 2017. 2.5.9 GST Compensation to States/ UTs for revenue 2.6 Competent Authority loss due to implementation of GST 2.6.1 The Appellate Tribunal under SAFEMA i. The Goods and Service Tax (Compensation to States) Bill, 2017 was passed by Lok Sabha 2.6.1.1 The Appellate Tribunal has been constituted on 29th March 2017 to provide for compensation under the Smugglers and Foreign Exchange Manipulators to the States for the loss of revenue arising on (Forfeiture of Property) Act, 1976 (SAFEMA). It started account of implementation of the Goods and functioning w.e.f. 03.01.1977. It hears appeals files Services Tax in pursuance of the provision of against the orders of Competent Authority under SAFEM/ the Constitution (One Hundred and First NDPS Acts, Adjudicating Authority under PMLA, FEMA Amendment) Act, 2016. Accordingly, GST and Prohibition of Benami Property Transactions Act compensation Act, 2017 has been enacted 1998. which provides detailed mechanism for 2.6.1.2 The Appellate Tribunal is located at New Delhi. compensation to the States for loss on account It consists of a Chairman (who is, or has been or is of implementation of GST. For the purpose of qualified to be a Judge of the Supreme Court or High GST compensation to States, a cess known as Court) and four Members. The other four members are Compensation cess is being levied on luxury & appointed from among the officers of the Central demerit goods and proceeds of such cess is Government who are not below the level of Joint Secretary being credited to a separate Public Account fund to the Government of India. known as Compensation Fund. GST 2.6.1.3 During the period 01.01.2019 to 30.11.2019 in compensation amounting to ` 48785.35 crore total 1405 Appeals (567 in PMLA, 34 in NDPS, 12 in for the period July, 2017 to March, 2018, ` SAFEMA, 107 in FEMA and 685 in PBPT) were filed and 81141.14 crore for the period April, 2018 to in addition 2189 Miscellaneous petitions (1222 in PMLA, March, 2019 and ` 45745 crore for period April, 38 in NDPSA, 33 in SAFEMA, 209 in FEMA and 687 in 2019 to July, 2019 has been released to the PBPT) were filed during the said period. Total 585 appeals States/ UTs towards provisional GST (337 in PMLA and 12 in NDPS, 24 in SAFEMA, 194 in compensation on bimonthly basis as per GST FEMA and 18 in PBPT) were disposed during the said (Compensation to States Act), 2017, subject to period. calculation of GST compensation based on AG 2.6.2 Competent Authority under SAFEMA/ NDPS certified figures. 2.6.2.1 The Smugglers and Foreign Exchange ii. Accordingly, GST compensation released to Manipulators (Forfeiture of Property Act, 1976 (SAFEMA), 123Annual Report 2019-2020 provides for forfeiture of illegally acquired property of the 2.6.2.2 SAFEM Act and NDPS Act provide for persons convicted under the Sea Customs Act, 1878, appointment of Competent Authorities for carrying out the Customs Act, 1962 and the Foreign Exchange forfeiture of illegally acquired properties. At present, the Regulation Act, 1947 and Foreign Exchange Regulation Offices of Competent Authorities are located at Kolkata, Act, 1974 and the persons detained under the Chennai, Delhi, Mumbai and one unit is at Ahmedabad. Conservation of Foreign Exchange and Prevention of SAFEM(FOP)A envisages establishment of an appellate forum, namely the Appellate Tribunal to hear the appeals Smuggling Activities Act, 1974. The Narcotics Drugs and filed against the orders of Competent Authority under Psychotropic Substances Act, 1985 (NDPSA) provides SAFEMA/NDPSA Act. for tracing, freezing, seizure and forfeiture of illegally acquired property of the persons convicted under that 2.6.2.3 The details regarding the number of reports Act or any corresponding law of any foreign country, and received by the Competent Authorities from enforcement those who are detained under the Prevention or Illicit agencies, the number of show cause notices issued and Traffic in Narcotic Drugs and Psychotropic Substances the value of the property involved therein, the number of orders of forfeiture passed and the value of the property Act, 1988 and Jammu and Kashmir Prevention of Illicit involved therein, and the value of sale proceeds of the Traffic in Narcotic Drugs and Psychotropic Substances property disposed of, year-wise, from 2000-01 to 2019- Act, 1988. 2020 are given in Appendix ‘A’. Appendix ‘A’ FORFEITURE OF ILLEGALLY ACQUIRED PROPERTY UNDER NDPSA AND SAFEMA BY COMPETENT AUTHORITIES Financial Number of Number of Notices Number of Value of Year reports for Forfeiture issued Forfeiture Orders sale received from and value of Property issued and value of proceeds of Enforcement involved. Property involved. Property Agencies disposed of (in ` lakhs) Number Value (in Number Value (in ` Lakhs) ` 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 `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 2018-2019 104 28 1243.69 4 94.26 918.93 2019-2020 96 22 9632.64 11 1172.52 224.44 (Jan to Nov- 19) 124Department of Revenue III 2.7 Customs, Excise & Service Tax Appellate vacancy of 3 more Technical Members and 1 Judicial Tribunal (CESTAT) Member in the year 2020. 2.7.1 Functions/ working of the Organization 2.7.2 Highlights of the performance and achievements during the year 2.7.1.1 The Customs, Excise and Service Tax Appellate Tribunal formerly known as Customs Excise & Gold 2.7.2.1 Despite various constraints including several (Control) Appellate Tribunal is a quasi-judicial body vacancies of Members and subordinate staff, the appeals hearing appeals filed against the orders passed by the are disposed in a consistent pace. A statement showing Commissioners of Customs and Central Excise under institution and disposal of appeals of the current financial the Customs Act, 1962 and Central Excise Act, 1944. year is given below: Service Tax appeals are also now filed before the Tribunal Year Institution Disposal Total Pendency under the Finance Act, 1994. The Tribunal is also having of Appeals as on 1.11.2019 appellate jurisdiction on Anti-dumping matters under the April 2019 to 10905 8645 77635 Customs Tariff Act and the special bench headed by the October 2019 President, CESTAT hears the appeals against the orders 2.7.2.2 The process of online filing of appeals and online passed by the designated authority of the Ministry of payment of appeal fee is undertaken by NIC. Information Commerce. Whenever two different decisions on a single is uploaded on the website of the Tribunal for the sake of issue are passed by co-ordinate Benches of the Tribunal, transparency in administration. All orders including daily the issue is resolved by constituting 3 Members Larger orders of the Tribunal are also uploaded besides real time Bench and a decision then rendered by the larger bench display of item number taken by the Bench which is is applicable to all Division Benches and subordinate available both on the website and display boards installed adjudicating authorities. in the premises. 2.7.1.2 The Principal Bench of the Tribunal is situated at 2.7.2.3 The whole north eastern region is conveniently Delhi and the regional benches are situated at Mumbai, placed under the jurisdiction of Kolkata Bench. However, Kolkata, Chennai, Bangalore and Ahmadabad. For the indirect tax litigation from N.E. region is relatively less. speedy disposal of appeals to the benefit of litigants, the 2.7.2.4 All facilities as required by the Government in Ministry of Finance, vide notification no. 7/2013 has respect of weaker sections including differently abled and notified creation of three new benches of the Tribunal at SC/ST are strictly followed and extended to the eligible Chandigarh, Allahabad and Hyderabad and three candidates/Staff. additional Benches one each at Delhi, Mumbai and Chennai. The regional benches at Allahabad, Chandigarh 2.7.2.5 All facilities are being extended to female and Hyderabad started functioning w.e.f. 1.10.2015, employees of this Tribunal as per O.M. No.13018/4/2009- 1.12.2015 and 14.12.2015 respectively. Estt.(L) dated 08/07/2009 of DOPT. To redress the grievances of women, a complaint committee has been 2.7.1.3 Each Bench of the Tribunal consists of a Judicial constituted. So far, no complaint has been received by Member and a Technical Member. To expedite the the committee. disposal of small cases with financial stake up to ` 50,00,000/- (Fifty lakh rupees), wherein no question of 2.7.2.6 The dynamic website of the Tribunal which rate of duty or valuation is involved, single member bench started in January 2017 is fully operational with the help is constituted. The Tribunal is also the final appellate of NIC and is now extended to all eight Regional Benches. authority hearing appeals from the orders of the Cause lists are uploaded on weekly basis and Daily orders Commissioner (Appeals). Appeals from the orders are uploaded on daily basis. Final orders are uploaded passed by the Tribunal are filed before the Hon’ble as soon as they are signed by the Members. All Supreme Court on Classification and Valuation issues information concerning the Tribunal is available as as they have all India ramifications. required by DOPT OM No.1/6/2011 dated 15/04/2013. The NIC has undertaken the job of online filing of appeal 2.7.1.4 The Tribunal is headed by the President who is which is first of its kind in a Tribunal. Online payment of a retired Judge of a High Court. There are 16 posts of appeal fee is also done along with it. Members (Judicial) and 16 posts of Members (Technical). At present, 8 posts of Technical Members and 3 posts of 2.8 Authority for Advance Ruling Division Judicial Members are lying vacant. There is anticipated 2.8.1 Customs, Central Excise & Service Tax 125Annual Report 2019-2020 Settlement Commission achievements of the Commission during the Year is given below: 2.8.1.1 Highlights of the Performance and No. of applications received No. of applications disposed of Duty Settled (` in crores) (upto November,2019) (upto November, 2019) (upto November, 2019) 257 249 243.49 2.8.1.2 Function & Working of the Organization. in the Ministry of Finance. The Central Government have constituted the The Settlement Commission has been set up to Customs & Central Excise Settlement Commission under expedite recovery of Customs, Central Excise & Service section 32 of the Central Excise Act, 1944 vide Notification Tax revenue locked up in adjudication proceedings. It No. 40/99-CX(NT) dated 09.06.99 and 41/99-CX(NT). offers a one-time opportunity to tax payers to make a The Commission consists of a Principal Bench presided true and full disclosure of their liabilities. Settlement over by the Chairman at New Delhi and 3 Additional Commission has also been empowered to grant Benches at Chennai, Mumbai and Kolkata presided over immunities from penalty and from prosecution, thus by Vice Chairman with 2 Members in each Bench. The offering an opportunity to tax payers to settle the disputes Commission functions under the Department of Revenue expeditiously. 2.8.1.3 Year-Wise Performance/achievements of the Settlement Commission: - Disposal No. of Applications Year No. of Applications No. of Application Duty settled (` in Received Rejected Settled 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 2017-18 563 116 488 428.95 2018-19 535 73 417 291.06 2019-20 (Up to Nov.19) 257 39 249 243.49 126Department of Revenue III 2.8.2 Income Tax Settlement Commission 2.8.2.5 Each bench has three Members. The Principal is presided over by the Chairman and each 2.8.2.1 The Income Tax Settlement Commission (ITSC) Additional Bench is presided over by Vice Chairman. The was set up in pursuance of the recommendations of the Chairman is of the rank of a Secretary to Government of Wanchoo Committee (1971) w.e.f. 01.04.1976. It is an India. The Vice-Chairman and the Members are of the Alternate Disputes Resolution (ADR) body within the rank of an Additional Secretary to the Government of realm of Direct Taxes for settlement of Income Tax and India. Members of the Commission are appointed from Wealth Tax cases. The main objective for setting up of the serving Chief Commissioners of Income Tax or of this commission was to give a statutory basis for equivalent rank. The senior most Member of every Bench, settlement of cases in the interest of revenue. The other than the Principal Bench is called Vice-Chairman Settlement Commission was established as a forum of of the respective Bench. The Chairman in the Principal mediation in place of litigation. The aim was to move the Bench is appointed from amongst the serving Members conflicting parties to a consensus than subjecting them of the Commission having a minimum remaining service to adversarial procedure inherent in regular administration of six months on the date of notifying the vacancy for the of justice. This was envisaged as an institution for post of Chairman of the Commission. statutory arbitration. 2.8.2.6 An assessee is required to make an application 2.8.2.2 The objective behind this institution is aptly to the Settlement Commission in the prescribed form to get summarized in the oft-quoted passage from the report of his case settled. He has to disclose Additional Income the Wanchoo Committee as under: not disclosed before the assessing officer and the “This, however, does not mean that the door for Additional Tax Payable on the Additional Income should compromise with an errant tax payer should forever be more than ` 50 lakhs in search cases and ` 10 lakhs in remain closed. In the administration of fiscal laws, whose other cases. The applicants are required to pay the primary objective is to raise revenue, there has to be Additional Tax together with the interest before filing the room for compromise and settlement. A rigid attitude application in the Settlement Commission. The Commission would not only inhibit a one-time tax evader or an un- then decides upon the admissibility of the application and intending defaulter from making a clean breast of his in case of admitted applications, the Commission affairs, but also unnecessarily strain the investigational carries out the process of Settlement in a time bound resources of the Department in cases of doubtful benefit manner by giving opportunity to both the parties. An to revenue, while needlessly proliferating litigation and Application filed before the Commission, if admitted, holding up collections”. is required to be disposed of by the Settlement 2.8.2.3 The Settlement Commission has seven benches Commission within 18 months from the date of filing of as under: - the application. The Commission has wide power of granting immunity from penalty and prosecution under the Income (i) One Principal Bench and Two Additional Benches Tax Act, 1961 and Wealth Tax Act, 1957, which in usual at New Delhi. course, would involve prolonged litigation between the (ii) Two Additional Bench at Mumbai. department and the taxpayer. An order passed by the (iii) One Additional Bench at Kolkata. Commission is final and conclusive. At present the benefit (iv) One Additional Bench at Chennai. of the Settlement mechanism can be availed by a tax payer only once in life-time, who has made the first application 2.8.2.4 The Commission comprises Members as on or after 1st June, 2007. Further details about the who are appointed by the Central Government from Commission are available on its Website. amongst the persons of integrity and outstanding ability, having special knowledge of and experience in problems 2.8.2.7 A statement showing the number of Application relating to the direct taxes and business accounts. files and disposal of is as under: Disposal and Pendency of cases u/s 245 D (4) FY Pendency of the cases at the Addition during Disposal during Pendency of the Beginning of the year the year the year cases at March end F.Y.2016-17 598 519 541 576 F.Y.2017-18 576 478 384 670 F.Y.2018-19 670 403 461 612 F.Y. 2019-20 612 130 306 436 (till October, 2019) 127Annual Report 2019-2020 2.8.3 Authority for Advance Rulings 2.8.3.4 Aims and Objectives 2.8.3.1 The Authority for Advance Rulings (Income-Tax) The basic purpose behind the constitution of the is a quasi-judicial body under the Ministry of Finance, Authority is to entrust the power of giving advance rulings which is chaired by a retired Supreme Court Judge. It to an independent adjudicatory body and to ensure further was established in 1993 as per the provisions of chapter that the procedure is simple, inexpensive, expeditious XIX B of the Income Tax Act 1961 inserted by Finance and authoritative. The rulings pronounced by the Authority Act 1993 w.e.f. 01.06.1993. The Authority gives rulings is binding on both parties before it. The advance ruling on the taxation issues raised by non-residents relating to does not have the frequent value of a judgement of High transactions undertaken/proposed to be undertaken with Court or Supreme Court. However, even for persons a resident. Residents having transactions with non- other than the applicant and the respondent, the advance residents can also seek ruling in relation to the tax liability ruling would be of a persuasive nature. The binding effect of a non-resident. Public Sector Undertakings can also of the ruling is related to the transaction and not to a apply to the AAR for a ruling. The scope of the Authority number of years. The ruling would remain in force so has been extended further vide notification dated long as the transaction continues and so long as there is 28.11.2014 and now a resident tax payer can also obtain no change in law or facts of on the basis of which the advance rulings in relation of his income tax liability arising ruling was pronounced. out of one or more transactions valuing rupees one 2.8.3.5 Efficacy of the Authority hundred crore or more in total. The Authority gives rulings The functioning of the Authority has been found on transactions under the Customs Act, 1962 as well. to be very useful particularly to the non-resident entities The ruling given by the Authority is of binding nature and doing business in India. In view of the growing number no further appeal against this is provided under the Act. of applications, two new benches of the Authority one at 2.8.3.2 Central Sales Tax Appellate Authority Delhi for National Capital Region and the other at Mumbai The Authority for Advance Rulings (Income Tax) has been set up. has also been notified vide notification dated 17.03.2005 2.8.4 National Institute of Public Finance and Policy (as amended by notification dated 07.06.2005) as Central (NIPFP) Sales Tax Appellate Authority to settle inter-state disputes 2.8.4.1 The NIPFP is a premier research organization falling under Section 6A read with Section 9 of the Central for conducting research, policy advocacy, and capacity Sales Tax Act, 1956. It started functioning as CSTAA building activities in the field of public economics and w.e.f. 01.03.2006. macro finance. Established in 1976 as an autonomous 2.8.3.3 Composition of the Authority institution under the Societies Registration Act, 1860 the The advance ruling in India is rendered by an Institute has made significant contribution to policy Authority constituted specifically for the purpose as the reforms at all levels of Government of India. The NIPFP Authority for Advance Rulings. It consists of a Chairman, provides research, advisory, and capacity building support Member (Revenue) and Member (Law) for Principal on macroeconomics, fiscal policy, and intergovernmental Bench and Vice-Chairman, Member (Revenue) and finance at both national and international levels. The Member (Law) for respective NCR Bench and Mumbai vision of the Institute is to “promote stable and sustainable Bench. The Chairman is a Judge of the Supreme Court development”. and the Vice-Chairman are the Judge of the High Court. 2.8.4.2 The Governing Body is chaired by an Economist The Members (Revenue) are from Indian Revenue of Eminence and at present Dr. Vijay Kelkar, currently Service (Income Tax) and Members (Law) are from the the Chairman of Janwani, Pune, Vice President of Pune Indian Legal Service. The salaries and allowances International Centre, is the Chairman of the Governing payable to and the terms and conditions of the Members Body. Government is represented by the Secretary have been prescribed by the Government of India. The (Revenue), Secretary (Economic Affairs), Chief Economic constitution of the Authority is such that it functions as an Adviser of the Ministry of Finance. There are three independent quasi-judicial body deemed to be a Civil eminent Economists and representatives of FICCI and Court for the purposes of Section 195 of the Code of ASSOCHAM on the Governing Body. There is an Criminal Procedure, 1973. Academic Committee advising the Director. 128Department of Revenue III 2.9 Central Economic Intelligence Bureau (CEIB) programmes with various specialized agencies on different subjects for upgradation of the capacity and skills 2.9.1 Organization and Functions of the Officers under the Department of Revenue/ 2.9.1.1 The Central Economic Intelligence Bureau is the Member agencies of REICs. The programmes conducted nodal agency on economic intelligence. It was set up in during the financial year 2019-20(upto 30.11.2019) are 1985 for coordinating and strengthening the economic as under: intelligence and enforcement activities under the Ministry  Legal Aspects & Legal Matters’ at National Law of Finance. University, New Delhi {(i) 22nd to 26th April, 2019 2.9.1.2 The Bureau is headed by a Director General who & (ii) 23rd to 27th September, 2019} is assisted by two Additional Directors General (JS  Investigating Economic Crime in Securities Equivalent), Joint Secretary (COFEPOSA), Additional/ Market’ at National Institute of Securities Markets, Joint Directors (DS/Director equivalent), Under Mumbai (from 13th to 17th May, 2019) Secretaries, Deputy Directors (US equivalent) and other staff. The Bureau has a sanctioned strength of 113  Banking Operation & Fiscal law Enforcement’ at Officers & Staff. At present, its working strength is 64 State Bank Institute of Consumer Banking, only. Hyderabad (from 24th to 28th June, 2019) 2.9.1.3 In terms of its existing charter, the CEIB functions  Intelligence Gathering & Intelligence Tradecraft’ as- by Intelligence Bureau at National Intelligence Academy, New Delhi {(i) 29th July to 2nd August, a) The Secretariat for the Economic Intelligence 2019 & (ii) 18th to 22nd November, 2019) Council (EIC)  Intelligence Gathering & Intelligence Tradecraft’ b) Coordination between various agencies for at Cabinet Secretariat Training Institute, Gurgaon coordinating action and repository of economic (26th to 30th August, 2019 intelligence (ECOINT) and  Forensic Accounting and Techniques of c) Administers the COFEPOSA Act 1974 at Central Investigation using Digital Forensic’ at NADT, Government Level. Nagpur (15th to 18th October, 2019). 2.9.1.4 As part of its mandate, the CEIB- 2.10 NATIONAL COMMITTEE FOR PROMOTION i) Maintains databases on economic offenders and OF SOCIAL AND ECONOMIC WELFARE offences 2.10.1 The Government of India constituted the National ii) Acts as a Think Tank and studies and analyses Committee for Promotion of Social & Economic Welfare macro level economic activities in 1992 for recommending the projects for promotion of iii) Supervises and monitors the functioning of sports, social and economic welfare, pollution control, Regional Economic Intelligence Councils etc. received from Trusts/ Institutions, to the Central (REICs), which are coordinating bodies at the Government for Notification under Section 35 AC of field level and comprise representatives from Income Tax Act, 1961. The funding of the approved various Central and State enforcement and projects is through donations on which the donors are investigative agencies dealing with economic entitled to 100% deduction under the Income Tax Law. offences. 2.10.2 The National Committee for Promotion of Social iv) Organizes training programmes in premier and Economic Welfare is constituted by the Central training institutions for officers of the Department Government for a term of (03) three years and consists of Revenue/ Member agencies of REICs. of 14 Members including its Chairman. The Government appoints former Chief Justice of India as Chairman of 2.9.2 Training on intelligence and relevant areas for the Committee and other 13 persons of public eminence, DoR: hailing from various walks of life, as Members of the The Bureau also organizes training programmes Committee. So far 9 such Committees have been in premier training institutions for officers of the constituted, all headed by a retired Chief Justice of India. Department of Revenue/ Member agencies of REICs. 2.10.3 In this context, it may be stated that Section 35AC The Bureau has taken up the task of coordinating training 129Annual Report 2019-2020 of IT Act, as amended by the Finance Act, 2016, provides eligible project or scheme and as such no deduction u/s that no deduction under this section shall be allowed in 35AC is available after 31.3.2017 (F.Y.). respect of any assessment year on or after 1st April, 2018. 2.10.4 In view of above, the 9th National Committee for Accordingly, the benefit of deduction under Section 35AC Promotion of Social and Economic Welfare was of Income tax Act was available only up to previous year reconstituted and subsequently notified on 31st March, ending 31.3.2017 (Assessment year 2017-18) in respect 2017 and the extended tenure is till 31st March, 2020. of payment made to association or institution already The composition of the Committee is as follows: 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 2.10.5 The functions and procedures of the National authorities in foreign jurisdictions. Unlike in many other Committee are governed by Rules 11-F to 11-O of the countries, in India, the Enforcement Directorate has the Income Tax Rules, 1962. The procedure of filing the sole jurisdiction to investigate the money laundering cases application and the manner in which the applications are and the Law Enforcement Agencies (LEAs) having the to be considered and decided by the National Committee responsibility to investigate a “predicate offence”, are enumerated in Rules 11-L and 11-M of the Income including the State Police Authorities, are required to Tax Rules, 1962. The projects/schemes of the institutions/ make a reference to the Enforcement Directorate to organizations recommended by the National Committee examine the money laundering aspect of the criminal and accepted by the Central Government are notified in activity. In certain cases, the fact that a predicate offence the Official Gazette. In cases where the National has taken place is also obtained from publicly available Committee does not recommend the scheme or project sources or on receipt of information from the Financial for approval, the decision of the Committee is Intelligence Unit (FIU). On receipt of the reference or communicated to the applicants by the Secretariat of the information and after making certain preliminary National Committee. verification, the Enforcement Directorate registers a case and initiates investigation (Enforcement Case Information 2.11 Directorate of Enforcement Report or the ECIR) following a risk based approach 2.11.1 Introduction taking into consideration factors such as materiality of 2.11.1.1The primary function of the Enforcement the offence, transnational nature of the crime, complexity Directorate is administration and enforcement of the of the case, the larger public interest and the availability Prevention of Money Laundering Act, 2002 (PMLA) of resources. including investigation into the offence of money 2.11.1.2The Enforcement Directorate is also entrusted laundering, filing of prosecution complaint before the with the implementation of the Foreign Exchange special court against the accused, attachment and Management Act (FEMA) whose object is to consolidate confiscation of property involved in money laundering and and amend the law relating to foreign exchange for carrying out international cooperation with competent facilitating external trade and payments and for promoting 130Department of Revenue III the orderly development and maintenance of foreign Enforcement and Special Director (H.O.). There are five exchange resources. The Enforcement Directorate Regional Offices located at Chandigarh (Northern initiates investigations and issues Show Cause Notices Region), Chennai (Southern Region), Delhi (Central (SCN) in cases where the allegations of contravention of Region), Kolkata (Eastern Region) and Mumbai (Western provisions under FEMA are noticed. These SCNs upon Region) each headed by a Special Director. In addition, adjudication results in imposition of penalty as well as there is a Headquarters Investigation Unit (HIU) headed confiscation of currency/property involved. by Special Director. Currently, there are three Additional Directors posted at Headquarters Office, Delhi, Mumbai, 2.11.1.3The Enforcement Directorate has also recently Chennai. been entrusted with the implementation of the Fugitive Economic Offenders Act, 2018 (FEOA). The FEOA 2.11.2.2There are twenty-two zonal offices, headed by provides for the measures to deter the fugitive economic Joint Directors, located at Ahmedabad, Bangalore, offenders from evading the process of law in India by Chandigarh, Chennai, Delhi, Guwahati, Hyderabad, staying outside the jurisdiction of Indian Courts and to Jaipur, Jalandhar, Kolkata, Kochi, Lucknow, Mumbai, preserve the sanctity of the rule of law in India. Action Panaji, Patna and Srinagar and thirteen sub zonal offices under the said Act can be initiated against economic located at Allahabad, Bhubaneswar, Dehradun, Indore, offenders who have left India so as to avoid criminal Jammu, Kozhikode, Madurai, Nagpur, Ranchi, Raipur, prosecution or who, being abroad, refuse to return to India Shimla, Surat, Vishakhapatnam. to face criminal prosecution and the total amount involved 2.11.2.3The Legal Wing of the Enforcement Directorate in the economic offence is more than 100 crore. comprises of the Additional Director (Prosecution), Deputy 2.11.2 Organizational Structure Legal Advisors and Assistant Legal Advisors. In addition, other Law Officers/Legal Consultants/Counsels are 2.11.2.1The Enforcement Directorate is headed by the appointed/empaneled from time to time. Director, who is not below the rank of Additional Secretary to the Government of India. He is assisted in his work at 2.11.2.4The organizational structure of the Enforcement the Headquarters by Principal Special Director of Directorate is presented in the following Table: Northern Regional Office at Chandigarh S. No. Zonal Office Sub-Zonal Office Territorial Jurisdiction 1&2 Chandigarh-I&II Haryana, Himachal Pradesh, (CDZO) Uttarakhand, UT of Chandigarh 3 Shimla (SHSZO) Himachal Pradesh 4 Dehradun (DNSZO) Uttarakhand 5 Jalandhar (JLZO) Punjab 6 Srinagar (SRZO) Jammu & Kashmir 7 Jammu (JMSZO) Jammu & Kashmir (6 Districts) 8 Jaipur (JPZO) Rajasthan Central Regional Office at New Delhi S. No. Zonal Office Sub-Zonal Office Territorial Jurisdiction 1 Delhi-I, II (DLZO)& CR Delhi 2 Lucknow (LKZO) Uttar Pradesh 3 Allahabad (Varanasi) Uttar Pradesh (34 Districts). (ALSZO) 4 Patna (PTZO) Bihar & Jharkhand 5 Ranchi (RNSZO) Jharkhand 131Annual Report 2019-2020 Eastern Regional Office at Kolkata S. No. Zonal Office Sub-Zonal Office Territorial Jurisdiction 1&2 Kolkata-I&II West Bengal, Odisha, Sikkim, UT of (KLZO) Andaman & Nicobar Islands 3 Bhubaneswar (BBSZO) Odisha 4 Sikkim 5 Guwahati (GWZO) Assam, Meghalaya, Arunachala Pradesh, Nagaland, Manipur, Mizoram and Tripura 6 Agartala (AGSZO) Tripura 7 Aizwal (AZSZO) Mizoram 8 Imphal (IMSZO) Manipur 9 Itanagar (ITSZO) Arunachal Pradesh 10 Kohima (KHSZO) Nagaland 11 Shillong (SGSZO) Meghalaya Western Regional Office at Mumbai S. No. Zonal Office Sub-Zonal Office Territorial Jurisdiction 1&2 Mumbai-I&II \ Maharashtra (MBZO) 3 Nagpur (NGSZO) Maharashtra (24 Districts) 4 Ahmedabad (AMZO) Gujarat, Madhya Pradesh, UTs of Daman & Diu, Dadra & Nagar Haveli 5 Surat (STSZO) Gujarat (07 Districts) 6 Indore & Bhopal Madhya Pradesh (INSZO) 7 Panaji (PJZO) Goa and Chhattisgarh 8 Raipur (RPSZO) Chhattisgarh Southern Regional Office at Chennai S. No. Zonal Office Sub-Zonal Office Territorial Jurisdiction 1&2 Chennai-I&II Tamil Nadu & UT of Puducherry (CEZO) 3 Madurai (MDSZO) Tamil Nadu (14 Districts) 4 Bangalore (BGZO) Karnataka 5 Mangalore (MGSZO) Karnataka (15 Districts) 6 Kochi (KCZO) Kerala & UT of Lakshadweep 7 Kozhikode (KZSZO) Kerala (7 Districts) 8 Hyderabad (HYZO) Andhra Pradesh 9 Vishakhapatnam Andhra Pradesh (9 Districts) (VKSZO) 2.11.2.5The location of offices of the Enforcement trafficking, illicit trafficking in stolen goods, corruption and Directorate all over India ensure that the money bribery, fraud, counterfeiting and piracy of products, laundering offences are investigated in an effective environmental crimes, kidnapping, robbery, smuggling, manner and it also acts as a deterrence for the potential extortion, forgery, piracy and insider trading and market offenders of money launderers. manipulation. These offences listed in the schedule are called “predicate offences” and section 3 of the PMLA 2.11.3 Offence of Money Laundering states that whoever is directly or indirectly involved or associated with any process or activity connected with 2.11.3.1Section 3 of the PMLA criminalizes the offence “proceeds of crime” related to these criminal activity will of money laundering related to a wide range of criminal be guilty of the offence of money laundering and is liable offences listed in the schedule to the PMLA. These for punishment with rigorous imprisonment of three to offences include participation in an organized criminal ten years under section 4 of the PMLA. group and racketeering, terrorism and terrorist financing, illicit trafficking in narcotics drugs and psychotropic 2.11.3.2The scope of section 3 has been widened over substances, illegal human trafficking, illicit arms the years following a risk based approach to ensure that 132Department of Revenue III each and every kind of money laundering offence is of crime as untainted property, it is enough if he is directly covered under the provision and the “proceeds of crime” or indirectly involved in any process of activity connected are not enjoyed with any person who could in any way with the proceeds of crime including its concealment, connected to the underlying criminal activity. Through the possession, acquisition or use. Thus, the definition of the Prevention of Money Laundering (Amendment) Act, 2012, offence of money laundering is in full compliance with section 3 was amended in the following manner with effect Article 3(1)(b) and 3(1)(c) of the Vienna Convention and from 15th February, 2013: Article 6(1) of the Palermo Convention. “Whosoever directly or indirectly attempts to 2.11.3.4Further, it has been clarified that the money indulge or knowingly assists or knowingly is a laundering cannot be interpreted as a one-time, party or is actually involved in any process or instantaneous offence that ceases with the concealment activity connected with the proceeds of crime or possession or acquisition or use or projection of the including its concealment, possession, proceeds of crime as untainted property or claiming it as acquisition or use and projecting or claiming it untainted. A person shall be considered guilty of the as untainted property shall be guilty of the offence offence of money laundering for as long as the said of money laundering.” person is enjoying the “proceeds of crime”. In addition, through the Finance (No. 2) Act, 2019, 2.11.3.5The offence of money laundering applies to the following Explanation was added in section 3 of the “whosoever” and thus includes a person who commits PMLA with effect from 1st August, 2019: the predicate offence, if that person is knowingly involved in the laundering of the proceeds and thus the offence of Explanation—For the removal of doubts, it is “self-laundering” is covered in the definition. The term hereby clarified that— “whosoever” in its generality also covers any “person” (i) a person shall be guilty of offence of money- which is defined in section 2(s) of the PMLA to include laundering if such person is found to have an individual and all forms of companies, firms, directly or indirectly attempted to indulge or associations and legal persons, which includes laundering knowingly assisted or knowingly is a party or is by third parties. Thus, the legal persons are also covered actually involved in one or more of the following and are liable to be fined under the provisions of PMLA. processes or activities connected with proceeds Section 70 of the PMLA provides that where the violation of crime, namely: of the Act is committed by a company, both the company (a) concealment; or and the individuals in charge of the company will be deemed to be guilty of that contravention unless they did (b) possession; or not have the knowledge of contravention or they have (c) acquisition; or exercised all due diligence to prevent it. (d) use; or 2.11.3.6The term “proceeds of crime” has been defined (e) projecting as untainted property; or in section 2(u) of the PMLA to mean any property derived (f) claiming as untainted property, or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the in any manner whatsoever; value of any such property or where such property is taken (ii) the process or activity connected with or held outside the country, then the property equivalent proceeds of crime is a continuing activity and in value held within the country or abroad. It may be noted continues till such time a person is directly or that the provision for equivalent value of property held indirectly enjoying the proceeds of crime by its within India, which may be attached/confiscated by concealment or possession or acquisition or use Enforcement Directorate, if the proceeds of crime is taken or projecting it as untainted property or claiming or held outside India was introduced through the Finance it as untainted property in any manner Act, 2015, with effect from 14th May, 2015, and its scope whatsoever.”. was further widened to property held abroad through the 2.11.3.3Thus, after this amendment, it is not necessary Finance Act, 2018, with effect from 19th April, 2018. that for committing an offence of money laundering, the 2.11.3.7Through the Finance (No. 2) Act, 2019, the person concerned should project or claim the proceeds following Explanation was added in section 2(u) of the 133Annual Report 2019-2020 PMLA with effect from 1st August, 2019: 2.11.3.8It may be noted that the term “property” has also been defined widely in section 2(v) of the PMLA and “‘Explanation.—For the removal of doubts, it is means any property or assets of every description, hereby clarified that “proceeds of crime” include whether corporeal or incorporeal, movable or immovable, property not only derived or obtained from the tangible or intangible and includes deeds and instruments scheduled offence but also any property which evidencing title to, or interest in, such property or assets, may directly or indirectly be derived or obtained wherever located. Through the Prevention of Money as a result of any criminal activity relatable to Laundering (Amendment) Act, 2012, an Explanation has the scheduled offence;’.” been added in section 2(v) and it has been clarified for Thus, the scope of the expression “proceeds of crime” the removal of doubts that the term “property” includes has been widened significantly and would not only include property of any kind used in the commission of an offence properties derived or obtained from the scheduled offence under the PMLA or any of the scheduled offences. but also any property which may directly or indirectly be 2.11.3.9A wide range of criminal offences have been derived or obtained as a result of any criminal activity listed in the schedule to the PMLA and are the “predicate relatable to the scheduled offence. Thus, the money offence” for the purposes of investigation of the offence laundering offences can be investigated independently of money laundering and attachment/confiscation of the without necessarily requiring investigation of predicate proceeds of crime. The list of predicate offences under offence. the PMLA have been expanded over the years based on a Risk Based Approach and the same has been summarized below:- Sl. No. Amending Act Modification in the Scheduled Offence 1. The Prevention of Money-Laundering Addition of Part C in the Schedule to include an Amendment Act, 2009 w.e.f. 1.6.2009 offence of cross-border implications and which are specified in Part A of the Schedule and the offences against property under Chapter XVII of the Indian penal Code 2. Finance Act, 2015 (w.e.f. 14.5.2015) Addition of Section 132 of the Customs Act, 1962, relating to false declaration, false documents etc. with a monetary limit of ` 10 million 3. Finance Act, 2018 (w.e.f. 19.4.2018) Addition of Section 447 of the Companies Act, 2013 relating to Punishment for Fraud 4. Black Money (Undisclosed Foreign Section 51 of the Black Money (Undisclosed Income and Assets) Imposition of Tax Foreign Income and Assets) Imposition of Tax Act, 2015 w.e.f. 1.7.2015 Act, 2015 2.11.3.10 In addition, the PMLA was amended offence in that country and which would have constituted through the Prevention of Money Laundering a predicate offence had it occurred domestically. (Amendment) Act, 2009 with effect from 1st June, 2009, Accordingly, if the proceeds of crime relate to drug to add Part C in the schedule to provide that the trafficking in a foreign jurisdiction and the same is predicate offence would include all the offences laundered in India, action can be taken under the specified in Part A and also the offences against property provisions of the PMLA including attachment/ under Chapter XVII of the IPC, if the offence has a cross- confiscation of properties. border implication. Offences of cross-border implications 2.11.3.11 An amendment in section 44 of the means any conduct by a person outside India which PMLA was also carried through the Finance (No. 2) constituted an offence at that place and which would Act, 2019, to clarify for the removal of doubts that the have constituted an offence specified in the schedule jurisdiction of the Special Court, while dealing with an to the PMLA had it been committed in India and if such offence under the PMLA, will not be dependent upon person transfers in any manner the proceeds of such any order passed in respect of the schedule offence. conduct or part thereof to India. Thus, the predicate Thus, even if an accused is discharged/acquitted from offences for money laundering also extend to conduct scheduled offence, the trial for the offence of money that occurred in another country which constitutes an laundering will continue. This also means that while 134Department of Revenue III proving the property is the proceed of crime, it is not an application to the Adjudicating Authority for retention necessary that a person be convicted of a predicate of such record or property or for continuing the order offence. It has also been clarified through Finance Act of freezing. (No. 2) of 2019, for the removal of doubt, that the 2.11.4.4 The Adjudicating Authority is a quasi- offence of money laundering is cognizable and non- judicial body comprising of a Chairperson and two other bailable offences and thus the officers of the members. On receipt of a complaint under sections 5 Enforcement Directorate have the powers to arrest or 17 or 18 of the PMLA, if the Adjudicating Authority subject to certain conditions. has reason to believe that any person has committed 2.11.4 Attachment and Confiscation an offence under section 3 of the PMLA or is in possession of proceeds of crime, it may serve a notice 2.11.4.1 Section 5 of the PMLA provides that of not less than 30 days on such person calling upon where the Director, Enforcement Directorate, or any him to indicate the sources of his income, earning or other officer not below the rank of Deputy Director assets, out of which or by means of which he has authorized by him, has reason to believe (the reason acquired the said property, the evidence on which he for such belief to be recorded in writing), on the basis relies and other relevant information and particulars, of material in his possession, that (a) any person is in and to show cause why all or any of such properties possession of any proceeds of crime and (b) such should not be declared to be the properties involved in proceeds of crime are likely to be concealed, money-laundering and confiscated by the Government. transferred or dealt with in any manner which may result in frustrating any proceedings relating to 2.11.4.5 The Adjudicating Authority after taking confiscation of such proceeds of crime, he may, by into consideration the above reply, hearing the order in writing, provisionally attach such property for aggrieved person(s) and the officers of the a period not exceeding 180 days from the date of the Enforcement Directorate, and after taking into account order. all relevant material, records a finding whether the properties are involved in money laundering. 2.11.4.2 After the attachment, the officer concerned is required to forward a copy of the 2.11.4.6 After the Adjudicating Authority decides attachment order along with the material in his that the property is involved in money-laundering, it possession to the Adjudicating Authority for confirms the order of attachment/freezing and gives a adjudication. The attachment will cease to have effect finding that the attachment shall continue during the after the expiry of 180 days or after the order of investigation for a period not exceeding 365 days or adjudication, whichever is earlier. The period of stay during the pendency of the proceeding related to any by the High Court, however, shall be excluded for offence under the PMLA before a Court, including computing the period of 180 days. During the period foreign Courts. Thus, after the order of the adjudicating of attachment, however, the persons interested in the authority, the attachment/freezing continues during the enjoyment of the immovable property so attached is investigation and will also continue after filing of a not prevented from such enjoyment. prosecution complaint till the matter is finally decided by the Court. 2.11.4.3 Section 17 of the PMLA gives power to Director, Enforcement Directorate , or any other 2.11.4.7 The order of confiscation is passed by officer authorized by him not below the rank of Deputy the Special Court under section 8(5) of the PMLA after Director, to carry out search and seizure operation and conclusion of the trial for the offence of money seize any record or property found during the search. laundering and all rights and title in the property vest If it is not practicable to seize such record or property, absolutely in the Central Government free from all the officer concerned may make an order to freeze the encumbrances. However, after the confirmation of the property prohibiting its transfer. Section 18 of the PMLA attachment/freezing by the Adjudicating Authority, a gives powers to the officers of Enforcement Directorate quasi-judicial body, it is provided in section 8(4) of the to search a person and seize any property. In the case PMLA that the officers of the Enforcement Directorate of seizure/freezing under sections 17 and 18 of the will take possession of the property attached and thus PMLA, the authorities concerned are required to make it is ensured that the offenders do not enjoy the 135Annual Report 2019-2020 “proceeds of crime”. Thus, after confirmation of the Special Court, the accused is convicted and is attachment/freezing by the Adjudicating Authority, it no punished in accordance with section 4 of the PMLA. longer remains only a “provisional measure” as the 2.11.6 International Cooperation property is not available to the criminals. 2.11.6.1 When proceeds of crime related to 2.11.4.8 Any person aggrieved with the order offence committed in India, is transferred in foreign of Adjudicating Authority, including the officers of the jurisdictions, or when accused person(s) has escaped Enforcement Directorate, can file an appeal within 45 from India, after committing the offence of money days before the Appellate Tribunal, another quasi- judicial authority under section 26 of the PMLA and laundering or part of it or the offence itself has been the Appellate Tribunal after giving the parties to the committed outside the country or the witnesses and appeal an opportunity of being heard may pass such other material evidence are available in another orders thereon as it thinks fit, confirming, modifying or country, it may be necessary to gather information or setting aside the order appealed against. Any person conduct formal investigation abroad. aggrieved with the order of Appellate Tribunal may file 2.11.6.2 Generally, the basis for seeking Mutual an appeal to the High Court within 60 days on any Legal Assistance from a Contracting State is the Mutual question of law or fact arising out of such order. Legal Assistance Treaty in Criminal Matters (MLAT). 2.11.5 Investigation, Prosecution and Conviction As of now, India has signed MLAT with 39 countries. 2.11.5.1 Under the PMLA, the officers of the Mutual Legal Assistance can also be sought on the Enforcement Directorate have wide range of powers basis Multilateral Treaties, such as, United Nation to investigate the offence of money laundering and for Convention against Corruption (UNCAC) or United attachment/freezing and confiscating the proceeds of Nation Convention on Transnational Organized Crime crime. These include powers of summons, survey, (UNCTOC). Where there is no such treaty the request search and seizure, search of persons, arrest etc. The can be made on the basis of mutual assurance of officers of various other departments such as officers reciprocity. These requests are normally made through of CBIC, CBDT, police, RBI, SEBI, IRDA etc. are the Special Courts under section 57 of the PMLA empowered and required to assist the officers of the although under the MLAT or the multilateral treaties, Enforcement Directorate in the enforcement of PMLA. the requests need not be routed through the Courts. 2.11.5.2 After registering the complaint, at the 2.11.6.3 If an order of attachment/freezing/ first instance, the officers of Enforcement Directorate confiscation has been issued by the officers of the identify, quantify and trace the “proceeds of crime”. They also collect the evidence relating to the Enforcement Directorate and the said property is commencement of the offence, which may comprise suspected to be in a foreign jurisdiction, the Special of information received from predicate agency on Court may issue a letter of request to a court or an parallel financial investigation, examination of accused, authority in the foreign jurisdiction for execution of such other persons associated with the offence and third order. parties, reduction of their statement in writing, carrying 2.11.6.4 The Enforcement Directorate also out survey and search etc. They provisionally attach provides assistance to foreign jurisdictions and the properties identified as “proceeds of crime” and investigates the offence of money laundering by file a complaint before the Adjudicating Authority. In carrying out necessary inquiries if a request is received appropriate cases, joint investigation in collaboration from a Court or authority in the said foreign jurisdiction. with the predicate agency is also conducted. It may also attach, seize, freeze, or confiscate the 2.11.5.3 After carrying out the necessary property in India derived or obtained, directly or investigation, the Enforcement Directorate also file a indirectly, by any person from the commission of an Prosecution Complaint before the Special Courts offence under the corresponding law committed in the constituted under section 43 of the PMLA, who takes foreign jurisdiction if a request is received from a Court cognizance of the offence of money laundering or authority in the said foreign jurisdiction. committed under section 3 of the PMLA. After trial in 136Department of Revenue III 2.11.7 Performance of Enforcement Directorate in the area of PMLA The work done by Enforcement Directorate in the area of PMLA is summarized in the following Tables: Table 1: ECIRs Recorded, Attachments Made and Prosecution Complaints filed Topic 01.07.05 2012- 2013- 2014- 2015- 2016- 2017- 2018- 2019-20 Total to 13 14 15 16 17 18 19 (up to 31.03.12 30.11.19) No. of cases 1437 221 209 178 111 200 148 195 109 2808 recorded (ECIR) No. of PMLA 38 11 55 69 74 101 103 216 58 725 Prosecution Complaints filed No. of 131 65 130 166 105 180 196 181 97 1251 Provisional Attachment Orders (PAOs) issued No. of PAOs 108 52 57 138 117 118 179 187 90 1046 confirmed Value of 1215 2358 1773 3657 2000 11032 7432 15490 22606 67564 Assets under attachment (` in crore) Value of 9601 326 1395 2151 2952 9189 5086 13175 3205 38440 assets under PAO confirmed by Adjudicating Authority (` in crore) After the Provisional Attachment is confirmed by the Adjudicating Authority wherein it is held that the property is involved in money laundering, the Enforcement Directorate takes possession of the property and the offenders do not enjoy the property and thus it no longer remains a “provisional measure” Table 2: Number of summons issued, searches conducted and persons arrested under PMLA Financial Year Number of summons Number of searches conducted Number of persons issued under PMLA arrested 2016-17 4567 226 31 2017-18 5837 368 38 2018-19 9175 519 24 2019-20 (till 6991 311 30 30.11.2019) 137Annual Report 2019-2020 Table 3: Money Laundering Investigation (ECIR) under different categories of offences (as on 31.03.2019) Category of Offence Corresponding Number of Number of Amount of provisions under cases cases proceeds the predicate Act investigated prosecuted seized or frozen/ attached (Amount in Crores) Offences related to Illicit NDPS Act 295 21 132.57 Trafficking in Narcotics Drugs & Psychotropic Substances Offences against the State IPC 121-121B 8 2 0.25 Offences relating to IPC 255-260 0 0 0 Counterfeiting Offences relating to Murder, IPC 302-414 59 12 402.21 Grievous Bodily Injury, Kidnapping, Extortion, Stealing, Robbery etc. Offences related to Cheating, Bank fraud 251 89 14,980.29 Fraudulent Deeds and Disposition Siphoning of 108 33 545.31 of Property, Forgery etc. (IPC 417- Government 488) Funds Ponzi Scheme/ 102 48 3802.85 Duping of Investors Others 465 131 10,088.72 Offences relating to Currency IPC 489A-489B 115 6 5.18 Notes and Bank Notes Offences related to Illicit Arms Arms Act, 1959 72 18 139.63 Trafficking Offences relating to unlawful Unlawful Activities 84 21 254.63 activities of individuals and Prevention Act, associations and dealing with 1967, Explosive terrorist activities Substances Act,1908 Offences relating to wildlife Wildlife Protection 11 3 0.85 including poaching, smuggling Act,1972 and illegal trade in wildlife and its derivatives Offences relating to Trafficking in Immortal Traffic 6 4 4.52 person Prevention Act, 1956, Juvenile Justice (Care & Protection of Children) Act, 2000 Offences related to corruption in Prevention of 566 210 14,035.95 government agencies and public Corruption Act, sector businesses in India. 1972 Offences relating to smuggling Antiquities & Art 3 1 43.30 and fraudulent commercial Treasure Act, activities in the antiques & 1972 sculptures Offences relating to use of Securities & 5 1 11.99 manipulative and deceptive Exchange Board devices in trading, insider trading of India Act, 1992 and substantial acquisition of securities or control Offences relating to evasion of Customs Act, 12 4 62.13 duty or prohibitions imposed 1962 under the Customs Act. 138Department of Revenue III Offences relating to bonded Bonded Labour 1 1 0.11 labour and child labour System (Abolition Act), 1976 and Child Labour (Prohibition and Regulation) Act, 1986 Offences relating to Copyright Copy Right Act, 4 2 18.23 and Trademark 1857 and Trade Marks Act, 1999 Offences relating to breach of Information 1 1 0 confidentiality Technology Act, and privacy 2000 Offences relating to Biological Diversity 1 0 0 Environmental Crime Act, 2002, Protection of Plant Varieties and Farmer’s Rights Act, 2001 Offences relating to discharging Environment 6 2 13.19 environmental pollutants, etc., in Protection Act, excess of prescribed standards 1986 and Water Prevention & Pollution Offences relating to emigration Emigration 5 2 9.20 and passport violations Act,1983, Foreigners Act, 1946 and Passport Act,1967 Offences where the categorization of the predicate 519 55 407.16 offence is not evident/other offences Total 2699 667 44,958.31 2.11.8 Performance of Enforcement Directorate in the area of FEMA The work done by Enforcement Directorate in the area of FEMA is summarized in the following Tables: Table 4: Investigations under FEMA Financial Year Investigation SCN SCN adjudicated Penalty imposed (` in initiated issued crores) 2016-17 1993 538 693 40.65 2017-18 3627 791 868 178.80 2018-19 2661 844 769 1905.18 2019-20 (up to 1946 380 326 355.87 30.11.2019) Table 5: Number of summons issued and searches conducted under FEMA Financial Year Number of summons issued Number of searches conducted under FEMA 2016-17 3240 222 2017-18 4156 126 2018-19 6102 151 2019-20 (till 30.11.2019) 5669 101 139Annual Report 2019-2020 2.11.9 Performance of Enforcement Directorate in 28 persons, out of which RCN has been published in the area of Extradition and RCN respect of 17 persons. A total of 28 Extradition requests have been sent to various countries in respect of 20 The Enforcement Directorate has made requests individuals. The year wise details are presented in the for publishing of Red Corner Notice (RCN) in respect of following Table: Table 6: Red Corner Notice (RCN) and Extradition Financial Year No. of RCN request made No. of Extradition requests made 2015-16 2 0 2016-17 0 0 2017-18 7 5 2018-19 17 17 2019-20 (till 30.11.2019) 2 6 2.11.10 Special Focus on Terror Financing  Authorized money transfer services such as 2.11.10.1 The Enforcement Directorate gives Western Union special focus on investigation of terror financing cases.  Hawala Payments The terrorism cases under UAPA are investigated and  Donations to NPOs/Social Welfare Organizations prosecuted by the National Investigation Agency (NIA) under the NIA Act, 2008. However, the State Police  Barter Trade Authorities also investigate the terrorism cases under  Fake Indian Currency Notes UAPA and also under various provisions of the IPC. 2.11.10.2 The focus of investigation by the Police 2.11.11 Other Initiatives Authorities are normally on criminal investigation such Other initiatives taken by the Enforcement Directorate as from where the arms have been received, how the conspiracy has been hatched, who was the mastermind, includes the following: what was the plot, what was the motive, who were (a) Swachch Bharat Abhiyan launched by the Hon’ble involved etc. Prime Minister on 2nd October, 2014 is being 2.11.10.3 The Enforcement Directorate, after a vigorously followed by Enforcement Directorate. On reference is made to it by the police authorities, carries 2nd October, 2019, a pledge ceremony was out the financial investigation, including from where the organized across all offices of the Enforcement funds have been received, how the funds were layered Directorate where all the officers and staff members into the banking channels, and if not through banking took pledge to keep our nation ‘Swachch’. Further, channels, whether it was from Hawala or Barter Trade or various drives have been organized including Trade Based Money Laundering. It also investigates, how installation of banners for creating awareness and to whom the funds were distributed and if the funds have been invested in some property, whether the among citizens and government officials towards property still exits or is liquidated. Once the property is the cause of this “Abhiyan”. Regular inspection of identified, the Enforcement Directorate provisionally the office premises is also being done. attaches the property and then takes possession after (b) A Vigilance Awareness Week was also organized confirmation by the Adjudicating Authority. If the property by the Directorate during 28th October to is liquidated, equivalent amount of property, whether in 2ndNovember, 2019 to create awareness among India or abroad, is attached. staff to check corruption at every level so that a 2.11.10.4 During investigation of cases related to corruption free society could be attained. terror financing by the Enforcement Directorate, it has been found that the terrorists use a number of methods (c) International Day of Yoga was celebrated on 21st of funding including the following:- June, 2019 by all the offices of this Directorate.  Banking channels by receipt of foreign All the officers / officials of the Directorate remittances participated with enthusiasm and zeal. 140Department of Revenue III 2.12 Financial Intelligence Unit – India April 2019 to 31 October 2019): - (FIU-IND) a. Regular interaction and exchange of information. 2.12.1 Background and function of FIU-IND b. Received 1114 requests for information from intelligence and Law Enforcement Agencies. Financial Intelligence Unit-India (FIU-IND) was c. Provided information in 798 cases requested set up by the Govt. of India to coordinate and strengthen collection and sharing of financial intelligence through an by the agencies. effective national, regional and global network to combat money laundering and related crimes. iv. Regional and global AML/CFT efforts (01 April 2019 to 30 November 2019): - 2.12.2 The main functions of FIU-IND include all a. 85 requests received from foreign FIUs matters pertaining to during 01.04.2019 to 30.11.2019. b. 364 requests sent to foreign FIUs during a) Analysis of information/reports received from 01.04.2019 to 30.11.2019. Reporting Entities as per the provisions of PMLA 2002 and Rules made thereunder and their v. Increasing awareness about money dissemination to authorized domestic agencies laundering and terrorists financing (01 April for further action. 2019 to 30 November 2019): - b) Enforcement of the provision of PMLA insofar as it relates to FIU-IND. a. 24 Programmes for training REs were conducted in which 686 participants c) Egmont Group and exchange of information with participated. foreign FIUs. b. 23 Review meetings at FIU-IND were held in which 128 participants participated. d) Interface with reporting entities and their c. 21 Training Programmes for training LEAs regulators and domestic agencies authorized to were conducted in which 577 participants receive information from FIU-IND including participated. promoting awareness about AML/CFT, capacity d. 08 meetings with LEAs were conducted in building and training. which 783 participants participated. 2.12.3 Highlights of the Performance/ achievements during 2019-20 from 01 April 2019 to 30 vi.Strengthening legislative and regulatory November 2019 framework: a. Regular interaction with the Department of i. Collection of information (01 April 2019 to 30 Revenue and Regulators. November 2019): - b. Suggestions received from stake holders or a. 1,05,41,022 Cash Transaction Report through Department of Revenue for (CTRs) received. amendments to the Prevention of Money b. 2,74,413 Suspicious Transaction Reports Laundering Act, 2002 and the PML (STRs) received. (Maintenance of Records) Rules, 2005 were c. 1,66,270 Counterfeit Currency Reports dealt with. (CCRs) received. c. Participated in proceedings of the AML d. 6,41,804 NPO Transaction Report (NTRs) received. Steering Committee for evolving Risk based ii. Analysis and dissemination of information (01 approach and framing of the National ML/ April 2019 to 30 November 2019): - TF Risk Assessment. a. 7,85,703 STRs processed. vii. Strengthening IT information: b. 20,451 STRs disseminated. a. Initiation of Project FINnet 2.0 b. Designation and Conceptualization of FINnet iii.Collaboration with domestic Law 2.0 features and initiation of tendering Enforcement and Intelligence Agencies (01 process. 141Annual Report 2019-2020 3. Central Board of Indirect Taxes and viii. To dissuade non-filers of returns, provision Customs of Rule 138E to block generation of e-way bill for those suppliers who fail to furnish GST 3.1 Goods & Services Tax returns for 2 consecutive tax periods has come into force from 21.11.2019.The Following decisions have been implemented/ unblocking of this facility is automatic on proposed to be implemented during 2019-20: filing returns but can also be triggered by i. Threshold limit for exemption from getting the taxpayers after filing returns. registration under GST have been increased. ix. Facility of single unified cash ledger is being Now there are two threshold limits for extended to the registered person which exemption from registration and payment of would allow them to transfer an amount from GST for the suppliers of goods i.e. Rs 40 lakhs one (major or minor) head to another (major and Rs 20 lakhs. States have an option to or minor) head in the electronic cash ledger. decide about one of the limits. Accordingly, x. Interest on delayed payments will now be in all States and Union Territories other than only on the net cash tax liability in specified Kerala, Telangana, Puducherry, Meghalaya, cases. Amendments to this effect have been Mizoram, Tripura, Manipur, Sikkim, Nagaland, made in the CGST Act but the same is yet Arunachal Pradesh and Uttarakhand, the exemption threshold for goods supplier is Rs. to be given effect as similar amendments in all the SGST Acts are awaited. 40 lakhs. The threshold for registration for service providers continues to be Rs 20 lakhs xi. Provisions have been made in the CGST Act and in case of Special category States Rs 10 2017 regarding constitution, qualification, lakhs. appointment, tenure, conditions of services ii. A composition scheme was made available of the National Appellate Authority for for suppliers of services (or mixed suppliers) Advance Ruling; to hear appeals against having an annual turnover in preceding conflicting advance rulings pronounced on financial year up to Rs 50 lakhs, with a tax the same question by the Appellate rate of 6% (3% CGST + 3% SGST). Authorities of two or more States or Union territories in case of distinct persons. iii. The eligibility for availing composition scheme for goods has been increased from xii. The tenure of National Anti-Profiteering Rs. 1 Crore aggregate turnover in the Authority has been extended by another two preceding financial year to Rs 1.5 Crore. The years. Further, it has been provided that limit remains unchanged at Rs.75 lacs for National Anti-Profiteering Authority may North Eastern states & Uttarakhand. impose penalty equivalent to 10% of the profiteered amount. iv. Completely automated new refund system has been introduced w.e.f. 26.09.2019 xiii. Filing FORM GSTR-9A for Composition wherein the filing, processing, sanction and Taxpayers and filing of FORM GSTR-9 for disbursal of refunds is online without any the taxpayers who (are required to file the physical interface between the claimant and said returns) have aggregate turnover up to the sanctioning/disbursing authority. Rs. 2 crores have been made optional for v. Alongwith this fully automated system, the the FY 2017-18 and 2018-19. disbursement is now single source wherein xiv. For taxpayers, having aggregate turnover of Central Government disburses refund > Rs. 2 crores, who are required to file FORM amount to the taxpayers in respect of State GSTR-9/9C for FY 2017-18 and FY taxes as well. The claimant thus does not 2018-19, several fields have been made need to wait to get refund from two optional for these years which is expected authorities. to make the process of filing these returns vi. Composition taxpayers need not file much simpler. Accordingly, Notification No. quarterly returns w.e.f. 01.04.2019. They are 56/2019-Central Tax dt. 14-11-2019 has been now required to pay tax quarterly and file issued. The last date of filing FORM GSTR9 their returns annually. & 9C for FY 2018-19 has been extended to 31.03.2020. vii. Online Information and Database Access or Retrieval (OIDAR) registrants have been xv. As the GST Appellate Tribunal are yet not exempted from furnishing annual return and functional, a removal of difficulty order has reconciliation statement since they are not been issued to provide that the limitation required to maintain accounts in India. period would count from the time when the 142Department of Revenue III president or state president enters office. help taxpayers in backward integration and automation of tax relevant xvi. In order to nudge taxpayers to timely file processes. It would also help tax their statement of outward supplies, authorities in combating the menace of restrictions have been imposed on availment tax evasion. E-invoicing shall be made of input tax credit by the recipients in cases mandatory for the taxpayers with annual where details of outward supplies have not turnover of 100 crores w.e.f. 01.04.2020. been furnished by the suppliers in the However, e-invoicing is proposed to be statement under section 37 of the CGST Act, rolled out on voluntary basis from 2017.Accordingly, Notification No. 49/2019- January 2020. Central Tax, dated 09-10-2019 has been issued to amend Rule 36(4) in the CGST iii. The Government has also decided to Rules, 2017 to give effect to this restriction. introduce the invoices with dynamic QR code in respect of B2C transactions for the xvii. Suitable amendments have been made in taxpayers with annual turnover more than the CGST Act, UTGST Act, and the 500 crores which would allow the customers corresponding SGST Acts in view of creation to make payment through online payment of UTs of Jammu & Kashmir and Ladakh. gateways. The scheme is proposed to be xviii. Steps have been initiated to link Aadhar with rolled out on voluntary basis from 01.03.2020 registration of taxpayers under GST and and is proposed to be made mandatory w.e.f. examine the possibility of making Aadhar 01.04.2020. mandatory for claiming refunds as well to weed out fraudulent registrations and refund Rationalization of tax rates: claimants. A. General policy direction as regards Customs xix. Keeping in view, the Government’s objective duty rates to give impetus to economic of transparency and accountability in indirect growth: tax administration through widespread use of information technology, CBIC has w.e.f. A1. In recent years, the Customs duty rate structure 08.11.2019 introduced Document has been guided a conscious policy of the government to- Identification Number (DIN), for all  Incentivize domestic value addition under communications sent by its offices to make in India initiative, which interalia taxpayers and other concerned persons. envisages imposition of lower duty on raw Presently DIN is applicable for search materials and providing reasonable tariff authorization, summons, arrest memos, barrier on goods being manufactured in India; inspection notices and letters issued in the course of any enquiry.  Put in place phased manufacturing plan in respect of significant products like mobile Decisions proposed to be implemented w.e.f. phone, other electronic goods like TVs, 01.04.2020: electric vehicles, batteries, solar panel etc. The BCD rate are calibrated in such a i. The Government has decided to roll out manner that encourages deepening of value the new return system from April, 2020 addition gradually. For example, in respect onwards which is a much simpler form. of mobile phones, initially the parts were However, GST New Return Offline Tool has placed under nil BCD while duty was been released on trial basis on the GST imposed on mobiles. Gradually, duty has Portal and the taxpayers are being been raised on parts in phased manner as encouraged to try the utility and provide their production began in India. feedback. A nationwide stakeholder feedback exercise was conducted in this  Providing level playing field to farmers with regard on 07.02.2019 in 26 cities at 210 adequate tariff barrier on agricultural produce. venues covering all states of India where  Have a graded duty structure so as to avoid 21857 stakeholders provided feedback on the duty inversion on value added products. new return system.  Calibrated customs duty structure in such ii. The Government has decided to way that incentivizes investment in key areas introduce electronic invoicing system in like petroleum exploration, electronic a phase-wise manner for B2B manufacturing etc. transactions. E-invoicing is a rapidly expanding technology which would  Strategic imports like defense goods not 143Annual Report 2019-2020 produced domestically are allowed imports  Finished items of consumption attract higher at concessional duty. duty, e.g., items like mobile, television, air- conditioner, refrigerators, washing machine,  The import of non-essential items is furniture, jewelry, including imitation jewelry, discouraged. watches, toys attract 20% BCD. Footwear,  To prescribe trade remedial duties, like anti- certain textile articles etc attract BCD at the dumping duty, CVD, safeguard duty on rate of 25%. (Details at Appendix ‘B’). dumped and subsidized imports causing  The BCD has been increased in past few injury to the domestic industry. budgets on items like oils, pulses, wheat,  Encourage exports, by making available the sugar, fruit juices, edible oils and raw material without the imposition of miscellaneous edible preparation to customs duty and allowing refunds of duty/ safeguard the interest of farmers. taxes on inputs, besides fiscal incentives.  Concerted efforts have been made to remove Prominently, gems and jewelry sector, inversions in duty structure. Tariff textiles, pharma, leather goods, electronics, Commission and DPIIT examines the issues fisheries, agriculture have been benefitted by of inversion/ negative effective protection to such initiatives relating to exports. the domestic industry. In majority of cases A2. Basic Customs Duty structure consequent to Tariff Commission did not find any inversion. adoption of the above guiding principles for inducing Appropriate corrections made in few cases economic growth in India: recommended by them. The inversion now  The basic customs duty rates in general are being spoken about essentially emanates Nil/2.5%/5%/7.5% on the inputs/ from FTA and ITA, the review of which lies in intermediate products [industrial chemicals, the domain of Department of Commerce. ores and concentrates, fuels, textile fibres A3. Import basket and volumes and yarns etc] used in industries for manufacturing. Decription 18-19 18-19 19-20 %growth (M$) [Apr_Sep] [Apr_Sep] [19-20] M$ M$ Apr_Sep Petroleum, coal 167860 83640 77358 -7.5 Precious metals/stones 64707 34465 29694 -13.8 Electronics, IT 52035 27569 27232 -1.2 Machinery 43832 22668 23083 1.8 Organic Chem 22388 11621 10857 -6.6 Polymers, plastic goods 15190 7786 7555 -3.0 Iron & steel 12575 6367 6413 0.7 Edible oils 9992 5390 4833 -10.3 Medical &Sci equip 9628 4755 4653 -2.2 Aircraft & parts thereof 7615 3595 3803 5.8 Inorganic chem 7612 3954 3362 -15.0 Fertilizers 6662 3454 3714 7.5 Auto & parts 6153 3241 2787 -14.0 MiscChem, pesticides etc 5814 2969 3142 5.8 Ships, dredgers etc 5791 1556 865 -44.4 All other items 76120 38599 37279 -3.4 Total imports 513974 261628 246630 -5.7 Source: CBIC/Exim Database-DOC 144Department of Revenue III A. The Goods and Services Tax: out of GST. 28% slab has been pruned by 90% and now only a handful item, most of B1. Evolution of GST- An instrument of economic which being luxury or sin goods remain in development 28% slab.  GST was rolled out with effect from 1st July, B2. Evolution of GST rate structure 2017 with a motto of “One Nation One market, One Tax”. It consolidated a myriad  The GST rates on goods and services were and complex rate structure with multitude initially fitted into 4 slabs i.e 5%, 12%, 18% of rates, varying with states, local bodies and 28%, largely based on the Pre-GST etc., and with huge cascading into one tax indirect tax incidence both of Centre and and a simplified procedural regime. The scale States, including the embedded taxes. The of reform was gigantic and the law and GST rates were fixed based on the pre-GST regime evolved in an inclusive way. There tax incidence. However, 28% rate slab has has been extensive participation of all stake since then been pruned considerably holders. (229 commodities to 29 commodities now). 28% list now has tobacco products,  One common tax across the length and automobile, auto parts, cement and certain breadth of the country, while ensured that white goods like air conditioners, large TVs. all inter-state trade barrier had gone, logistic became efficient with turn -around time  The GST Council has reviewed the rates in transport decreasing significantly, cascading a number of its meetings and has suggested of taxes gone and a transparent, neutral, revision in the GST rates on around 400 efficient tax regime coming into existence, commodities and 77 categories of services, it also evoked huge response as the entire since July 2017 (List attached as nation looked at the taxes exactly the same Appendix ‘C’). These rate rationalizations way. Council responded swiftly, glitches have reduced the cost to the consumers thus have been addressed quickly and necessary increasing the, purchasing capacity/ changes were made timely. Procedural consumption. glitches were addressed at fast pace. B3. GST rate on auto and auto parts  While continuous improvements are being  GST rate structure on auto and auto parts made in an extremely responsive way in has been discussed and debated GST, never the less it has been a defining significantly in last few months. Auto sector and unprecedented tax reform in India. contributes significantly to GST revenue.  In certain opinions it has been argued that Therefore, any change in GST rate of manner of implementation of GST may have automobiles and parts will have a significant had certain adverse impact. However, these implication to revenue and compensation views /opinions were not based on any sound requirement. The GST rates on auto sectors fundamental study ignoring the benefits has been discussed in the GST Council. The accrued to trade and consumer on account Council did not recommend any change. It of single tax across country, uniform was felt that temporary auto slowdown may automated business processes, removal of be attributable to certain other reasons such check post at borders, logistic becoming as lack of credit, base effect (as in last few efficient, lower of effective tax rates, tax years auto sector has grown rapidly), and incidence going down almost on all supplies. structural changes like adoption of newer fuel Creating a single common tax with uniform standards from BS-IV to BS-VI from April law and procedure in such a diverse country 20 etc. in itself is such a gigantic reform.  GST on electric vehicle: to promote clean  It has also been argued that the present rate and sustainable environment friendly slabs are too many and that GST vehicles, the government has reduced the compliance needs a substantial GST rate on Electric Vehicles and Electric simplification. The GST rate structure has Vehicle Chargers to 5%. evolved with extensive deliberations in GST Council and the four rate structure is a huge C: Central excise duty on Diesel and petrol simplification over the multitude of taxes and cess with multiple state wise rates. GST rate C1. The revenue contribution by way excise duty/ structure has been further simplified after roll cesses of petroleum sector to central exchequer in 2018- 19 was 2,31,000 crore rupees. The central excise duty 145Annual Report 2019-2020 rates on petrol and diesel are calibrated from time to time Rs 2 a litre, while helped in generating annual revenue of taking into account the crude prices and the exchange about Rs 28000 crore, did not cause significant hardship rate. The excise duty rates were on petrol and diesel were to consumer in view of the lowering of price otherwise on reduced by Rs 2 per litre in Oct 2017, and by Rs 1.5 per account of softening of cost of crude. Also, it is a conscious litre in Oct 2018. In this year budget, the excise duty was policy of the Government to reduce dependence on fossil raised by Rs 2 per litre as the prices of crude softened to fuels (which in any case are largely imported), incentivize about USD 60/ bbl of crude as compared to a high of new renewables like solar, wind and also to incentivize about USD 85/bbl in Oct 18. Exchange rate also softened use of EVs. Therefore, there is considerable justification during this period. Thus, increase in excise duty rate by for imposing higher taxes on fossil fuels. Appendix ‘B’ Description of goods From To Chemicals Naphtha 5% 4% Methyloxirane (Propylene Oxide) 7.5% 5% Ethylene dichloride (EDC) 2% Nil Raw materials used in manufacture of Preform of Silica: - Applicable rate Nil a) Silicon Tetra Chloride b) Germanium Tetra Chloride c) Refrigerated Helium Liquid d) Silica Rods e) Silica Tubes Textile Wool fibre, Wool Tops 5% 2.5% Steel and other base metals Inputs for the manufacture of CRGO steel: - 5% 2.5% a) MgO coated cold rolled steel coils b) Hot rolled coils c) Cold-rolled MgO coated and annealed steel d) Hot rolled annealed and pickled coils e) Cold rolled full hard Amorphous alloy ribbon 10% 5% Cobalt mattes and other intermediate products of cobalt metallurgy 5% 2.5% Capital goods Capital goods used for manufacturing of following electronic items, Applicable rate Nil namely- (i) Populated PCBA (ii) Camera module of cellular mobile phones (iii) Charger/Adapter of cellular mobile phone (iv) Lithium Ion Cell (v) Display Module (vi) Set Top Box (vii) Compact Camera Module Food processing Cashew kernels, broken Rs. 60 per kg or 70% 45% whichever is higher Cashew kernels Rs. 75 per kg or 70% 45% whichever is higher 146Department of Revenue III Chemicals, Plastics and Rubber Palm stearin and other oils having 20% or more free fatty acid, Nil 7.5% Palm fatty acid distillate and other industrial monocarboxylic fatty acids. acid oils from refining for use in manufacture of oleochemicals and soap Poly Vinyl Chloride 7.5% 10% Floor cover of plastics, Wall or ceiling coverings of plastics 10% 15% Articles of plastic 10% 15% Butyl Rubber 5% 10% Chlorobutyl rubber or bromobutyl rubber 5% 10% Paper Industry a. Newsprint Nil 10% b. Uncoated paper used for printing of newspapers c. Lightweight coated paper used for magazines Printed books (including covers for printed books) and printed Nil 5% manuals Textile Water blocking tapes for manufacture of optical fiber cables Nil 20% Ceramic products Ceramic roofing tiles and ceramic flags and pavings, hearth or wall 10% 15% tiles etc. Steel and base metal products Stainless steel products 5% 7.5% Other alloy steel 5% 7.5% Wire of other alloy steel (other than INVAR) 5% 7.5% Base metal fittings, mountings and similar articles suitable for 10% 15% furniture, doors, staircases, windows, blinds, hinge for auto mobiles Electronic goods and machine Indoor and outdoor unit of split system air conditioner 10% 20% Stone crushing (cone type) plants for the construction of roads Nil 7.5% Charger/ power adapter of CCTV camera/ IP camera and DVR / Nil 15% NVR Loudspeaker 10% 15% Digital Video Recorder (DVR) and Network Video Recorder (NVR) 15% 20% CCTV camera and IP camera 15% 20% Optical Fibres, optical fibre bundles and cables 10% 15% Automobile and automobile parts Friction material and articles thereof etc. 10% 15% Glass mirrors, whether or not framed, including rear-view mirrors 10% 15% Locks of a kind used in motor vehicles 10% 15% Catalytic Converter 5% 10% Oil or petrol filters for internal combustion engines 7.5% 10% Intake air filters for internal combustion engines 7.5% 10% Lighting or visual signaling equipment of a kind used in bicycles or 10 % 15% motor vehicles Vehicle Horns 10% 15% 147Annual Report 2019-2020 Other visual or sound signalling equipment for bicycle and motor 7.5% 15% vehicle Parts of visual or sound signaling equipment, windscreen wipers, 7.5% 10% defrosters and demisters of a kind used in cycles or motor vehicles Windscreen wipers, defrosters and demisters, Sealed beam lamp 10% 15% units, Other lamps for automobiles. Completely Built Unit (CBU) of vehicles 25% 30% Chassis fitted with engines, for the motor vehicles of headings 10% 15% 8701 to 8705 Bodies (including cabs), for the motor vehicles of headings 8701 to 10% 15% 8705 Reducing customs duty to promote electrical mobility Parts for exclusive use Electric vehicles - Applicable rate Nil a. E-drive assembly b. On board charger c. E compressor d. Charging Gun Changes in Customs duty to address the problem of duty inversion in certain sectors Marble Slabs 20% 40% Raw material, parts or accessories for use manufacture of artificial Applicable rate Nil kidneys, disposable sterilized dialyzer and micro-barrier of artificial kidney Reduction in customs duty to promote renewable energy All forms of Uranium ores and concentrates, for generation of 2.5% Nil nuclear power Uranium enriched in U-235 or its compounds, plutonium and its 7.5% Nil compounds, mixtures etc. for generation of nuclear power All goods required for setting up of Nuclear power plant under Applicable rate Nil project imports: - a) MahiBanswara Atomic Power project- 1 to 4, b) Kaiga Atomic Power project – 5 & 6, c) Gorakhpur Atomic Power project- 3 & 4, d) Chutka Atomic Power project- 1 & 2) Duty rationalization/ withdrawal Petroleum crude Nil Re. 1 per tonne Specified electronic goods such as switches, sockets, plugs, Nil Applicable connectors, relays etc. rate Capital goods used for manufacturing of specified electronic items, Nil Applicable namely- rate (i) Cathode Ray tubes; (ii) CD/CD-R/DVD/DVD-R; (iii) Deflection components, CRT monitors/CTVs; (iv) Plasma Display Panel Export Promotion for sports goods Foam/ EVA foam and pine wood are being included in the list of Applicable rate Nil item allowed duty free import upto 3% of FOB value of sports goods exported in the preceding financial year 148Department of Revenue III Reduction in customs duty for Defence sector Specified Military equipment and their parts imported by Ministry of Applicable rate Nil Defence or Armed forces Additional revenue measures Silver (including silver plated with gold or platinum) unwrought or in 10% 12.50% semi-manufactured forms, or in powder form Silver dore bar, having silver content not exceeding 95% 8.50% 11% Base metals clad with silver, not further worked than semi- 10% 12.50% manufactured Gold (including gold plated with platinum) unwrought or in semi- 10% 12.50% manufactured forms, or in powder form Gold dore bar, having gold content not exceeding 95% 9.35% 11.85% Base metals or silver, clad with gold, not further worked than semi- 10% 12.50% manufactured Platinum, unwrought or in semi-manufactured forms, or in powder 10% 12.50% form [ other than Rhodium] Base metals, silver or gold, clad with platinum, not further worked 10% 12.50% than semi-manufactured Waste and scrap of precious metals or of metal clad with precious 10% 12.50% metals; other waste and scrap containing precious metal compounds, of a kind used principally for the recovery of precious metal. Gold and Silver imported by an eligible passenger as baggage 10% 12.50% India. Appendix ‘C’ (iii) supply of goods and services to Food and 1. Reduction in the GST rate on supply of goods: Agriculture Organisation (FAO) for specified (i) 12% to 5% on all electric vehicles projects in India. (ii) 18% to 5% on charger or charging stations 3. GST rates have been increased from, - for Electric vehicles (i) 5% to 12% on goods, falling under chapter (iii) 18% to 12% on parts of Slide Fasteners 86 of tariff like railway wagons, coaches, (iv) 18% to 5% on Marine Fuel 0.5% (FO) rolling stock (without refund of accumulated ITC). This is to address the concern of ITC (v) 12% to 5% on Wet Grinders (consisting accumulation with suppliers of these goods. stone as a grinder) (ii) 18% to 28% +12% compensation cess on (vi) 5% to Nil on Dried tamarind and Plates and caffeinated Beverages cups made up of leaves/ flowers/bark (vii) 3% to 0.25% on cut and polished semi- 4. Measures for Export Promotion precious stones (i) Exemption from GST/ IGST: (viii) Applicable rate to 5% on specified goods a) at the time of import on Silver/Platinum for petroleum operations undertaken under by specified nominated agencies Hydrocarbon Exploration Licensing Policy b) supply of Silver/Platinum by specified (HELP) nominated agency to exporters for 2. Exemptions from GST/IGST on: exports of Jewellery, (i) imports of specified defence goods not being (ii) Inclusion of Diamond India Limited (DIL) in manufactured indigenously (upto 2024) the list of nominated agencies eligible for IGST exemption on imports of Gold/Silver/ (ii) supply of goods and services to FIFA and Platinum so as to supply at Nil GST to other specified persons for organizing the Jewellery exporters. Under-17 Women’s Football World Cup in 149Annual Report 2019-2020 5. GST concession in certain cases for specific annual return and make quarterly payment of GST period: - after completion of provision of service. This quarterly payment of GST would not adversely (i) Exemption to Fishmeal for the period affect the cash flow as it would provide a time 01.07.17 to 30.09.19. There were doubts as buffer for the small service providers. regards taxability of fishmeal in view of the interpretational issues. However, any tax (ii) Special package for real estate sector - collected for this period shall be required to (a) Construction of affordable residential houses, be deposited. i.e. houses having carpet area of upto 60 (ii) 12% GST during the period 1.07.2017 to sqm in metros and 90 sqm in non-metros 31.12.2018, on pulley, wheels and other and having value upto Rs. 45 lakhs)- 1% parts (falling under heading 8483) and used without lTC. as parts of agricultural machinery. (b) Construction of residential houses other than affordable residential houses- 5% without Rationalization of GST Rates of Services in 2019 ITC. I. GST Rates reduced from 18% to 12% (iii) Special rate for job work service 1. Supply of “hotel accommodation” having value of (a) Job work services in relation to diamonds supply of a unit of accommodation above one thousand has been reduced from 5% to 1.5%. rupees but less than or equal to seven thousand five V. Other rationalization of GST Rates hundred rupees per unit per day or equivalent. Grant of liquor licence by State Governments 2. GST rate has been reduced from 18% to 12% on against payment of license fee or application fee or by supply of all job work services, which are not currently whatever name called, has been notified as “no supply” to eligible for the 5% rate (such as machine job work in remove implementational ambiguity on the subject. engineering industry), except supply of job work in relation to bus body building which would remain at 18%. VI. Exemption from levy of GST 1. Intermediate tax on development right, such as II. Reduction of GST Rates from 18% with ITC to Transfer of Development Rights, long term lease (premium), 5% without ITC Floor Space Index has been exempted to address the GST on outdoor catering services other than in cash flow issues in the real estate sector. premises having daily tariff of unit of accommodation of 2. Storage or warehousing of cereals, pulses, fruits, Rs 7501 has been reduced from 18% to 5%without ITC. nuts and vegetables, spices, copra, sugarcane, jaggery, III. Reduction of GST Rates from 28% with ITC to raw vegetable fibres such as cotton, flax, jute etc., indigo, 18% unmanufactured tobacco, betel leaves, tendu leaves, rice, coffee and tea. “Hotel accommodation” service having value of supply of a unit of accommodation above seven thousand 3. Services provided by an intermediary to a supplier five hundred rupees per unit per day or equivalent has been of goods or recipient of goods when both the supplier and reduced from 28% to 18%. recipient are located outside the taxable territory. IV. Special provisions: 4. “BANGLA SHASYA BIMA” (BSB) crop insurance scheme of West Bengal Government has been exempt (i) Special Composition Scheme for from GST. Service Providers: To boost the MSME sector, with effect from 5. Services of life insurance business provided or 01.04.2019, composition scheme for service agreed to be provided by the Central Armed Paramilitary providers has been introduced. The scheme can Forces (under Ministry of Home Affairs) Group Insurance be availed by a registered person having annual Funds to their members under the respective Group turnover upto Rs. 50 lakhs, which is considerably Insurance Schemes of these Central Armed Paramilitary high. The service providers opting for new forces has been exempted. composition scheme can now pay GST @ 6% 6. Services provided by an intermediary to a supplier and would not be eligible to avail any input tax. of goods or recipient of goods when both the supplier and The service providers covered under the recipient are located outside the taxable territory is exempt Composition Scheme shall be required to file 1 from GST. 150Department of Revenue III 7. Services related to FIFA Under-17 Women’s respect of 26 types (79 Nos.) of equipment have been World Cup 2020 similar to existing exemption given to conveyed to Directorate of Logistics, CBIC. FIFA U 17 World Cup 2017 have been exempted.  During 2019, (out of 12) Revenue Laboratories, 8. Upfront amount payable in respect of service by namely at New Delhi, Kandla, Vadodara, Mumbai, Kochi, way of granting of long term lease of (thirty years, or more) Chennai and Vizag, have been granted NABL accreditation of industrial plots or plots for development of infrastructure for chemical testing in accordance with ISO/IEC for financial business, provided by the State Government 17025:2017 for defined scope. Laboratories at New Delhi Industrial Development Corporations or Undertakings or and Chennai are also accredited for forensic analysis. by any other entity having 20% or more ownership of  A Proposal for recognizing CRCL, New Delhi as Government to the industrial units or the developers in the Regional Customs Laboratory of WCO, AP Region any industrial or financial business area. has been initiated. In the meeting of the Regional Contact 3.2 Anti-Smuggling /Anti-Evasion Points held at Puducherry, during 18-20.11.2019, the proposal received widespread support and Board is now The decisions/initiatives taken in anti-smuggling/ taking up the proposal with the WCO Secretariat. anti-evasion areas during the last one year are as follows: 3.2.3 Non-Intrusive Inspection Systems: 3.2.1 Border Control Measures:  Procurement of Container Scanners: In  Amendment in Import and Export Policy of principle approval in respect of 01 Drive Through Rail electronic cigarettes: ASU vide Circular No. 35/2019- Scanner for JNPT and for 05 Mobile X ray-based Container Customs dated 01.10.2019 based on the notification Scanner for major ports have been conveyed to Directorate issued by DGFT to ban Import and Export of e-Cigarettes of Logistics, CBIC. or any parts or components thereof such as refill pods, atomisers, cartridges etc. including all forms of Electronic  Procurement of 30 Full Body Scanner (FBS)- Nicotine Delivery Systems (ENDS), Heat not burn In principle approval in respect of 30 FBS has been products, e-hookah and the like devices, has directed field conveyed to Directorate of Logistics, CBIC. formations under CBIC to prevent any attempt of Import/ Export of such goods.  Procurement of 82 X-ray baggage inspection system (XBIS): In principle approval in respect of 82 XBIS  Formation of Working Group to implement has been conveyed to Directorate of Logistics, CBIC. Article 8 of the WHO FCTC Protocol: A working Group has been constituted to implement Article 8 (i.e. Track  Procurement of Air Cargo Inspection System: and Trace System) of the Protocol to Eliminate Illicit Trade Subsequent to the Notification No. 29/2019- Customs (NT) in Tobacco Products has been constituted to chart out dated 01.04.2019 amending the Cargo Handling further road map and timeline for the implementation of Regulation, 2009, major private ports/cargo handlers have provisions of the Protocol.The timeline for the been directed to procure and install ACIS at major Air Cargo implementation of the Article 8 has been finalized and Complexes at their expense. desired steps are being taken to ensure strict compliance  Various steps were taken to streamline the of the timeline. functioning of the department through issuing guidelines  Draft Revised Guidelines for deposit of seized/ regarding the disposal of confiscated gold with SPMCIL: This unit has submitted (i) Muriate of Potash issued vide Board’s the draft revised guidelines for the deposit of seized/ Circular No. 20/2019-Cus; confiscated gold with SPMCIL to the Department of (ii) Seized/confiscated Foreign Origin Liquor Economic Affairs based on the discussion of Director (FT) issued vide Board’s Circular No. 30/2019- in PMO wherein it was decided that the stock of seized Cus gold available with DoR may be utilized by DEA for giving it to SPMCIL for minting IGC, to banks under GML and to (iii) Unmanned Aircraft System (UAS)/ RBI for monetary reserves to reduce import of Gold, Unmanned Aerial Vehicle Systems (UAVS)/ increase value addition and monetization of Gold in the Remotely Piloted Aircrafts System (RPAS)/ economy. Drones issued vide Board’s Circular No. 32/ 2019-Cus. 3.2.2 Central Revenue Control Laboratory (CRCL):  Following Initiatives are under process:  Procurement of equipment for Central (i) Efforts are also being made for coordinating Revenue Control Laboratory (CRCL): Approval in with various departments for streamlining the 151Annual Report 2019-2020 process of disposal of Red Sanders/Fire  Proposals were sent to Tax Research Unit for Arms/NDPS etc. enlarging the scope of GST Compensation Cess by bringing under its ambit caffeinated/energy drinks and non- (ii) An SoP for dealing with the Sanction of alcoholic beer. Out of which the proposal of caffeinated/ prosecution of Gr.A Officers under Customs energy drinks have been accepted by GST Council which Act, 1962 is being looked in; could potentially add Rs. 100 Crore/annum Plus to (iii) Systems study for removal of Alerts from Government Revenue and the proposal to bring the taxation ICES systems of non-alcoholic beer is under consideration. (iv) A comprehensive Disposal Manual 2019  GST-Investigation Wing is collating and consolidating all existing Instructions/ disseminating cases of fake invoices (issuance & Circulars regarding disposal of seized/ availment) detected by different field formations. This confiscated goods has been approved by the information is now being shared with the States also Board and is in press for printing. through the office of GST Council.  Apart from above, following Circulars / 3.3 DRAWBACK Instructions/Modus Operandi have been issued: Important items of work accomplished by the CIRCULARS on following subjects were issued: Drawback Division of CBIC during the period (i) Generation and quoting of Document Identification 01.04.2019 to 30.11.2019 are as follows: Number (DIN) on any communication issued by the officers a) Exemption from furnishing Bank Guarantee under of the Central Board of Indirect Taxes and Customs (CBIC) Advance Authorization, Duty Free Import Authorization and to tax payers and other concerned persons; Export Promotion Capital Goods (EPCG) schemes has MODUS OPERANDI (MOs) on following subjects were been extended to manufacturer exporters/service providers issued: registered with the GST authorities subject to specified conditions. Circular No. 31/2019- Customs dated (i) Fraudulent Refund claim of Input Tax credit by a 13.09.2019 has been issued for this purpose. CGST Unit for goods exported to an NSEZ unit (Deemed Export) against fake documents; b) In terms of Hon’ble FM’s announcement dated 14.09.2019 regarding measures to boost exports, (ii) Evasion of GST in the Supply of used glass bottles additional 2% MEIS rates for certain items have been to Breweries; allowed beyond FY2018-19 upto 31.12.2019. (iii) Non-reversal of proportionate Input Tax Credit c) With a view to expedite clearance of Duty availed on common inputs, attributable to exempted Drawback claims and avoid litigation, clarification has been supplies of De-Oiled Rice Bran, in terms of Section 17 of issued that where short realization of export proceeds upto the CGST Act, 2017 read with Rule 42 of the CGST Rules, 12.5% of FoB value is on account of agency commission 2017; and foreign bank charges, Duty Drawback would be permitted without deducting such charges. Circular No. (iv) Detection of cases of ITC refunds by merchant 33/2019-Customs dated 19.09.2019 has thus been issued. exporters in connivance with units in kandla SEZ, Gandhidham, Gujarat. d) Clarification regarding claims for Brand Rate of Duty Drawback has been issued that the incidence of INSTRUCTIONS on the following subjects were issued: Education Cess, Secondary and Higher Education Cess, (i) Arrest under GST-Filing of Caveat in Hon’ble Social Welfare Surcharge and Clean environment Cess Supreme Court; (erstwhile Clean Energy Cess) are required to be included in these claims. It has also been clarified that Stowage (ii) Directions of Hon’ble Supreme Court in the matter Excise Duty cannot be considered for inclusion in Duty of SLP Nos.4322- 4324/2019; Drawback of any export goods. Instruction No. 04/2019– Customs dated 11.10.2019 refers in the matter. (iii) Monitoring of Companies under the Process of Strike off under Section 248 of Companies Act, 2013; e) The Drawback Committee has been set up by the Government and tasked to review the All Industry Rates (iv) Judgment of Hon’ble Supreme Court in the case of Duty Drawback for the year 2019. of State of Utter Pradesh & Ors vs. M/s Kay Pan Fragrance Pvt Ltd. In Civil Appeal No.8942/2019 & 8944/2019. f) Quarterly review of All Industry Rates of Duty Drawback on gold and silver jewellery/ articles was 152Department of Revenue III completed and revised AIRs have been notified vide SabkaVishwas -Legacy Dispute Resolution Scheme, Notification No. 82/2019-Customs (N.T.) dated 15.11.2019. 2019 announced by the Hon’ble FM, in the recent Budget. The Scheme has been notified and is currently operational  Significant developments/policy decisions from 1st September 2019 till 31st of December 2019.The taken during the year two main components of the Scheme are dispute resolution and amnesty. The dispute resolution component is aimed In terms of Hon’ble FM’s announcement dated 14.09.2019, at liquidating the legacy cases of Central Excise and Ministry of Textiles (MoT)’s Rebate of State and Central Service Tax that are subsumed in GST whereas the Taxes and Levies (RoSCTL) scheme and DoC’s amnesty component could bring the non-compliant tax Merchandise Export from India Scheme (MEIS) scheme payer/tax evaders under the tax net. will transit into Remission of Duties or Taxes on Export Product (RoDTEP) scheme. RoDTEP scheme shall iii. The Wing overviews the implementation of the replace MEIS and rebate various Central and State levies Budgetary Support Scheme under the GST. The Scheme and taxes which are not refunded under other schemes. was notified by the Department of Promotion of Industry This would be a WTO compliant scheme and improve the and Internal trade, Ministry of Commerce &Industry, competitiveness of the Indian export goods in the however, the Scheme is being implemented by CBIC. The international market. Scheme covers the Himalayan State and North Eastern States including Sikkim. The Scheme provides budgetary 3.4 Central Excise support to the eligible units which were availing benefits i. The Central Excise Wing deals with the policy under the respective central excise exemption notifications issues related to Central Excise and legacy issues. With in the erstwhile regime of Central Excise taxation. the implementation of GST w.e.f. 01.07.2017, there are iv. Some of the important works undertaken by this only five items now on which Central Excise is being levied. Wing in the F.Y. 2019-20 are as under: ii. The wing is overviewing the implementation of the S. No. Notification No. & Date Subject 1 04/2019-CE(NT), dt. 21-08- Implementation of SabkaVishwas (Legacy Dispute 2019 Resolution) Scheme (SVLDRS), 2019 2. 05/2019-CE(NT), dt. 21-08- Rules under SVLDRS, 2019. 2019 3 06/2019-CE(NT), dt. 04-12- Seeks to extend SVLDRS, 2019 to the mentioned 2019 enactments S.No Circular No. Date Subject 1. 1074/07/2019-CX 12-12-2019 SabkaVishwas (legacy Dispute Resolution) Scheme 2019- reg. 2. 1073/06/2019-CX 29-10-2019 SabkaVishwas (Legacy Dispute Resolution) Scheme, 2019-reg 3 1072/05/2019-CX 25-09-2019 SabkaVishwas (Legacy Dispute Resolution) Scheme, 2019-reg 4 1071/4/2019-CX.8 27-06-2019 Circular on SabkaVishwas (Legacy Dispute Resolution) Scheme, 2019 5 1070/3/2019-CX 24-06-2019 Implementation of CBIC (ICEGATE) E-payment portal from1st July, 2019 - Revised procedure for making e-payment of Central Excise and Service Tax arrears under the new CBIC- GST Integrated portalhttps://cbic-gst.gov.in-Reg. 6 1069/02/2019-CX 08-05-2019 Revised Procedure for electronic filing of Central Excise returns and for electronic payment of Excise duty and Service tax arrears under the new portal www.cbic-gst.gov.in. 7 1068/01/2019-CX 10-01-2019 Review of progress of implementation of Scheme of Budgetary Support to eligible industrial units located in States of Jammu and Kashmir, Uttarakhand, Himachal Pradesh, and North East including Sikkim-Clarifications 153Annual Report 2019-2020  PRESERVATION OF HERITAGE BUILDINGS:  No. of buildings in which action for installation of roof-top Solar Panels is yet to be initiated = 61 INTACH (Indian National Trust for Art and Cultural Heritage) has been appointed by CBIC as consultancy  No. of buildings in which matter is under process/ agency for restoration and conservation of the following Preliminary Survey (PS) has been conducted by CPWD/ SECI = 175 departmental buildings which have been granted status of ‘Heritage Building’.  No. of buildings in which work for conducting preliminary survey is under process with local CPWD/Solar 1. Goa, Customs building (a.k.a. Blue Building) has venders : 64 been converted into a museum and the work for its  No. of buildings in respect of which Preliminary restoration and renovation is under consideration. Survey (PS) Report has been submitted = 111 2. Ballard Estate, Mumbai Customs Building has  No. of buildings found feasible for the installation been declared a heritage building and the renovation of of Solar Panels during the PS conducted by CPWD/SECI the subject building is under consideration. = 76  MANDATORY INSTALLATION OF LED BASED  No. of buildings not found feasible for the LIGHTS AND ENERGY EFFICIENT EQUIPMENT (FANS installation of Solar Panels during the PS conducted by AND AIR-CONDITIONERS) IN ALL GOVERNMENT CPWD/SECI = 35 OWNED BUILDINGS: No. of buildings for which Power Purchase Agreement 1. Name of the Scheme: UJALA (Unnat Jyoti by (PPA) has been signed by the field formations (applicable Affordable LEDs for All) only for RESCO model) = 22; Also, 15 solar panels have also been installed under CAPEX Model. 2. Designated Agency: M/s. Efficient Energy Services Limited 3.6 Performance of Directorate General of 3. Target/Objective: Mandatory Installation of Taxpayer Services LED lights and energy i. PUBLICITY: efficient equipment in all 468 Government Owned  Print Advertisements Buildings GST Return Calendar; Sabka Vishwas (Legacy Dispute 4. Progress Report: Resolution) Scheme, 2019; Examination for confirmation of enrollment of GST Practitioners; Notice for Customs S. Progress Status Number of Brokers Examination-2020; Public Notice -GST Annual No. buildings Return Mela 1. CBIC owned government buildings in which work of installation of LED  Electronic Media based lighting has been completed 102 Short films on following topics were produced for utilization 2. CBIC owned government buildings in of various media platforms: which work of installation of LED based 03 Hindi, 01 English and 11 Regional language TV lighting has been partially completed Commercials were produced on Sabka Vishwas (Legacy and is under progress 90 Dispute Resolution) Scheme, 2019; Authorized Economic Total 192 Operator (AEO) Scheme; Short Film on World Customs Organization (WCO) theme of ‘Smart Borders’ dedicated  Installation of Rooftop Solar Panels in to the year 2019; Government Buildings (under RESCO Model) Making of a Short Film on Chairman (CBIC)’s Resume for the World Customs Organization (WCO). 1. Name of the Scheme: National Solar Mission 2. Designated Agency: M/s. Solar Energy ii. Posters on following topics were designed Corporation of India Limited and shared with field formations under CBIC for 3. Target/Objective: Installation of Rooftop Solar utilization at jurisdictional level: Panels 4. Progress Report: Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019; Swachchta Abhiyan themed ‘Say no to  No. of buildings identified by CPWD for the one-time use plastic’; Initiatives undertaken by Indian installation of Solar Panels =236 154Department of Revenue III Customs for enhancing ease of doing business; Vigilance undertaken by the department in the public domain and Awareness Week, 2019; Goods & Services Tax. to create and enhance awareness about the indirect taxes handled by the department. The focus of this Pavilion was iii. Social Media on GST. Information on various aspects of GST and also Customs. The chosen information was displayed through Social media platforms were aptly utilized for panels, translites, blowups. Digital screens were utilized dissemination of departmental information and messages. to display departmental films/audio-visuals. A lot of queries/ Informative creatives and videos were produced and placed clarifications etc. from the visiting public were anticipated. at department’s Twitter handle CBIC_, Facebook page and With this in view, six Helpdesks, manned by departmental Youtube channel. officers and supervised by DC/AC rank officers were set WhatsApp Creatives, Hoardings and Emails on up to authoritatively address the queries of trade & public. Sabka Vishwas Scheme were designed and shared with Updated booklets on various topics were made available field formations under CBIC for utilization at jurisdictional for distribution to visitors. Quiz kiosks aimed to enhance level. public awareness about indirect taxes were installed. Nukkad natak and Ventriloquist shows were held which iv. Radio: focused on various schemes, features and benefits of GST as well as Customs. These shows were performed by A radio jingle on Sabka Vishwas (Legacy Dispute trained artists during the entire duration of IITF and received Resolution) Scheme, 2019 was produced and broadcast a lot of public attention and participation. Rounds of painting on over 260 All India Radio stations and over 95 Pvt. BOC competitions/ quiz contests for kids, game shows & empanelled FM Radio Stations. interactive sessions were held through the fair period, with attractive gifts embossed with departmental logo given v. CBIC Website away to winners & participants. The Customs & GST Recognizing the enormous reach and popularity Lounge drew huge response and was quite successful in of CBIC website, extensive use of CBIC website was made achieving its objectives. CBIC received the Silver Award for publicity, awareness and information dissemination. for its lounge in the Central Government category from Information available on this site includes GST Acts & the Hon’ble Commerce & Industry Minister. Rules, notifications, circulars, orders, Public Notices, ix. TAXPAYER SERVICE CENTRES Press Releases, GST Fliers, General FAQs, Sectoral FAQs, Overview of GST, Anti-profiteering etc. One of the mandates of DGTS has been to set up Taxpayer Service Centres in all Commissionerates. vi. Projection from 1-12-2019 to 31-3-2020: Vigorous follow-up has ensured setting up of Taxpayer Advertisements/multi-media campaign will be Services Centres in the Commissionerates of Customs, undertaken as per direction & final mandatory approvals Central Excise & Service Tax. from the Ad Approval Cell, Bureau of Outreach & x. PUBLIC GRIEVANCE OFFICERS Communications, Ministry of I&B. These may broadly cover topics related to various features, provisions, Public Grievance Officers have been designated in all the schemes, compliance processes related to GST; Important Commissionerates across the country and details are decisions taken by the GST Council in its meetings; Sabka available on CBEC website. The Citizens’ Charter provides Vishwas (Legacy Dispute Resolution) Scheme, 2019; Late for appeal to superior officer in the event of unsatisfactory fee waiver on pending Form GSTR-I (July 2017 to November response from Public Grievance Officer. Accordingly, 2019); International Customs Day, 2020. contact details of the superior officer have also been posted on the website for the benefit of taxpayers. vii. Electronic Media: TVC xi. PUBLICATIONS The World Customs Organisation (WCO) has dedicated the year 2020 to the theme ‘Customs fostering  Publication List from 1.4.2019 to 30.11.2019: Sustainability for People, Prosperity & the Planet’. India is a member country of the WCO and it is proposed to Brochure WCO, CBIC; Chairman CBIC Brochure produce a short film showcasing the initiatives taken by for World Customs Organisation (8-Page); Pocket Indian Customs with this theme. Sampark-2019; Customs Manual, 2018; Brochure on Ease of Doing Business; World Customs Organisation Brochure; viii. Customs & GST Lounge at IITF-2019 Single page leaflet ( 4 language- Chairman, CBIC); 8 Page Brochure (4 Languages) Chairman CBIC; CBIC Magazine; This Directorate set up Customs & GST Lounge GST MSME Sector Booklet; Civil List-2019; Booklet on at India International Trade Fair-2019 held at Pragati Sabka Vishwas (Legacy Dispute Resolution) Scheme, Maidan, New Delhi from November 14 to 27, 2019. This 2019; GST Audit Manual; National Trade Facilitation Action was part of CBIC’s initiatives to place the initiatives 155Annual Report 2019-2020 Plan 2017-20; CRCL Brochure; CRCL Brochure (A4); (iv) Principal Directorate General of Income Tax (HRD) Disposal Manual, 2019; CBIC Newsletter, November, 2019. a) Directorate of Income Tax (HRD) Green Customs; ICEGATE, Reward Scheme for Informers; Guide for Travelers; e-Sanchit; Diirect Port Delivery (DPD); b) Directorate of income Tax (Exam & OL) Authorized Economic Operators (AEO) Scheme; GST (v) Principal Directorate General of Income Tax Audit; Composition Scheme; Refund in GST; Refund in (Vigilance) IGST; Refund in ITC; Benefits of GST; Annual Return; Composition Scheme for Services; New Return (vi) Principal Directorate General of Income Tax (Legal Mechanism; Sabka Vishwas Scheme (English); Sabka & Research) Vishwas Scheme (Hindi); Atithi app; ICE dash; Overview a) Directorate of Income Tax (L&R) of GST; Casual Taxable Person. b) Directorate of Income Tax (Audit & Inspection)  Projection List from 1.12.2019 to 31.3.2020: CBIC Newsletter December, 2019; CBIC Newsletter (vii) Directorate General of Income Tax (Risk January, 2020; CBIC Newsletter February, 2020; Assessment) Departmental Wall Calendar, 2020; Departmental Desk a) Directorate of Income Tax (Risk Assessment) Calendar, 2020; Indian Customs Declaration Forms (ICDFs); CBIC Magazine; Sampark, 2020; Pocket b) Directorate of Income Tax (Recovery) Sampark, 2020 Income Tax Department is the subordinate organization of the CBDT having jurisdiction across the xii. Significant developments/policy decisions country divided into 18 regions headed by Principal Chief taken during the year for the development of a Commissioners of Income Tax who are entrusted with particular sector, including initiatives for improving delivery of public services and for ensuring “inclusive supervision and collection of direct tax and taxpayer growth”; services. Directors General of Income Tax (Investigation) supervise the investigation functions and deal with tax The Directorate has carried out media campaigns evasion and unearthing unaccounted income. Director highlighting enhanced ease of doing business as part of General of Income Tax (Intelligence and Criminal e-governance/online initiatives like ICEGATE & ACES. Investigation) supervises the intelligence gathering and investigation in tax related crimes. Chief Commissioner of 4. Central Board of Direct Taxes (CBDT) Income Tax (Exemptions) supervises the work of exemption and non-profit organizations/ trusts across the country and 4.1 Organization and functions Principal Chief Commissioner of Income Tax (International The Central Board of Direct Taxes (CBDT), created Taxation) supervises the work in the field of International by the Central Boards of Revenue Act 1963, is the apex Tax and Transfer Pricing. body entrusted with the responsibility of administering direct Principal Chief Commissioners of Income Tax are tax laws in India. The CBDT consists of a Chairman and assisted by Chief Commissioners, Principal six Members and is assisted by the following Directorates: Commissioners and Commissioners of Income Tax and (i) Principal Directorate General of Income Tax Principal Directors General/ Directors General of Income (Administration & Tax Payer Services) Tax are assisted by Additional Directors General of Income Tax within their jurisdictions. Commissioners of Income a) Directorate of Income Tax (PR, P&P) Tax posted as Commissioners of Income Tax (Appeals) b) Directorate of Income Tax (O&MS) perform appellate functions and adjudication of disputes. The Income Tax department has its presence in 530 cities c) Directorate of Income Tax (TPS-I) and towns across the country, having more than 8.45 crore d) Directorate of Income Tax (TPS-II) Taxpayers (AY 2018-19). e) Statistics (R&S) Wing The National Academy of Direct Taxes (NADT), f) Directorate of Income Tax (Infrastructure) Nagpur and Regional Training Institutes at different locations function under the overall supervision of a Director g) Directorate of Income Tax (Expenditure General of Income Tax (Training) to cater to the training Budget) needs of officers and officials. (ii) Principal Directorate General of Income Tax The Principal Chief Controller of Accounts, CBDT (Systems) with the assistance of Zonal Accounts Officers is (iii) Principal Directorate General of Income Tax responsible for accounting of revenue collections as well (Training) as expenditure of the Income Tax Department. 156Department of Revenue III 4.2 Direct Taxes Collection of the economy, ensure macroeconomic stability and promote social welfare by providing fiscal incentives for The performance of the Income Tax Department investments in the social sector. The underlying theme of during the FY 2019-20 in various key areas is as under: the tax proposals for the Budget 2019-20 and the Taxation (i) The collection of direct taxes has decreased from Laws (Amendment) Act, 2019 is to continue to provide Rs. 7,36,296 crores in Financial Year 2018-19 momentum to the buoyancy in direct taxes through (upto 31.12.2018) to Rs. 6,92,665 crores deepening and widening of the tax base, reducing corporate (provisional)# in FY 2019-20 (upto 31.12.2019) i.e. tax rate, promoting horizontal equity in personal income a growth of (-) 5.9% over the last Financial Year. tax, simplifying tax procedure and enhancing the The growth rate under Corporate Income Tax is effectiveness, transparency and accountability of the tax (-)13.7% and growth rate under Personal Income administration. In this endeavor, few of the legislative Tax growth is 4.7 %. In the FY 2019-20, about measures taken during FY 2019-20 are mentioned below: 51.9% of the Budget Estimate of Rs. 13,35,000 (i) Reduction in Corporate tax rate: The Finance has been collected till 31.12.2019. (No.2) Act, 2019 reduced the base corporate tax (ii) During the Financial Year 2019-20 upto Nov. 2019, rate for small and medium sized domestic the department collected Rs. 15,741 crores out of companies whose turnover does not exceed arrear demand and Rs. 3,365 crores out of current Rs 400 crore to 25 %. Further, in order to attract demand upto Nov. 2019*. fresh investment, create jobs and stimulate overall economic growth, The Taxation Laws (iii) TDS collection for Financial Year 2019-20 (upto (Amendment) Ordinance, 2019 was promulgated 31.12.2019) has grown to Rs. 3,62,636 crores at on 20.09.2019. Subsequently, the Ordinance has a growth of 7.8% over last Financial Year for the been enacted as the Taxation Laws (Amendment) corresponding period (upto 31.12.2018) and Act, 2019. The said Act has, inter-alia, further constitutes 42.04% of the gross direct tax reduced the corporate tax rates. It provides that collections. existing domestic companies may opt for a (iv) During the Financial Year 2019-20, (upto concessional tax regime at an effective tax rate of 31.12.2019) collection under Advance Tax is Rs. 25.17% (22% tax, plus surcharge at 10% and cess 3,27,009 crores showing a growth of (-)10.2% over at 4%), if they do not avail the specified deductions the last Financial Year for the corresponding period and incentives. Further, new manufacturing (up to 31.12.2018) and constitutes 37.91% of the domestic companies set up on or after 01.10.2019 gross direct tax collections. may opt to be taxed at an effective tax rate of 17.16% (15% tax, plus surcharge at 10% and cess (v) During FY 2018-19, 6.49 crore income tax returns at 4%), provided that they do not avail of any (ITRs) of Assessment year 2018-19 were filed specified incentives or deductions and fulfil certain compared to 5.47 crore ITRs filed for Assessment pre-conditions. The domestic companies opting Year 2017-18, which translates into a growth of to be taxed under any concessional tax regime 18.6%. Moreover, during FY 2018-19, 1.1 crore new will also not be required to pay Minimum Alternate ITR filers were added to the filer base as compared Tax (MAT). However, for companies which continue to 1.07 crore new filers added in FY 2017-18. to avail incentives or deduction, the existing rate * Source: CAP-1, DOMS, CBDT of MAT has been reduced from 18.5% to 15%. # Source: Pr. CCA, CBDT (ii) Relief in Personal Income tax: Vide Finance 4.3 Direct Taxes Advisory Committees Act, 2019, 100% tax rebate has been provided to With a view to encouraging mutual understanding individuals having taxable income up to Rs. 5 lakhs. between taxpayers and Income tax officials and to advise (iii) Incentives to National Pension System (NPS) the Government on measures for removing the difficulties subscribers: In order to enable the pensioner to of general nature pertaining to Direct Taxes, a Central Direct have more disposable funds, the limit of exemption Taxes Advisory Committee (CDTAC) at Delhi and 64 has been increased to 60% of the total amount Regional Direct Taxes Advisory Committees (RDTAC) exist payable to the person at the time of closure or his at important stations. Representatives of Trade and opting out of the scheme. Further, in order to Professionals Associations are also nominated to these ensure that the Central Government employees Committees. The term of these Committees is two years get full deduction of the enhanced employer from the date of their constitution. contribution, section 80CCD of the Income-tax Act, 4.4 TPL Division 1961 (the Act) has been amended to increase the limit from 10 to 14 % of contribution made by the Tax policies are formulated in order to mobilize Central Government to the account of its employee. financial resources for the nation, achieve sustained growth In addition, in order to provide the Central 157Annual Report 2019-2020 Government employees more options of tax saving would be made with the Start-up entity. Further, investments any amount paid or deposited by a other income-tax demand of the Start-ups would Central Government employee as a contribution not be pursued unless the demand was confirmed to his Tier-II account of the new pension scheme by ITAT. CBDT has also constituted a Start-up Cell shall be eligible for deduction under section 80C under the aegis of Member (IT&C), CBDT to redress subject to the specified conditions. grievances and to address various tax related issues in the cases of Start-ups. A consolidated (iv) Faceless e-assessment: In order to remove the circular clarifying the provisions pertaining to existing human interface and personal interaction assessment of Startups was also issued by the prevailing in the assessment procedure, a scheme CBDT on 30.08.2019. of faceless assessment in electronic mode (ix) Initiatives to promote housing: For realisation involving no human interface has been notified. of the goal of 'Housing for All' and affordable (v) Pre-filling of return: In order to make tax housing, the provision of tax holiday has been compliance more convenient, pre-filled Income tax extended up to 31.03.2020 for developers of Returns (ITR) have been provided to individual affordable housing. In order to provide a further taxpayers. The ITR form now contains pre-filled impetus an additional deduction of up to Rs. details of salary income, house property income, 1,50,000/- for interest paid on loans borrowed up capital gains from securities, bank interest, to 31.03.2020 for purchase of an affordable house valued up to Rs. 45 lakh has been provided. dividends and various tax deductions. Information regarding these incomes and deductions are being (x) Boost to Automobile Industry: In order to provide collected from concerned sources such as banks, relief to tax payers purchasing new vehicles for mutual funds, EPFO etc. To enable pre-filling, the the purpose of business or profession, enhanced scope of furnishing of Statement of Financial depreciation of 30 % and 45 % have been notified Transactions (SFT) has been widened by requiring for motor cars and motors buses/lorries. In addition certain more persons to submit information in to this, in order to promote electrical vehicles respect of financial transactions facilitated or deduction in respect of interest on loan taken for undertaken by them. purchase of an electrical vehicle from any financial institution up to a maximum of Rs 1,50,000/- has (vi) Interchangeability of PAN and Aadhaar: To been provided, subject to the condition that the enable a person who does not have PAN but has loan has been sanctioned during the period Aadhaar, use Aadhaar in place of PAN, while beginning on the 01.04.2019 to 31.03.2023. entering into certain reportable transactions, PAN (xi) Promotion of International Financial Services will be allotted to such person on the basis of Centre (IFSC): With a view to incentivize the IFSC, Aadhaar after obtaining demographic data from several direct tax incentives have been provided to UIDAI. A person who has linked his Aadhaar to an IFSC including 100 % profit-linked deduction his PAN will be allowed the option to use his under section 80-LA of the Act, exemption from Aadhaar instead of his PAN where he is required dividend distribution tax from current and to quote PAN while entering into a reportable accumulated income to companies and mutual transaction. funds, exemptions on capital gain to Category-III (vii) Promoting Digital Payments: Vide the Finance AIF and interest payment on loan taken from non- (No. 2) Act, 2019, section 269SU has been residents. Further, under the Taxation Laws introduced in the Act with effect from 01.11.2019 (Amendment) Act, 2019 it has been provided that the companies opting for lower rates of taxation to provide that every person, carrying on business will be allowed to claim profit linked deduction whose total sales exceeds Rs 50 cr. in the year available to the units of IFSC. immediately preceding the previous year, shall, provide facility for accepting payment through the 4.5 ITA Division prescribed electronic modes, in addition to the Important initiatives taken by the ITA Division facility for other electronic modes of payment, if during the year 2019-20 are as follows: any, being provided by such person. I. Conduct of income-tax assessment (viii)Simplification of compliance norms for proceedings electronically - Implementation Startups: Various steps have been undertaken by of E-assessment Scheme,2019: the Government to provide a hassle-free tax environment to the startups. CBDT has reiterated The Income-tax Department has made continuous that the outstanding income-tax demand relating efforts for digitizing the interactions with the tax payers, to additions made under section 56(2) (viib) of the which would help in increasing the transparency, efficiency Act (angel tax) would not be pursued and no and accountability. In this context, it is relevant to mention communication in respect of outstanding demand that in a significant step, in 2017, ITD developed an 158Department of Revenue III Integrated platform i.e. Income Tax Business Application between the taxpayers and Income-tax Department, Central (ITBA) for electronic conduct of various functions/ Board of Direct Taxes (CBDT), has directed that all proceedings including assessments. This is integrated with communications to the taxpayers by income-tax authority the 'E-filing' portal which is used by the tax payers to relating to assessment, appeals, orders, statutory or electronically communicate with the ITD. This has otherwise, exemptions, investigation, penalty, prosecution, minimized the interface between the assessing officer and rectification, approval shall be issued from 1st day of the tax payers and has made the process of assessment October, 2019 onwards with a computer generated non-intrusive and tax-payer friendly. Scrutiny in around Document Identification Number (DIN) duly quoted in such 2,00,000 cases have been completed through e-proceeding communication. In certain exceptional circumstances, the facility during the F.Y 2018-19. To eliminate interface communications can be issued manually after taking written between Assessing Officer and the assessee during the approval of CCIT/DGIT concerned. Such communications course of assessment proceedings and for optimum have to be regularized within 15 working days of its utilization of the resources through economies of scale issuance by generating a DIN number and uploading on and functional specialization, a new E-assessment the system. In all pending assessment proceedings, where Scheme 2019 has been notified by the CBDT on notices were issued manually, prior to issuance of this 12th September, 2019. The salient features of the scheme Circular, the income-tax authorities shall identify such are as under: cases and shall upload the notices in these cases on the systems by 31st October, 2019. i. A National e-Assessment Centre (NeAC) and Regional e-Assessment Centres (ReACs) have 4.6 Investigation Division been set-up. During the Financial Year 2019-20, the Government ii. All communication with the assessee or any other has taken several steps, by way of policy-level initiatives person for the purpose of making assessment and more effective enforcement actions on the ground to under the Scheme, as also internal communication tackle the issue of black money. These steps include among the functional units, shall be through the legislative and administrative measures, creation of more NeAC and shall be made exclusively in electronic advanced systems and processes with due focus on mode. capacity building and greater use of information technology. iii. Under the Scheme, a person shall not be required i. Search and seizure and survey actions: to appear before the Centre or any unit either During F.Y. 2018-19*, search and seizure actions personally or through authorized representative. were carried out against more than 980 groups leading to Personal hearing, if required, shall be conducted seizure of assets worth over Rs. 1580 crores and admission through video conferencing, including use of any of undisclosed income of over Rs. 18590 crores. Whereas, telecommunication application software which during F.Y. 2019-20* (upto October, 2019), search and supports video telephony, in accordance with the seizure actions were carried out in over 750 groups. The procedure laid down by the Board, actions in these cases led to seizure of assets worth over Rs. 810 crores and an admission of undisclosed income iv. Under the Scheme, there will not be any fixed of over Rs. 4390 crores. territorial jurisdiction and the cases will be assigned by the system. Further, during F.Y. 2018-19*, over 15400 surveys were conducted leading to detection of undisclosed income After the notification of the Scheme, requisite of over Rs. 16120 crores. Whereas, during F.Y. 2019-20* jurisdiction orders under section 120 of the Income-tax (upto October, 2019), over 3920 surveys were conducted Act,1961 have been issued from ITA division and the orders leading to detection of undisclosed income of over Rs. for the diversion of the man power for the newly created 10630 crores. NeACs and ReACs have been issued. The Pr. CCIT (NeAC) has assumed charge and is undertaking further work on (*Figures are provisional) procedural aspects of NeAC and ReAC. Revenue Secretary ii. Prosecutions & compounding: Dr. Ajay Bhushan Pandey inaugurated National Various measures have been taken by the Income- e-Assessment Centre (NeAC) on 7th October, 2019. tax Department (ITD) in the recent past to strengthen the Notices u/s 143(2) of the Income-tax Act, 1961 in 58,317 prosecution mechanism with a view to identify the deserving cases have been digitally signed and issued in a centralized prosecutable cases at the earliest and pursue the same manner by National e-Assessment Centre (NeAC). Scrutiny with due seriousness. in these cases will be conducted by the NeACs and ReACs as per the E-Assessment Scheme, 2019. During F.Y. 2018-19, over 3500 prosecution complaints were filed and 105 persons were convicted. II. Issue of IT orders, notices, summons, letters, Whereas, during F.Y. 2019-20* (upto October, 2019), more etc. through a centralized system than 720 prosecution complaints have been filed and 28 In order to maintain proper audit trail of all communication persons have been convicted. 159Annual Report 2019-2020 Further, during F.Y. 2018-19, more than 2230 cases were As an outcome of the actions taken by the Income- compounded while during F.Y. 2019-20*, more than 760 tax Department under the BM Act, as on 31/03/2019, cases have been compounded. undisclosed foreign assets and income valued at over Rs. (* Figures are provisional.) 12180 crores (subject to fluctuations in currency conversion) have been detected. In 13 cases, information The Central Board of Direct taxes issues guidelines has been sent to Enforcement Directorate for action under from time to time for streamlining the application of statutory PMLA, 2002. Further, as on 31.03.2019, more than 50 prosecution provisions envisaged under Chapter XXII of the prosecution complaints have been filed under the BM Act. Income Tax Act, 1961 thereby ensuring that only deserving cases of habitual offenders or defaults with large revenue Whereas, till 31/10/2019, undisclosed foreign implications are selected for filing criminal prosecution assets and income valued at over Rs. 12500 crores complaints and minor cases of omission are not subject (subject to fluctuations in currency conversion) have been to any harassment. The latest such guideline on procedure detected. During FY 2019-20 (till 31.10.2019), in 18 more for identification and processing of cases for prosecution cases, information has been sent to Enforcement under direct tax law has been issued on 9/09/2019 in the Directorate for action under PMLA, 2002. Further, as on form of Circular No. 24/2019. The prescribed procedure 31.10.2019, 35 prosecution complaints have been filed clearly lays down that filing of prosecution complaints in under the BM Act during the year. deserving cases below the threshold limit is to be taken iv. Actions under the Prohibition of Benami up only with the previous administrative approval of a Property Transactions Act, 1988 ("the Benami collegium comprising senior most officers of the rank of Act"): Chief Commissioner of Income Tax/Director General of Income Tax (Investigation). The Benami Transactions (Prohibition) Amendment Act, 2016 was enacted to amend the Benami Transactions Further, with a view to mitigate unintended hardship (Prohibition) Act, 1988 with a view to, inter alia, enable to taxpayers in deserving cases and to reduce the confiscation of benami property and prosecution of the pendency of existing prosecution cases before the courts, benamidar(s), beneficial owner(s) and/or abettor to such a one-time relaxation for a period up to December, 2019 benami transaction. The amended statute is now known was granted for seeking condonation of delay from Hon'ble as the Prohibition of Benami Property Transactions Act, FM in filing compounding application beyond 12 months of 1988 which came into force w.e.f. 1st November, 2016. filing prosecution complaints. The Benami Act provides for provisional attachment and iii. Actions under The Black Money (Undisclosed subsequent confiscation of benami properties, whether Foreign Income and Assets) and Imposition movable or immovable. It also allows for prosecution of the of Tax Act, 2015 ("the BM Act"): beneficial owner, the benamidar and the abettor to benami transactions, which may result in rigorous imprisonment Recognizing the limitations of the Income-tax Act, up to 7 years and fine upto 25% of fair market value of the 1961, etc. in dealing with black money stashed abroad, property. The ITD has been implementing the Benami Act the Government enacted a comprehensive and a more and in the process has set up 24 dedicated Benami stringent new law that has come into force w.e.f. Prohibition Units (BPUs) under its Investigation Directorates 01.07.2015. It has separate taxation of undisclosed foreign all over India to ensure swift action in respect of Benami income and assets; more stringent provisions for properties. concealment penalties (equal to three times the amount As an outcome of unabated actions taken by ITD, of tax payable as against variable percentage under the during F.Y. 2018-19, show cause notices for provisional Income-tax Act, 1961); more stringent provision for attachment of benami properties were issued in over 550 prosecutions (rigorous imprisonment up-to 10 years with new cases and provisional attachment was made in over fine for wilful attempt to evade taxes, etc. in relation to 650 cases. The value of properties under attachment was undisclosed foreign income/assets as against 7 years over Rs. 4760 crore. In more than 730 cases, references under the Income-tax Act, 1961); the offence of tax evasion were made to the Adjudicating Authority under the Act. under the new law has been made non-compoundable and Further, in 530 cases, the Adjudicating Authority confirmed the offenders will not be permitted to approach the Income- the orders of provisional attachment passed by the ITD. tax Settlement Commission and most importantly, for the Moreover, during the F.Y. 2019-20 (upto October, 2019), first time, this law has included the offence of wilful attempt show cause notices for provisional attachment of benami to evade tax etc. in relation to undisclosed foreign income/ properties were issued in over 130 new cases and assets as a Scheduled Offence under the Prevention of provisional attachment has been made in 115 cases. The Money-laundering Act, 2002 (PMLA) enabling attachment value of properties under attachment is over Rs. 2240 crore. and confiscation of the proceeds of crime of wilful attempt In more than 290 cases, references have been made to to evade such tax, etc. i.e. the black money stashed the Adjudicating Authority under the Act. Further, in over abroad, eventually leading to recovery of such undisclosed 770 cases, the Adjudicating Authority has confirmed the foreign income and assets/black money stashed abroad. orders of provisional attachment passed by the ITD. 160Department of Revenue III v. Investigation in foreign assets cases: 4.7 Audit and Judicial Division In HSBC bank accounts cases, as an outcome of I. Judicial Work investigation, undisclosed income of about Rs.8400 crore Measures initiated to reduce litigation before the has been brought to tax on account of deposits made in appellate forums: unreported foreign bank accounts. Further, concealment penalty of about Rs.1200 crore has been levied in Following steps have been taken to reduce the 172 cases. So far, 204 prosecution complaints in HSBC litigations at various appellate forums: cases have been filed in 89 cases. (i) Vide CBDT Circular No. 17 of 2019 dated In International Consortium of Investigative 08.08.2019, Monetary limits of filing departmental Journalists (ICIJ) cases, sustained investigations conducted appeals to ITAT/ High Court/ Supreme Court were have led to detection of more than Rs.11,010 crore of credits significantly enhanced to tax effect of Rs. 50 lakhs, in the undisclosed foreign accounts so far and 99 1 Crore and 2 Crore from earlier limits of Rs. 20 prosecution complaints in 58 such cases have already been lakhs, 50 lakhs and 1 Crore. As a result, 6038 filed before criminal courts. Investigation in the cases and 6000 departmental appeals have been revealed in Panama Paper Leaks cases have led, as on identified and withdrawn from ITAT and High Courts, 31.10.2019, to conduct of search and seizure action in respectively. Similarly, 1041 cases have been 64 cases and survey action in 12 cases. In 38 cases, withdrawn from Supreme Court. criminal prosecution complaints have been sanctioned; (ii) To reduce pendency and enable faster disposal of notices under section 10 of the Black Money Act issued in pending cases in Supreme Court, 22 issues 53 cases. Investigations so far have detected undisclosed totalling approx. 1000 pending cases have been foreign investments of about Rs. 1565 crore. identified for bunching them together and request In Paradise paper cases, as on 31.10.2019, has been made to Hon'ble Supreme Court for early Search & seizure and/or survey conducted in 31 cases, fixation of cases on priority. notices under section 10 of the Black Money Act issued in (iii) Central Technical Committee (CTC) has been 40 cases; criminal prosecution complaints have been filed created at the level of CBDT to resolve contentious in 7 cases and undisclosed foreign investments detected legal issues and to formulate Departmental View/ of approx. Rs. 210 crores. Settled View. CTC has issued 30 Circulars on vi. Updation of Survey Manual: Settled Issues/ Departmental View, with directions to withdraw/not press such Departmental appeals The Survey Manual covering all aspects of survey before HC/ SC. u/s 133A of IT Act, 1961 was revised after a gap of 12 years. Some of the aspects related to survey action (iv) Department has issued Standard Procedure for like need for a survey action, procedure for carrying out a handling matters relating to frequently litigated survey, methodology for verification of stock, handling of sections, i.e. section 14A, 68 and 147. It is digital data etc. have been covered in a detailed manner, expected that these standard procedures will go keeping in mind the advancement in technology and new a long way in minimizing litigation. & innovative modus-operandi followed for tax evasion. II. Audit and PAC work vii. Updation of 'Techniques of Investigation' General Functioning: Manual: (i) Acknowledging the importance of Comptroller and In view of the economic transactions getting Auditor General (C&AG) and Public Accounts integrated across the borders and to keep the tax Committee of Parliament in providing checks and authorities abreast with the cutting-edge developments in balances, each observation of the C&AG by way the field of tax investigations, the 'Manual on Techniques of Draft Paragraphs (DPs) and System Appraisals of Investigation', released in the year 2002 is being revised. is thoroughly examined by the Audit & Public Till date updated Volumes I to IV of the ''Techniques of Accounts Committee (A&PAC) Section of CBDT Investigation Manual'' have been published, which deal with in the Ministry. The replies/ comments of the issues involved in investigation of undisclosed foreign Ministry are compiled in consultation with the field assets, role of GST in tax investigations, conducting authorities and then furnished to the C&AG and investigations in cases involving transactions in commodity the PAC as the case may be. markets, money and currency markets, derivatives, the latest concepts and technology for handling digital (ii) The Performance Audit Reports and draft paras evidences and conducting their forensic examination and reported by the C&AG and the report of PAC on the essential aspects of bitcoins and cryptocurrencies, the subjects selected by the PAC are also the tax-related issues arising in Joint Ventures with foreign examined by (A&PAC) Section of CBDT in the multi-national corporations and foreign manufacturer etc. Ministry and Action Taken Notes (ATNs) are 161Annual Report 2019-2020 prepared and furnished to the C&AG till they are was established in September 2013 to develop a finally settled. report identifying tax issues raised by the digital economy and detailed options to address these Performance: challenges. (iii) During the year, Compliance Report No. 9 of 2019 (ii) The mandate of TFDE was renewed by the Inclusive [Tabled before Parliament on 30/07 /2019] having Framework (IF) on BEPS in January, 2017 and 472 draft paras was dealt with. Besides draft paras, this included delivery of an interim report on the there were seven chapters / long draft paras tax challenges of digital economy in 2018 and a involving multiple illustrated cases. Initial replies final report by 2020. India being a member of the on 446 draft paras as well as chapters were sent TFDE Bureau, has actively participated in all the and draft A'I'Ns were uploaded in some of the cases meetings of TFDE during the year and submitted and chapters. It may be mentioned here that all its inputs and comments on various issues raised 472 draft para/ cases are in process of settlement during the meetings. In March 2018, the BEPS to the satisfaction of the C&AG during the year. Inclusive Framework (IF), working through its Task (iv) Action Taken Reports in two PAC reports [Report Force on the Digital Economy (TFDE), issued Tax No. 103 and Report No. 104] have been sent to Challenges Arising from Digitalization - Interim PAC and Report No. 136 is in the process for Report 2018 (the Interim Report). The impetus to submission of Report. the current work was provided by the G20 timeline of 2020 for finding a solution to the problem. Internal Audit: Subsequently, after multiple discussions at forum (v) A statement of Internal Audit Objections with of IF and TFDE and following the public revenue effect is given below: - consultation in March 2019, the Inclusive Framework agreed to a Programme of Work (PoW) Objection Raised/ Settled & Balance pending for at meeting held in Paris in May 2019 based around the period 01.04.2019 to 31/10/2019: following two pillars: Number of objections Amount (Rs in Lakh)  Pillar One focusses on the allocation of taxing up to 31/10/2019 rights, and seeks to undertake a coherent and Opening Balance as on 31,049 11,41,468 concurrent review of the profit allocation and nexus 01/04/19 rules; Raised 6,592 2,28,293 Total 37,641 13,69,761  Pillar Two focusses on the remaining BEPS issues Settled 5,068 1,78,630 and seeks to develop rules that would provide Outstanding 32,573 11,91,131 jurisdictions with a right to "tax back" where other jurisdictions have not exercised their primary taxing SAC Meetings: rights or the payment is otherwise subject to low (vi) The SAC meetings have been held regularly under levels of effective taxation. the chairmanship of the Addl. Secretary (Revenue) (iii) In this process, G-24 backed by India put forward for monitoring the settlement of audit paras. a proposal based on Significant Economic 4.8 Foreign Tax and Tax Research Division Presence and proposed profit attribution through fractional apportionment method. India's proposal 4.8.1 Policy Issues on International Taxation was included as part of the above-mentioned public 4.8.1.1 India's Active participation in work related to consultation document. The solution proposed is addressing tax challenges of Digital Economy simple and seeks for a revision of nexus rules based on sustained and significant presence in (i) As a part of follow up work on outcomes of Action the economy which can be determined by revenue 1 report of BEPS project on addressing the threshold and additional digital factors like number challenges of digital economy, India has been of users, contracts etc. The above PoW stresses active participant in OECD/G20 initiatives relating for a solution to be delivered in 2020. The PoW to taxation of digital economy and has consistently was subsequently endorsed by the G20 Finance supported the need to address the tax challenges Ministers and Central Bank Governors in their arising out of new business models in digital meeting held in June 8-9, 2019 at Fukuoka, Japan technology which have transformed the way the and by the G-20 leaders in Osaka, Japan. business operates. The Task Force on the Digital Economy (TFDE), a subsidiary body of the (iv) Subsequently, OECD carried out two public Committee on Fiscal Affairs (CFA) in which non- consultations on "Secretariat's proposals for OECD G-20 countries participate as Associates Unified Approach" under Pillar 1 and on "Pillar 2" on an equal footing with OECD member countries, in which India has actively participated and raised 162Department of Revenue III in concerns, wherever required, which have been are entered into for twin purpose of (a) allocation duly documented. Presently, in order to find a of taxation rights between the Contracting States solution based on global consensus, India is with a view to avoid double taxation and deeply engaged in the discussions on Pillar 1 and (b) prevention of fiscal evasion through exchange 2 at international level with the OECD and Inclusive of information, assistance in collection of taxes Framework on BEPS comprising of 137 member etc. As on 31.12.2019, 95 DTAAs are in force. countries, which has been mandated by the G-20 (ii) In old DTAAs (before 2009), there were generally to find a consensus solution to address the tax no provisions for exchange of banking information. challenges arising from digital economy. Further, the information could be exchanged only 4.8.1.2 Committee to examine issues related to if it was relevant for application of DTAA and not Attribution of Profits to PEs in India and amendments for enforcement of domestic laws. In addition, under of Rule 10 of Income Tax Rules: the old DTAAs, the information received could generally not be used for non-tax purposes even (i) A committee was constituted with the approval of after the consent of the supplying State. Chairman, CBDT to examine the issues related Accordingly, from 2009 onwards, a number of tax to attribution of profits to Permanent treaties were modified through amending Establishments in India and to suggest Protocols. amendments to Rule 10 of Income Tax Rules, 1962. The committee consisted of 12 members (iii) India has actively participated in the Base Erosion and was headed by JS [FT&TR-I] as the & Profit Shifting (BEPS) project of OECD/G-20 chairperson of the committee. Due to expansion and endorsed the outcomes of the BEPS project in the definition of PE due to BEPS, it was felt which were in the form of 15 action points for that it is important to focus on how profits had to addressing tax avoidance by Multinational be attributed to PEs in India. It was also important Enterprises. Under BEPS Action 15, the BEPS in view of the strong reservations of India with outcomes and minimum standards that all respect to Article 7 introduced by the OECD MTC countries have agreed to, are being implemented 2010 as per which the profit attribution to PE has by the signing of the Multilateral Convention for to be done on the basis of FAR analysis. FAR Implementation of Tax Treaty Related Measures method is entirely based on supply side factors to Prevent Base Erosion and Profit Shifting also and does not give any weightage to the contribution called as Multilateral Instrument (MLI). of demand side factors, which are very important (iv) India is a signatory to the MLI along with the 92 in earning of profits by any enterprise. Adoption of other signatories (as on date) and it has notified FAR based approach for attribution of profits to 93 DTAAs under Covered Tax Agreements PE in the source jurisdiction is neither in proposed to be modified by the MLI depending accordance with economic principles nor does it upon the treaty partners notifying the same under capture true profit attributable to PE. MLI. On 25th June, 2019, India deposited the (ii) During the year number of meetings of the Instrument of Ratification to OECD, Paris along committee took place and the report was finalised with its Final Position in Terms of Covered Tax titled as "Proposal for Amendment of Rules for Agreement (CTAs), Reservations, Options and Profit Attribution to Permanent Establishment" and Notifications under the MLI, as a result of which with the approval of Chairman, CBDT a public MLI entered into force for India on 01st October, consultation was also carried out in the said report. 2019 and its provisions will have effect on India's The report of the committee was well received in DTAAs from FY 2020-21 onwards. public. Some comments from stakeholders like (v) India as a member of Inclusive Framework on ICRICT and BEPS Monitoring group were very BEPS is committed to implement the minimum supportive of the proposal. Subsequently, after standard under BEPS Action 6 and BEPS Action analyzing the public comments and seeking 14. The minimum standards are to be met in feedback of the Committee members on the same, respect of DTAAs with Inclusive Framework the report along with the public comments was countries. Implementation of minimum standards submitted to TPL division of the CBDT for under these BEPS actions will be subject to a considering changes in the Rule 10 of Income- peer review process by OECD as well. Minimum Tax Rules, 1962 standards under both Action 6 and 14 can be met 4.8.2 Negotiation of Tax Treaties through MLI if the treaty partner has also signed MLI. However, in case of four countries viz. Canada, (i) The Foreign Tax and Tax Research (FT&TR) Macedonia, Trinidad & Tobago and Ukraine, these Division negotiates and finalizes the Double minimum standards were required to be met Taxation Avoidance Agreements (DTAAs) which 163Annual Report 2019-2020 through bilateral amending protocols. Accordingly, (i) The third round of negotiation for signing DTAA the CBDT has shared drafts of the amending with Chile was held by the two sides in June, 2019. protocols with said countries so as to meet In this meeting, agreement was reached on all minimum standard under BEPS Action 6 and the outstanding articles. Cabinet has approved BEPs Action 14. Further, since Sri Lanka is not a signing of DTAA. signatory to the MLI as of now, bilateral (j) Cabinet has approved the signing of the protocol amendment is required in the case of India's DTAA amending the DTAA between India and Brazil. with Sri Lanka with respect to updation of the (k) The signing of India-Brunei TIEA took place on Preamble and insertion of PPT provision under 28.02.2019 in New Delhi. Action 6. Accordingly, Protocol amending the India-Sri Lanka DTAA is under submission to the (l) The Protocol amending the Convention between Cabinet for its approval, post completion of inter- Morocco and India for the Avoidance of Double ministerial consultations. Taxation and prevention of Fiscal Evasion with respect to Taxes on Income was signed at the (vi) Besides the above, during the year 2019 the Government level at New Delhi on 08.08.2013, has following steps have been taken to augment India's entered into force on 15.07.2019 and has been tax treaty network: notified in the official Gazette on 22.10.2019. (a) Steps have been taken for bilateral revision of (vii) With countries/jurisdictions with which it is felt that existing treaties to make it more relevant & updated there is no need for allocation of taxation rights for by incorporating the provisions which will align the avoidance of double taxation, such as offshore existing DTAAs with the present international jurisdictions, the FT&TR Division negotiates and standards and the positions taken by India under enters into Tax Information Exchange Agreements MLI. In this regard, renegotiation has been started (TIEAs) containing provisions for exchange of with France and Denmark to revise the existing information. As on 30.12.2019, 20 TIEAs are in treaties. First round of negotiations has already force. taken place and substantial progress has been (viii)India has also joined the Multilateral Convention made with these two countries. on Mutual Administrative Assistance in Tax (b) India has sent its proposal to Italy for revising the Matters (Multilateral Convention) which came into treaties either through Amending Protocol or force for India on 01.06.2012 and which provides a comprehensive revision. wide range of administrative assistance in tax matters, including exchange of information, (c) Germany and Switzerland have not included India assistance in collection of taxes, tax examination in its covered tax agreements under MLI, hence abroad, joint audit etc. India has been actively India has proposed them for entering into an pursuing with other countries to join this Amending Protocol to align the treaty with MLI Convention. As on 27.11.2019, 135 countries/ and present international standards. jurisdictions have signed/joined the Multilateral (d) Post ratification of MLI, synthesized text of MLI Convention and it has come into force for and DTAAs with Singapore and UAE has been 120 countries/jurisdictions. published on the department website for the benefit (ix) The SAARC Countries have signed agreement on of all stakeholders. Mutual Administrative Assistance in tax matters on 13.11.2005 which came into effect for India from (e) Negotiation with Azerbaijan is also underway and 01.04.2011. It provides wide range of administrative is at advanced stage for entering into DTAA. assistance. (f) During this year an amending protocol which was (x) In the modified/renegotiated DTAAs as also in the signed between India and Spain in 2012 was also new DTAAs/TIEAs entered after 2009 and also notified in the official gazette. under the Multilateral Convention and SAARC (g) The Protocol amending India-China DTAA has been Multilateral Agreement, the banking information notified in the Official Gazette on 17th July, 2019, and information for domestic tax purposes can also and shall have effect in India from 1st April 2020. be exchanged. Further, generally the information received may be used for non-tax purposes if such (h) The Protocol amending the Agreement between use is permitted under the laws of both the India and Kyrgyz Republic DTAA was signed on supplying and receiving State and with the consent 14th June, 2019 and ratified by the Hon'ble of the supplying State. President of India and coordination with MEA (and Kyrgyz Republic) is under way for entry into force 4.8.3 Role of Tax Treaties in Prevention of Fiscal of the Protocol. Evasion and Tackling of the Menace of Black Money 164Department of Revenue III (i) Effective investigation of tax evasion and avoidance, (v) The following additional steps have been taken by including unearthing of unaccounted money the Government in recent past for effectively stashed abroad, is possible only if there is access utilizing the above mechanism of Exchange of to information from foreign countries. However, Information: foreign governments, particularly offshore financial a) Bilateral meeting was held with the UK Exchange centres, are most unlikely to provide information of Information (EOI) and Assistance in Collection on the basis of just letters or on a plea regarding of Taxes (ACT) teams in the month of May 2019 their moral obligations to prevent tax evasion. wherein detailed discussion was held on the policy Among other factors, parting with information issues in EOI, pendency of requests for information without a legal basis may be challenged in their and enhancing mutual administrative assistance own Courts and may be against their own public between the two countries. This has resulted in policy or public opinion of their citizens. Such better responsiveness from the UK and resolution information about money and assets hidden of long pending issues. A detailed deliberation was abroad and about undisclosed transactions entered also held with UK ACT team to enhance ACT into overseas, can be obtained only through "legal relations between the two countries through an instruments" or treaties entered between India and MOU. those countries. b) Bilateral meeting was held with the Swiss (ii) The "legal instruments" through which information authorities in the month of August 2019 wherein can be efficiently obtained for the purposes of detailed discussion was held on automatic investigation under Indian tax laws are the DTAAs, exchange between the two countries, EOI policy TIEAs, Multilateral Convention and SAARC issues, the pendency of requests for information Multilateral Agreement, which create a legal and enhancing mutual administrative assistance. obligation on a bilateral basis to provide The two sides also examined the progress made information. These agreements have, over the in exchange of information in the HSBC leaks years, taken the shape of instruments of co- cases which was pending thus far and the operation between the countries party to the automatic exchanges of financial account agreements, for sharing of tax revenues and information which have taken place in September, elimination of double taxation; for the prevention 2019. Secretary level meeting was also held with of fiscal evasion, tax avoidance and fraud, primarily the Swiss authorities in November, 2019 during through exchange of information in relation to the which the two sides welcomed the start of taxpayers concerned; and for assistance in automatic exchange of financial account information between the two sides. A joint collection of taxes. statement was also signed by the Secretaries of (iii) The Government of India can obtain information the two sides. which is "foreseeably relevant" for administration c) Bilateral meeting was held with the US authorities and enforcement of domestic laws concerning in the month of September 2019 wherein detailed taxes from 153 countries/jurisdiction under DTAAs/ discussion was held on EOI policy issues, the TIEAs/Multilateral Convention/SAARC Multilateral pendency of requests for information and enhancing Agreement. With some countries/jurisdictions, mutual administrative assistance. This has resulted there can be more than one agreement e.g. DTAA in better responsiveness from the USA. as well as Multilateral Convention, under which information can be received. Table at Appendix 'D' d) Meetings were held with other tax authorities on lists the countries/jurisdictions and the current side lines of other international meetings such as status of tax treaty with that country/jurisdiction. those with the tax authorities of Jersey, Cayman Islands, Bermuda etc. These bilateral meetings (iv) Information received under the tax treaties shall will help us in making targeted and specific be disclosed only to persons or authorities requests for information and to understand the concerned with tax purposes and they may use problems, if any, which prevent them in providing the information only for such purposes. They may, the information, and how the same can be however, disclose the information in public court addressed. proceedings or in judicial decisions, which may for instance be in the form of filing a complaint or e) The Central Action Plan issued by the CBDT, read prosecution in a competent court. The information with Manual on Exchange of Information, explains the process and emphasizes the need to make so disclosed becomes public and may be used exchange of information references seeking by other law enforcement agencies dealing with information under the tax treaties. The Central corruption, money laundering, terrorist financing Action Plan 2019 also mandates that every Pr. etc. 165Annual Report 2019-2020 CIT charge will organize training and sensitization if the signatory country has not given a reservation programme for making proper references under tax and also under the SAARC Multilateral Agreement. treaties. (ix) The other form of administrative assistance f) Regular trainings programs have also been held possible under tax treaties are tax examination at places like NADT, Mumbai, Delhi, Bengaluru abroad, simultaneous examination, joint audit, etc. to equip the officers with requisite knowledge service of notices, etc. which are presently not and skills to make appropriate requests/enquiries being used much. under the prevailing tax-treaties of India, to address 4.8.4 Tax Issues in G20 the issue of offshore-based tax evasion and Black Money stashed abroad. (i) India is a leading contributor to the discourse on international tax issues at G-20 in all its meetings g) Workshops on Exchange of Information were also at the level of Leaders (represented by Hon'ble held with Investigation Wings of Mumbai, Delhi PM of India), Finance Ministers, Central Bank and Bengaluru to reconcile pendency of requests, Governors and Deputies. The International Tax discuss issues faced in EOI by both sides and Issues features prominently in the G20 Agenda sensitize the officers about requirements of foreign and primarily consist of Base Erosion and Profit tax authorities and other aspects of EOI. Shifting (BEPS) and Automatic Exchange of Information (AEOI). The paragraph on tax issues h) Steps are also being taken to ensure that the in the recent communique of the G-20 Leaders at information received from our treaty partners is Osaka, Japan in June, 2019 states as follows: effectively utilized to combat tax evasion and avoidance. "We will continue our cooperation for a globally fair, sustainable, and modern international tax i) Efforts are also being made to complete system, and welcome international cooperation investigations quickly and file complaints/ to advance pro-growth tax policies. We reaffirm prosecutions in appropriate cases expeditiously. the importance of the worldwide implementation (vi) Under tax treaties, the Contracting States may of the G20/OECD Base Erosion and Profit Shifting also provide information to their treaty partners with (BEPS) package and enhanced tax certainty. We a view to prevent fiscal evasion even if no specific welcome the recent progress on addressing the reference is received in this regard under tax challenges arising from digitalization and "spontaneous exchange of information". As of now, endorse the ambitious work program that consists number of information received under this route is of a two-pillar approach, developed by the Inclusive not many and efforts are being made at bilateral Framework on BEPS. We will redouble our efforts level to improve cooperation in this regard. for a consensus-based solution with a final report by 2020. We welcome the recent achievements (vii) Under most of the DTAAs and Multilateral on tax transparency, including the progress on Convention, Automatic Exchange of Information automatic exchange of information for tax (AEOI), which is systematic and periodic purposes. We also welcome an updated list of transmission of "bulk" taxpayer information by the jurisdictions that have not satisfactorily source country to the residence country, is also implemented the internationally agreed tax possible. India is receiving information from some transparency standards. We look forward to a countries under AEOI. However, the information further update by the OECD of the list that takes received under the AEOI mostly relates to interest, into account all of the strengthened criteria. dividend, salary, pension etc. and further is not in Defensive measures will be considered against a standard format and thus is not very effective in listed jurisdictions. The 2015 OECD report prevention of offshore tax evasion. The global inventories available measures in this regard. We standard on AEOI has, therefore, been developed call on all jurisdictions to sign and ratify the under guidance and leadership of G20 countries multilateral Convention on Mutual Administrative which has made a sea change in our ability to Assistance in Tax Matters. We reiterate our address offshore tax evasion. support for tax capacity building in developing countries." (viii)In many Indian DTAAs, there is provision for assistance in collection of taxes under which the (ii) India remains committed towards consistent Contracting States are obliged to collect tax dues implementation of BEPS package and has been from assets located in their country. The provision actively involved in the work being done on for assistance in collection of taxes is also present addressing the tax challenges arising from in some TIEAs. Assistance in collection of taxes digitalization. India has consistently stated that a is also possible under the Multilateral Convention level playing field should be maintained in the 166Department of Revenue III implementation of the global standards on tax between revenue agencies to investigate tax affairs transparency. However, more work needs to be of offenders who commit financial crimes and cross done to maintain a level playing field, particularly borders for escaping investigations and facing the as a number of countries / jurisdictions are yet to consequences under law. Various avoidance exchange information with all interested schemes have come up recently in the form of appropriate partners. India has urged that the Residency by Investment/Citizenship by Global Forum should evolve mechanisms to Investment/CRS avoidance schemes. India has effectively monitor and further update the progress urged G20 to call upon countries to cooperate in made by all committed jurisdictions with respect this area. India is of the view that any exchange of to implementation of AEOI and actual exchanges financial account information will be useful when carried out between all interested appropriate there is legal instrument between jurisdictions to partners within the committed timelines and report provide assistance in collection of taxes so that the same to the G20. It should list jurisdictions the offshore assets of the taxpayer are not only taking note of the OECD's criteria for identifying taxed but ultimately brought back in India (country jurisdictions that have not satisfactorily of residence) through recovery of taxes raised implemented the internationally agreed standards against those assets. There is a need to initiate of tax transparency. India has suggested that work towards broader cooperation and standards- OECD should, by end of 2019 propose possible setting in the area of Administrative Assistance in defensive measures to be taken against Collection of Taxes. India has also raised the need jurisdictions that do not adhere to the international to develop a Taxation Working Group in the G20 standards of tax transparency including effective so as to analyse the work carried out by exchange of information under CRS. The review of International Organizations before the same are implementation of the AEOI standard by committed considered at the level of Finance Ministers and jurisdiction will begin in 2020. G20 should, the Leaders. therefore, closely monitor the developments to 4.8.5 G20/OECD Project on Base Erosion and ensure that the level playing field is maintained Project Shifting (BEPS) which may include brining more and more jurisdictions under the commitment process. (i) Base Erosion and Profit Shifting (BEPS) refers to Further, the Global Forum may be asked to identify strategies adopted by taxpayers having cross- jurisdictions of relevance for Automatic Exchange border operations to exploit gaps and mismatches of Information by the 2020 Leaders' Summit so in tax rules of different jurisdictions which enable that they may be asked to commit to the AEOI them to shift profits outside the jurisdiction where Standard. This is particularly significant as the the economic activities giving rise to profits are financial assets would be shifted to such performed and where value is created. BEPS has jurisdictions and would go unreported thereby been a cause of concern for developing and rendering the entire process ineffective and also emerging economies for long as it erodes their pose a serious threat to the maintenance of a level tax base depriving them of much needed resources playing field. for developmental activities. It is also unfair to general taxpaying public and further provides an (iii) The worldwide implementation of AEOI under CRS unfair competitive advantage to Multinational in 2018 has ushered in a new era of tax Enterprises (MNEs) vis-à-vis domestic companies transparency. India believes that there is a need having no opportunities for the BEPS strategies. for adopting a whole of Government approach in dealing with cross-border exchange of financial (ii) At the request of G20 Finance Ministers, in July information automatically under the CRS. Towards 2013 the OECD, working with G20 countries, this goal it is necessary for the recipient jurisdiction launched an Action Plan on BEPS, identifying 15 to share the financial information received under specific actions needed in order to equip CRS with other Law Enforcement Agencies. India governments with the domestic and international believes that the goal on promoting exchange of instruments to address this challenge. The Action information may be broadened in scope to Plan provides for 15 actions to be undertaken to 'Enhancing mutual administrative assistance in tax put an end to double non-taxation and ensure that matters. Wider cooperation for mutual profits are taxed where the economic activities that administrative assistance in tax matters through generate them are carried out and where value is the Multilateral Convention on Mutual created. The actions outlined in the plan and Administrative Assistance in Tax Matters should expected outcome are summarized below: provide opportunities for closer collaboration 167Annual Report 2019-2020 S. Action Expected Output No. 1. Address the Tax Challenges of the Report identifying key issues raised by the Digital Economy digital economy and possible actions to address them 2. Neutralise the effects of hybrid Changes to the Model Tax Convention mismatch 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 Deductions and other financial domestic rules payments Changes to the Transfer Pricing Guidelines 5. Counter harmful tax practices more Finalise review of member country regimes effectively, taking into account transparency and substance Strategy to expand participation to non- OECD members Revision of existing criteria 6. Prevent Treaty Abuse Changes to the Model Tax Convention Recommendations regarding the design of domestic rules 7. Prevent the artificial avoidance of PE Changes to the Model Tax Convention status 8. Assure that Transfer Pricing Changes to the Transfer Pricing Guidelines Outcomes are in Line with Value and possibly to the Model Tax Convention Creation / Intangibles Changes to the Transfer Pricing Guidelines and possibly to the Model Tax Convention 9. Assure that Transfer Pricing Changes to the Transfer Pricing Guidelines Outcomes are in Line with Value and possibly to the Model Tax Convention Creation / Risks and Capital 10. Assure that Transfer Pricing Changes to the Transfer Pricing Guidelines Outcomes are in Line with Value and possibly to the Model Tax Convention Creation / Other High-risk transactions 11. Establish methodologies to collect Recommendations regarding data to be and analyse data on BEPS collected and methodologies to analyse them 12. Require taxpayers to disclose their Recommendations regarding the design of aggressive tax planning domestic rules arrangements 13. Re-examine Transfer Pricing Changes to Transfer Pricing Guidelines Documentation and Recommendations regarding the design of domestic rules 14. Make dispute resolution mechanisms Changes to the Model Tax Convention more effective 15. Develop a Multilateral Instrument Report identifying relevant public international law issues Develop a multilateral instrument 168Department of Revenue III (iii) The G20 countries entrusted the work of (a) collaborating with other countries in development development of recommendations on these 15- of recommendations to prevent base erosion and point Action Plan to the OECD. During the G20 profit shifting; and meeting, India and some other non-OECD G20 (b) safeguarding the interests of India and other countries raised an issue that the base erosion developing countries in development of new and profit shifting is a global concern and standards. accordingly the recommendations should be developed through global consensus and not by (vii) Developing countries and other non-OECD/non- the OECD countries only. After detailed G20 economies have been extensively consulted negotiations in G20, it was agreed that all the eight through numerous regional and global fora non-OECD G20 countries (Argentina, Brazil, meetings and their input has been fed into the China, India, Russia, Saudi Arabia and South work. Business representatives, trade unions, civil Africa) would participate in the "Project on BEPS" society organizations and academics have also on an equal footing. The OECD agreed to modify been very involved in the process through its rules for associating non-OECD G20 countries opportunities to comment on discussion drafts and on an equal footing and a formal letter requesting their comments were discussed through the non-OECD G20 countries to become an consultation meetings and webcasts. Associate was made. It was also decided that (viii)The first set of seven deliverables described in the the other developing and low-income countries will Action Plan was presented to G20 Finance also be associated with the work on BEPS and Ministers in September 2014 and to Leaders in their inputs will be taken while developing the November, 2014. These include recommendations recommendations. for realigning taxation and relevant substance to (iv) India accepted the offer to become an "Associate" restore the intended benefits of international in the BEPS Project through our acceptance letter standards both in the area of bilateral tax treaties dated 31st July, 2013. The other seven non-OECD by preventing treaty abuse and in the area of G20 countries also accepted the offer. In transfer pricing to assure that transfer pricing accordance with the OECD Council's resolution, outcomes are in line with value creation in the area the eight "Associates" are participating on an equal of intangibles and ensuring better transparency footing with OECD countries, including for tax administrations and better consistency of participation in its Bureau in the Committee requirements for taxpayers through improved overseeing the project in the discussions and in transfer pricing documentation and a template for the decision-making process. As per this country-by-country reporting. resolution, the Associates "would be expected to (ix) After an elaborate exercise and discussions in associate themselves in the outcome of the project Focus Groups, Working Parties and the or of the discussions unless they state otherwise". Committee of Fiscal Affairs, a holistic package of (v) The Committee on Fiscal Affairs (CFA) has a measures have been agreed upon, and have been Bureau consisting of 12 members. The Bureau made public on 5th October, 2015, and the same oversees the progress of the Project and participate was presented to G20 Finance Ministers during in the decision-making process. Since in the the meeting in Lima, Peru on 8th October, 2015 BEPS Project, 8 non-OECD G20 countries are and were endorsed by the G20 Leaders at Antalya, participating on an equal footing, it was decided Turkey in November, 2015. to expand the Bureau to "Bureau Plus" for BEPS (x) The recommendations made under the BEPS Project and it was also decided to include 3 out of Project will be implemented through domestic 8 non-OECD G20 countries in the Bureau Plus legislations and treaty provisions in a coordinated through a process of elections by these 8 manner, and will be supported by targeted countries. Accordingly, India, Brazil, China and monitoring and strengthened transparency. These South Africa now represent the eight non-OECD measures include the following: G20 countries in the Bureau Plus. (a) Adoption of minimum standards to tackle issues (vi) It may be noted that India participated in the BEPS in cases where no action by some countries would Project on an equal footing engaging constructively have created negative spill overs (inclusive adverse and extensively through different mechanisms competitiveness impacts) on other countries such including direct participation in Working Parties as consistent implementation in the areas of treaty and Focus Groups set up under the Committee shopping, country by country reporting, fighting on Fiscal Affairs (CFA) of OECD in finalizing the harmful tax practices and improving dispute deliverables with the twin purpose of: resolution. 169Annual Report 2019-2020 (b) Agreement on common approaches for changing review which will have to be defined and adapted domestic legislation relating to neutralizing hybrid to the different actions with a view to establishing mismatches and limiting interest deductibility. a level playing field by ensuring all countries implement their commitments so that no country (c) Providing guidance based on best practices for would gain unfair competitive advantage. countries which seek to strengthen their domestic legislation relating to mandatory disclosure by (xii) The recommendations made under the BEPS taxpayers of aggressive or abusive transactions, Project have been made on the basis of arrangements, or structures, and the building consensus arrived at by the OECD (34 in number) blocks of effective Controlled Foreign Company and non-OECD G20 countries (8 in number) and (CFC) rules. thus India is an equal participant in making such recommendations. A summary of the (d) Development and analysis of options to tackle the recommendations in the final report with regard to problems posed by digital economy including the 15 Action Points along with action taken on digital presence test, introduction of a withholding those recommendations is placed at Appendix 'E'. tax and equalization levy in addition to identification of implementation mechanism to facilitate VAT BEPS Inclusive Framework collection in the country where the consumer is (xiii) In Ankara in September 2015, the OECD was located which is particularly relevant for online mandated by the G20 Finance Ministers to build ordering and delivery of goods and services. an inclusive framework for implementation and to (e) Launch of an innovative mechanism to update the report to them by early 2016. The architecture for global network of more than 3 500 bilateral tax the inclusive framework was agreed at the January treaties. 90 countries had joined an ad hoc group and March meetings of the CFA and welcomed by to draft a multilateral instrument which has been G20 Finance Ministers at their meeting in Shanghai finalized and adopted in November 2016. This will on 26-27 February and 14-15 April 2016 at implement the treaty-related BEPS measures and Washington D.C. In the April meeting, the G20 facilitate the modification of bilateral tax treaties Finance Ministers, noting that the first meeting in a synchronized and efficient manner, without on inclusive framework was to be held in June the need to invest resources to bilaterally 2016, encouraged all relevant and interested renegotiate each treaty. jurisdictions to join the new inclusive framework on an equal footing. The work of Inclusive Implementation of BEPS Recommendations Framework includes consideration of the manner in which non-OECD countries will consider (xi) Countries are sovereign and it is therefore up to themselves committed to the agreed rules and their them to implement the changes but it is expected implementation. India continues to contribute to that they will implement their commitments in the this important phase of the BEPS Project. case of the standards, and that they will seek consistency and convergence when deciding upon (xiv) The first meeting of the CFA and BEPS Inclusive the implementation of the other measures. G20 Framework was held in Kyoto, Japan from and OECD countries continued to work on equal 30th June 2016 and 1st July 2016. In this meeting footing to complete the areas which required further several governance issues for the inclusive work in 2017 and continued to do so in 2018, such framework as well as future road map were as finalizing transfer pricing guidance on the discussed and decided. As on December 31, 2018, application of transactional profit split methods and total 127 members have joined the Inclusive on financial transactions, discussing the rules for Framework. The Steering Group of the Inclusive the attribution of profits to permanent Framework comprises members from establishments in light of the changes to the 22 countries. India has a representation in the permanent establishment definition, a continued Steering Group of the Inclusive Framework. India examination of the issues relating to the broader strongly supports the inclusive approach of the question of treaty entitlement of investment funds framework to monitor and review the success of (other than collective investment funds i.e. non- implementation of the BEPS recommendations, CIV funds).G20 and OECD countries will keep and would collaborate with all the G-20, developing working on an equal footing to monitor the countries and international organizations to ensure implementation of the BEPS measures. The that there is a level playing field amongst various monitoring will consist of an assessment of economies. India shall actively participate in the compliance with the minimum standards in the Inclusive Framework to also ensure that the form of a periodic and public report on what concerns of the developing countries are countries have done to implement the BEPS appropriately addressed in the implementation recommendations. It will involve some form of peer phase. 170Department of Revenue III (xv) Today the countries and jurisdictions who have havens are obliged to provide information only when joined the Inclusive Framework have all committed the requesting State has some information already to implement the BEPS package, and are now in its possession and investigation in the particular progressing the Inclusive Framework's mandate, case has already commenced. The information which is to: on "request" thus may have limited effect in identifying the financial assets hidden in offshore (a) Review the implementation of the four BEPS jurisdictions and tax havens through a complex minimum standards; web of entities. (b) Gather data for the monitoring of the other aspects (iii) Accordingly, the Government of India took a of implementation, including under BEPS Action leading role in international fora, including at G20 1 (on the tax challenges of the digital economy) and Working Party 10 of the OECD, towards and Action 11 (on measuring and monitoring building an international consensus amongst major BEPS); economies of the world that the problem of (c) Finalize the remaining technical work to address offshore tax evasion and flow of illicit money can BEPS challenges; and be addressed only by the free flow of financial account information, exchanged amongst (d) Support jurisdictions in their implementation of the countries on an automatic basis. BEPS package, including by providing further guidance on the standards and by developing (iv) On the request of the G20, the OECD, working toolkits for low income countries. with all the non-OECD G20 countries, including India, developed a single uniform standard for (xvi) In last one-year significant progress has been automatic exchange of information, the Common made in implementation of the BEPS package, Reporting Standards (CRS) on AEOI. This new including the four minimum standards, and these global standard was endorsed by the G20 Finance measures are already having major impact on Ministers in their meeting in Cairns on 21.09.2014 BEPS activities. The work of the Inclusive and by the G20 Leaders in their summit at Brisbane Framework in this 12-month period has been on 16th November, 2014. As stated earlier, the related to the establishment of the peer review Hon'ble Prime Minister in his intervention at the processes, the ongoing standard-setting work and G20 Leaders' Summit on 16.11.2014 in Brisbane delivery of guidance on implementation, as well strongly supported the new global standard on as the assistance being delivered, often in automatic exchange of information and stated that partnership with other international organizations this would be instrumental in getting information and regional bodies, to ensure all countries and about unaccounted money hoarded abroad and jurisdictions are supported in the BEPS enable its eventual repatriation. Government of implementation process. In all these processes India is emphasising at various international fora, India has played active role and supported positive the need to ensure that every financial centre initiatives keeping in mind concerns of developing commits to the new reporting standards and further, nations. that their implementation at global level is 4.8.6 Automatic Exchange of Information (AEOI) monitored by the Global Forum. (i) Automatic Exchange of Information (AEOI) is (v) In keeping with its leadership role in this area, systematic and periodic transmission of "bulk" India also joined a group of 49 countries as "early taxpayer information by the source country to the adopters" of the new standards and has residence country, which is possible under most commenced exchange of information in 2017. As of the DTAAs and Multilateral Convention on on date, while 153 countries/jurisdictions, including Mutual Administrative Assistance in Tax Matters. India, have expressed their commitment to implement CRS on AEOI in certain timeframe, 47 (ii) Although exchange on "request basis" has developing countries are yet to set the date for resulted in improving transparency, its scope is first automatic exchange. The current status of limited since the offshore financial centres and tax commitment for AEOI is tabulated below: 171Annual Report 2019-2020 AEOI: STATUS OF COMMITMENTS1 JURISDICTIONS UNDERTAKING FIRST EXCHANGES IN 2017 (49) JURISDICTIONS UNDERTAKING FIRST EXCHANGES IN 2018 (51) JURISDICTIONS UNDERTAKING FIRST EXCHANGES IN 2019 (2) JURISDICTIONS UNDERTAKING FIRST EXCHANGES IN 2020 (7) DEVELOPING COUNTRIES HAVING NOT YET SET THE DATE FOR FIRST AUTOMATIC EXCHANGES (47) (vi) For implementation of AEOI under CRS, as on about money stashed abroad and ultimately 26.11.2019 107 countries/jurisdictions have joined bringing it back. the Multilateral Competent Authority Agreement 4.8.7 Inter-Governmental Agreement (IGA) with USA ("MCAA") which provides a framework for exchange for purposes of FATCA of information on automatic basis as per the new global standards. After joining the framework of (i) India entered into Inter-Governmental Agreement the MCAA, as above, countries/jurisdictions need (IGA) with the USA under the Foreign Account Tax to enter into bilateral/multilateral arrangements for Compliance Act (FATCA) on 9th July 2015. This exchanging information subject to confidentiality will obligate the Indian financial institutions to and data safeguards requirements in the recipient provide financial information to Indian tax country/jurisdiction. India has signed MCAA on authorities, which will then be transmitted to USA 3rd June 2015. automatically. Similarly, under the IGA the USA financial institutions will also be providing (vii) As committed by India, the first exchanges have information to USA tax authorities, which will be taken place in September 2017 and the same is transmitted to India automatically. The USA had reflected in the AEOI Report of the Global Forum. enacted the FATCA in 2010 with the objective of India has automatically exchanged information for tackling tax evasion by obtaining information in calendar year 2016, 2017 and 2018 on reciprocal respect of offshore financial accounts maintained basis with jurisdictions with whom AEOI has been by USA residents and citizens. The provisions of activated. FATCA essentially provide for 30% withholding tax (viii)The new global standards are very wide in scope on US source payments made to Foreign and oblige the treaty partners to exchange wide Financial Institutions (FFIs) unless they enter into range of financial information after collecting the an agreement with the Internal Revenue Service same from financial institutions in their country/ (IRS) to provide information about accounts held jurisdictions including information about the with them by USA persons or entities (firms/ ultimate controlling persons and beneficial owners companies/trusts) controlled by USA persons. of entities. (ii) Under IGA, India receives information about Indian (ix) AEOI based on CRS, when fully implemented, tax residents who have financial accounts in the would enable India to receive information from every USA, which will include, country in the world including offshore financial  The name, address and Indian TIN of any person centres and tax havens and would be the key to that is resident of India and is an account holder prevent international tax evasion and avoidance of the account; and would be instrumental in getting information 172Department of Revenue III  Account number; 10) and Aggressive Tax Planning (Working Party 11).  Gross amount of interest, US source dividends or other income paid or credited, depending on the (ii) In addition, the CFA has established a number of nature of the financial account. other subsidiary bodies such as the Forum on Tax Administration, the Forum on Harmful tax Reporting of information under the IGA with USA Practices, the Task Forces on Tax Crime and Other began from 30th September, 2015 and information Crimes, the Task Force on the Digital Economy pertaining to the calendar year 2014, 2015, 2016, 2017 and the Task Force on Tax and Development. The and 2018 has already been exchanged between the two Centre for Tax Policy and Administration (CTPA) countries. acts as the Secretariat to the CFA and its subsidiary bodies and provides technical expertise Implementation of AEOI and FATCA and support to the CFA. (iii) For implementation of FATCA and CRS, necessary (iii) India's engagement with OECD in the field of Direct legislative changes were made through Finance Taxes began in the 1990s in the form of delivery of (No. 2) Act, 2014, by amending section 285BA of technical development programme at the National the Income-tax Act, 1961. Income-tax Rules, 1962 Academy of Direct Taxes at Nagpur. Since then, were amended vide Notification No. 62 of 2015 India has been associated with the taxation work dated 7th August, 2015 by inserting Rules 114F of OECD and since 2006 have been accorded the to 114H and Form 61B to provide a legal basis for status of "Participant" (earlier known as "Observer") the Reporting Financial Institutions (RFIs) for to the work of CFA and in this capacity was maintaining and reporting information about the participating in the meetings of CFA and its Reportable Accounts. subsidiary bodies, although as "participant", India (iv) A Guidance Note was released on 31st August do not take part in the decision-making process 2015 to provide guidance to the Financial and is not bound by the CFA's conclusions, Institutions, Regulators and officers of the Income proposals or decisions. Tax Department for ensuring compliance with the (iv) The Indian delegates have been participating in reporting requirements provided in Rules 114F to the meetings of Working Parties and Task Force 114H and Form 61B of the Income-tax Rules, 1962. in view of the prominent role of OECD in The Guidance Note is intended to explain the development of international standards in the areas complex reporting requirements and provide further of international taxation, transfer pricing and guidance wherever required. To address the exchange of information. The policy adopted by evolving issues in the implementation the Guidance India was that of continuous engagement and Note has been updated on 31.12.2015, 31.05.2016 participation, and influencing the development of and 30.11.2016. The financial institutions international standards to protect our revenue submitted their first report in form 61B by interests while ensuring at the same time that in 31.05.2017 based on which India has started areas where the stand and position taken by India exchange of information automatically under is not in conformity with the stand taken by the FATCA and CRS from 30th September, 2017. India OECD, the reservations and positions of India are has conducted exchanges in 2018 and 2019 on taken into account during the updating of various similar lines. India has also received information standards and guidelines being developed by the related to calendar year 2016, 2017 and 2018 from OECD. the USA. (v) For the last two years, the work of OECD is 4.8.8 India's Association with OECD primarily concentrated on BEPS and AEOI discussed above. Some of the other areas of (i) The OECD is an organization of 34-member OECD's work related to taxation in which India is countries who are signatories to the Convention associated are summarized below: on the Organization for Economic Co-operation and Development. Tax issues have always been (a) OECD Global Relations Training Programme an important part of OECD's overall activities and (GRTP) are undertaken by the Committee on Fiscal Affairs During the year, files were processed for (CFA) and its subsidiary bodies. These subsidiary nomination of Senior level Officers of the bodies carry out the work on a number of different Department in respect of foreign deputation to topics, including development of the Model Tax attend the following important meetings/ Convention (Working Party 1), Tax Policy and conferences: Statistics (Working Party 2), Transfer Pricing (Working Party 6), Consumption Taxes (Working  IMF-Japan: High level International tax conference for Asian Countries, Party 9), Exchange of Information (Working Party 173Annual Report 2019-2020  IFA Congress, released 2017 update to the OECD Model Tax Convention. India's reservation to the Articles and  Joint Meeting of Tax and Environment Experts, commentary are recorded under the Chapter "Non-  India-Thailand Joint Tax Force, OECD Economies' positions on the OECD Model Tax Convention".  OECD Task Force of Tax Crime and Other Crime, India has been regularly participating in the  IBFD Taxation of Digital Economy, deliberations of WP-1 and contributing to working  IMF TADAT Seminar on issues related to tax treaties, model tax conventions and their commentaries, including all During the year, 28 officers in all were deputed for emerging issues requiring amendment to the model attending OECD GRTP programme. Two OECD tax conventions and their commentaries. The work GRTP programmes were conducted in NADT. One area of WP-1 also includes follow-up work programmes for the tax probationers of Bangladesh undertaken in respect of Action 6 (Preventing Treaty was conducted at NADT. Abuse), Action 7 (Preventing Artificial Avoidance (b) Forum on Harmful Tax Practices (FHTP) of PE status) and Action 14 (Making dispute Resolution More Efficient) of the BEPS project, Forum on Harmful Tax Practices (FHTP) was as identified in the final reports of these actions, established following the publication of OECD's which have already been endorsed by OECD and 1998 report on "Harmful Tax Competition: An G-20 Countries including India. Emerging Global Issue" to identify those preferential tax regimes that have harmful effects. In view of the ongoing work on taxation of digital Main work of FHTP is to review preferential tax economy, WP1 has also been tasked with carrying regimes of member countries and to make forward the work on building the consensus recommendations to remove features that create solution for addressing the tax challenges arising harmful effect or to abolish the regime. from digitalisation of the economy especially with regard to formulation of new nexus rule under pillar Forum on Harmful Tax Practices (FHTP) of CFA, 1 and treaty related issues under Pillar 2. OECD is presently undertaking work under Action Considering India's active involvement and valuable 5 of Base Erosion and Profit Shifting (BEPS) contribution to the ongoing work on taxation of Action Plan. Under Action Item 5 of BEPS Action digital economy, India has also been opted as Plan, FHTP is required to deliver three outputs (i) member of Extended Bureau of the WP1, which Finalization of review of member/associate county proposes to undertake the technical work on regimes; (ii) A strategy to expand participation to formulating new nexus rule under Pillar 1 and the non-OECD member countries; (iii) Revision of tax treaty-related issues arising out of Pillar 2 existing criteria. (GloBE) encompassing the design of a switch- over rule for tax treaties; a subject to tax rule for During 2019, India's transparency framework under inclusion in tax treaties; and the compatibility of Action 5 of the Base Erosion and Profit Shifting the Pillar 2 proposals with tax treaty obligations. was reviewed positively (d) OECD's Working Party 2 (c) OECD's Working Party 1 Working Party No.2 (WP2) of OECD provides an The Working Party 1 on Tax Conventions and opportunity to convey India's views on important Related Questions was created on 1st May 1971 subjects of tax policy. BEPS Action Point 11 has with the mandate to act as a forum for the finalized report titled "Measuring and Monitoring discussion of issues related to the negotiation, BEPS". It inter alia involves: application and interpretation of tax conventions, to examine proposals for the modification of the a. Establishing methodologies to collect and OECD Model Tax Convention and to draft analyses data on BEPS and the actions to appropriate recommendations for dealing with the address it: issues it has examined and for periodic updates b. Develop recommendations regarding to the Model Tax Convention. Since then WP-1 indicators of the scale and economic impact has brought out multiple updates to the Model Tax of BEPS and ensure that tools are available Convention latest being 2017 update which was to monitor and evaluate the effectiveness and released on 18th December, 2017. Being an active economic impact of the actions taken to participant to this forum, India has protected its address BEPS on an ongoing basis. source-based taxation rights by successfully incorporating its consistent positions, wherever WP2 is also the nodal body for conducting required, under various articles in the recently Economic Impact Assessment of Proposals being 174Department of Revenue III considered for Tax challenges of digitalization of to exchange information automatically starting the economy. This division has coordinated with from 2017. WP 10 has not only played the the WP2 in this economic impact assessment, instrumental role in development of AEOI giving inputs wherever necessary. Standards, it is even now continuously issuing FAQs and other guidance to clarify the matters (e) OECD's Working Party 10 pertaining to implementation of CRS on AEOI. The mandate of OECD Working Party 10 (WP 10) Two meetings of the WP 10 and one meeting of on Exchange of information and Tax Compliance the WP 10 Expert Subgroup (ESG) were attended is to provide support for improvements in the legal, during the year - one in March 2019 and one in practical and administrative framework to facilitate October 2019. During these meetings, the main exchange of information and mutual administrative discussion was on model rules for reporting on assistance between the countries with the view to Sharing and Gig Economies and a Guidance improving tax compliance and ensuring protection document on confidentiality provisions of tax of taxpayers' rights. treaties. The guidance document on confidentiality The financial crisis of 2009 was a watershed for was finalised during the meeting on October, 2019. fighting tax havens when the G20 announced that There were also discussions on enhanced co- the "era of bank secrecy is over". Global Forum operation under the tax treaties in the field of Joint on Transparency and Exchange of Information for Audit and Assistance in collection of taxes. Tax Purposes was restructured to strengthen the India has also been offered associate status in capacity for co-operation in international tax the Working Party 10 of the OECD which was matters and it developed a standard of accepted by India in November, 2019. transparency and exchange of information for tax purposes (EOIR). It was also decided to implement (f) OECD's Working Party 11 automatic exchange of information (AEOI), which WP11 is entrusted with the responsibility of is systematic and periodic transmission of "bulk" addressing the following BEPS Action Points taxpayer information by the source country to the related to 'Aggressive Tax Planning' (ATP): residence country, on a global basis to curb offshore tax evasion. The G20 Leaders in the Los Action Item No. 2 - Neutralize the effects of hybrid Cabos summit in June, 2012, accordingly mismatch arrangements; requested the OECD to work with G20 countries  Action Item No. 3 - Strengthening Controlled to develop a Common Reporting Standard (CRS) Foreign Corporation (CFC) Rules; on Automatic Exchange of Information (AEOI). The OECD Working Party 10 (WP 10) on Exchange  Action Item No. 4 - Limit Base Erosion via Interest of information and Tax Compliance was entrusted Deductions and other Financial payments; and with the work of developing standards for AEOI.  Action Item No. 12 - Require taxpayers to disclose WP 10, working with G20 countries, developed their aggressive tax planning arrangements the CRS on AEOI which was endorsed by the G20 [Mandatory Disclosure Regime (MDR)]. Finance Ministers in their meeting in Cairns on 21.09.2014. The Hon'ble Prime Minister in his India has been actively associated with WP11 and intervention at the G20 Leaders' Summit on 16th in 2015 Indian delegate was elected as a Vice- November, 2014, in Brisbane strongly supported chair of Working Party 11, being only the second the new global standard on AEOI and stated that non-OECD country (China is the other) to have a this would be instrumental in getting information representation in a leadership position of the about unaccounted money hoarded abroad and subsidiary body of OECD. The Indian delegate enable its eventual repatriation. continues to be the Vice-chair of WP 11 and as a Vice-Chair of WP11 Indian delegate has the The Government of India took a leading role in additional responsibility of conducting WP11 international fora, including at Working Party 10 meetings, participating in the decision-making of the OECD, towards building an international process of the Bureau of WP11, to determine the consensus amongst major economies of the world agenda/program of work for WP11 etc. that the problem of offshore tax evasion and flow of illicit money can be addressed only by the free As part of the work being done for the consensus flow of financial account information, exchanged solution to address tax challenges posed by amongst countries on an automatic basis. In digitalisation, OECD Working Parties have been keeping with its leadership role in this area, India assigned work proposed by the Program of Work has also joined a group of 48 countries as "early which was approved by the G20/OECD Inclusive adopters" of the new standards and has committed framework (IF) (of which India is also a member) 175Annual Report 2019-2020 in its meeting held in May 2019. The working party programmes for tax officials, in country training meetings are being held to carry out the technical programmes tailored to meet specific needs of work on the proposed unified approach under Pillar member's publication of a quarterly newsletter, One concerning "Nexus" and "Profit allocation" provision of consultancy services and research challenges arising from digitalisation and Global facilities for members upon request, supply of Anti-Base Erosion (GloBE) proposal under Pillar information to members, etc. Two. Working Party 11, which has responsibility (ii) India participated in the Technical Conference by for the development of coordinated measures to CATA during the year in Malaysia and India's address aggressive tax planning, has been called contribution was widely appreciated. upon to advance the work on Pillar Two liaising with other working parties as necessary. The WP- 4.8.10 Income Tax Overseas Units 11 has to work on technical aspects of Pillar 2 of (i) During the year 2018, Income Tax Overseas Units this new tax regime, which will concentrate on (ITOUs) remained functional in eight Indian areas such as inclusion rule, switch over rule, Missions viz. Mauritius, Singapore, France, Japan, undertaxed payment rule, subject to tax rule, etc. Netherlands, UK, Germany and USA. IRS officers It may be noted that these Issues are of have been posted as First Secretary (Economic), significance and relevance to both, the Indian tax authorities as well as the Indian taxpayers that in these Income Tax Overseas Units (ITOUs). are part of an MNE groups. With shift of businesses (ii) Selection process of IRS officer to the post of First to the digital arena, there is a need for tax Secretary in the Income Tax Overseas Unit (ITOU) administrators to frame effective principles to at Germany was completed during the year and govern taxation of the digital economy. India has the officer has joined the Indian Mission at been keenly looking at the scope that is being Germany. chalked out by WP-11 and actively participating so that India is able to take an appropriate position (iii) In addition to this, selection process of IRS officers on addressing remaining BEPS risk of profit shifting to the post of First Secretary in the Income Tax to entities subject to no or very low taxation. Overseas Units (ITOUs) is underway in respect of unit at Cyprus. (g) Tax Inspectors Without Borders (TIWB) 4.8.11 Cooperation with BRICS Countries on Tax India is presently engaged under the TIWB Matters programme with Eswatini and Sierra Leone as a partner administration. India is providing experts (i) BRICS is an important multilateral block that seeks in the field of transfer pricing and international to represent the interests of the developing taxation to Eswatini and Sierra Leone. TIWB has countries. The BRICS countries together account also been expanded for facilitating capacity for 30% of the global land, 43% of the global building between jurisdictions in the field of tax population and 21% of the world's GDP. This investigation under TIWB-CI (criminal platform aims to promote peace, security, investigation), and India is participating in this prosperity and development in multi polar, programme as well, providing expert assistance interconnected and globalized world. The BRICS to Uganda. countries represent Asia, Africa, Europe and Latina America, which gives their cooperation a 4.8.9 Coordination with other Multilateral Agencies transcontinental dimension making it especially (i) India is an Associate member of Centre for Inter valuable and significant. American Tax Administration (CIAT), a multilateral (ii) In 2018, the Heads of Revenue of all the BRICS organization. The efforts of CIAT are focused on countries had agreed on a High-Level Capacity cooperation between the tax administrations of Building Action Plan in which all the BRICS different jurisdictions with a view to work jointly countries shall be identifying their areas of strength against international tax evasion. To fulfil this and invite delegations from other BRICS countries objective, CIAT organizes different activities, studies, workshops, seminars etc. wherein tax with an aim towards building capacity of the other administrations can share their suggestions, countries in that area. Under this Action Plan, practices, experiences etc. During 2019, India workshops/symposia have been held at Brazil, participated in the General Assembly and Russia, India and South Africa. As a part of this Technical Conference meeting held by CIAT. India Action Plan, India organised workshop on has been an important member of Commonwealth Investigation of Undisclosed Foreign Assets Association of Tax Administrators (CATA) since including Common Reporting Standards and 1979. CATA's activities include organizing annual coercive measures to increase tax enforcement technical workshops, high quality training at NADT, Nagpur in 2019. 176Department of Revenue III 4.8.12 India's Collaboration with Forum on Tax various countries to ensure that their related party Administration (FTA) international transactions are priced at arm's length. Sometimes, the income of the group is (i) Forum on Tax Administration (FTA) was created in taxed in various jurisdictions and disputes arise July, 2002 at the initiative of Committee on Fiscal due to economic double taxation of the same Affairs (CFA) of the OECD, with the aim of promoting income in the hands of different taxpayers of the dialogue between tax administrations and of same MNE group. Similarly, MNEs also face identifying innovative tax administration practices. juridical double taxation where the same income FTA is a unique forum for cooperation between is taxed in the hands of the same taxpayer in revenue bodies at Commissioner level with different jurisdictions. To resolve such disputes, participation from 53 OECD and non-OECD countries the Double Taxation Avoidance Agreements including members of the G-20. The work of FTA is (DTAAs) provide a mechanism through the "Mutual overseen by the FTA Bureau, which comprises heads Agreement Procedure" Article of such DTAAs. of revenue administrations of 13 of the member Under this mechanism, the competent authorities countries. India is member of the FTA and Revenue of countries having a DTAA between them may Secretary is the member of FTA Bureau. consult each other and reach an understanding to (ii) India is an active participant in the collaborative avoid double taxation. work program of FTA organised under three pillars: (ii) India has a wide network of DTAAs and has been supporting the international agenda; improving able to successfully resolve double taxation issues compliance; and future tax administration. These with various treaty partners by effectively using three work streams of FTA have been further the Mutual Agreement Procedure (MAP) Article. categorized into multiple projects and India has The largest number of tax disputes is with the been very actively collaborating with FTA on various United States of America, which is not surprising projects. because both countries have a very high volume (iii) To support the initiatives which are high on of trade and American MNEs have significant international agenda, India has been collaborating business presence in India. This calls for a with FTA on its project on Use and Assurance of constant and deep engagement by the Indian CRS data, Effective taxation of Sharing/Gig competent authority with the American competent Economy, Introduction of On-Line Cash Registers, authority. India also has a number of tax disputes Joint International Task force on Shared Intelligence with United Kingdom, Japan, China, Netherlands, and Collaboration (JITSIC), Tax Debt Management Canada, Switzerland, Australia, Denmark, and FTA MAP forum etc. India is a member of the Sweden, Finland, Germany, etc. Both the Joint JITSIC Advisory Group. Significant projects Secretaries in the Foreign Tax and Tax Research undertaken under JITSIC were Panama Papers (FT & TR) Division of CBDT (JS, FT & TR-I and JS, leaks and Paradise Papers leaks projects. In the FT & TR-II) are the two Indian competent Paradise Papers Project, India was part of the authorities. While JS, FT & TR-I is the competent Initial Assessment Group. India contributed authority for North American and European towards development of EOI Guidance Note and countries, JS, FT & TR-II is the competent also compiled the Media Template. authority for the rest of the world. (iv) FTA's work programme for 2019-2020 is structured (iii) Between 1st April, 2019 to 10th December, 2019, around three priority areas viz Tax Certainty & bilateral meetings for resolving tax disputes under BEPS, Tax Co-operation and Digital MAP have been held with the competent authorities Transformation. India has expressed its willingness of USA (twice), United Kingdom, Japan (twice), to participate in these projects. Denmark, Sweden, China, Singapore, South (v) Furthermore, it is important to mention that India Korea, Finland, etc. More such meetings have has also been made a member of Advisory Group been scheduled till 31st March, 2020 with USA, for the Effective use of information received under UK, Switzerland, etc. The meetings have proved the Common Reporting Standard (CRS) and BEPS to be very successful in resolving various disputes Impacts and inputs projects. India has been relating to double taxation. regularly participating in these projects through (iv) The Mutual Agreement Procedure (MAP) has emails and webex calls and wherever required proved to be a very useful instrument for India in comments/inputs are being sent to the FTA resolving long-standing and complex issues of Secretariat from time to time. double taxation. During the period 1st April, 2014 4.8.13 Mutual Agreement Procedure to 10th December, 2019, approximately 660 tax disputes relating to 660 assessment years (i) Multinational Enterprises (MNEs) operating across (number of taxpayers involved would be about 180) the world are subjected to transfer pricing audit in have been resolved under MAP by the Competent 177Annual Report 2019-2020 Authorities of India through negotiations with their would determine the Arm's Length Price (ALP) of counterparts of various countries. Along with the such international transactions and/or specify the Advance Pricing Agreement (APA) scheme of the manner in which the ALP is to be determined. Government of India, MAP has come to be (iii) Legislative provisions for Rollback of APAs were recognized as an effective and efficient alternate brought into the Income-tax Act, 1961 through the dispute resolution mechanism. Together, APA and Finance (No. 2), Act 2014 in July, 2014. The Rules MAP have helped in reducing tax disputes, governing the Rollback of APAs were notified in fostering a non-adversarial tax regime and have the Income-tax Rules, 1962 on 14th March, 2015 helped in creating a conducive taxation [Rules 10 MA and 10 RA] and the existing APA environment in India. Scheme got amended accordingly. Subsequently, 4.8.14 Advance Pricing Agreements CBDT issued a Circular on 10th June, 2015 [Circular No. 10/2015] to provide clarifications on (i) Advance Pricing Agreement (APA) provisions were certain issues related to the Rollback provisions introduced in the Income-tax Act, 1961 through in a question and answer format. the Finance Act 2012. Sections 92CC and 92CD were introduced in the Act to provide the legislative (iv) The Rollback provisions allow the terms and backing to the APA Scheme, which was notified conditions of the APA to be rolled back for a in the Income-tax Rules, 1962 on 30th August, maximum of 4 years prior to the first year of the 2012 [Rules 10F to 10T]. These rules lay down APA period. Thus, a taxpayer would be able to the detailed procedures for filing of pre-filing have certainty in matters of transfer pricing for a consultation application; pre-filing consultation; maximum period of 9 years by applying for an APA payments of fees; filing of APA application; with Rollback. processing of APA application; withdrawal of APA (v) Under the APA Scheme, APAs can be multilateral application; terms and conditions of APA; filing of or bilateral (involving CBDT and 1 or more countries Annual Compliance Report; Compliance Audit; and the taxpayers) or unilateral (involving the CBDT revision, cancellation and renewal of APA; etc. only and the taxpayer). Over the last seven and a Besides, Rule 44GA was inserted to provide for half years, close to 1200 APA applications have procedural aspects while dealing with bilateral or been filed in India. A large majority of these multilateral APAs. In May 2013, a Taxpayers applications (about 80%) are for unilateral APAs Information Series on "Advance Pricing Agreement between the Indian taxpayer and the CBDT. Till Guidance with FAQs" was released to provide 20th December, 2019, 320 Agreements have been clarifications on certain issues. entered into and it is expected that some more (ii) The Advance Pricing Agreement (APA) Scheme was APAs could possibly be entered into by 31st introduced to reduce litigation in transfer pricing March, 2020. The average time taken by CBDT to matters and provide tax certainty to Multinational conclude an APA is about 36 months, which is Enterprises (MNEs) doing business in India. It was less than the average time taken by advanced tax provided that APAs could be entered into with jurisdictions like USA, Canada and UK. taxpayers for a maximum period of 5 years in respect (vi) The details of APA applications received and APAs of international transactions between Associated entered into have been provided in the two tables Enterprises (AEs) within an MNE group. The APAs below: Table 1: Details of APA Applications Received and Disposed No. of No. of Applications disposed No. of Applications No. of Financial Agreements of due to withdrawal or other under Processing Applications Year Signed till 20th reasons till as on 20th Filed December, 2019 20th December 2019 December 2019 2012-13 146 102 20 24 2013-14 232 120 40 72 2014-15 206 59 19 128 2015-16 132 23 3 106 2016-17 101 10 - 91 2017-18 168 4 - 164 2018-19 170 2 - 168 2019-20* 10 - 10 Total 1165 320 82 763 * Till 20th December, 2019 178Department of Revenue III 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 58 9 67 2018-19 41 11 52 2019-20* 43 6 49 Total 283 37 320 * Till 20th December, 2019 (vii) In April, 2017 the Central Board of Direct Taxes Business Identification Number (CBIN) or simply published an APA Annual Report for the first time. Business Identification Number (BIN) for providing The Annual Report was an initiative of the CBDT registration to a number of government to bring into the public domain various statistical departments and services. and qualitative aspects of India's APA programme, (c) One Person- One PAN with a view to encouraging discussion and debate amongst taxpayers, policy makers, media, The Income-tax Act permits one person to have only one PAN. To avoid issuance of duplicate PAN, economists, etc. on the strengths and weaknesses the data is checked for duplication by using the of the programme. The second and third Annual software having phonetic matching algorithm. In Reports on the APA programme were released in order to further strengthen the de-duplication 2018 and 2019, respectively. process the PAN database is being seeded with 4.9 Directorate of Systems Aadhaar number for individuals and Company 4.9.1 Project Name: PAN Identification Number (CIN) for corporate entities. (a) Permanent Account Number (PAN) (d) PAN Verification Facility As per section 139A of Income-tax Act, 1961 PAN PAN verification facility is provided to the (Permanent Account Number) is a 10-digit alpha- government departments through the websites of numeric number allotted by the Income-tax the Income-tax department through link "Know Your department to taxpayers and to the persons who PAN" facility on Income-tax official web site apply for it under the Income-tax Act, 1961. www.incometaxindiaefiling.gov.in, if name, father's Permanent Account Number (PAN) enables the name and date of birth (DoB) /Date of Incorporation (DoI) are known. department to link all transactions and correspondences of a person with the department. Service for PAN verification is also provided by Income-tax PAN Service Providers (UTITSL and PAN database has shown steady growth in tune NSDLe-Gov) to agencies falling under any of the with economic progress. The progressive number approved categories as per procedure laid down of PANs allotted up to 30th November, 2019 by the Directorate of Systems. (cumulative) is 48,59,90,948. During the current year (up to, 30th November 2019) 4,02,73,565 (e) Grievances Redressal Machinery: PANs have been allotted. Grievance redressal machinery related to PAN is (b) Common Business Identification Number well defined. The Income-tax department has a (CBIN or BIN) special electronic grievance redressal system called e-Nivaran on e-filing portal of the Though, as per section 139A of the Income-tax Department i.e. on Act 1961, role of Permanent Account Number incometaxindiaefiling.gov.in. Grievances are (PAN) was envisaged as that of a tax-payer also received through Centralized Public Grievance identity limited to Income-tax department. Redressal and Monitoring System (CPGRAMS) However, PAN is now required for various activities of Government of India and through the designated like opening of a bank account, opening of a demat PAN service providers. account, for other financial transactions prescribed (f) New Initiatives in Rule 114(B) of the Income-tax Rules, 1962, registration for Goods and Services Tax (GST) etc. a. Issue of e-PAN with enhanced QR Code Thus, PAN is leveraged to become Common thorough Aadhaar based eKYC 179Annual Report 2019-2020 e-PAN is being allotted, to individuals applying month of November 2019, total 51,20,991 through Aadhaar based eKYC route of PANs have been authenticated with Aadhaar application, within 2 hours TAT(eight hours database. Seeding of Aadhaar in remaining of TAT for application made after 20:00 hrs). PANs is presently going on. b. Integration with MCA for issue of PAN and CBDT, vide notification no. 75/2019 dated TAN/ Instant e-PAN for corporates: 28.09.2019 has mandated that every person PAN and TAN processes have been integrated who has been allotted Permanent Account with the process of registration of new Number as on the 1st day of July, 2017, and companies using a Common Application Form who is eligible to obtain Aadhaar number, shall SPICe at MCA portal. PAN and TAN are being intimate his Aadhaar number to the Principal allotted on near to real time basis (Turn Director General of Income-tax (Systems) or Around Time (TAT) of 15 minutes). Principal Director of Income-tax (Systems) except the persons excluded under sub- c. Aadhaar address update facility section 139AA of the Act. Facility to update address in PAN data base, with the address given in Aadhaar data 4.9.2 Project Name: Project Insight: base has been launched. This facility is free The scope of Project Insight was conceptualized of cost and works through integration with to enable ITD in meeting the three goals namely (i) to UIDAI. promote voluntary compliance and deter noncompliance; d. Facility for downloading e-PAN: (ii) to impart confidence that all eligible persons pay appropriate tax; and (iii) to promote fair and judicious tax A facility to enable the existing PAN holder administration. Under this project an integrated data to download e-PAN through MSP's warehousing and business intelligence platform is being websites after OTP authentication has been rolled out in a phased manner. created. This enables a secure e-PAN which is printable many a time. e-PAN can be i. A State-of-the-Art Data warehouse has been downloaded in pdf format. Further, facility to operationalized under Project Insight with end-of- download in .xml format (machine readable) day integration of key projects/data sources of has also been launched. Income Tax Department. Insight Data Warehouse e. Enhanced QR code on e-PAN & Physical is being used for providing comprehensive MIS to PAN Card: TPL for pre-budget analysis, impact assessment and policy formulation. The e-PAN is embedded with an enhanced QR code which captures demographic data ii. A dedicated reporting portal (https:// as well as photograph and signature of report.insight.gov.in) has been rolled out to provide applicant. This QR code can be read through a comprehensive interface between Reporting an app which is freely available on Google Entities and the Income-tax Department. The Play Store. The enhanced QR code enables Reporting Portal enables seamless data offline verification of PAN data, thus processing, data quality monitoring and report eliminating possibility of photo shopping rectification. Report Generation Utilities, etc. resulting in enhanced security of PAN Information Request Utility, User guides, videos, card and e-PAN. Chatbot have been provided to the reporting entities f. Reprint of PAN card to assist them in meeting reporting obligations. All submitted reports are processed and Data Facility of reprint of PAN card (at nominal rate) Quality Reports (DQR containing defects and has also been launched to enable PAN holder exceptions) is shared with the reporting entities obtain fresh PAN card in case of loss/damage for rectification of defects. I&CI users have been etc. provided with functionalities to enable monitoring g. Integration of PAN with AADHAAR UIDAI of registration, statement filing, correction of (Aadhaar PAN linking) defects and initiation of compliance verification Integration of database with UIDAI has already wherever required. taken place for seeding of Aadhaar with PAN iii. Income Tax Transaction Analysis Centre for dual purpose. It prevents any of the (INTRAC) has been operationalized for handling duplicate PAN from being issued to any data integration, data processing, data quality applicant as well as to identify the monitoring, data warehousing, master data applicant having an already issued PAN. management and data analytics. Data has been Till 30.11.2019 a total of 29,65,57,524 PANs enriched by standardization of bank account of individuals have been seeded with Aadhaar number/contact/address, address clustering, data base, which is approximately 62.43% of geocoding, relationship identification/clustering. total PAN allotted to individuals. During the 180Department of Revenue III Data Analytics is being used for identification of consisting of i-Wiki, i-Library, i-Forum and i-Query, high risk cases including the following: has been rolled out to assist ITD in "Organizing creating, sharing, using and managing organization a. Identification of high risk non-filers under NMS knowledge for getting the right knowledge to the (AY 2016-17 onwards) right person at the right time". b. Selection of cases for scrutiny under CASS (CASS 2018 onwards) x. Insight Learning Hub, an integrated platform consisting of learning management system, online c. Identification of high risk refund claims (April courses, competency tests and training material 2018 onwards) repository has been rolled out to supports capacity d. Identification of high risk remittances (Sep building of ITD employees by "delivery and tracking 2018 onwards) of customized learning content to employees using e. Risk assessment of information received under competency-based training approach". Automatic Exchange of Information (AEOI) 4.9.3 Project Name: Non- Filers Monitoring System f. Risk assessment of information received under (NMS) Pilot Project Country-by-Country Reporting (CbCR) The Income Tax Department has implemented the g. Risk assessment of Suspicious Transaction Non- Filers Monitoring System (NMS) which assimilates Reports (STRs) received form FIU-IND and analysis in-house information as well as transactional iv. Compliance Management Central Processing data received from third- parties, including Statements of Centre (CMCPC) has been operationalized for Financial Transaction (SFT), Tax Deduction at Source (TDS) leveraging campaign management approach and Tax Collection at Source (TCS) statements, Intelligence (consisting of emails, SMS, reminders, outbound and Criminal Investigation (I&CI) data etc.to identify such calls, letters) to support voluntary compliance and persons/entities who have undertaken high value financial resolution of compliance issues. A dedicated transactions but have not filed their returns. Following number compliance portal (https://compliance.insight. of non-filers with potential tax liabilities were identified. gov.in) has been rolled out to display information  NMS Cycle 7(AY 2017-18):38.81 lakh to the taxpayer and capture response on compliance issues in a structured manner for  NMS Cycle 8(AY 2018-19):15.58 lakh effective compliance monitoring and evaluation. The information about transactions is made available on the online portal and email and SMS is sent to v. Business Intelligence Dashboard consisting of the non-filer to provide online response and submit interactive Business Intelligence (BI) reports has return. Many non-filers file their return and pay been implemented to provide actionable information appropriate taxes. The details of high-risk non-filers to ITD users with drill down. The BI reports have are pushed to the field formation for further action. been classified under various themes such as Tax An online portal has been developed to enable Collection, Tax Base, ITR Information, Business verification and monitoring of actionable information Information, Exemption, Taxpayer Compliance, TDS by the field formation, this functionality enables Information, TDS Compliance, International field officers to generate letters, view online Transactions, Third Party Information etc. response and initiate appropriate proceedings vi. GIS (Geographical Information System) under the Act. Dashboard consisting of more than 100 interactive 4.9.4 Project Name: Refund Banker GIS reports have been implemented to provide high- level geographical view to senior management for The Refund Banker project has enabled system effective monitoring. driven process for determination, generation, issue, dispatch and credit of refunds. This project has made the vii. Collaborative Verification module under Insight process of delivery of refund completely automated, speedy Portal has been rolled out which enables ITD user and transparent. Under the Refund Banker Scheme, paper to view online response submitted by the taxpayer and electronic refunds determined by the Income Tax and capture case related activities and verification Assessing Officers are sent in electronic files by Income result in a structured manner. The ITD user will Tax Department to the State Bank of India (SBI), which also be provided access to Profile View of the entity has been designated as the Refund Banker agent of the under Verification. Department. The Refund Banker sends ECS or Direct viii. Profile View under Insight Portal has been rolled Credits to the bank accounts, where the refunds have been out which provides comprehensive multi-year profile processed for electronic payment. of taxpayer and other entities with secure role A web-based status tracking facility in collaboration based information access control. The Profile with India Post and National Securities Depository Ltd. views displays key insights, financial ratios and (NSDL) is available under the Scheme. Call centre facility related information for effective analysis. with toll free number 1800-42-59-760 is also available for ix. Insight Knowledge Hub, an integrated platform tracking status of refunds issued through the scheme. 181Annual Report 2019-2020 The Assessing Officer's role in issuing refunds is are available on departmental system for monitoring status limited to processing the return of income on computer. of issue of refunds. There has been a steady increase in The status of refunds is updated on the departmental number and percentage of refunds issued through the application with reasons for non- payment in case of unpaid scheme. During current Financial Year, 2019-20 (up to or returned refunds, to enable the assessing officers to re- December 2019), the percentage of refunds issued through send the refund for payment after removing the deficiency. the scheme is 99.99 % of the total number of refunds issued Audit trail and MIS on unpaid/unpicked refunds (with ageing) all over India as under: Financial Year No. of Refunds No. of Other Total Percentage (Paid) through Refunds of Refunds Refund Banker (Paid) Paid through Refunds Banker 2018-19 2,81,90,436 2,493 2,81,92,929 99.99% 2019-20 2,75,07,167 383 2,75,07,550 99.99% (upto Dec. 2019) A new mechanism of PAN Account validation using maintained by NSDL. Modified File validation instructions PFMS has been implemented since last two years to shift have been installed in the software of all collecting banks to electronic payment of refund. Under this arrangement, and at TIN to ensure better data quality. NSDL extracts the PAN Account information is transmitted to the banks the data, prepares OLTAS files and transmits the same to using PFMS interface and banks provided the PAN, Name, the OLTAS server maintained at NCC, New Delhi. From etc. seeded in the account to enable validation of PAN and there, the data is populated into the ITD OLTAS database, Account linkage. From April, 2019 the department has enabling the Assessing Officers to give due credit to the started obtaining the same data string online through NPCI taxpayers for the tax payments made by them, and also which has larger coverage of integration with banks. A generation of collection reports for AO/ Range Head/CIT/ repository of around 3.5 crore PAN and Bank account Pr. CIT/CCIT based on PAN/ TAN jurisdiction, irrespective linkage has been created for validation and due diligence of the place or mode of payment. before issuing refunds. In case of validated PAN Account The salient features of the OLTAS Project are as record, the refund exceeding the predefined threshold under: (50,000) is issued electronically. As a result of this initiative, from 01.03.2019 the department has started transmitting  The collecting and nodal branches of banks can 100% refunds through electronic mode. verify the status of the tax payment data transmitted by them to TIN through TIN website 4.9.5 Project Name: OLTAS (Online Tax Accounting tin-nsdl.com. System)  The taxpayers can verify their tax payments OLTAS project integrates online tax payments through Challan Status Enquiry at the TIN website, made by tax payers with the running ledger accounts of on the basis of TAN/CIN (Challan Identification tax payers maintained by the Income tax department for Number). Challan Identification Number under tax credit. OLTAS functions in close coordination with RBI, OLTAS is a unique combination of BSR Code of Agency Banks and TIN (presently being managed by the bank/branch, Date of deposit and Challan serial NSDL). number. The objective of OLTAS project was to do away  Reports on top advance tax payers and TDS with the paper trail for tax credit and paper validation system. payers with quarter-wise comparative analysis with OLTAS project has been one of the landmark e-governance preceding financial year are also available to the initiatives undertaken by the department. Under the project, Commissioners of Income Tax and Commissioners all payments made in bank are uploaded on T+3 basis. of Income Tax (TDS) for monitoring of collections. Cash payments can be mapped with the bank and the assessee with PAN/TAN irrespective of the place of  Monthly MIS reports are generated by TIN for payment. A country wide network of 26 agency banks and Income Tax Department as well as for Pr. CCA, their 13,000 branches including 3 private sector banks are CBDT and RBI, for monitoring and follow-up. authorized by the RBI for collecting direct tax payments  TIN provides an OLTAS dashboard facility to the under OLTAS. Under this Project, the banks enter data of collecting bank branches, their nodal branches as tax payment challans in their computer system and transmit well as their link cells for monitoring upload of tax the challan information online to the server of the Tax payment data and for its reconciliation with funds Information Network (TIN) of the Income-tax Department, remitted by them to RBI. 182Department of Revenue III  A separate OLTAS dashboard facility is also portal with all fields pre-filled. User needs to only available through TIN website for the Finance select Bank and proceed for payment. This Minister, senior functionaries of CBDT, Chief provides ease of tax payment and also reduces Commissioners/Directors General of Income Tax, mistakes in filling tax challan. Commissioners of Income Tax (TDS) and iv. Integration of online tax payment facility with Commissioners of Income Tax (Computer demand notice/e-filing portal: The taxpayer can Operations) for monitoring direct tax collections click on the tax payment link while viewing demand on a daily basis. details on the e-filing portal, which will display filled Recent initiatives for promoting digital payments regular tax challan from the tax payment portal are as under: with all fields pre-filled. This provides ease of tax payment and also reduces ensures linking of i. Payment through cards: Presently, 6 banks payment with the demand (using automatic namely, SBI, PNB, Indian Bank, HDFC, Canara capture of Demand Identification number) and ICICI Bank have started the e-payment facility online through its debit cards as well. v. Integration with UMANG: Challan 280 payment and Challan Status Inquiry (CIN based view) has been ii. Payment through ATMs: ATMs of Corporation integrated with UMANG (Unified Mobile Application Bank, Bank of Maharashtra, Axis Bank, Central for New Age Governance) Bank of India, Bank of India, HDFC Bank, Canara Bank, Union Bank of India, Punjab & Sind Bank, vi. Converting online tax payment facility to mobile Punjab National Bank, Indian Bank, UCO Bank, responsive pages: This facilitated users to access Andhra Bank, Bank of Baroda and Oriental Bank payment portal through mobiles. of Commerce. vii. Mobile App for tax payment and refund tracking: iii. Integration of online payment facility with return Users can use mobile app for tax payment and preparation: The taxpayer can click on tax tracking refund status through the convenience of payment link on online ITR preparation facility their mobile phones. (ITR1 and ITR4), which will display filled Self- Financial year wise percentage of e-payments is as below: Assessment Tax challan from the tax payment Financial Year % in terms of total % in terms of total amount number of e-challans associated with e-challans 2018-19 82.26 91.14 2019-20 (upto Dec 19) 84.81 91.64 4.9.6 Project Name : Integrated E-filing & Income Tax Department. It is expected that the new Centralized Processing Centre CPC 2.0 Integrated e-Filing and CPC 2.0 shall deliver a world class experience to the taxpayers similar to that they are Background: experiencing in the online and mobile world in sync with The existing e-Filing and CPC 1.0 projects have world -wide trends. brought many significant changes in the tax filing and The above is planned to be achieved by: processing system of the nation and were a revolutionary step, but with the increased spread of digital systems in i. Providing ease in filing returns using wizard-based all aspects of life, access to mobile apps and growth in e- forms and generating pre-filled returns for the tax commerce, there has been higher expectations from the payers. tax payers with regard to filing and processing of income ii. Actively promoting e-Verification of returns and tax returns. establish complete (100%) paperless environment. Although e-Filing and CPC 1.0 have proved to be iii. Reducing processing time of returns on year-on- game changers and a win-win for the department, tax year (YoY) basis and achieve real time processing payers and MSP, a need has arisen for a complete of returns and credit of refunds. ambitious transformation of tax payer's experience and the iv. Educating and empowering the tax payers by pro- business model. actively engaging with tax payers through digital To fulfill the expectations of taxpayers, the Integrated media. e-Filing and Centralized Processing Centre 2.0 Project (hereinafter referred to as CPC 2.0 project) envisions to v. Pro-actively communicating and engaging with tax redefine Income tax filing and processing in India to provide payers and enhancing transparency. a best-in-class experience to all taxpayers. The Union vi. Reducing errors, grievances, rectifications on a Cabinet has given its approval for CPC 2.0 Project of the YoY basis and achieve "first-time-right" outcome. 183Annual Report 2019-2020 vii. Facilitating tax payers and consistently reducing disincentive for processing beyond 15 days the outstanding demand. through a unique payment model. viii. Ensuring real time data exchange with all Accreditation of employers, deductors, banks stakeholders and achieve total seamless CAs etc. - Accreditation program with employers, integration. deductors, banks, CAs, ERI and TRPs etc. will enable the department to obtain information about taxpayers relating ix. Continuously promoting tax compliance in the to salary, interest, income from house property, deductions country resulting in to reduction of tax delinquency. etc. throughout the year in an accurate manner which will Objectives envisaged for the project: enable CPC 2.0 to accurately pre-fill the return and take Faster and accurate outcomes for taxpayer. up these returns for faster processing. i. First time right approach. Taxpayer Outreach Program- To prepare online ii. Enhancing user experience at all stages. campaign, brochures, news items, educative material etc. iii. Improving taxpayer awareness and education which will be run on digital platforms including social media through continuous engagement. on a continuous basis. The campaign will focus on thematic requirements of the department such as requirements for iv. Promoting voluntary tax compliance. e-filing of return, frequently asked questions, common v. Managing outstanding demand. errors, outstanding tax demand, rectification etc. This Key features of the Project: outreach shall help improve the accuracy of the return and All existing processes and functions of the existing assist taxpayers in the filing, processing and create e-Filing and CPC-ITR managed by incumbent MSPs for awareness about the initiatives taken by CPC. e-Filing and processing of Income Tax returns and their Tax Payer Facilitation for Outstanding Tax interfaces with other projects would continue. The additional Demand Management- Additionally, ever since the items that have now been envisaged in CPC 2.0 based on government of India has been collecting taxes there has the learnings of the existing projects are - been an increase in the tax debts i.e. the outstanding tax Focus on real time processing - Due to higher demand which the tax payers needs to pay to the income expectations of the taxpayers, Integrated e-Filing and CPC tax department. Moreover, large number of taxpayers do 2.0 is expected to achieve a near real time processing of not pay small payments since there is no multipronged returns. This is expected to be achieved by following: approach to reach out to the taxpayer to facilitate him in making payment or in seeking rectification of tax demands a) Pre-filling of Income Tax Returns- To enable which may not be correct. The outstanding tax demand faster processing pre-filled returns is being not only creates grievances but also slows down the pace provisioned in the RFP in-line with the TARC of processing. recommendations. a) To comprehensively take up this matter, the new b) Process and hold - In Integrated e-Filing and CPC MSP would leverage the partner ecosystem of 2.0 the clock to start processing shall start as accredited entities (CA/TRP/ERIs) to reach out to soon as the tax payer files his income tax returns the taxpayer and facilitate resolution of the and submits it on the e-filing portal. outstanding tax demand. c) Prioritization of returns & risk profiling - The b) For this purpose, the MSP would be paid a fee ITR's shall be processed as per the priority orders which would be a multiple of the quoted rate. and not at random. Following priority order has been set refund cases (high to low)> demand c) The advantage of this approach would be that the cases (high to low)> NDNR at the last. Additionally, MSP would pass on a portion of the fee to the the Individual returns shall have priority over non- partners who would, therefore, be incentivized to individual returns and e-verified returns shall have reach out to the taxpayer. priority over ITR-V based returns. d) The Mobile App system that would be built for this d) Reducing weighted average time of purpose would be available for departmental processing - To achieve real time processing the personnel such as TRO and ITIs to pursue tax MSP shall endeavor to reduce the weighted average collection efforts. time of processing by 10 % year on year. The e) For this purpose, a minimum committed performance level is also provisioned in the service expenditure of Rs. 15 Cr per annum is being level metric to ensure compliance. proposed as reimbursement over and above the e) First time right approach - CPC 2.0 has been transaction rate that would be paid to the MSP for envisaged to avoid all kinds of re-works. This shall processing of ITRs. reduce the number of rectifications and grievances. New e-Filing Portal with Zero Downtime- A f) Innovative payment model: By providing an complete re-design of the e-Filing portal has been envisaged incentive for faster processing as well as a for the project to provide modern day technology backed - 184Department of Revenue III a) user friendly designs, Present Status of the Project: b) wizard based easy to use forms, The project is under design and development phase c) user journey mapping to enhance experience, while the existing CPC1.0 and E-filing 1.0 is being continued d) all forms in online mode to provide ease to tax for the benefit of taxpayers and Department. The Project payers. will be rolled out in a phased manner including taxpayer facing which are expected to be rolled out from 1st April Over the years a need was felt to maintain high 2020 like e-Filing, e-Payment of taxes etc. Extensive uptime of the e-Filing portal especially during the peak discussions with TPL Division of CBDT are under progress periods, thus keeping this in view a no downtime of the for the finalization of revamped ITR forms for Assessment website has been provisioned in the RFP which is to be Year 2020-21 and other statutory forms. Extensive achieved by the MSP through website replication and Taxpayer Outreach through Digital Media Platforms has failover strategies, content delivery networks and a stringent been initiated under CPC 2.0 Project, which has received SLA and penalty mechanism on downtime to ensure MSPs positive feedback. compliance. Mobile App—To provide 'anytime anywhere 4.9.7 Project Name: TAXNET Project access' to tax payers. (i) Aims and object of the ongoing TAXNET project is Integrated Communication Management—To to provide seamless connectivity (IP-VPN enhance the existing call center services and integration services) to the departmental users in the income with Grievance Management Systems and CPC internal Tax department all over India. systems to provide a unified view to the tax payer regarding (ii) The TAXNET project acts as the architectural the history of grievances and the status of the current backbone of the entire digital edifice of the Direct grievances. Moreover, modern technologies like Virtual tax administration in India. It provides seamless, Assistants, Chat Agents, Screen Sharing and secure, efficient & dedicated connectivity to more communication through social channels has been than 780 locations spread over more than 500 cities provisioned in the RFP. in India. It is like golden thread which permeates Capacity Building and e-Learning—In order to through all modules, applications & platforms of provide effective learning capacity building requirements the Income Tax Department. In effect, it serves as have been specified in the RFP with provisions for a force multiplier for the entire digital machinery of developing a learning management systems and e-Learn the department. The ultimate success and the programs which shall augment knowledge of the resources execution of the all the modules like a Operation by providing anytime access to knowledge and ensuring Clean Money, ITBA, CPC-TDS and CPC-ITR- continuous learning for ITD employees, MSPs and its sub- Bangalore, Project Insight etc., in this critical way, contractor's teams. entirely rest on its shoulders. It works silently in Planning and Implementation of the Project: the background, being successfully executed since the year 2008. To implement this project, open tender was published on 8th February 2018 by the Income Tax (iii) Change Order Management is the integral part of Department on Central Public Procurement Portal (CPPP). the TAXNET Contract. In the instant dynamic After completing the open tendering process, M/s Infosys environment, it provides much needed operational Ltd was selected as the Managed Services Provider for flexibility. The major activities in change orders the implementation of the project on the lowest cost basis are as follows: (L-1). The Union Cabinet has approved the expenditure  Relocation of nodes/ Additional nodes sanction of Rs.4,241.97 crore (including GST @ 18%) for  Establishing new site Integrated e-Filing & Centralized Processing Center (CPC)  Shifting of site 2.0 Project of the Income Tax Department on 16th January 2019 from FY 2018-19 to FY 2026-27 which includes payout  Bandwidth Augmentation to the M/s Infosys Ltd. (the Managed Service Provider for These are executed as per the departmental the project). The Letter of Award of Contract has been issued requirement and requisitions from the field formations. The to M/s Infosys Ltd. on 23.01.2019 to design, develop, table-1 below gives the brief description of Change Order implement, operate and maintain Integrated e-Filing and Management, received during the F.Y. 2019-20 (till Centralized Processing Center 2.0 project. 30-11-2019). Sl. No. Shifting of Sites New Site Relocation Addl. Nodes Nodes No. of Sites Total No. of No. of Sites Total No. of Nodes Nodes 09 226 06 213 263 352 Grand Total No. of Nodes 1154 185Annual Report 2019-2020 4.9.8 NEW TAXNET 2.0 PROJECT FOR SELECTION to, inter alia, oversee implementation of Taxnet OF MSP FOR WAN, LAN, FMS AND VC 2.0, perform acceptance testing, monitor the SERVICES FOR ITD network as well as perform network and security audit, SLA verification etc. The RFP for Taxnet 2.0 was approved by the IFU, the Ministry of Law and the Revenue Secretary. (ii) The NIMMS RFP is under finalization and the NIMMS After due approvals, the RFP was released on Service Provider is expected to be on-boarded at the 02.12.2019. The Taxnet 2.0 project is for selection of MSP same time as the MSP for Taxnet 2.0. for WAN, LAN, FMS and VC Services. The major scope 4.9.10 Web Master Project of work of Taxnet 2.0 is proposed as under: (i) The National Website (https://www. i. Taking over of the existing LAN and creation/ incometaxindia.gov.in) hosts a number of augmentation of LAN to provide assured End- services with user friendly functionalities and to-End Secured Network connectivity: The features. Amongst the various services that the Department now seeks to have about 97% of its website hosts are a number of facilities put online sites on OFC as the medium for last mile relating to content on direct tax laws, PAN, TAN connectivity as this would ensure a dependable etc., providing returns & statements of e-filed and reliable connectivity cases, international tax related content, FAQs, tutorials, tax information, press release, latest ii. Implementation and management of Network news etc. The number of visitors to the website Operating Centre: A Network Operating Centre has been continuously increasing that shows its with Network Monitoring System is envisaged efficacy and popularity. in the premises of the Department that would facilitate visibility and management of the entire (ii) The website contains ‘Tax Payer Services network centrally. Module’ and ‘Aaykar Setu (Mobile Application on Android)’. The main highlights of the iii. Supply, operating and maintaining the VC facility Aaykar Setu are- equipment at about 120 locations, provision for software-based Video Conferencing i. ASK IT – It functions as a CHATBOT (A virtual solutions including allowing third party machine chatting with the user) which provides conferences over internet. solution to queries of taxpayers relating to PAN, TAN, TDS, Return Filing, Refund Status, Tax iv. Provide comprehensive Facility Management Payment etc. on real time basis and Maintenance Services across all Income Tax offices. ii. Live Chat with Tax Experts – In case users have any query they can use the chat option v. Further, the technical and security at TPS section. This facility will be available specifications of all the hardware and on all working days (i.e. Monday to Friday) equipment required have been upgraded. between 10:00 AM to 06:00 PM The 1st pre-bid conference was held on iii. Tax Return Preparer’s at your doorstep 07.01.2020 and saw participation from about 30 – It helps to locate the TRP on Google map. organizations including telecom service providers, system A Tax Payer can locate / search the TRP at integrators and OEMs. The conference mainly focused the desktop as well as on his mobile App. on discussing the top queries of potential bidders and iv. Tax Tools – To facilitate tax calculations for clarifying the same, as appropriate. filing ITR, various tax tools are available, The 2nd pre-bid conference is scheduled to be which give output required for ITR on the held on 28.01.2020 and the last sate of submission of basis of inputs / information available with bids is 03.03.2020. user. Once the MSP for TAXNET 2.0 is on-boarded, v. PAN / TAN – All the services related to PAN/ the RFP mandates implementation within 52 weeks (12 TAN i.e. PAN / TAN application, De- months). duplication, PAN surrender, PAN-Aadhar Linking are available through the portal 4.9.9 NETWORK IMPLEMENTATION MANAGEMENT & MONITORING SERVICES (NIMMS) vi. TDS / TRACES – It provides links to all the services useful for a Tax Deductor / (i) NIMMS is envisaged as a Project Monitoring Unit Collector, Tax Deductee in one place (PMU) of Taxnet 2.0. Through NIMMS, the alongwith proper bifurcation of services Department seeks to engage qualified manpower between Tax Deductor / Deductee etc. 186Department of Revenue III vii. Latest Updates on website through b. Tax rates as per Income Tax Act vis-à- email/SMS – It will help the taxpayers in vis Tax Treaties. finding out the information required as per c. Relevant provisions under Income-Tax upcoming compliance dates on the main Act, Companies Act, Service Tax and window of the Tax Payer Services. FEMA for Non-residents viii. Tax Gyaan –Tax Gyaan is a multiple- d. There is a section for Synthesised Text choice question web-based game to for the “Double Taxation Avoidance provide knowledge to the youths Agreements”. So far, ‘Synthesised Text’ accessible from mobile as well as desktop. for the application of the Agreements (iii) Other Features of Website: entered into with 12 countries have been uploaded. i. Complete information related to Direct Taxes Due Dates v. Providing information to the Tax Payer ii. Promoting Tax Payers to take Integrity in the form of FAQs / Tutorials / Tax Pledge – Integrity pledge is being Information series booklets. promoted through publishing of relevant vi. Cross linking: - Cross linking across all the web link at Home Page of the Website. sections of Income-Tax Act 1961, has been iii. Website is now one of the most educative provided. Further, all related Income-Tax sites, built on state-of-the-art technology, Rules 1962, FAQs, Tax Services, Income- having a rich repository of more than 100 Tax forms are available on that page itself. Tax and Allied Laws, Rules, approximately vii. Services centric information Page for 10,000 Circulars and Notifications which various services such as PAN / TAN, are cross-referenced and hyperlinked for Return Filing, Tax Payment, Tax calendar, users’ convenience. Tax Chart & Tables, Tax utilities, Tax iv. International Taxation related contents Helplines and more have been provided. An “Exchange of Information” functionality viii. The website is friendly for differently abled has been created on the Income-tax persons and can be accessed easily by Department website for dissemination of visually challenged users, users with partial information to financial institutions, or poor sight including colorblind users and Departmental officers as well as public at deaf users. It is bilingual and Rajbhasha large. The Chairman, CBDT on 22-11- compliant. 2019 inaugurated the functionality which consolidates all the relevant AEOI ix. Separate corner for Senior Citizens. (Automatic Exchange of Information) x. Latest News & Press Release are updated related information at one place for on real time basis. convenient access by all stakeholders. The portal would be a repository of policy xi. Other facilities and technical circulars / guidance / a. Income Tax Office Locator (covers notifications issued by the CBDT, and details of all Income-tax Offices across provide links to relevant circulars / India) guidance issued by the regulatory authorities in India and other international b. Separate pages of Pr. CCIT / DGIT- bodies. The portal is not only be useful Includes information about field offices, for the domestic financial institutions but Grievance Redressal Mechanism, will also help the foreign tax authorities respective CPIOs, Appellate Authorities and financial institutions to get information under RTI Act. about the Indian laws, rules and procedures related to AEOI under CRS. c. Tenders from Department. Other features in the same regard include: (iv) During the FY 2018-19, the portal experienced total number of 244,46,20,727 hits and had a. More than 130 Tax Treaties, which 2,19,08,764 total number of visitors. This shows India had entered into with Foreign that the website is being very widely used by the Countries, have been uploaded (with taxpayers and members of public and the website unique facility of Treaty comparison) has gained sufficient visibility. 187Annual Report 2019-2020 4.9.11 Video Conferencing authority from the pre-login page of e-filing portal of income tax department. This is in pursuance Video Conference (VC) facility is available across of the directions by the Hon’ble Prime Minister in 48 stations (57 sites), which is assigned to the which he has asked the Department of Revenue Telecommunications Consultants India Limited (TCIL) to come up with specific measures to ensure that with effect from April 2017. The bandwidth for the purpose the honest taxpayers are not harassed and is being provided under Taxnet project, the maintenance served better. It may be noted that earlier there of Video Conferencing devices and facilitation during such have been some instances where it was not conferences are ensured by the O/o ADG-4 team. The possible to maintain the audit trail of the manually importance of VC has grown tremendously since its issued communication which in some cases inception in the year 2006 given that senior authorities of caused inconvenience to taxpayers sometime. the Department now frequently resort to such conferences However, with the present system of attaching/ to save precious time and resources. The VC is also used quoting a DIN to every notice or communication by the System Directorate for imparting training and of Income Tax Authority is giving better services resolving queries. to taxpayers without any possible harassment. 4.9.12 Facility Management Services (FMS) Number of communications with DIN generated The O/o ADG-4 team, through its MSP, provides the Facility Management Services (FMS) to all the offices Sl. Module No. of DINs across the country. Till 1st June 2014 the FMS was No generated supporting 13,000 network users. The network user count 1. ITBA (till 12-12-2019)) 24.45 lakhs increased to 14500 in 2015, 15500 in 2016 and as on December 2017 and this has further increased to 19550 2. CPC-ITR (till 12-12-2019)) 607.53 lakhs currently. The RSA tokens are supplied and supported 3. CPC-TDS (till 12-12-2019) 10.39 lakhs by TCS and distributed by the FMS team through respective CIT (Admin & TPS) concerned. The FMS team Total 642.37 lakhs also facilitates the video conferences organized for various field offices across the country. (ii) Implementation of ‘E-assessment scheme’ 2019: 4.9.13 Project Name: ITBA In order to provide greater accountability and Achievements under the key/flagship transparency in tax administration, the programmes being implemented by Department during Government has vide Central Board of Direct the year Taxes notification dated 12th September, 2019 (i) Introduction of quoting Documentation launched a scheme of e-assessment of Income- Identification Number (DIN): tax in electronic mode, with no human interface. As per the Circular Number 19/2019 dated 14- Revenue Secretary Shri Ajay Bhushan Pandey 08-2019 issued by the Central Board of Direct inaugurated National e-Assessment Scheme Taxes, except in some exceptional (NeAC) on 08-10-2019 which has been carried circumstances, no communication shall be out on ITBA with the support of Insight team. With issued by any Income Tax Authority relating to the implementation of this scheme on the ITBA assessment, appeals, orders, statutory or platform, greater efficiency, transparency and otherwise, exemptions, enquiry, investigation, accountability in the assessment process is verification of information, penalty, prosecution, coming out as there is no physical interface rectification, approval etc. to the assessee or any between the tax payers and the tax officers. In other person, on or after the 1st day of October, the first phase 58,322 cases have been selected 2019 unless a computer-generated Document for scrutiny under the faceless e-Assessment Identification Number (DIN) has been allotted and Scheme 2019 and the e-notices have been is duly quoted in the body of such communication. served before 30th of September 2019 for the In order to comply with the direction contained in cases of Assessment Year 2018-19. The Benefits CBDT Circular No. 19/2019, dated 14-08-2019, of Faceless Assessment can be summarized as functionality has been provided in ITBA/ITD to under: - quote/generate DIN in respect of almost all • NeAC eliminates human interface between communication issued by the Income Tax Assessing Officer and Assessee Authority. With the introduction of this functionality taxpayers can also authenticate the genuineness • New System optimizes the utilization of of notice/letter/order issued by the income tax resources through economies of scale 188Department of Revenue III • NeAC introduces team-based assessment • CPC(TDS) reconciles and co-relates information with dynamic jurisdiction from various sources including banks (tax payment), deductors (reporting tax deduction), • Ease of compliance for taxpayers Assessing Officers (mapping no tax / low tax • Brings transparency and efficiency, thus deductions) and tax professionals (reporting improves quality of assessment and international transactions). monitoring • CPC(TDS) undertakes bulk processing of TDS • Functional specialization as only one agency statements to generate ‘Annual Tax Credit’ dealing with faceless assessment statements for each taxpayer in Form 26AS, TDS certificates in Form 16 / 16A/ 16B/16C & identifies • Expeditious disposal of cases TDS defaults of short payment, short deduction, interest, etc. • Standardization and quality management · The users/ stakeholders interact with the CPC 4.9.14 Project Name: Centralized Processing Cell (TDS) system and with each other through (Tax Deduction at source) in-short CPC (TDS) multiple channels of communication including About CPC (TDS) Call Centre, e-mail, website, etc. The Centralized Processing Cell for Tax • E-Governance established by CPC (TDS) led to Deduction at source CPC(TDS) is a technology driven the reduction of Non-Filers and increased the initiative of the Income Tax Department to put in place Statement filing by 15% till date and led to better Non-Intrusive, Non-Adversarial administration in the TDS compliance. country. The robust technology platform has been Demographic spread leveraged to provide value added services to more than 23.75 lakh deductors, 9.09 crore taxpayers from all over CPC(TDS) brings value to various institutions, India and abroad and more than 980 officers of the organizations (both within and outside government). It Income Tax Department who are administering TDS touches all government establishments, banks, financial across India. institutions, corporates on one hand and on the other, provides services to the taxpayers, whether filing tax Centralized Processing Cell – CPC(TDS) returns or otherwise. The users of the facilities at CPC undertakes end to end processing of TDS statements (TDS) include – through a Rule Based Technology enabled system • More than 9.09 crore Taxpayers including and offers e- services that are accessible on any-time, corporates, individuals, business entities and any-where basis with no cost to the taxpayers / deductors. others. 45 banks & E-filling website are linked to The rule based automated processing of ‘Statements’ the CPC(TDS) System for online access to Tax facilitates uniform interpretation of laws, faster turnaround Credit Statement (26AS). Around 8.52 Crore time besides ensuring seamless flow of data for tax registered users of e-filing website of the Income credits. CPC(TDS) introduces transparency in the Tax Department have online access to Tax Credit processes through online display of information and Statement (26AS) with over 94.50 crore 26AS provides an integrated platform for tax deductors, viewed till date. taxpayers and the officers of Income tax department. Thus, it forms the backbone of overall TDS • More than 23.75 Lakh Deductors including administration in the Income Tax Department. more than 1,75,000 offices of the Central & State Governments. India is one of the very few countries to put in • More than 5,000 Government (Central & state) place an initiative of this scale for reconciliation of Tax treasuries, sub-treasuries in each district and Deducted at Source. other Principal Accounts officers. Concept of CPC(TDS) · More than 980 Field Officers of the Income • Centralized Processing Cell (TDS) provides a Tax Department, spread across the country, who comprehensive solution to deductors through are responsible for TDS administration. ‘Tax Deduction, Reconciliation, Analysis and • Tax policy wing of the Central Board of Direct Correction Enabling System (TRACES)’ - its Taxes. core engine on the CPC(TDS) website www.tdscpc.gov.in. TDS Assessing Officers Attributes of the CPC(TDS) (AOs) of the Income Tax Department have i. Database size – 3300 crores transactional data. been provided Intranet Portal that offers wide variety of functionalities to the AOs. ii. State of the art Data Centres at NOIDA and Pune. 189Annual Report 2019-2020 iii. 250 plus operational resources. for a deductor-deductee combination. In this way, the amount depicted in the TDS certificate matches with the iv. Processing Capacity amount reflected in the Annual Tax Credit Statement. This  Processing capacity of more than 1 crore rules out possibility of a mismatch while processing of deductee records in 24 hours. Income Tax Returns. More than 209.14 Crore digital TDS certificates have been downloaded by deductors from  Average processing time < 5 days from the TRACES website till date. date of receipt of statements at CPC(TDS). The matching of TDS credits, while processing  Processing capacity of nearly 2000 inbound of Income Tax Returns has improved upto 96%. Verifiable letters in a day. single version of truth, through reengineering, also  Processing capacity of nearly 30000 eliminates any possibility of fraudulent claim of TDS based outbound intimations in a day. on bogus TDS certificates. v. Intimation of defaults is also sent to the registered Online 197 Certificates (Lower Deduction Certificates) email IDs of the deductors. Issuance of 197 Certificates (Lower Deduction CPC (TDS) - Game Changer Certificates) have been made online and contactless. Issuance of 197 including revision of certificate is The core engine of the CPC(TDS) viz called completely online now which is fast and convenient for TRACES (Tax Deduction Reconciliation, Analysis & taxpayers. More than 72,000 requests have been received Correction Enabling System) is a web-based since inception. Approximately 40,000 Form-13 application that provides an interface to all stakeholders certificates have been downloaded from TRACES associated with TDS administration. The application has website. three important attributes: Online Correction of TDS statements â Reconciliation –On TRACES, Input (OLTAS Challan and Original/Correction Statement as The CPC(TDS) provides facility for online received from Tax Information Network) and correction of TDS statements. Thus, the deductors can Output (Form 16/16A/16B/16C and Form 26AS now correct PANs and other attributes of the transactions as produced by TRACES) are duly reconciled. by promptly filing a correction any time anywhere. At Therefore, TRACES ensures that two sets of the same time, with this facility, any correction, for records are in agreement. resolution of defaults can also be carried out at deductors’ convenience. More than 2.67 crore corrections were â Analysis - TRACES facilitates compilation of received and processed by CPC(TDS) till date out of reports that are provided to the Officers in the which 76.59 lakhs corrections were received during the Income Tax Department for policy making. The period 01.04.2018 to 30.11.2019. reports are also available to the Commissioners of Income Tax/Range Officers & TDS Assessing E-Office Officers for enforcement of TDS provisions at The CPC(TDS) provides an integrated the regional levels. technology driven platform for enabling e-office in the Correction Enabling System – TRACES Income Tax Department. Over 980 Officers of the enables correction systems to the deductors for correcting Income Tax Department, administering TDS the challans, statements, etc. This facilitates resolution / provisions across India, connect with CPC(TDS) closure of defaults. RE-ENGINEERED PROCESS system through its Intranet services. In addition, a THROUGH CPC (TDS) dedicated Helpdesk for assistance to these officers has been enabled. With the inception of CPC(TDS), following processes have been reengineered:- The CPC(TDS) has re-engineered following processes in the offices of the TDS Field Officers: Issue of Digital TDS Certificate • The CPC(TDS) provides visibility to the Field The traditional practice of manual TDS Officers as regards grievances of the deductors/ certificates was a major cause of TDS mismatch in the taxpayers related to their jurisdiction. This has processing of Income Tax Returns. helped in bringing down physical visits to the ITD The CPC(TDS) now generates TDS certificates office. from the data reported by the deductors and after • The CPC(TDS) provides a facility for Online matching tax payments (reported through banks or other Generation of Notices and Orders, required for competent entities). These certificates, having a the enforcement of TDS provisions. This has reference number, are verifiable online and unique helped in minimizing manual activities for Field 190Department of Revenue III Officers and allowing them to focus on • ‘Any time Anywhere’ facility for online correction supervision and control. - Facilitates resolution of defaults. • Online repository of the notices and orders The impact is clearly visible in the following areas through CPC(TDS) facilitates adherence to of TDS administration: statutory timelines. The tax demand, raised as • Improvement in filers of TDS Statements within consequence of these actions, is also captured due date. in the system. • Improvement in deposit of tax within due date. • The CPC(TDS) facilitates consolidation of • Reduction in TDS default cases. ‘manual demands’ and ‘System generated • Reduction in quoting of invalid PANs. demands’ on one platform. • The CPC(TDS) provides platform for sharing INSTITUTIONALIZED MECHANISMS FOR of knowledge and best practices among the GRIEVANCE REDRESSAL & COMMUNICATIONS officers of the Income Tax Department through The CPC (TDS) has put in place a Call Centre for the facility of ‘Quality Cases’ (QC) and real time support to all the stakeholders. Further, the ‘Awareness Program’ (AP) material upload on stakeholders can also reach CPC(TDS) through e-mail, the TRACES website. Grievance Portal on the website and by writing a letter. The Centralized Issue & Dispatch of Intimations - grievances are being handled in a centralized manner and Automated Document Management System (DMS) all the stakeholders are given visibility regarding grievance by virtue of an integrated system. More than 58.91 lakhs The intimations are being dispatched from a grievances have been responded by CPC(TDS) since centralized automated system, through emails, SMS, inception out of which 10.93. lakhs grievances were postal mail and are also being shown on the dashboard of the deductors. With these services in place, the responded during the period 01.04.2018 to 30.11.2019. manpower in the department has been relieved of the Data for Policy Formulation and Social Policy task of manually sending out intimations. They can now Planning focus on quality tasks. Using data mining and analytics tools, CPC(TDS) The deductors also benefit as defaults are provides an updated Management Information System intimated to them within seven days of filing of the TDS (MIS) and Business Intelligence (BI) reports to the field statement, leading to better compliance. There are better chances of service of intimations, etc because address authorities. This helps them to focus on the potential cases of communication is same as that stated in the TDS involving high-risk. Field authorities stand empowered and statement. More than 4.27 Crores intimations have been equipped to take up the enforcement work in effective and issued since inception of CPC(TDS) out of which 1.11 efficient manner. The output of analytical tools also acts Crores intimations were issued during the period as an input for effective policy formulation. 01.04.2018 to 30.11.2019. Citizen Centricity Proactive dissemination of Information - The operationalization of CPC(TDS) has PROMOTING voluntary compliance benefitted multiple stakeholders involved in TDS The inception of CPC (TDS) marks a paradigm administration by way of an integrated interactive platform shift in the TDS administration towards achieving a Non- for Service Delivery. This has made a tremendous impact Adversarial, Non-Intrusive Tax administration on effort, time and cost. Timely processing of TDS statements coupled TAXPAYERS with multifold communication channels (Portal, emails and call centre) has facilitated compliance-driven ecosystem i. With CPC (TDS) generating TDS certificates for the deductors. CPC(TDS) has leveraged these centrally, the initiative has eliminated mismatch channels to send specific emails to the target of tax credits at the time of claiming credit audience (e.g. non-filers, late filers, tax defaulters etc.) for TDS in the Income Tax Return. with an aim to create ‘TDS default free’ environment and to promote voluntary compliance. ii. The taxpayers do not have to maintain record of manual paper TDS certificates. All information Three-pronged approach has been adopted to related to TDS credits, is available online in the address the closure of the defaults: form of Annual Tax Credit statement (Form • Timely intimation to the deductors –giving sense 26AS). The taxpayer has to only verify it from of “someone watching” - Persuades them for time to time. voluntary compliance. iii. With the elimination of manual issuance of TDS • E-mail & Call Centre campaign - Persuades the certificate by the deductor, verification by the deductors to close the defaults. Income Tax Department is not required. This has 191Annual Report 2019-2020 cut down unnecessary delays in the granting Feedback and Grievance Redressal: The of tax credits. centralized tracking of grievance ensures that the time taken for redressal is minimized. iv. The availability of Form 26AS online has facilitated accurate & complete reporting of Quality Services provided by CPC (TDS): Income. As a consequence, compliance cost (i) Intermediate Communication in the course of for the taxpayer has come down. processing of TDS Statements: v. The e-filing website of the Income tax department CPC (TDS) has implemented the functionality to pre-populates Tax Credit data in the Income Tax identify PAN and Challan related errors in the Return based on information sent by CPC(TDS). Original TDS Statement filed by the deductors This has made the process of filing Income Tax during preliminary scanning and to communicate Return easy. the same to the respective deductors through vi. The Annual Tax Credit Statement is updated SMS text and email registered at TRACES. The on a near real time basis. Hence discrepancies deductor was given an opportunity to rectify in the TDS reported by the deductor, can be mistake pointed out by the System in 7 days. reported by taxpayer to deductor, while the CPC(TDS) has sent over 30 lakh Intermediate transaction is very recent. Communications till May’2019. vii. Malpractices in the issuance of refunds, etc. Presently this functionality has been discontinued have been minimized. as there is change in the process resulting due to no hold period provided to deductor for DEDUCTORS correction in the statement. This decision has i. Single Window Delivery: A comprehensive been taken by the department on the basis of web-based service delivery platform takes care trend in correction statements filed by the of all the compliance needs of deductors and is deductors in the past during holding period. a source of constant feedback. (ii) Institutionalized Constant Feedback process: ii. Online and Offline Correction facility is CPC (TDS) connects with the Deductors as part available on anytime anywhere basis. This is of its “Good Governance” Programme to one of the major components of the integrated continuously assess satisfaction levels for interactive platform of CPC(TDS). various services offered by CPC (TDS). CPC(TDS) connected with over 4,44,163 end- iii. The CPC (TDS) has promoted voluntary users since from January’2015 to 30th compliance by the deductors. Through November’2019 as part of this exercise to take proactive dissemination of Information, CPC their feedbacks. (TDS) has been able to help the deductors in avoiding defaults and consequent costs by Following Satisfaction results have been providing valuable updates through achieved for the period 01.04.2018 to 30.11.2019 with educational emails and other sources. the Good Governance Programme of CPC (TDS): Period Sum of Call Not Sum of Not Sum of Sum of Not Total Satisfaction Connected Satisfied Satisfied Applicable Calls % 01.04.2018 to 88,424 2,059 55,738 40,648 1,86,869 96.44% 30.11.2019 192Department of Revenue III (iii) Call Back facility provisioned by CPC (TDS): TRACES to access the website functionalities Being sensitive to end-users’ requirements, the through direct integration facility, through which Inbound Helpdesk IVR facility at CPC (TDS) has the users can Login on their bank site and provisioned for a call back facility on “Node 8” on navigate to TRACES through 3rd party integration the toll free number 1800 103 0344. CPC(TDS) and approved successful validations. This is connected with over 1,34,308 users from February extremely useful for banks in integrating their 2015 to 30th November’2019 who used the above application with website TRACES. The objectives facility on IVR. The above facility has been of the integration are: applauded by the deductors, which is extremely convenient and saves their time and effort. • To have cost effective, secured and authentic access to TRACES portal by the In addition to the above, all end users, who tried banks/corporates having multiple branches. to connect with CPC(TDS) over its toll-free number, however, could not speak to the • To engage corporate/bank head quarter as Helpdesk Agent and dropped the call, are also a responsible partner for proper called back within the next working day to provide authentication of their branches. assistance on any possible query. • To eliminate risk of unauthorized access. (iv) Deductor Awareness Programme: CPC (TDS), • Ease of use for TRACES users by relaxed in order to drive Proactive dissemination of KYC for use of facilities offered by TRACES. Information and promote voluntary compliance, reaches out to the Deductors through email Currently approximately 45 banks& E-filling campaigns on a regular basis. website are availing the facilities of TRACES, out of which 25 banks have been directly integrated. The Income Tax Department had earlier been CPC (TDS) has received excellent feedback from relying on traditional methods of advertisements, the users due to the ease, security and postal letters and seminars to disseminate convenience of the above facility. information. The communications sent out by the department were generic and did not deliver (vii) Data Quality Errors and Resolution: focused message to specific audience. Centralized Processing Cell (TDS) observed from The inception of CPC(TDS) marks a paradigm its records that the deductors often reported shift in TDS administration towards achieving a “Structurally Correct, however Invalid PANs” in Non-Adversarial, Non-Intrusive Tax administration. their TDS Statements, due to manual statement Approx. 5.34 Crore of educational e-mails on preparation procedures. This results in incorrect various issues have already been sent by CPC reporting of PAN related information and (TDS) including 0.35 crore educational e-mails consequently correct Tax Credits not being sent during the period 01.04.2018 to 30.11.2019 available to the deductees timely. CPC (TDS) to the deductors. E-mails sent through manual Analytics provides for the facility of correcting the campaign are 3.43 Crore& through automated PANs through suggestions based on PAN server are 1.91 Crore. reporting history, using the Data Quality tool. Such tickets are created in the CPC(TDS) systems, (v) Capability Building Programmes: CPC (TDS) which are first reviewed and approved by internal adopted effective strategy for Organizational resources, which are made available to the Capacity building and skills up gradation for deductors for acceptance of correct PANs, while resources at all levels to ensure success of the implementation in e-Governance. To achieve this, submitting Online PAN Corrections at TRACES. CPC (TDS) initiated an extensive exercise to The deductors are communicated through email conduct workshops spread across all 26 TDS campaigns for such correction suggestions for charges spread across the country, educating the PAN errors available in their TDS statements to deductors and Filed Assessing Officers on better perform corrections online. During the period usage of the facilities offered by TRACES in 01.04.2018 to 30.11.2019 over 8.44 lakh PAN improving TDS compliance. In over 55 major cities correction suggestion were implemented in the more than 104 workshops were conducted across system and communicated to relevant deductors. India during the 01.04.2018 to 30.11.2019. There has been over 37% improvement in the (vi) Secure Corporate Integration: TRACES deductors using the above facility and correcting website allows Deductor Banks registered on their records. 193Annual Report 2019-2020 (viii) The performance of CPC (TDS) during the April’19 to November 2019 is presented financial year 2018-19 and for the period below: a. Overall performance: Description From 01.04.2018 to From 01.04.2019 to 31.03.2019 30.11.2019 TDS statements processed 71.21 Lakh 55.50 Lakh for 26AS TDS certificates downloaded 44.96 Crore 49.31 Crore TDS statements processed 33.05 Lakh 23.67 Lakh for defaults No. of intimations issued Via Email – 72 Lakh Via Email – 40.37 Lakh (For TDS statements/26QB statements/ (For TDS statements/26QB RUD/Reprocessing of statement) statements/RUD/Reprocessing Via Print – 13.47 Lakhs of statement) Via Print – 7.78 Lakh b. Download statistics Download Type From 01.04.2018 to From 01.04.2019 to 31.03.2019 30.11.2019 Form 16A 39.35 Crores 37.49 Crores Form 16 5.56 Crores 11.78 Crores Form 16B 3.91Lakhs 2.53 Lakhs Form 16C 0.14 Lakhs 0.12 Lakhs c. 26AS views: Online activities From 01.04.2018 From 01.04.2019 to 31.03.2019 to 30.11.2019 Total 26ASviews 18.12 crore 17.30 crore Unique PANs viewing 26AS 6.98 crore 6.47 crores d. Provisional Form 16/16A/16B & 27D views: Form 16A 82,420 Form 16 1,22,054 Form 16B 2,242 27D 293 (ix) SMS Initiatives: NEW INITIATIVES BY CPC TDS • SMS to salaried taxpayers indicating TDS The following initiatives taken during the period by employer for Quarter Ended and upto pertaining to the calendar year 2019: Quarter Ending. i. Taxpayer can view his provisional Form 16/16A/ • Advisory SMS to deductors for filing TDS statements before due dates and to non- 16B and 27D online through TRACES website filers immediately after due-date. from FY 2016-17 onwards. 194Department of Revenue III ii. Form 24Q (Salary Statement) to be filed by “In India, taxpayers can view online their tax deductors has been enhanced to capture the payments and taxes deducted at source as well as certain detailed data of salary which helps in prefilling information reported by third parties. This has helped ITR forms. Owing to this initiative, the salaried taxpayers to report missing credit and has improved the taxpayer is getting its ITR prefilled. Taxpayers accuracy of processing their claims for refunds.” just need to verify the prefilled data and is able to file the income tax return on single click. 4.9.15 Project Name: CPC, Bengaluru iii. Refund of excess TDS paid on sale of immovable Central Processing Centre for Income Tax Returns property (Form 26QB) is also made online without Centralized Processing Center for Income Tax any manual intervention. Returns is the processing unit of the Income Tax iv. Form 16 - Part B generation has been enabled Department for processing and accounting of all Income online through TRACES website. Earlier DDO Tax Returns filed electronically. were required to generate it individually through • CPC has processed 5.94 crore returns of income their systems and issue it to the taxpayers. during Financial Year 2018-19 with year on year v. Enabled Aadhar based authentication in CPC growth rate of 34% (5.30 crores processed during (TDS) as an additional authentication mode for the Financial Year 2017-18). Further till 30th Nov TRACES users. 2019, CPC has processed 4.72 crore returns in vi. DIN Verification Functionality on TRACES Financial Year 2019-20. Homepage wherein taxpayer can verify • CPC has achieved a peak processing capacity communication received from the department. of 12.30 lakhs returns per day. Recognition of the Project: • CPC has processed 35,16,75,769 E-Returns till The impact made by CPC (TDS) has been 30th November 2019, as against the target of 2.7 recognized by Government of India in the form of following crore e-filled returns, that CPC was to process awards: in 5 years. a) CPC (TDS) received National Award for e- Increased adoption of EVC: Electronic governance, 2014-15 (under the category of Verification Code (EVC) process implemented in April GOLD Award). Further, CPC (TDS) is one of the 2015 through E-filing is successful and more than 50 lakh projects of CBDT to receive Prime Minister’s taxpayers have adopted this Green Initiative. CPC has Award for excellence in public administration for already processed 3.02 crore returns validated through its initiative “Easy Tax Compliance through EVC for AY 2019-20. Quality Services” for the F.Y-2012-13. Faster Processing of ITRs: Average processing b) OECD in its report titled “Technologies for better time is reduced to 50 days for AY 2019-20, which is less tax administration: A practical guide for Revenue than the period specified in citizen’s charter (6 months) and bodies”, published in May 2016 has highlighted much less than performance in manual processing. the achievement of CPC(TDS) as under: Activity Achievements during Achievements during Achievements during 01-04-2017 to 01-04-2018 to 01-04-2019 to 31-03-2018 31-03-2019 30-11-2019 (In Lakhs) (In Lakhs) (In Lakhs) Processing of returns 264 711 472 Rectifications 3.91 6.03 7.93 Calls handling 8.7 9.46 6.18 Email-Communications 1709 2336 1575 SMS Communications 1986 2153 1337 Savings by use of email: Till date, CPC has and around 5.26 Crore intimations sent by Speed Post sent around 115.78 Crore digitally signed PDF based all over the country. Savings due to e-delivery as intimations by email, around 106.11 Crore SMS alerts compared to postage is Rs. 1,736 crore. 195Annual Report 2019-2020 Financial Year Communications via email Postage cost saved sent to taxpayers (Rs. Crores) # FY 2010-11 5,927,080 8.89 FY 2011-12 36,769,270 55.15 FY 2012-13 42,943,613 64.42 FY 2013-14 65,630,267 98.45 FY 2014-15 93,941,486 140.91 FY 2015-16 232,366,069 348.55 FY 2016-17 118,245,615 177.37 FY 2017-18 170,914,052 256.37 FY 2018-19 233,633,529 350.45 %age Growth over last year 37% FY2019-20 (Nov 19) 157,524,898 236.28 Total savings in 9 FY's 1,736.84 # Average cost of speed-post/ordinary post taken as Rs.15/- • To enable handling of large volume and managing limits. For the FY 2018-19 (till 31st March 2019) size of the e-mails and improving aesthetics of CPC has processed 46.50 Lakh requests intimations and campaigns, email through HTML processed out of 49.00 Lakh requests filed. For template has been enabled and used. FY 2019-20, 7.93 lakh rectifications are disposed till 30th Nov 2019. Due to the higher accuracy Customer Service: 90 call center agents attend level of processing at CPC, there has been a to over 5,000 calls daily in 3 languages. Around sharp drop in overall rectification requests. 71.59 lakh calls attended till 31st March 2019. For FY 2019-20, 6,18,923 calls have been Refund Reissue: Refund reissue requests due attended till Nov 19. to refund failures at bank, incorrect bank account number, etc. involving amount of Rs. 5,663.20 Outbound calls: CPC call center made 8,61,855 cr. for FY 2018-19 were processed. All such outbound calls to Assessing Officers in requests are processed within 7 days of request connection with Demand Management till 30th accepted by CPC. Nov 2019. Grievance Redressal: CPC has enabled Web Demand Management: To deal with the issue based Taxpayer Grievance Mechanism in the FY of updating of arrear demands, the outstanding 2016-17. Under this system, the taxpayers can demand position in CPC FAS (Financial login to the e-filing web portal of the department Accounting System) was made available to field and submit their grievances online. The AOs through the AO Portal and to taxpayers resolution of the grievances and other assistance through ‘My Account’ on e-filing website. As on is provided through registered e-mails of the 31st March 2019, AO has acted on 32,62,729 taxpayers. Status of redressed of the grievance entries involving arrear demand of Rs. is also updated on the e-filing web portal. Up to 5,44,130.88 Crore. CPC has also facilitated 31st March 2019, 14.70 lakh grievances have Taxpayers to revert on the demand position by been received out of which 14.59 (96%) lakh agreeing/disagreeing to the demand through E grievances have been addressed. E-Nivaran filing website. Responses received in 56,74,054 Centralized Grievance System has been entries totaling to Rs.5,64,147.69 Crores have integrated with Online Grievance Portal from 19th been received from Taxpayers through e-filing August 2016 and 11.32 lakh grievances were website. received and 10.99 lakh were processed till 31st Services to AO via ITBA: CPC has enabled March 2019. For FY 2019-20, 4.79 lakh have completion of Scrutiny Assessments through the been processed till 30th Nov 2019. ITBA system. 2.13 lakh orders were processed Rectification: Rectification requests received during FY 2018-19. For FY 2019-20, 1.09 lakh from taxpayers processed within statutory time orders were processed as on 30th Nov 2019. 196Department of Revenue III Physical Returns Processing: CPC has • Request for Intimation u/s 143(1) and 154 enabled processing of Physical ITR (paper) that • Tax Credit Mismatch Summary are digitized in the filed formation across the country. In FY 2018-19, 21.05 lakh digitized • View Form 26AS physical returns received through ITBA have • Add/Register as Representative been processed at CPC. • e-Vault Additional Security Option Storage of Documents: CPC has stored over 26.91 Crore ITR V physical documents through • Login through Net Banking a Record Management Service and has been • Verification and Validation of Contact details of awarded ISO 15489 certification, the first entity Taxpayers in Asia to achieve this. • Submitting Response to Outstanding Tax 4.9.16 e-Filing of Income Tax Returns Demand Project Description • e-Nivaran – Grievance Submission for multiple The e-Filing project is an eminent e-governance entities and e-delivery measure taken by the Income Tax • Schematron Implementation – ITR Validation Department for providing web- enabled services to the Rule engine taxpayers. The project aims at enabling e-filing of Income tax returns, audit reports and other Forms prescribed • Electronic Verification Code for filing of ITRs under the Income Tax over Internet directly by taxpayers (EVC) and through e-return intermediaries (ERIs). The project also provides other web- enabled services to facilitate • e-PAN public private participation in the filing of returns. • e-Proceedings The e-Filing portal https://incometaxindiaefiling. The dedicated help desk deals with query or gov.in provides following personalized services to the grievance related to e-Filing. The portal also provides help taxpayer: and static content ‘in Hindi’ for users. • Filing of Income Tax Return/Forms e-Filing of ITRs: Electronic filing of IT returns • TDS Statement submission over the internet picked up from AY 2006-07 and the number of returns filed electronically has risen from • PAN Aadhaar Linking around 4 Lakh in FY 2006-07 to 668.09 Lakh in FY 2018- • Rectification uploads and status after processing 19. For FY 2019-20, 636.63 lakhs are filed as on 30th Nov 2019. The progressive achievement of e-filing • Refund Re-issue Request scheme is as under: Financial Year Number of e-returns Growth Other forms Growth (in lakhs) 2006-07 4 - - - 2007-08 22 450% - - 2008-09 48.5 120% - - 2009-10 52.5 8% - - 2010-11 91.56 74% - - 2011-12 164.12 79% - - 2012-13 214.87 31% - - 2013-14 296.81 38.67% 22.81 - 2014-15 341.73 15.13% 33.96 48.84% 2015-16 433.43 26.83% 46.61 37.25% 2016-17 528.68 21.97% 59.95 28.62% 2017-18 674.74 27.63% 75.64 26.17% 2018-19 668.09 0.99% 87.48 15.65% 2019-20 (30/11/2019) 636.63 NA NA NA 197Annual Report 2019-2020 Filing Growth (AY Split) ITR Forms AY 2018-19 AY 2017-18 Increase % ITR – 1 3,11,66,957 2,50,46,670 24.44% ITR – 2 46,12,120 46,55,177 -0.92% ITR – 3 1,21,49,205 99,08,934 22.61% ITR – 4 1,43,75,902 1,27,61,551 12.65% ITR – 5 15,03,185 13,15,360 14.28% ITR – 6 8,92,103 8,19,063 8.92% ITR – 7 2,40,114 2,23,549 7.41% Total 6,49,39,586 5,47,30,304 18.65% The total number of returns filed in FY 2018-19 of returns filed till Nov 2019 is 6.36 Crore as against 6.08 is 6.68 Crore, as against 6.74 Crore returns filed in FY crore during corresponding period of FY 2018-19, which 2017-18. The apparent decrease in the number of ITRs is an increase of 4.73%. filed during FY 2018-19 pertaining to earlier years was New Registered Users: There has been due to an amendment in Section 139(5) of the Income- significant growth in the New PANs getting registered on tax Act, 1961 brought in vide Finance Act, 2017, w.e.f. the e-filing site, showing increased use of the e-Filing 01.04.2018, which mandated that a revised return could and other facilities through the e-Filing website. The be furnished only upto the end of the relevant Assessment number of registered users of the e-Filing portal as on Year, which led to filing of nearly 1.21 crore ITRs for AY 30-11-2019 is 8.45 Crores 2016-17 in the FY 2017-18. For FY 2019-20, the number e-Filing of Audit reports and other forms: Other Forms FY 2018-19 FY 2017-18 FY 2016-17 Total Forms Filed 87,48,259 75,64,025 65,47,313 For FY2019-20, 76,92,644 no. of other forms are filed as on 30th Nov 2019. Total Forms available for e-Filing FY2019-20 FY 2018-19 FY 2017-18 FY 2016-17 91 87 82 81 e-verification of ITR-V using EVC: Electronic agencies such as NSDL, UTIITSL, SBI Refund Banker Verification Code has enabled the tax payers and etc. are also roped in the scheme. CPC-ITR, CPC-TDS auditors to verify the Income Tax Returns and Audit and E- Filing Portals are also there, and is addressing Certificates without digital signature, saving them the cost grievances filed by the tax payers. Grievances filed with and time for sending paper verification to the Department. CPGRAMS will also be integrated soon. As on 31st March 2019, 3,52,94,298 ITRs and other Forms 4.9.17 Project Name: Aayakar Sampark Kendra were e-Verified using Internet Banking, ATM OTP, Aadhaar OTP, D Mat Account and Bank Account. As on Project Description 30th Nov 2019, 3,59,82,809 ITRs are e-verified for FY Aayakar Sampark Kendra is Taxpayer 2019-20. Information and Services Center of the Income tax Department to answer queries related to the status of e-Nivaran: e-Nivaran is the online grievance PAN and TAN applications, procedure of filing of Income redressal system of the Income Tax Department. All types tax and Wealth tax returns, categories of assessees of Grievances such as PAN application, processing, mandatorily required to file e-returns or make e-payment, assessment, appeals, TDS etc., can be filed by tax procedure of e-filing of income tax returns, with or without payers. It is a cent percent paperless system, were digital signature. A facility to register grievances on communication is enabled through, e- mail, SMS also. telephone or through email and assist in getting them Apart from Income Tax Department network, other related resolved, is also provided. 198Department of Revenue III Deliverables Group-A officers, four regional Directorates of Income Tax (Vigilance) assist her in conduct of preliminary Deliverables from Aayakar Sampark Kendra are: verifications or investigations. She makes all vigilance • Country wide facilities for assistance in e-filing related references to CBDT, CVC, DOPT, UPSC etc. All of income tax returns with or without digital such references are sent to her through the concerned signatures and information related Challan and Zonal ADG(Vig.). Return Preparation software. Head office attends to all matters concerning • Assistance in downloading various forms: Income disciplinary proceedings against all serving Group Tax Return Forms, Wealth Tax Return Forms. ‘A’ officers and all retired Group ‘A’ to Group ‘C’ officers/ officials. Thus, Pr. DGIT(V)/CVO, CBDT, Delhi assists • Facility to send Forms by e-mails. the Disciplinary Authority (DA) i.e. the Finance Minister • Procedure of making tax payment, including e- on all vigilance matters in consultation with CVC, UPSC payment and payment through ATM. and DoP&T. • Answer queries related to the status of PAN and Four Zonal Directorates of Income Tax TAN applications & related procedure. (Vigilance) assist her in the handling of vigilance matters pertaining to their respective regional jurisdictions. These • Status of Refund. Directorates process complaints against Group ‘B’ officers • Answer Queries related to assessment and also conduct preliminary verifications and investigations in respect of both Group - A and Group - B Jurisdiction. officers. • Procedure of viewing Tax Credit Statement and registration for Tax Credit Statements. Zonal offices are headed by officers of the rank of Commissioners who work under the control and • List of Tax Information Network Facilitation supervision of DGIT(V)/CVO, CBDT. Besides, they assist centers and PAN Service centers. DGIT(V)/CVO, CBDT in respect of all enquiries/ • NMS Related Queries. investigation etc. assigned to them by DGIT(V)/CVO, CBDT from time to time. · Handling misc. queries. b. SIGNIFICANT POLICY DECISIONS Achievements To expedite the disposal of disciplinary The Department has setup Aayakar Sampark proceedings cases, CVC and the DoP&T have Kendra with toll free No.18001801961 and short code issued instructions from time to time, laying down 1961. There is a National Call Centre (NCC) at Gurgaon guidelines for expeditious disposal of the disciplinary and five Regional Call Centres (RCCs) at Jammu, proceeding cases and emphasized that long delays in Jangipur, Kochi, Shillong & Vadodara which cater to finalizing disciplinary matters are not only unjust to officials taxpayers in 14 languages including, Hindi & English. who may be finally exonerated, but help the guilty to evade punitive action. It has been instructed that the Inquiry 4.10 Vigilance Officers should scrupulously abide by the CVC and a. FUNCTIONS/ WORKING OF ORGANIZATION DoP&T instructions on the subject and conduct hearings in Departmental Inquires on a day to day basis, and The Vigilance set-up of the Income Tax conclude the inquiry within the stipulated timeline of six Department is headed by the Director General of Income months without fail. Further, post-restructuring, all the Tax (Vigilance). She is also the Chief Vigilance Officer of officers are able to contribute more constructively in the the Organization. She is responsible for taking the initial disposals of pending DP matters. All efforts to bring down decision on complaints against Group-A officers. She is the pendency have been made. also required to maintain an up to date record of such complaints and their latest status, through the prescribed c. Systems Improvement registers, for submission of reports to the CVC, DOP&T Systems studies are carried out regularly by the Vigilance etc. All the complaints against Group-A officers are, Directorate. Based upon the findings of the study, therefore, required to be forwarded to her for registration feedback and suggestions are given to the concerned in the CVO’s register as well as for further necessary wing of the Department. A Systems study was carried action. out by the Vigilance Directorate with regard to the As CVO, she is required to examine and irregularities in the appellate orders passed by comment on all proposals where a reference to the CIT(Appeals). CBDT has issued Instruction No. 20/2003 CVC is required to be made. Apart from the officers posted dated 23.12.2003 directing for issue of appellate orders in her headquarters, who assist in initial processing of within 15 days of the last hearing. The Instruction was complaints and post disciplinary proceeding cases of reiterated vide CBDT letter F. No. 279/Misc.53/2003-ITJ 199Annual Report 2019-2020 dated 19.06.2015 for strict compliance. The instructions are communicated to the DGIT (Vigilance) for are also applicable to orders passed by the CIT investigation and further necessary action. (Administrative)/ CCIT as regards matters within their e. Training and awareness campaigns purview under different sections of the Income Tax Act. conducted and proposed The instruction was reiterated vide letter F. No. DGIT(Vig.)/HQ/SI/Appeals/2017-18/9959 dated Training courses are organized regularly for the 08.03.2018 and further giving instructions to CCsIT keep field officers for updating their skills and knowledge in mind that in the matters of corruption, unless otherwise about the Vigilance matters. The officers of the Vigilance evidenced, the vicarious liability of a supervisory officer Directorate visit NADT, Nagpur and field offices for can become absolute, if the supervisor who has the right, imparting training. Training courses are organized ability or duty to control the activates of a subordinate regularly for the field officers for updating their skills does not take steps to prevent the acts of misdemeanour and knowledge about the Vigilance matters. The officers by the subordinate. Failure of the Chief Commissioners of the Vigilance Directorate visit NADT, Nagpur and field of Income Tax to conduct regular inspections of the offices for imparting training. CIT(Appeals) working under them or failure to keep a f. Mechanism put in place to measure watch on the quality of orders would be viewed adversely development outcomes of major schemes/ by the CBDT. programmers implemented through the d. PREVENTIVE VIGILANCE department/Division. Income Tax Department has undertaken Probity following reform initiatives in last few years by harnessing Steps to ensure probity in Government latest technology to enable a System driven working servants: environment in the Department. These measures are aimed to introduce objectivity and reduce human interface In order to ensure probity in income Tax between the taxpayer and the officials. The following Department following steps have been taken. initiatives have been taken: i) Review of Officers under FR 56(j) is now being Setting up of Tax Information Network done for all Officers in the age group of 50 to 60 years of age. • Taxnet project for networking of all its offices across the country; ii) In review meetings of FR56(j) not only IPR, APAR but also Secret note in integrity column, • Setting up of Centralized Processing Centre at doubtful reputation etc. are made the basis of Bengaluru examination. • Setting up of Centralized Processing Cell (TDS) iii) Separate efforts are being made to bring at Vaishali comprehensive data updation on absconding/ • E-filing of returns, resigned/ expired Officers. • Refund Banker Scheme to improve channel iv) Offices of Pr. CCIT (CCA) have been asked to delivery of refunds; conduct review under FR 56(j) for grade B&C employees with due seriousness. • Sevottam Scheme for monitoring of dak and grievances; v) This exercise of review under Rule 56-(j) is being done regularly on quarterly basis for all • Dedicated Call Centre employees (Group- ‘A’, ‘B’& ’C’). Upto • Comprehensive Website that consolidated all e- 31.12.2019, 962 cases were reviewed. services etc. g. Inputs on E-Governance activities: Sensitive posts and rotation transfers Through comprehensive computerization The Transfer Policy of the CBDT lays down the initiatives, the department has enabled end-to-end e- guidelines for transfer & posting of IRS officers. As per delivery services that inter alia include: the policy, the officers posted in sensitive posts are • E-Payment of taxes transferred out on a regular basis. • E-filing of TDS statements Scrutiny of APARs • E-Processing of TDS statements The CBDT is the custodian of the APARs. Any adverse remarks in APAR about integrity of any officer • E-view of tax credits 200Department of Revenue III • E-filing of Income Tax Returns (ii) Streamlining of MIS Reports: • E-Processing of Income Tax Returns DOMS is undertaking the work of revamping of Reporting System by merging multiple reports • E-Matching of tax Credits being sent to higher authorities into a single • E-tracking of processing of the Income Tax integrated online and IT Enabled reporting Returns system on ITBA platform. • E-Delivery of Refunds (iii) Manual of Office Procedure: • E-tracking of Refunds The Manual of Office Procedure was updated. (iv) Digitization of Income Tax Rules from 1995 Therefore, the present initiatives of the to 2018: department have made it possible to comply with the tax obligations without visiting the Income Tax Office on The Income Tax Rules from 1995 to 2018 which anywhere, anytime basis. This is reflected in the latest were published by the Department in print format were initiatives of the Department regarding e-Assessment, digitized. e-Nivaran and e-Appeal. Thus, the tax payers can (v) Review of RFD: participate in scrutiny assessment proceedings using e- Assessment facility, get their grievances redressed In order to equip the department with a tool to through e-Nivaran and file appeals online through e- measure the progress regarding various development Appeal. schemes, the Results Framework Document (RFD) is drafted every year. The RFD is an agreement between 4.11 Pr. DGIT (Administration & Tax Payers Chairman, CBDT and the Responsibility Centres vide Services) which a set of targets are resolved to be achieved within a matrix of measurable success indicators. DIT (O&MS) There are seven (7) Directorates under the is the coordinator for preparing Results Framework charge of the Pr. DGIT (Admn. & TPS), New Delhi which Document (RFD) every year and for half yearly and yearly are attached offices of the CBDT under the administrative review of RFD. The RFD for the year 2019-20 was control of the Department of Revenue, Ministry of prepared and submitted to CBDT in March, 2019. Finance. Each Directorate is headed by an Addl. Director General of Income-tax, an officer in the rank of (vi) Process & Management Studies: Commissioner of Income-tax. Study to ensure integrity and accuracy of The details of all the above Directorates are given statistics of demand reported in CAP-I vis-à-vis CPC ITR hereunder: was under taken and completed. A. Directorate of Income-tax (O&MS): B. Directorate of Income-tax (TPS-I & TDS): The major steps/initiatives/decisions taken by The Directorate of Income-tax (TPS-I & TDS) Directorate of Income-tax (O&MS) with respect to the monitors and implements the following functions/works during the F.Y. up to 30-11-2019 are: related to taxpayer services: (i) Aayakar Sewa Kendra – Setting up: i. Monitoring of all ASK Centres located pan India, training of ASK Personnel and coordination of Aayakar Sewa Kendra (ASK) is the single window accreditation/audit by Bureau of Indian Standards system for implementation of Citizen’s Charter of the of the ASK centres. Presently, 190 ASK centres Income Tax Department and a mechanism for achieving have been certified by BIS. Further, the excellence in public service delivery. Details of setting up Directorate is in the process of getting 50 more are as under: ASK centres accredited during F.Y 2019-20. ii. Monitoring of Online Grievance Redressal From 01.04.2018 Projection/Estimate from System, e-Nivaran and registering the feedbacks to 31.03.2019 01.04.2019 to 31.03.2020 from the taxpayers/citizens whose grievances have been resolved. ‘E-Nivaran’ is an electronic 30 ASKs have 44 more ASKs are to be setup grievance redressal system integrated with the been set up by 31-03-2020 ITBA application, the Department’s internal online working system. The paper grievances received In All 430 Aayakar Sewa Kendras have been set up through ASK Centres are also digitized and across all buildings of the Income Tax Department upto integrated with E-Nivaran module. The CBDT 31-03-2019. also forwards the grievances which are received 201Annual Report 2019-2020 manually or through e-mail in the offices of PM/ by the subordinate offices. The Directorate constantly FM/MOS/Chairman/Members, CBDT, to the monitors the resolution of the grievances throughout the Directorate. These grievances are also uploaded country. on E-Nivaran module according to PAN The disposal of grievances from 01.04.2019 to jurisdiction. The Directorate monitors the 30.11.2019 in respect of the Directorate is as under: pendency and redressal of E-Nivaran grievances all over the country. The Directorate has also i. Disposal of grievances - 90% (Grievance implemented a system of registering the received during the year- 2020, Disposal- 25984; feedbacks from the taxpayers/citizens whose Brought Forward were 2649) grievances have been resolved. ii. Average Disposal Time-27 days. iii. Maintenance of TPS module/Mobile App “Aaykar D. DIRECTORATE OF INCOME-TAX (PR, P&P): Setu” on the lines of Digital India initiative, which provides extensive information about tax related The Directorate of Income-tax (Public Relations, queries/services. The Directorate has launched Printing & Publications) is responsible for Publicity and an e-platform for accessing the key tax payer Public Relations, Printing and Publications in the Income- services provided by the Department to the tax Department all over India. general public/taxpayers. The Tax Payer Services Its main functions are: Module/Mobile App provide extensive information about tax related queries & services. i. To carry out the advertisement campaign for the Income Tax Department in print, electronic iv. Implementation and Monitoring of the Tax Return media, internet, social media and outdoor Preparer Scheme, in accordance with the publicity for bringing awareness amongst provisions of section 139B of the Income Tax Act, taxpayers about income tax provisions and 1961 which codifies the function, code of conduct statutory timelines. & duties and obligations of the TRP’s. The TRP (Amendment) Scheme, 2018 has been ii. To set up and operate Tax Payer Lounge at the amended, expanded and notified in January, Indian International Trade Fair, Pragati Maidan, 2018 and is presently under review for launch/ New Delhi and also in other fair/exhibitions in implementation. India. v. Review of Citizen’s Charter 2014. The Directorate iii. Running the Mobile App ‘Aaykar Kutumb‘ (the digital version of AHB). also implements and monitors Citizen’s Charter. The Citizen’s Charter is being reviewed and the iv. To bring out publications for internal use of proposed Citizen’s Charter, 2019 will be Income Tax Department. launched/released soon. v. Updation, publishing and distribution of vi. Work related to TDS Administration. The Administrative Hand Book containing information Directorate is monitoring TDS collection, TDS in respect of the CBDT and the Income Tax Arrear and current demand collection, TDS Department, and contact details of Senior related grievances/complaints, consolidation of Officers. data regarding prosecution and compounding, vi. Design, publishing and distribution of New Year TDS surveys/spot verifications and outreach Calendar and table Calendar of Income Tax programmes and other TDS related functions. Department. The Directorate also organizes all India TDS conference every year for strategy to make TDS vii. Publishing of Tax Payer Information Series in the system effective, exploring new areas to be form of booklets, brochures/pamphlets pertaining covered by TDS/TCS. to various income & other direct taxes related issues. C. DIRECTORATE OF INCOME-TAX (TPS-II): E. Directorate of Income Tax (Infrastructure): The Directorate of Tax Payer Service – II has been assigned the duties of monitoring of disposal of The Directorate is responsible for processing and public grievances on CPGRAMS. All grievances are examination of Infrastructure proposals received from the downloaded from the website pgportal.gov.in and after field formations. A wide variety of proposals such as examination, action taken by the offices subordinate to purchase of land, ready built office & residential CBDT are monitored by the Directorate to ensure timely accommodation; construction of office(s) & residential resolution of the grievances. Information about Redressal buildings, Hiring/ Rent revision of Office space, repairs & action taken in such cases, is uploaded on the website renovation works etc. are dealt with. 202Department of Revenue III During the year under consideration, so far, the Budget and Expenditure Matters for Grant No. 32 - Direct Directorate has been successful in getting some major Taxes for the Central Board of Direct Taxes. projects sanctioned. These are as under: G. Directorate of Income-tax (Research & • Construction of office building at Nariman Point Statistical Wing): for sum of Rs. 106 Crores, The Directorate of Research and Statistics is • Purchase of Land at Tripura for construction of responsible for collection, compilation and dissemination office worth Rs. 21.00 Crores, of statistics on various aspects of Direct Taxes. These statistics are being collected from the field establishments • Construction of Office building on plot of land i.e. from the offices of Chief Commissioners of Income situated at Bhopal for sum of Rs. 82.00 Crores. Tax/Director General of Income Tax and Commissioners • Demolition of building(s) at BKC, Mumbai for of Income Tax (Appeals). construction of New Office Complex 4.12 MEDIA CENTRE (M&TP) • Construction of Office Building at Dibrugarh with The Media Centre, set up in the CBDT in August sanctioned cost of 34.50 crores. 2006, disseminates information of public value relating • Purchase of land in Gurugram for office building to Direct Taxes through the Print and Electronic Media. for cost of Rs. 91.36 Crores. During the year, various press releases were issued to bring different important decisions and tax issues to the The Directorate has taken initiative and has public notice and to highlight different achievements of asked field formations to install CCTVs at important the Income Tax Department. Several press briefings of project sites for remote monitoring of these projects. senior functionaries were organized. As a result of regular The Directorate has recently developed and installed interface with the media, a more realistic and positive IPMS – Infrastructure Project Management System for image of the Department could be projected. The CBDT effective monitoring of all project proposals. twitter handle @ IncomeTaxIndia is also being managed by the Media Centre. During 2019-20, the twitter handle F. Directorate of Income Tax (Budget- started engaging directly with the tax-payers resulting in Expenditure): expeditious resolution of grievances. Information of public The Directorate of Expenditure Budget is value relating to Direct Taxes is also disseminated mandated to act as the Nodal Authority in respect of all regularly through the twitter account. 203Annual Report 2019-2020 Appendix ‘D’ India’s DTAA/TIEA/Multilateral Agreement as on 31st December, 2019 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 08.07.2013 4.12.2013 Agreement (“DTAA”) Multilateral Convention on Mutual 1.3.2013 1.12.2013 Administrative Assistance in Tax Matters (“Multilateral Convention”) 3. Andorra Multilateral Convention 05.11.2013 01.12.2016 4. Anguilla Multilateral Convention Extension by the 01.03.2014 United Kingdom 5. Antigua and Barbuda Multilateral Convention 27.02.2018 01.02.2019 6. Argentina Taxation Information Exchange 21.11.2011 28.01.2013 Agreement (“TIEA”) Multilateral Convention 03.11.2011 01.01.2013 7. Armenia DTAA 31.10.2003 09.09.2004 Protocol 27.01.2016 Not yet entered into force 8. Aruba Multilateral Convention Extension by the 01.09.2013 Netherlands 9. Australia DTAA 25.07.1991 30.12.1991 Protocol 16.12.2011 02.04.2013 Multilateral Convention 03.11.2011 01.12.2012 10. 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 11. Azerbaijan Multilateral Convention 23.5.2014 01.09.2015 12. Bahamas TIEA 11.02.2011 01.03.2011 Multilateral Convention 15.12.2017 01.08.2018 13. Bahrain TIEA 31.05.2012 11.04.2013 Multilateral Convention 29.06.2017 01.09.2018 14. Bangladesh DTAA 27.08.1991 27.05.1992 Protocol 16.02.2013 13.06.2013 SAARC Multilateral Agreement 13.11.2005 19.05.2010 204Department of Revenue III No. Jurisdiction Type of EOI agreement Date signed Date from which in force 15. Barbados Multilateral Convention 28.10.2015 01.11.2016 16. Belarus DTAA 27.09.1997 17.07.1998 Amending Protocol 03.06.2015 19.11.2015 17. 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 18. Belize TIEA 18.09.2013 25.11.2013 Multilateral Convention 29.05.2013 01.09.2013 19. Bermuda TIEA 07.10.2010 03.11.2010 Multilateral Convention Extension by 01.03.2014 United Kingdom 20. Bhutan SAARC Multilateral Agreement 13.11.2005 19.05.2010 DTAA 04.03.2013 17.07.2014 21. Botswana DTAA 08.12.2006 30.01.2008 22. Brazil DTAA 26.04.1988 11.03.1992 Protocol 15.10.2013 Not yet in force Multilateral Convention 03.11.2011 01.10.2016 23. British Virgin Islands TIEA 09.02.2011 22.08.2011 Multilateral Convention Extension by 01.03.2014 United Kingdom 24. Brunei Darussalam Multilateral Convention 12.09.2017 01.07.2019 25. Bulgaria DTAA 26.05.1994 23.06.1995 Multilateral Convention 26.10.2015 01.07.2016 26. Burkina Faso Multilateral Convention 25.08.2016 Not yet in force in Burkina Faso 27. Canada DTAA 11.01.1996 06.05.1997 Multilateral Convention 03.11.2011 01.03.2014 28. Cameroon Multilateral Convention 25.06.2014 01.10.2015 29. Cayman Islands TIEA 21.03.2011 08.11.2011 Multilateral Convention Extension by 01.01.2014 United Kingdom 30. China DTAA 18.07.1994 21.11.1994 Protocol 26.11.2018 Multilateral Convention 27.08.2013 01.02.2016 31. Chinese Taipei (Taiwan) DTAA 12.07.2011 12.08.2011 205Annual Report 2019-2020 No. Jurisdiction Type of EOI agreement Date signed Date from which in force 32. Chile Multilateral Convention 24.10.2013 01.11.2016 33. Colombia DTAA 13.05.2011 07.07.2014 Multilateral Convention 23.05.2012 01.07.2014 34. Cook Island Multilateral Convention 28.10.2016 01.09.2017 35. Costa Rica Multilateral Convention 01.03.2012 01.08.2013 36. Croatia DTAA 12.02.2014 06.02.2015 Multilateral Convention 11.10.2013 01.06.2014 37. Curacao Multilateral Convention Extension by the 01.09.2013 Netherlands 38. Cyprus DTAA 13.06.1994 21.12.1994 Protocol 18.11.2016 14.12.2016 Multilateral Convention 10.07.2014 05.09.2014 39. Czech Republic DTAA 01.10.1998 27.09.1999 Multilateral Convention 26.10.2012 01.02.2014 40. Denmark DTAA 08.03.1989 13.06.1989 Protocol 10.10.2013 01.02.2015 Multilateral Convention 27.05.2010 01.06.2011 41. Dominican Republic Multilateral Convention 28.06.2016 01.12.2019 42. Egypt (United Arab DTAA 20.02.1969 30.09.1969 Republic) 43. El Salvador Multilateral Convention 01.06.2015 01.06.2019 44. Estonia DTAA 19.09.2011 20.06.2012 Multilateral Convention 29.05.2013 01.11.2014 45. Ethiopia DTAA 25.05.2011 15.10.2012 46. Ecuador Multilateral Convention 21.12.2018 01.12.2019 47. Faroe Islands Multilateral Convention Extension by 01.06.2011 Denmark 48. Fiji DTAA 30.01.2014 15.05.2014 Finland DTAA 15.01.2010 19.04.2010 49. Multilateral Convention 27.05.2010 01.06.2011 50. France DTAA 29.09.1992 01.08.1994 Multilateral Convention 27.05.2010 01.04.2012 51. Gabon Multilateral Convention 03.07.2014 Not yet in force in Gabon 52. Georgia DTAA 24.08.2011 08.12.2011 Multilateral Convention 03.11.2010 01.06.2011 53. Germany DTAA 19.06.1995 26.10.1996 Multilateral Convention 03.11.2011 01.12.2015 206Department of Revenue III No. Jurisdiction Type of EOI agreement Date signed Date from which in force 54. Ghana Multilateral Convention 10.07.2012 01.09.2013 Gibraltar TIEA 01.02.2013 11.03.2013 55. Multilateral Convention Extension by the 01.03.2014 United Kingdom 56. Green Land Multilateral Convention Extension by the 01.06.2011 Denmark Greece DTAA 11.02.1965 17.03.1967 57. Multilateral Convention 21.02.2012 01.09.2013 58. Grenada Multilateral Convention 18.05.2018 01.09.2018 59. Guatemala Multilateral Convention 05.12.2012 01.10.2017 Guernsey TIEA 20.12.2011 11.06.2012 60. Multilateral Convention Extension by the 01.08.2014 United Kingdom Hong Kong DTAA 19.03.2018 30.11.2018 61. Multilateral Convention 01.09.2018 Hungary DTAA 03.11.2003 04.03.2005 62. Multilateral Convention 12.11.2013 01.11.2014 Iceland DTAA 23.11.2007 21.12.2007 63. Multilateral Convention 27.05.2010 01.02.2012 Indonesia DTAA 07.08.1987 19.12.1987 64. Revised DTAA 27.07.2012 05.02.2016 Multilateral Convention 03.11.2011 01.05.2015 Ireland DTAA 06.11.2000 26.12.2001 65. Multilateral Convention 30.06.2011 01.09.2013 Isle of Man TIEA 04.02.2011 17.03.2011 66. Multilateral Convention Extension by the 01.03.2014 United Kingdom Israel DTAA 29.01.1996 15.05.1996 67. Protocol 14.10.2015 19.12.2016 Multilateral Convention 24.11.2015 01.12.2016 Italy DTAA 19.02.1993 23.11.1995 68. Multilateral Convention 27.05.2010 01.05.2012 Japan DTAA 07.03.1989 29.12.1989 69. Protocol 11.12.2015 29.10.2016 Multilateral Convention 03.11.2011 01.10.2013 70. Jamaica Multilateral Convention 01.06.2016 01.03.2019 207Annual Report 2019-2020 No. Jurisdiction Type of EOI agreement Date signed Date from which in force 71. Jersey TIEA 03.11.2011 08.05.2012 Multilateral Convention Extension by the 01.06.2014 United Kingdom 72. Jordan DTAA 20.04.1999 16.10.1999 Kazakhstan DTAA 09.12.1996 02.10.1997 73. Multilateral Convention 23.12.2013 01.08.2015 Protocol 06.01.2017 12.03.2018 74. Kenya DTAA 12.04.1985 20.08.1985 Revised DTAA 07.11.2016 30.08.2017 Multilateral Convention 08.02.2016 Yet to be in force in Kenya 75. 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 76. Kuwait DTAA 15.06.2006 17.10.2007 Protocol 26.03.2018 Multilateral Convention 05.05.2017 01.12.2018 77. Kyrgyz Republic DTAA 13.04.1999 10.01.2001 Latvia DTAA 18.09.2013 28.12.2013 78. Multilateral Convention 29.05.2013 01.11.2014 79. Lebanon Multilateral Convention 12.05.2017 01.09.2017 Liechtenstein TIEA 28.03.2013 20.01.2014 80. Multilateral Convention 21.11.2013 01.12.2016 81. Liberia TIEA 03.10.2011 30.03.2012 82. Libya DTAA 02.03.1981 01.07.1982 Lithuania DTAA 26.07.2011 10.07.2012 83. Multilateral Convention 07.03.2013 01.06.2014 Luxembourg DTAA 02.06.2008 09.07.2009 84. Multilateral Convention 29.05.2013 01.11.2014 Macau, China TIEA 03.01.2012 16.04.2012 85. Multilateral Convention 01.09.2018 86. Macedonia DTAA 17.12.2013 12.9.2014 87. Malaysia DTAA 14.05.2001 14.08.2003 Revised DTAA 09.05.2012 26.12.2012 Multilateral Convention 25.08.2016 01.05.2017 208Department of Revenue III No. Jurisdiction Type of EOI agreement Date signed Date from which in force 88. Maldives SAARC Multilateral Agreement 13.11.2005 19.05.2010 TIEA 11.04.2016 02.09.2016 89. Malta DTAA 28.09.1994 08.02.1995 Revised DTAA 08.04.2013 07.02.2014 Multilateral Convention 26.10.2012 01.09.2013 90. Marshall Island TIEA 18.03.2016 21.05.2019 Multilateral Convention 22.12.2016 01.04.2017 91. Mauritius DTAA 24.08.1982 06.12.1983 Protocol 10.05.2016 19.07.2016 Multilateral Convention 23.06.2015 01.12.2015 92. Mexico DTAA 10.09.2007 01.02.2010 Multilateral Convention 27.05.2010 01.09.2012 93. Moldova Multilateral Convention 27.01.2011 01.03.2012 Monaco TIEA 31.07.2012 27.03.2013 94. Multilateral Convention 13.10.2014 01.04.2017 95. Mongolia DTAA 22.02.1994 29.03.1996 96. Montenegro DTAA 08.02.2006 23.09.2008 97. Montserrat Multilateral Convention Extension by the 01.10.2013 United Kingdom 98. Morocco DTAA 30.10.1998 20.02.2000 Protocol 08.08.2013 Not yet in force Multilateral Convention 21.05.2013 01.09.2019 99. Mozambique DTAA 30.09.2010 28.02.2011 100. Myanmar DTAA 02.04.2008 30.01.2009 101. Namibia DTAA 15.02.1997 22.01.1999 102. Nauru Multilateral Convention 28.06.2016 01.10.2016 103. 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 104. Netherlands DTAA 30.07.1988 21.01.1989 Protocol 10.05.2012 02.11.2012 Multilateral Convention 27.05.2010 01.09.2013 105. New Zealand DTAA 17.10.1986 03.12.1986 Protocol 26.10.2016 07.09.2017 Multilateral Convention 26.10.2012 01.03.2014 106. Nigeria Multilateral Convention 29.05.2013 01.09.2015 209Annual Report 2019-2020 No. Jurisdiction Type of EOI agreement Date signed Date from which in force 107. Niue Multilateral Convention 27.11.2015 01.10.2016 108. Norway DTAA 02.02.2011 20.12.2011 Multilateral Convention 27.05.2010 01.06.2011 109. Oman DTAA 02.04.1997 03.06.1997 110. Pakistan SAARC Multilateral Agreement 13.11.2005 19.05.2010 Multilateral Convention 14.09.2016 01.04.2017 111. Panama Multilateral Convention 27.10.2016 01.07.2017 112. Peru Multilateral Convention 25.10.2017 01.09.2018 113. Philippines DTAA 12.02.1990 21.03.1994 Multilateral Convention 26.09.2014 Not yet in force in Philippines 114. Poland DTAA 21.06.1989 26.10.1989 Protocol 29.01.2013 01.06.2014 Multilateral Convention 09.07.2010 01.10.2011 115. 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 116. Qatar DTAA 07.04.1999 15.01.2000 Multilateral Convention 10.11.2017 01.01.2019 117. Romania DTAA 10.03.1987 14.11.1987 Revised DTAA 08.03.2013 16.12.2013 Multilateral Convention 15.10.2012 01.11.2014 118. Russia DTAA 25.03.1997 11.04.1998 Multilateral Convention 03.11.2011 01.07.2015 119. Samoa Multilateral Convention 25.08.2016 01.12.2016 120. San Marino TIEA 19.12.2013 29.08.2014 Multilateral Convention 21.11.2013 01.12.2015 121. Saint Kitts and Nevis TIEA 11.11.2014 02.02.2016 Multilateral Convention 25.08.2016 01.12.2016 122. Saint Lucia Multilateral Convention 21.11.2016 01.03.2017 123. Saint Vincent and the Multilateral Convention 25.08.2016 01.12.2016 Grenadines 124. Saudi Arabia DTAA 25.01.2006 01.11.2006 Multilateral Convention 29.05.2013 01.04.2016 125. Senegal Multilateral Convention 04.02.2016 01.12.2016 210Department of Revenue III No. Jurisdiction Type of EOI agreement Date signed Date from which in force 126. Serbia DTAA 08.02.2006 23.09.2008 Multilateral Convention 13.06.2019 01.12.2019 127. Seychelles TIEA 26.08.2015 28.09.2016 Multilateral Convention 24.02.2015 01.10.2015 128. 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 129. Sint Maarten Multilateral Convention Extension by the 01.09.2013 Netherlands Slovak Republic DTAA 01.10.1998 27.09.1999 130. Multilateral Convention 29.05.2013 01.03.2014 131. Slovenia DTAA 13.01.2003 17.02.2005 Protocol 17.05.2016 21.12.2016 Multilateral Convention 27.05.2010 01.06.2011 132. South Africa DTAA 04.12.1996 28.11.1997 Protocol 26.7.2013 26.11.2014 Multilateral Convention 03.11.2011 01.03.2014 133. Spain DTAA 08.02.1993 12.01.1995 Protocol 26.10.2012 Not yet in force Multilateral Convention 11.03.2011 01.01.2013 134. 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 135. Sudan DTAA 22.10.2003 15.04.2004 136. Sweden DTAA 24.06.1997 25.12.1997 Protocol 07.02.2013 16.08.2013 Multilateral Convention 27.05.2011 01.09.2011 137. Switzerland DTAA 02.11.1994 29.12.1994 Protocol 30.08.2010 07.10.2011 Multilateral Convention 15.10.2013 01.01.2017 138. Syria DTAA 06.02.1984 25.06.1985 Revised DTAA 18.06.2008 10.11.2008 139. Tanzania DTAA 27.05.2011 12.12.2011 140. Tajikistan DTAA 20.11.2008 10.04.2009 Protocol 17.12.2016 20.02.2018 211Annual Report 2019-2020 No. Jurisdiction Type of EOI agreement Date signed Date from which in force 141. Thailand DTAA 22.03.1985 13.03.1986 Revised DTAA 29.06.2015 13.10.2015 142. Trinidad and Tobago DTAA 08.02.1999 13.10.1999 143. Tunisia Multilateral Convention 16.07.2012 01.02.2014 144. Turkey DTAA 31.01.1995 01.02.1997 Multilateral Convention 03.11.2011 01.07.2018 145. Turkmenistan DTAA 25.02.1997 07.07.1997 146. Turks & Caicos Multilateral Convention Extension by the 01.12.2013 United Kingdom 147. Uganda DTAA 30.04.2004 27.08.2004 Multilateral Convention 04.11.2015 01.09.2016 148. Ukraine DTAA 07.04.1999 31.10.2001 Multilateral Convention 27.05.2010 01.09.2013 149. 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 01.09.2018 150. United Kingdom DTAA 25.01.1993 26.10.1993 Protocol 30.10.2012 27.12.2013 Multilateral Convention 27.05.2010 01.10.2011 151. 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 09.07.2015 31.08.2015 Act (FATCA) 152. Uruguay DTAA 08.09.2011 21.6.2013 Multilateral Convention 01.06.2016 01.12.2016 153. Uzbekistan DTAA 29.07.1993 25.01.1994 Protocol 11.04.2012 20.07.2012 154. Vietnam DTAA 07.09.1994 02.02.1995 Protocol 03.09.2016 21.02.2017 155. Zambia DTAA 05.06.1981 18.01.1984 212Department of Revenue III Appendix ‘E’ Summary of Outcome under BEPS Project Action 2 – Neutralize the Effects of Hybrid Mismatch Arrangements Action 1 – Address the Tax Challenges of the Digital Economy A common approach which will facilitate the convergence of national practices through domestic and treaty rules The Action 1 report concludes that the digital economy have been developed under Action 2 to neutralize hybrid cannot be ring-fenced as it is the economy itself. The mismatch arrangements. This will help to prevent double report analyses BEPS risks exacerbated in the digital non-taxation by eliminating the tax benefits of mismatches economy and shows the expected impact of the and to put an end to costly multiple deductions for a single measures developed across the BEPS Project. Rules and expense, deductions in one country without implementation mechanisms have been developed to corresponding taxation in another, and the generation of help collect value-added tax (VAT) in the country where multiple foreign tax credits for one amount of foreign tax the consumer is located in the case of cross-border paid. By neutralizing the mismatch in tax outcomes, but business-to-consumers transactions. This will help to not otherwise interfering with the use of such instruments level the playing field between domestic and foreign or entities, the rules will inhibit the use of these suppliers and facilitate the efficient collection of VAT due arrangements as a tool for BEPS without adversely on these transactions. Technical options to deal with the impacting cross-border trade and investment. broader tax challenges raised by the digital economy such Action 3 – Strengthen CFC Rules as nexus and data have been discussed and analysed. As both the challenges and the potential options raise The report on Controlled Foreign Company Rules (CFC systemic issues regarding the future framework for the Rules) establishes guidance based on best practices for taxation of cross-border activities that go beyond BEPS the building blocks of effective CFC Rules, while issues, OECD and G20 countries have agreed to monitor recognizing that the policy objectives of these rules vary developments in this regard. among jurisdictions. The recommendations are designed to ensure that jurisdictions that choose to implement them India has been a participant in the Task Force on Digital will have rules that effectively prevent taxpayers from Economy (TFDE), which was created to carry out the shifting income into foreign subsidiaries. It identifies the work of “the tax challenges of digital economy . In 2016, challenges to existing CFC Rules posed by mobile income India has introduced Equalization Levy which is one of such as that from intellectual property, services and digital the three options to deal with the taxation challenges transactions, and allows jurisdictions to reflect on presented by digital economy recognized in the Final appropriate policies in this regard. The work emphasizes Report on Action 1 of BEPS. that CFC Rules have a continuing, important role in tackling BEPS, as a backstop to transfer pricing and other The mandate of TFDE was renewed by the Inclusive rules. Framework (IF) on BEPS in January, 2017 and this included delivery of an interim report on the tax challenges Action 4 – Limit base erosion via interest deductions of digital economy in 2018 and a final report by 2020. In and other financial payments March 2018, the IF, working through the TFDE, issued A common approach to facilitate the convergence of Tax Challenges Arising from Digitalization – Interim Report national rules has been elaborated in the area of interest 2018 (the Interim Report). Subsequently, the IF agreed deductibility. The influence of tax rules on the location of to a Programme of Work (PoW) at its meeting held in debt within multinational groups has been established in Paris in May 2019, based around two pillars- Pillar 1 and a number of academic studies and various media reports Pillar 2, as elucidated in section 1 of this document. have shown how groups can easily multiply the level of Subsequently, OECD carried out two public consultations debt at the individual group entity level via intra-group on “Secretariat’s proposals for Unified Approach” under financing. At the same time, the ability to achieve Pillar 1 and on “Pillar 2” in which India has actively excessive interest deductions including those that finance participated and raised in concerns, wherever required the production of exempt or deferred income is best which have been duly documented. Presently, in order to addressed in a coordinated manner given the importance find a solution based on global consensus, India is deeply of addressing competitiveness considerations and of engaged in the discussions on Pillar 1 and 2 at ensuring that appropriate interest expense limitations do international level with the OECD and Inclusive not themselves lead to double taxation. The common approach aims at ensuring that an entity’s net interest Framework on BEPS comprising of 137 member deductions are directly linked to the taxable income countries, which has been mandated by the G-20 to find generated by its economic activities and fostering a consensus solution to address the tax challenges increased coordination of national rules in this space. arising from digital economy. 213Annual Report 2019-2020 India has introduced limit on interest deduction through Action 7 – Prevent the Artificial Avoidance of PE Finance Bill, 2017. The new section 94B of the Income- Status tax Act provides that interest income claimed by an entity Tax treaties generally provide that the business profits of as a payment to its Associated Enterprise (AE) shall be a foreign enterprise are taxable in a State only to the extent restricted to 30% of its earnings before interest, taxes, that the enterprise has in that State a permanent depreciation and amortization (EBITDA) or interest paid/ establishment to which the profits are attributable. The payable to AE, whichever is less. definition of permanent establishment included in tax Action 5 - Counter Harmful Tax Practices More treaties is therefore crucial in determining whether a non- Effectively, Taking into Account Transparency and resident enterprise must pay income tax in another State. Substance The report includes changes to the definition of permanent establishment in Article 5 of the OECD Model Tax Current concerns on harmful tax practices are primarily Convention, which is widely used as the basis for about preferential regimes which can be used for artificial negotiating tax treaties. These changes address profit shifting and about a lack of transparency in techniques used to inappropriately avoid tax nexus, connection with certain rulings. The Action 5 report sets including via replacement of distributors with out a minimum standard based on an agreed methodology commissionaire arrangements or via the artificial to assess whether there is substantial activity in a fragmentation of business activities. Together with the preferential regime. In the context of IP regimes such as changes to tax treaties proposed in the reports on Actions patent boxes, consensus was reached on the “nexus” 2 and 6, the changes will restore taxation in a number of approach. This approach uses expenditures in the country cases where cross-border income would otherwise go as a proxy for substantial activity and ensures that untaxed or would be taxed at very low rates as result of taxpayers benefiting from these regimes did in fact engage the current provisions in tax treaties. in research and development and incurred actual expenditures on such activities. The same principle can Actions 8-10 Assure that transfer pricing outcomes also be applied to other preferential regimes. In the area are in line with value creation of transparency, a framework has been agreed for Transfer pricing rules, which are set out in Article 9 of tax mandatory spontaneous exchange of information on treaties and the Transfer Pricing Guidelines, are used to rulings that could give rise to BEPS concerns in the determine on the basis of the arm’s length principle the absence of such exchange. The results of the application price for transactions within an MNE group. The existing of the elaborated substantial activity and transparency standards in this area have been strengthened, including factors to a number of preferential regimes are included in the guidance on the arm’s length principle and an the report. India has created the necessary framework for approach to ensure the appropriate pricing of hard-to- implementation of transparency framework and the same value-intangibles has been agreed upon within the arm’s has been subject to peer review also. length principle. The work has focused on three key areas. Action 6 - Prevent Treaty Abuse Action 8 looked at transfer pricing issues relating to controlled transactions involving intangibles, since The Action 6 report includes a minimum standard on intangibles are by definition mobile and they are often preventing abuse including through treaty shopping and hard-to-value. Misallocation of the profits generated by new rules that provide safeguards to prevent treaty abuse valuable intangibles has heavily contributed to base and offer a certain degree of flexibility regarding how to erosion and profit shifting. Under action 9, contractual do so. The new treaty anti-abuse rules included in the allocations of risk are respected only when they are report first address treaty shopping, which involves supported by actual decision-making and thus exercising strategies through which a person who is not a resident control over these risks. Action 10 has focused on other of a State attempts to obtain the benefits of a tax treaty high-risk areas, including the scope for addressing profit concluded by that State. More targeted rules have been allocations resulting from controlled transactions which designed to address other forms of treaty abuse. Other are not commercially rational, the scope for targeting the changes to the OECD Model Tax Convention have been use of transfer pricing methods in a way which results in agreed to ensure that treaties do not inadvertently prevent diverting profits from the most economically important the application of domestic anti-abuse rules. A clarification activities of the MNE group, and the use of certain type that tax treaties are not intended to be used to generate of payments between members of the MNE group (such double non-taxation is provided through a reformulation as management fees and head office expenses) to erode of the title and preamble of the Model Tax Convention. the tax base in the absence of alignment with the value- Finally, the report contains the policy considerations to creation activity undertaken. The combined report be taken into account when entering into tax treaties with contains revised guidance which responds to these issues certain low or no-tax jurisdictions. To achieve this and ensures that the Transfer Pricing Guidelines secure minimum standard in a swift manner, India has signed outcomes that see operational profits aligned with the the Multilateral Instrument (MLI). economic activities which generate them. 214Department of Revenue III BEPS creates additional transfer pricing challenges for regime that fits host countries’ need to obtain early developing countries beyond those also experienced by information on aggressive or abusive tax planning developed countries. The report contains guidance on schemes and their users. The framework is also intended transactions involving cross-border commodity as a reference for countries that already have mandatory transactions as well as on low value-adding intra-group disclosure regimes, in order to enhance the effectiveness services, two areas identified by developing countries as of those regimes. The recommendations provide the of critical importance. This guidance will be supplemented necessary flexibility to balance a country’s need for better with further work mandated by the G20 Development and more timely information with the compliance burdens Working Group, which will provide knowledge, best for taxpayers. It also sets out specific best practice practices, and tools for developing countries to price recommendations for rules targeting international tax commodity transactions for transfer pricing purposes and schemes, coupled with the development and to prevent the erosion of their tax bases through common implementation of more effective information exchange types of base-eroding payments. and co-operation between tax administrations. Action 11 – Measuring and monitoring BEPS Action 13 – Re-examine Transfer Pricing Documentation There are hundreds of empirical studies finding evidence of tax-motivated profit shifting, using different data Improved and better-coordinated transfer pricing sources and estimation strategies. While measuring the documentation will increase the quality of information scope of BEPS is challenging given the complexity of provided to tax administrations and limit the compliance BEPS and existing data limitations, a number of recent burden on businesses. The Action 13 report contains a studies suggest that global CIT revenue losses due to minimum standard based on a three-tiered standardised BEPS could be significant. Action 11 assesses currently approach to transfer pricing documentation. First, the available data and methodologies and concludes that guidance on transfer pricing documentation requires significant limitations severely constrain economic multinational enterprises (MNEs) to provide tax analyses of the scale and economic impact of BEPS and administrations with high-level information regarding their improved data and methodologies are required. Noting global business operations and transfer pricing policies these data limitations, a dashboard of six BEPS indicators in a “master file” that is to be available to all relevant tax has been constructed, using different data sources and administrations. Second, it requires that detailed assessing different BEPS channels. These indicators transactional transfer pricing documentation be provided provide strong signals that BEPS exists and suggest it in a “local file” specific to each country, identifying material has been increasing over time. New OECD empirical related-party transactions, the amounts involved in those analyses estimate, while acknowledging the complexity transactions, and the company’s analysis of the transfer of BEPS as well as methodological and data limitations, pricing determinations they have made with regard to that the scale of global corporate income tax revenue those transactions. Third, large MNEs are required to file losses could be between USD 100 to 240 billion annually. a country-by-country report that will provide annually and The research also finds significant non-fiscal economic for each tax jurisdiction in which they do business the distortions arising from BEPS, and proposes amount of revenue, profit before income tax and income recommendations for taking better advantage of available tax paid and accrued and other indicators of economic tax data and improving analyses to support the monitoring activities. Country-by-Country (CbC) reports should be of BEPS in the future, including through analytical tools filed in the ultimate parent entity’s jurisdiction and shared to assist countries to evaluate the fiscal effects of BEPS automatically through government-to-government and countermeasures for their countries. Going forward exchange of information. In limited circumstances, enhancing the economic analysis and monitoring of BEPS secondary mechanisms, including local filing can be used will require countries to improve the collection, compilation as a backup. An agreed implementation plan will ensure and analysis of data. that information is provided to the tax administration in a timely manner, that confidentiality of the reported Action 12 – Require taxpayers to disclose their information is preserved and that the Country-by-Country aggressive tax planning arrangements reports are used appropriately. Taken together, these The lack of timely, comprehensive and relevant three documentation tiers will require taxpayers to information on aggressive tax planning strategies is one articulate consistent transfer pricing positions, and will of the main challenges faced by tax authorities worldwide. provide tax administrations with useful information to Early access to such information provides the opportunity assess transfer pricing risks, make determinations about to quickly respond to tax risks through informed risk where audit resources can most effectively be deployed, assessment, audits, or changes to legislation. The Action and, in the event audits are called for, provide information 12 report provides a modular framework of guidance to commence and target audit enquiries. By ensuring a drawn from best practices for use by countries with consistent approach to transfer pricing documentation mandatory disclosure rules which seeks to design a across countries, and by limiting the need for multiple 215Annual Report 2019-2020 filings of country-by-country reports through making use 5.1 Activities undertaken by the Integrated of information exchange among tax administrations, Financial Unit: MNEs will also see the benefits in terms of a more limited All offices under the Department of Revenue, compliance burden. Law enabling exchange of CbC which inter-alia include Revenue headquarters, Central report was introduced through Finance Act, 2016. Board of Direct Taxes (CBDT), Central Board of Indirect Subsequently, amendments have been brought in the Taxes & Customs (CBIC), Narcotics Control Division, Rules by inserting new rules (rules 10DA & 10DB) and Central Bureau of Narcotics, Chief Controller of Factories, the rules were notified on 1-11-2017, with effect from 31- Central Economic Intelligence Bureau, Financial 10-2017. Intelligence Unit (FIU-IND), Goods & Service Tax Council Action 14 – Make dispute resolution mechanisms Secretariat, Enforcement Directorate, Customs, Excise more effective & Service Tax Appellate Tribunal (CESTAT), Settlement Commission (IT/WT), Authority for Advance Rulings, Countries recognize that the changes introduced by the Appellate Tribunal for Forfeited Property, Adjudicating BEPS Project may lead to some uncertainty, and could, Authority under PMLA, Income Tax Ombudsman, without action, increase double taxation and MAP National Committee for Promotion of Social & Economic disputes in the short term. Recognizing the importance Welfare, all field offices of Income Tax Department which of removing double taxation as an obstacle to cross- include Directorate General of Income Tax (Systems), border trade and investment, countries have committed Directorate General of Income Tax (Legal & Research), to a minimum standard that will address obstacles that Directorate of Income Tax (O&M Services), Directorate currently prevent the effective and efficient resolution of of Income Tax (Infrastructure), National Academy of Direct double taxation cases. In particular, this includes a strong Taxes and other field offices under the Central Board of political commitment to the effective and timely resolution Direct Taxes all field offices under Central Board of of disputes through the mutual agreement procedure. The Indirect Taxes & Customs which include Directorate commitment also includes the establishment of an General of Systems & Data Management, Directorate effective monitoring mechanism to ensure the minimum General of Human Resource Development, Directorate standard is met and countries make further progress to of Revenue Intelligence, Directorate General of Goods rapidly resolve disputes. and Service Tax Intelligence, Directorate General of Action 15 - Develop a Multilateral Instrument Goods and Service Tax, National Academy of Customs, Indirect Taxes & Narcotics, etc., are serviced by the three Drawing on the expertise of public international law and units of Integrated Finance Division in terms of Budget tax experts, the Action 15 report explores the technical formulation, allocation, expenditure monitoring, control, feasibility of a multilateral instrument (MLI) to implement enforcing economy, scrutiny and sanction of expenditure the BEPS treaty-related measures and amend bilateral proposals beyond the delegated powers of field offices. tax treaties. It concludes that a multilateral instrument is desirable and feasible, and that negotiations for such an 5.2 Details of expenditure and financial proposals instrument should be convened quickly. Based on this scrutinized and approved: analysis, a mandate was developed for an ad-hoc group, (a) Creation and continuation of posts, construction/ open to the participation of all countries, to develop the purchase/hiring of offices, as well as residential multilateral instrument and open it for signature in 2016. accommodation for the field formations of Central Board More than 100 countries participated in the work on an of Indirect Taxes & Customs and Central Board of Direct equal footing. The MLI has been finalized and on the first Taxes, Department of Revenue and its attached offices. date for signing the MLI on 7th June, 2017, 68 jurisdictions including India signed the MLI. As on date, there are 90 (b) Procurement of goods and services including signatories of MLI, out of which 37 jurisdictions including procurement of anti-smuggling equipment i.e. India have already ratified the same. scanners and marine vessels. 5. Integrated Financial Unit (IFU) (c) Proposals for deputation abroad of officers of the Department, CBDT, CBIC and their field offices. Integrated Finance Division of the Department of Revenue is under the direct supervision of Addl. (d) Restructuring proposals, redeployment of Secretary & Financial Advisor (Finance). There are three personnel in field formations and constituent units dealing with budget, finance and expenditure units. management in respect of the grants pertaining to (e) Comprehensive Computerization of Department Department of Revenue, Direct Taxes and Indirect of Revenue, its field formation including Customs Taxes. Director (Finance), D/o Revenue/GST & Customs and GST formations and Income Tax field and Director (Finance), Direct Taxes/Expenditure assist the AS&FA (Fin). formations. 216Department of Revenue III (f) Proposals from Committee of Management (ii) Review of Monthly and Quarterly Expenditure vis- (COM), D/o Revenue which oversees the à-vis budgetary allocations and MEP/QEA and functioning of Government Opium & Alkaloid report to Revenue Secretary and Expenditure Works (GOAWs). Secretary in compliance to the guidelines of the Department of Expenditure, Ministry of Finance (g) Grants-in-aid to National Institute of Public for strict financial discipline. Finance & Policy and Central Revenue Sports & (iii) Review of specific activities/developments of Cultural Board. Department of Revenue and report to Secretary (h) Proposals for Delegated Investment Board (DIB), (Expenditure) through monthly DOs. Public Investment Board and Cabinet Committee (iv) Enforcement of instructions on economy in on Economic Affairs (CCEA) relating to expenditure by periodic review of expenditure and comprehensive computerization plan of CBDT/ advisories to spending authorities for expenditure CBIC, capital expenditure involving construction control in line with the economy instructions of office/residential complexes and readymade issued by the Department of Expenditure. office/residential buildings of all the three Departments. (v) Preparation and budgetary allocation for Compensation to States/UTs for revenue loss on (i) Proposals received for sanction of financial roll out of GST; Government Opium & Alkaloid assistance from the Customs & Central Excise Works; Acquisition of residential and office Welfare Fund and Special Equipment Fund. accommodation; Strengthening of IT capability Revision of norms were finalized in respect of for e-governance of CBIC, CBDT and setting up of/refurbishing of recreation/ sports Department of Revenue; Acquisition of ships and clubs, gymnasiums, Departmental Canteens, fleets to strengthen Marine capability & Acquisition of Anti-Smuggling equipment. crèches for children of Departmental officials, guest houses and cash award scheme for 5.5 In addition, the allocation and monitoring of the meritorious children with special emphasis on girl budget relating to advances, viz. House Building Advance, children and children of group ‘D’ staff. Computer Advance etc. were also done. (j) Schemes proposed by CBDT/CBIC for utilizing 5.6 The Integrated Finance Division has also been the budget provision under 1% Incremental entrusted with the formulation of schemes of important Revenue Incentive Scheme for obtaining expenditure proposals from their initial stage. It also approvals of the competent authority. follows up with the Department/Boards for the settlement of audit objections, inspection reports, draft audit paras (k) Proposals involving relaxation/interpretation of and reports of PAC/Standing Committee. financial rules and all proposals requiring 6. Implementation of Official Language reference to the Department of Expenditure. Policy 5.3 The expenditure budget/non-tax revenue receipts 6.1 The Department of Revenue has a full-fledged of Department of Revenue, Direct Taxes and Indirect Official Language Division which is entrusted with the task Taxes for BE 2019-20 was prepared. RE 2019-20 and of implementing the Official Language Policy of the BE 2020-21 ceiling has been finalized and communicated Government of India. The Division is headed by a Director by the Budget Division, Department of Economic Affairs. (OL) and operates through four Official Language The Details of RE 2019-20 and BE 2020-21 in respect of Sections; each headed by an Assistant Director (OL) and all the three grants are as below: supervised by two Deputy Directors (OL). The Division (Rs. in crore) deals with matters relating to implementation of Official Grant Gr. No. 2019-20 2020-21 Language Policy of the Union and takes follow up action BE RE BE on the orders and instructions issued by the Department D/o Revenue 31 203466.73 243505.77 272250.83 of Official Language from time to time. Entire translation Direct Taxes 32 7338.44 7343.44 8065.39 work of the Department from English to Hindi and vice- Indirect 33 7900.50 7900.50 8500.50 versa is ensured by the Official Language Division. Taxes The Department of Revenue is notified under 5.4 Integrated Finance Division has taken the following Rule 10(4) of the Official Language Rules, 1976. 30 steps/initiatives in 2019-20:- sections of the Department have been specified for doing their entire work in Hindi. (i) Implementation of Cash Management Plan as per Monthly Expenditure Plan (MEP) and 6.2 Performance of the OL Division during the year under report: Quarterly Expenditure Allocations (QEA) as envisaged by Budget Division of Department of a. All the documents pertaining to CBIC, CBDT & Economic Affairs, Ministry of Finance. Revenue HQs were invariably issued bilingually 217Annual Report 2019-2020 as per the requirement under Section 3(3) of the 6.6 Incentive Schemes: Official Languages Act, 1963; Under the incentive scheme of the Department b. All gazette notifications, replies to Parliament of Official Language, Ministry of Home Affairs, cash Questions and Assurances pertaining to CBIC, awards of Rs. 2000/-, Rs. 1200/- and Rs. 600/- are given CBDT and Revenue HQs were furnished to those officials who do noting/ drafting and other official bilingually; work in Hindi. c. Notes and monthly summaries for the Cabinet, 6.7 Training: Action Taken Reports (ATRs) on the Report of the Comptroller & Auditor General of India, During the year 2019-20, 8 JSA/ ASOs/ MTS and Annual Report and Outcome Budget of the 5 Stenographers were nominated for training in Hindi Ministry of Finance were translated and made typing and Hindi stenography, respectively, in the courses available bilingually; run by the Central Hindi Training Institute, Ministry of Home Affairs. d. A number of Double Tax Avoidance Agreements entered into with various countries were 7. Implementation of the Right to translated into Hindi; and Information Act, 2005 e. Website material received from all the sections 7.1 In order to facilitate dissemination of information of the Department of Revenue (HQs), CBDT and under the provisions of the Right to Information Act, 2005, CBIC was translated into Hindi and uploaded on Department of Revenue has initiated the following action: the Ministry’s website. (i) The RTI Cell is in operation in DOR to collect, 6.3 Hindi Salahakar Samiti and OLIC meetings: transfer the applications under the RTI Act, 2005 Action has been taken for formation of Sanyukt to the Central Public Information Officers/ Hindi Salahakar Samiti of the Departments of Revenue, Appellate Authorities/ Public Authorities Expenditure and Investment & Public Asset Management concerned and to submit the quarterly returns and Office of the Comptroller and Auditor General of India. regarding receipt and disposal of the RTI Applications/ Appeals to the Central Information 6.4 Official Language Inspections: Commission. The officers of the Hindi Division of the (ii) The Department has proactively disclosed Department also carried out inspections of 09 sections information as per section 4(1) (b) of the RTI Act of headquarters and 06 subordinate offices under the on the Department’s website (https://dor.gov.in/ control of the Department of Revenue during the year rti/proactive-disclosure-under-section-41-b-rti- under report with the view to assess the progress in use act-2005) Details of the Department’s functions of Hindi in the office and suggested ways to accelerate along with its functionaries etc. and the directory the use of Hindi in the official work. of officers have been placed on the Department’s 6.5 Hindi Day/ Hindi Pakhwara: official website. RTI Application/ Appeals along On the occasion of Hindi Day, a message was with their reply have been proactively disclosed issued by the Hon’ble Finance Minister exhorting all the and uploaded on the Department’s website. officers/employees of the Department to do their (iii) The list of Central Public Information Officers and maximum official work in Hindi. Appellate Authorities is updated and uploaded Hindi Pakhwara was celebrated from 01 from time to time on the Department of September, 2019 to 15 September, 2019. Various Revenue’s website for facilitation of the viewer competitions like Hindi noting & drafting, Essay writing, and RTI applicants. To facilitate the receipt of Extempore Speech competition, Quiz competition, Hindi applications under the RTI Act, 2005 a provision typing and Hindi Shorthand competition were organized has been made to receive the applications at the during the Hindi Pakhwara. Also, there was an award RTI Cell, Department of Revenue, Room No. B- scheme for doing maximum work in Hindi during the Hindi 31, North Block, New Delhi-01. The Applications fortnight for the gazetted officers, Hindi speaking non- thus received are further forwarded to the CPIOs/ gazetted officers as well as the non-Hindi Speaking non- Public Authorities concerned. gazetted officers separately. Those who secured first, second and third positions in these competitions have (iv) The RTI Application can be filed online through been given cash prizes of Rs. 5000/- (First prize), Rs. www.rtionline.gov.in. The RTI Applicant can 3000/- (Second prize) and Rs. 2000/- (Third prize) and check the status of their RTI Application through also 3 consolation prizes of Rs. 1000/- each were given. the website. 218Department of Revenue III (v) The Joint Secretary, Department of Revenue has (vi) The National Institute of Public Finance and been nominated as the Nodal Officer for ensuring Policy (NIPFP) has been assigned the task for compliance with the proactive disclosure conducting the third party audit of the guidelines under Section 4 of the RTI Act and Department’s proactive disclosure package. proper monitoring & coordination with the (vii) The following chart indicates the number of RTI Training Institute as well as Central Information Application and Appeals received in the financial Commission for carrying out sample audit in year 2019-20 up to 30.09.2019: Department of Revenue, Ministry of Finance. RTI Application/ No. of Applications No. of Cases Decisions Decisions Appeal type received during the transferred to other where request where year 2019-20 including PAs u/s 6(3) + rejected requests/ cases transferred to returned to the appeals other PAs Applicant replied Offline RTI 331 180 14 173 Application Offline Appeals 42 NA 20 16 Online RTI 2498 2203 0 235 Application Online Appeals 69 NA 31 11 Total Registration fee collected u/s 7(1) Rs. 1410/- Total Additional fee collected u/s 7(3) Rs. 3865/- 7.2 Central Board of Indirect Taxes and Customs the Headquarters office, there are 33 CPIOs, one (CBIC): CPIO for each of the section. The no. of applications received, applications rejected and i. CBIC is implementing the provisions of Right to requests accepted by the CPIOs in CBIC during Information Act, 2005 since its enforcement. In the year 2019-20 are given below: Quarter ending No. of applications No. of cases transferred to No. of No. of on received during the other Public Authorities requests requests quarter under Section 6 (3) rejected accepted 30.06.2019 839 286 14 601 30.09.2019 803 220 33 684 *includes applications filed online only. ii. There are 23 Appellate Authorities, who decides appeals rejected and appeals accepted by the the appeals received under the RTI Act from CPIOs in CBIC during the year 2019-20 are given various applicants. The no. of appeals received, below: Quarter ending on No. of appeals received No. of appeals No. of appeals during the quarter rejected accepted 30.06.2019 75 2 63 30.09.2019 47 10 40 219Annual Report 2019-2020 iii. Registration fee collected under section 7(1) 7(3) during these three quarters is as given and the additional fee collected under section below: Quarter ending on Fee collected under Additional fee collected section 7(1) (in Rs.) under section 7(3) (in Rs.) 30.06.2019 850 8781 30.09.2019 680 9095 iv. The fee is excluding the amount of fee received CBIC. Hence, applications pertaining to the for submitting applications online on the RTI portal. remaining field formations are transferred manually with the direction provide information v. The Government has also launched RTI Portal directly to the citizen. which facilitates filing of applications online by the Citizens. The applications concerning vii. Appeals against the information provided in Department of Revenue are accessed by the two response to RTI online applications are also Nodal Officers, one for Customs and the other made online, which are transferred to concerned for rest of the matters pertaining to CBIC. First Appellate Authority, who also provide Thereafter, these applications are transferred, requisite reply to the citizen on the portal itself. online, to concern CPIOs in the Board, who are CBIC has received 122 appeals from April, 2019 required to provide requisite information, online, to September, 2019. on the Portal itself so that the applicant may 7.3 Narcotics Control Division: immediately access the requisite information. So far, CBIC has received 1642 applications from Various provisions of Right of Information Act, April, 2019 to September, 2019. 2005 have been implemented in the Central Bureau of narcotics in the year 2005. Unit -wise information of vi. At present, the facility for transferring the CBIO’s and First Appellate Authorities appointed at applications received on the RTI portal is limited present is as follow: to the CPIOs in the Board and 51 CCs/DGs of S. No. Headquarters MP Unit Raj. Unit UP Unit 1 CPIO 1 17 8 2 2 FAA 1 1 1 1 Further, it is to apprise that the application 7.5 Income Tax Settlement Commission received under RTI section are dealt with the RTI Act The Settlement Commission is very sensitive to and are disposed of in the time limit. Detailed functions the implementation of the RTI Act, 2005. In the all seven and various aspects of the work done by the Department Benches including Principal at New Delhi. The JDI/ADI are also available on CBN website http://www/cbn.nic.in and Administrative Officer has been designated as CPIO 7.4 Customs, Excise & Service Tax Appellate under the said Act. The Secretary and Director of Income Tribunal (CESTAT) Tax (Investigation) who is equivalent to the Joint Secretary to the Government of India in each Bench has been The Public Information Officer and the Appellate designated as Appellate Authority under the said Act. Authority have been nominated by the Public Authority in all Benches of the Tribunal and they are acting in 7.6 Financial Intelligence Unit – India accordance to the provisions of the Right to Information Number of RTI applications received, disposed Act, 2005, in dispensing the information. All RTI of and denied during the Year 2019-2020 (Upto to 30th applications and orders including orders of the Appellate Nov, 2019) Authority are uploaded on the website. Year Received Disposed Off Remarks Transferred Denied 2019-2020 52 27 24 Pending 1* *One RTI received online on 27-11-2019 is outstanding on 30th Nov 2019 Note: FIU-IND has been included in the Second Right to Information Act, 2005, is exempt from the Schedule of Right to Information Act, 2005 vide operation of this Act, except for the information Department of Personnel & Training notification dated pertaining to the allegation of corruption and human right 28.09.2005 and therefore under Section 24(1) of the violation. 220Department of Revenue III 8. E-governance activities 8.1.1.3 Special Grievance Cells for MSMEs Special cells to address grievances of the Micro Small Medium 8.1 Central Board of Indirect Taxes and Customs Enterprises sector has been initiated in Chennai and (CBIC) JNCH Customs formations. These cells look into issues 8.1.1 E-governance measures under Customs of delayed clearances, pending refund applications etc. The services provided will be examined and will be asked 8.1.1.1 ICEDASH (Indian Customs EDI Dashboard) to be replicated in other customs formations. is an extremely handy, user friendly, informative Dashboard which is automatically populated to indicate 8.1.1.4 Turant Customs In line with the drive to improve the Customs station-wise performance in regard to time India‘s standing in the Ease of Doing Business index, taken for clearance of imports. This is mapped against the department has launched several new measures the target time to enable the field formations to monitor under the umbrella of Turant Customs, for which a circular on real time basis whether or not their performance is was issued in March 2019. Reforms have been made in below par and take remedial steps, whenever needed. It customs procedures wherein goods can be given faster also enables the comparison across similarly placed clearances by new initiatives such as automated queuing Customs stations. ICEDASH also shows the progress of bills of entry before customs officers which now does made in the last one month for each Customs station. away with the need for the trade to come forward Thus, it is a powerful tool for real time monitoring of import physically for clearance of goods. Other initiatives such clearances. Further, it uses the colour coding like Green as virtual assessment under the umbrella of turant for clearances where time is less than 36 hours, red for customs are also being introduced on pilot basis. clearances taking more than 72 hours and amber for time 8.1.1.5 Creation of new tariff lines in Finance Act (02) in between two extremes. This tool has actually altered of 2019 A high level Working Committee was formed in the behaviour of the officers as they are now aware that February 2019 to look into the requirements of trade, their performance is being monitored by higher authorities. This reform is resulting in behavioural ministries, associations, export promotion councils for changes of the customs officers and it was introduced creation of new tariff lines. Consultations were carried on International Customs Day in January 2019. out based on their recommendations and the issues were examined. Resultantly, around 300 new tariff lines were 8.1.1.2 e-SANCHIT The Single Window Interface for created in the Budget. Apart from above, the Customs Facilitation of Trade (SWIFT) was initiated as part of the Tariff was also streamlined and synchronized on the lines “Ease of Doing Business” initiatives to facilitate Trading of HS. Across Borders in India. The objective of the project is to allow importers and exporters a facility to lodge their 8.1.1.6 A streamlined scheme has been launched for clearance documents online at a single point without/ with promoting ‘Make in India’ by allowing manufacturing minimal interface with regulatory authorities. One of the in Customs Bonded Warehouse with single point key initiative to facilitate online clearance at a single point, approval, digital account keeping and simplified is paperless processing application i.e. e-SANCHIT. E- compliance requirements. SANCHIT is an online application that allows a trader to The objective is to give an impetus to the ‘Make submit all supporting documents for clearance of consignments electronically with digital signatures. By in India’ policy of the government through a scheme under using eSANCHIT, trader does not have to approach to Section 65 of the Customs Act, 1962(hereinafter referred different regulatory agencies with hard copy of the to as ‘the Act’). Section 65 of the Act enables conduct of documents thereby making the entire process of manufacture and other operations in a Customs-bonded consignment clearance faceless and paperless. After warehouse. For this, Manufacture and other Operations implementing a successful pilot in October, 2017, e- in Warehouse Regulations 2019 and Circular 34/2019- SANCHIT was made mandatory on import side from 1st Customs dated 1st October 2019 issued by CBIC provide April, 2018 at all the Customs EDI locations in the country. clarity on process, taxability and documentation From 2019, measures were initiated wherein more requirements for units operating under Section 65 of the number of PGAs(Participating Government Agencies) Act. The scheme is streamlined with clear and transparent have also been brought on the e-sanchit platform. The procedures, documentation and compliance department has even taken measures for automatic requirements. The main features of the scheme are as registration of the PGAs in the system. Further e-sanchit below - is now being revamped from December 2019 by way of introducing unique document codes in the customs (i) A Single application cum approval form has been system which futher enables more efficient customs prescribed for uniformity of practice and certainty administration. With eSANCHIT facility the need for paper of outcomes. There shall also be a single point documentation and consequent physical touch point for of approval to set up and oversee the operation every stage of clearance has drastically come down. It of such units, Viz., the jurisdictional has resulted in substantial reduction in time and cost. Commissioner of Customs. 221Annual Report 2019-2020 (ii) There shall be no geographical limitation on (i) Read API: for fetching supporting where such units can be set up. documents from eSanchit by PGAs. In this, PGAs would be in a position to fetch the (iii) The scheme would also enable efficient capacity documents uploaded by them from utilization, as there is no limit on quantum of eSanchit. A facility will also be developed clearances that can be exported or cleared to where PGAs like FSSAI and PQ would be the domestic market. able to access documents uploaded by other (iv) A single digital account has been prescribed for users (IEC holders) for scrutiny as a part of ease of doing business and easy compliance. SWIFT. This will play a critical role in promoting investments (ii) Write API: for posting documents to eSanchit into India and enhancing ease of doing business. by PGAs. In this, PGAs would be given functionality to post the LPCOs to eSanchit 8.1.2 E-governance measures under Anti- for document codes pertaining to those Smuggling Unit PGAs. Single Window Project: Further in next phase, LPCOs, which need • eSANCHIT in Exports: Single Window debit/credit will be identified for integration implemented eSANCHIT in exports to all EDI of data transfers. locations vide circular no. 43/2018 –Cus dated • Compliance Information Portal: Under Single 08.11.2018. Exports can upload the required Window Project, a single web-based source is supporting documents on eSANCHIT at the time being developed which will project all import/ of filing Integrated Declaration for export of export clearance related procedural steps, duties, goods. The process would eliminate the fees and charges of any commodity related to requirement of exporters submission the physical Customs and other Regulatory Agencies/ copy of these documents to Customs and the Ministries on a single platform for both Trade and officers of PGAs. It will reduce the dwell time and Officers. The CTH mapped compliance cost of shipment. information / database for import has been • PGA eSANCHIT: Single Window implemented populated in the backend database with the help PGA eSANCHIT on 16.11.2018 whereunder all the of NIC for all Chapters of ITC (HS). Beta version PGAs would upload the license/permit/certificate/ of CIP has been launched. Final version of CIP other authorization (LPCOs) on eSANCHIT. An IRN is expected to be launched in January, 2020. generated for the LPCOs would be communicated to the beneficiaries (IEC holder) who can use the 8.1.3 E-governance initiatives under Drawback said IRN for making the LPCO available to the Division: Customs for clearance of goods. This would To promote paperless transactions and improve eliminate physical interface between PGA, delivery of public services, printing of physical copies of Customs and the beneficiaries. It will reduce the Advance Authorisations/Export Promotion Capital Goods dwell time and cost of shipment. As of now, 47 out (EPCG) Authorisations issued for EDI ports as port of of 53 PGAs are registered on ICEGATE for using registration had been discontinued with effect from eSANCHIT. These PGAs have been enabled for 01.03.2019. In this regard, Circular No. 07/2019-Cus uploading the LPCOs on eSANCHIT. Matter is dated 21.02.2019 had been issued. Thereafter, to further under constant persecution with remaining 6 PGAs enhance ease of doing business, physical copies of MEIS/ for them to register on ICEGATE. SEIS duty credit scrips have also been phased out for • New dashboard for eSANCHIT: A new authorisations issued for EDI ports with effect from dashboard for eSANCHIT has been developed 10.04.2019 vide Circular No. 11/2019-Cus dated using which the PGAs can upload the LPCOs on 09.04.2019. eSANCHIT in bulk and with much ease. It allows 8.1.4 E-governance initiatives under Directorate to upload 10 LPCOs of different type and General of Human Resource Development pertaining to different beneficiaries at a time. (DGHRD) • Application Programme Interface (API): For (i) Implementation of SPARROW CBIC (Smart the PGAs which have their own system for Performance Appraisal Report Recording Online) for issuing LPCOs, API is being developed, wherein, Group ‘B’ and ‘C’ Officers & staff: Central Board Of Indirect the PDF document would be automatically Taxes & Customs (CBIC) became the first Central uploaded on eSANCHIT from their system by Government Department to implement SPARROW on a connecting to CBIC’s API Interface. There would large scale for Group ‘B and ‘C’ cadres for recording of be two types of APIs: 222Department of Revenue III Annual Performance Appraisal Report and (APAR) and through internet. Placing of various other information of Immovable Property Return (IPR) for around 50,000 the concerned authorities have also been taken up. The personnel. In addition to promoting digitisation and reduce organization purchase goods & services through GeM of paper work it is going to help immensely in timely filing ad tendering through e-procurement portal. of APAR and improved cadre management across the 8.3 Income Tax Settlement Commission country. For smooth implementation of the same, dedicated e-mails, help-lines are also provided for This Commission has its own official website i.e. officers. Further, trainings were also given to Master itscindia.gov.in. All the officers and staff members have Trainers in the Zones for smooth implementation and been provided the personal computers. Salary and other approachable grievance redressal within the Zones. dues are being paid to the officers of the Commission thorough e-transfer system. (ii) Bhavishya Software for Pensioners related Work: Bhavishya On-line pension tracking system to 8.4 Enforcement Directorate: enable a retiring employee to keep himself informed about The initiatives taken by the Enforcement the progress of his pension process case through SMS Directorate for e-Governance in the recent past are or e-mail was initiated by the government. Under this 1290 summarized below: DDOs got registered till 25.11.2019 on BHAVISHYA Portal. The process of bringing on-board the remaining (a) Enforcement Directorate, Headquarters office unregistered DDOs is underway. and Zonal offices have their own LAN which is connected to NICNET, WAN, Enforcement 8.2 Narcotics Control Division: Directorate HQ and Zonal offices are using the 8.2.1 Central Bureau of Narcotics (CBN) office automation tools like Microsoft Office to accomplish the day to day activities like preparing As regards, E-Governance activities, it is stated letter, excel sheet and graphs. that various instructions of the Government, on issue of e-governance, are noted for compliance and necessary (b) All the payments like salaries, reimbursements, action. Use of CCTV’s Camera’s at Settlement and payment to vendors etc. are being paid through Weighment centres was also successfully carried out. Public Finance Management System (PFMS). Payment to cultivators made through e-payment from the (c) An Employee Information System (EIS) has been crop year 2012-2013 continuously. initiated which is a web-based application to Computers have been provided, almost, in each store, process and generate the various reports section and have been inter-connected through Network. of an employee. It provides the information of an All urgent reports or replies to the references received employee such as present post, place of posting, from the Ministry are being forwarded to the Ministry of date of joining in enforcement Directorate, date Finance, New Delhi and other offices through e-mail, as of birth and retirement, next date of promotion far as possible. and post, information of sanctioned post, working post and vacant post at the Directorate and its The Central Bureau of Narcotics web site has subordinate offices. been updated and all the application forms for issue of export/import authorization for export/import of (d) An Expenditure Monitoring System (EMS) has Psychotropic substances, Narcotics Drugs and Precursor been developed to capture the details of budget chemicals can be downloaded from the CBN website: estimates, budget allocation and monthly www.cbn.nic.in. The opium cultivation data from 1998- expenditure by the various offices of the 99 has also been uploaded on the CBN website: directorate. www.cbn.nic.in (e) To automate day to day activities of store ‘E-Purti’ 8.2.2 Chief Controller of Factories (CCF) store management software application was tailored as per the need of the stores. After The Organization of Chief Controller of Factories modification and testing of the application it was has launched its own website which contains complete made available to users on 1st April, 2019. information about the organization, its activities, contact Procurement via Gem (Government E details, etc. All tenders for procurement of material and Marketplace) is also incorporated. Now the issue services are timely loaded in the website for information of items to officers and staff in Enforcement and participation of the manufacturers / suppliers. The Directorate Headquarters is via E Purti. organization has also arranged to display various (f) FTS (File Tracking System) has been reconfigured information pertaining to production of drugs, sale of to meet the requirement of the Directorate. A new drugs, etc. through internet. Placing of various other instance of data base and application has been information for information of the concerned authorities created on the existing server. have also been taken up and likely to be provided soon 223Annual Report 2019-2020 8.5 Financial Intelligence Unit – India (FIU-IND) revamp of the FINnet application (FINGate, FINCore and FINex). The project also includes redesigning of 8.5.1 Aim and Objectives processes to improve compliance and strengthen the 8.5.1.1 Objectives of FINnet 2.0 Project strategic and tactical wings of FIU-IND The key objective of the FINnet 2.0 project is to 8.5.1.2 Road Ahead drive a technology led transformation of the FINnet The following table describes the transformation ecosystem. This will encompass redevelopment and of FINnet at a high level as envisaged on the present day: Factor Envisaged state (FINnet 2.0) Facilitate ease of reporting through  Reporting format rationalization revamp of mode of reporting  Simplified reporting utilities for REs  Automatic reporting through API based integration with RE’s database(s)  E-filing through web forms Processing speed and improvement in  Advanced validations through integration with external accuracy and consistency of linkages databases and relationships  Machine learning to be implemented to improve the accuracy of linkages Accurate targeting of cases  Machine learning enabled recipient LEA selection to reduce manual intervention  System learns from the past actions of FIU users Enhanced case creation, analysis and  Case inspector tool for LEAs to configure views and risk scoring templates for case download  Enable LEAs to select attributes for download  Multiple formats for case dissemination  Enable ad hoc dissemination through dynamic risk scoring of suspected entities and creation of watch lists. Streamlined communication between the  Secure mobile eco-system for FINnet users FIU-IND and REs/LEAs  Seamless and real time information sharing between entities  Comprehensive notification framework (email, mobile, text messages) Continuous handholding of user groups  The envisaged system shall monitor the compliance for all REs on a continuous basis and organise trainings and workshops for continuous handholding of REs.  Unified communication cell to address grievances and issues advisories as and when needed (Dedicated call centre for all user groups) Set up of a dedicated strategic analysis  Formulation of Red Flag Indicators (RFIs) cell  Institutional learning and best practices  Identification of new data sources for integration  Assessment of technological capabilities Technology  Complete technology refresh is envisioned  Near real time data exchange – API based integration 224Department of Revenue III 8.5.2 Target Beneficiaries 8.5.2.1 Stakeholders Envisaged Benefits The success of a project can only be judged by The success of a project can only be judged by the benefits it confers on the various stakeholders. The following the benefits it confers on the various stakeholders. The table summarizes the expected benefits of the Project. following table summarizes the expected benefits of the Project. 8.5.2.2 Stakeholders Envisaged Benefits Financial Intelligence Unit Adoption of global best practices and procedures for operational transformation led by technology  Enhanced and improved validations on the input reports  Capability to handle increased workload  Advanced analysis powered by best in class technology  Improved compliance and continuous handholding  Better utilization of Government resources in areas of value-added services, on account of outsourcing of non-core activities User groups (REs and FIU  Uniform and well-defined processes analysts and approvers)  Additional data sources for continuous learning and awareness  Trainings for requisite skill enhancement  Improved employee skills and domain expertise due to increased focus on core activities LEAs  Quick and speedy dissemination of relevant cases  Better turnaround time for ad hoc requests  Better usability and configurability of LEA facing functionalities  Seamless, Omni channel communication framework for all interactions 8.5.2.3 Benefits 9. Swachh Bharat Campaign The following are the cost benefits envisaged – Department of Revenue undertook several steps as a part of Swachh Bharat Campaign initiated by i. Early detection, containment and Government of India on the occasion of 150th Anniversary investigation of money laundering cases of Mahatma Gandhi. Under Swachhta Action Plan (SAP) The envisaged system shall allow the FIU-IND 2019-20, various activities were undertaken by the to conduct faster processing of reports and Department, viz. Swachhta Hi Sewa campaign from generation of cases, thereby reducing the lead 11.09.2019 to 02.10.2019 comprising of various activities time between reporting and dissemination of including Swachhta pledge by Hon’ble Finance Minister, cases. Plastic waste shramdaan, Essay writing/ slogan writing/ ii. Increased focus on strategic analysis cartoon competition on the theme Swachhata (Plastic waste management) and 31 Activity documents & various FIU-IND is built on three pillars namely – images have been uploaded on the web portal of the Strategic, operational and tactical analysis. The Ministry of Drinking Water and Sanitation. During SAP operations tasks can be taken care of by 2019-20, the Department put ban on use of single-use technology to a great extent. This would provide plastic items viz. PET water bottles, Plastics cups, plastic bandwidth to focus on strategic and tactical folders, plastic glasses, Polythene, etc. in office premises initiatives if FIU-IND. New typologies can be and introduced use of Glass jugs/glass tumblers/ devised, frequent review of red flags can be done recyclable paper folders in the office premises. The and new sectors can be identified to combat Department has been monitoring the implementation of money laundering and terrorist financing in the nation. Swachhta Action Plan of all field formations of Central 225Annual Report 2019-2020 Board of Direct Taxes (CBDT) and Central Board of Department are regularly being advised to motivate their Indirect taxes and Custom (CBIC). During 2019-20, to subordinate offices to create competitive feeling among encourage cleanliness in the office complexes, themselves through implementation of the various awareness drives for maintaining cleanliness with the activities mentioned in SAP 2019-20. Swachhata participation of the officers and employees were done in Pakhwada from 11.09.2019 to 02.10.2019 was observed this Department. In addition to the routine cleaning, with full zeal and enthusiasm in various offices of Income sweeping/ mopping of floors, cleaning of corridors Tax Department with the campaign initiated as Swachhata including staircases and all the rooms/ halls were Hi Sewa (SHS). Emphasis was given on ban on use of undertaken during cleaning activities which also included single use plastic items. Compliance reports are being cleaning of toilets and adjoining areas using disinfectants obtained from various field offices regularly and all the with necessary provisioning of soap, toilet paper, hand field offices have taken initiatives towards Cleanliness dryer, dustbins and necessary items. Collection of all and beautification of surroundings, creating Swachhata obsolete and equipment and removal thereof, viz. Awareness at local level/ display and banner/ foster newspapers/ magazines, e-waste viz., old computers & healthy competitions. peripherals through e-waste auction and general waste Central Board of Indirect Taxes and Customs (CBIC): through normal auction, disposal of old cars/ vehicles after following due procedure under provisions of GFR, Under the SAP 2019-20, various field offices of 2017. Renovation work to create better working ambience CBIC have undertaken various activities for Green and has been done in several rooms keeping in view Clean Belt like Waste Collection drive, installation of optimization of office space. Weeding/ recording drive Composting machines, rain water harvesting system, was also undertaken and simultaneously digitization/ supply of dustbins and other sanitary items to Cancer scanning of old records/ files was carried out through a Institute, Plantation of fallow land, planting saplings for hired private company targeting optimization of office fresh air and greenery, setting up of vertical garden in space. Total Budget of Rs. 8600 lakhs were allocated GST office for clean and fresh air, installed oxygen under Swachh Bharat Campaign and Rs. 3935.61 lakhs chamber for clean and fresh air to breathe, installation of have been incurred till November, 2019. sprinklers, uprooting of wild bushes for Clean habitations/ clean Factories/ PHC/ CHC/ Hospitals, awareness drive Central Board of Direct Taxes (CBDT): about Solid Waste Management, conducted Swachhta Under the Swachh Bharat Abhiyan of Rally for creating awareness regarding Ban of Single use Government of India, all the field offices of Income Tax plastic in office premises. 226Department of Revenue III 227 I - eruxennA sCBO/sTS/sCS fo noitatneserpeR )CIBC( smotsuC dma sexaT tceridnI fo draoB lartneC :noitazinagrOAnnual Report 2019-2020 228 I - eruxennA )TDBC( sexaT tceriD fo draoB lartneC :noitazinagrO evoba 5 ot 2 nmuloc eht ni dedulcni ton dna noitutitsni gniniart eht ni gniogrednu era sreciffo ”A“ puorG )TI( SRI ehT .9102 raey eht ni edam tnemtnioppA*Department of Revenue III 229 I - eruxennA retrauQ daeH euneveR :noitazinagrOAnnual Report 2019-2020 230 I - eruxennA )DNI-UIF( tinU ecnegilletnI laicnaniF :noitazinagrO hcihw tsniaga ,CIN htiw deredacne era stsop ’A‘ puorG 01 ,stsop ’A‘ puorG 24 eseht fo tuo sreciffO ’A‘ puorG 24 fo htgnerts denoitcnas a gnivah si DNI-UIF * .9102.11.03 no sa dellif era stsop 02 ,stsop 23 gniniamer eht fo tuO .erdac CIN yb edam era stnebmucni eht fo gnitsop )’C‘ puorG( STM 60 fo stsop rof tpecxe ylno noitatuped si tnemtnioppa fo edom ehT :etoNDepartment of Revenue III 231 I - eruxennA AMEFAS rednu lanubirT etalleppA ehT :noitazinagrOAnnual Report 2019-2020 232 I - eruxennA ytreporP deriuqcA yllagelli fo erutiefroF rof ytirohtuA tnetepmoC :noitazinagrODepartment of Revenue III 233 I - eruxennA )TATSEC( lanubirT etalleppA xaT ecivreS & esicxE ,smotsuC :noitazinagrOAnnual Report 2019-2020 234 I - eruxennA noissimmoC tnemeltteS esicxE lartneC & smotsuC :noitazinagrODepartment of Revenue III 235 I - eruxennA scitocraN fo uaeruB lartneC :noitazinagrOAnnual Report 2019-2020 236 I - eruxennA tnemecrofnE fo etarotceriD :noitazinagrO .9102 ,peS ni noitangiser lacinhceT nekat sah yrogetac devresernu fo etadidnac enO *Department of Revenue III 237 I - eruxennA yciloP dna ecnaniF cilbuP fo etutitsnI lanoitaN :noitazinagrOAnnual Report 2019-2020 238 I - eruxennA uaeruB ecnegilletnI cimonocE lartneC :noitazinagrODepartment of Revenue III 239 I - eruxennA sgniluR ecnavdA rof ytirohtuA :noitazinagrOAnnual Report 2019-2020 240 I - eruxennA noissimmoC tnemeltteS xaT emocnI :noitazinagrO noitatuped yB *Department of Revenue III 241 II - eruxennA SEITILIBAID HTIW SNOSREP EHT FO NOITATNESERPER )CIBC( smotsuC dna sexaT tceridnI fo draoB lartneC :noitazinagrOAnnual Report 2019-2020 242 II- eruxennA )TDBC( sexaT tceriD fo draoB lartneC :noitazinagrO .evoba 5 ot 2 nmuloc eht ni dedulcni ton ,noitutitsni gniniart eht ni gniogrednu era sreciffo ”A“ puorG )TI( SRI ehT .9102 raey eht ni edam tnemtnioppA*Department of Revenue III 243 II- eruxennA retrauQ daeH euneveR :noitazinagrOAnnual Report 2019-2020 244 II - eruxennA AMEFAS rednu lanubirT etalleppA ehT :noitazinagrO : etoN )noisiv wol ro ssendnilb morf gninereffus snosrep( deppacidnaH yllausiV rof sdnats HV )i( )tnemriapmi gninraeh morf gninereffus snosrep( deppacidnaH gniraeH rof sdnats HH )ii( )yslap laberec ro ytilibasid srotomocol morf gninereffus snosrep( deppacidnaH yllacidepohtrO rof sdnats HO )iii(Department of Revenue III 245 II- eruxennA ytreporP deriuqcA yllagellI fo erutiefroF rof ytirohtuA tnetepmoC :noitazinagrO : etoN )noisiv wol ro ssendnilb morf gninereffus snosrep( deppacidnaH yllausiV rof sdnats HV )i( )tnemriapmi gninraeh morf gninereffus snosrep( deppacidnaH gniraeH rof sdnats HH )ii( )yslap laberec ro ytilibasid srotomocol morf gninereffus snosrep( deppacidnaH yllacidepohtrO rof sdnats HO )iii(Annual Report 2019-2020 246 II- eruxennA )TATSEC( lanubirT etalleppA xaT ecivreS & esicxE ,smotsuC :noitazinagrO : etoN )noisiv wol ro ssendnilb morf gninereffus snosrep( deppacidnaH yllausiV rof sdnats HV )i( )tnemriapmi gninraeh morf gninereffus snosrep( deppacidnaH gniraeH rof sdnats HH )ii( )yslap laberec ro ytilibasid srotomocol morf gninereffus snosrep( deppacidnaH yllacidepohtrO rof sdnats HO )iii(Department of Revenue III 247 II - eruxennA noissimmoC tnemeltteS esicxE lartneC & smotsuC :noitazinagrOAnnual Report 2019-2020 248 II - eruxennA scitocraN fo uaeruB lartneC :noitazinagrODepartment of Revenue III 249 II- eruxennA tnemecrofnE fo etarotceriD :noitazinagrO :etoN .egnahcxe es retni atouq HV morf dellif ycnacaV enO *Annual Report 2019-2020 250 II- eruxennA uaeruB ecnegilletnI cimonocE lartneC :noitazinagrO : etoN )noisiv wol ro ssendnilb morf gninereffus snosrep( deppacidnaH yllausiV rof sdnats HV )i( )tnemriapmi gninraeh morf gninereffus snosrep( deppacidnaH gniraeH rof sdnats HH )ii( )yslap laberec ro ytilibasid srotomocol morf gninereffus snosrep( deppacidnaH yllacidepohtrO rof sdnats HO )iii(Department of Revenue III 251 II- eruxennA sgniluR ecnavdA rof ytirohtuA :noitazinagrOAnnual Report 2019-2020 252 II- eruxennA noissimmoC tnemeltteS xaT emocnI :noitazinagrO : etoN )noisiv wol ro ssendnilb morf gninereffus snosrep( deppacidnaH yllausiV rof sdnats HV )i( )tnemriapmi gninraeh morf gninereffus snosrep( deppacidnaH gniraeH rof sdnats HH )ii( )yslap laberec ro ytilibasid srotomocol morf gninereffus snosrep( deppacidnaH yllacidepohtrO rof sdnats HO )iii(Department of Revenue III Annexure - III Summary of important observations included in Audit Reports presented to Parliament during 2018 I. Central Board of Indirect Taxes and Customs and 11 review paras’ 1st ATN were forwarded to C&AG till (CBIC) 24.12.2019. During the financial year 2019 -2020, three (03) The vetting comments on “Levy and Collection of ST review paras and 294 Audit paras were received with two on Works Contracts”; on “Commercial Training & Audit Reports (Report No. 4 of 2019 & 11 of 2019) in Coaching Service” and “VCES, 2013 (22 of 2016)” were respect of Central Excise, Service Tax & GST received received on 26.7.2019, 26.7.2019 and 28.5.2019 from C&AG Office. 57 Draft Audit paras were received respectively. The replies are being processed. in the Ministry from C&AG Office. No Draft Review para Further, after finalization of ATN/settled by C&AG, the has been received. Out of 294 Audit paragraphs in Report same is being regularly uploaded in the APMS portal of No. 4 of 2019 and paragraphs in Report No. 11 of 2019, Monitoring Cell during the year on the direction of the Ministry’s comments and replies on 265 audit paras Committee of Secretaries (CoS). Summary of the work done by PAC is given below : Details Work done by the PAC Section (Central Excise, Service Tax & GST) Oral Evidence attended NIL PAC Visits Study visit held on 16.9.19 to 18.9.19 in to Kolkata and Bhubaneshwar Details Background Details Background Notes were prepared on paras 3.5.4.2, 3.5.5 of Chapter III Notes and paras 4.5.3, 4.5.5 of Chapter IV of the report 4 of 2019. 1st ATN sent to Audit Audit Report No. 4 of 2019 - Chapter III Audit Report No. 4 of 2019 - Chapter V & VI Audit Report No. 11 of 2019 - Chapter I, II and IV Total further comments 1. Levy and collection of ST on Works Contracts; sent to audit 2. Cenvat Credit Scheme; 3. VCES 2013; 4. Recovery of Arrears in ST; 5. Recovery of Arrears in Central Excise; 6. Entertainment Sectors; 7. Tobacco Products; 8. Plastics and Articles; 9. Commercial Training & Coaching Services; Draft Audit Paras Out of 57 Draft Audit Paras, replies on 31 DAPs were sent within time limit; (DAPs) 11 Review Paras 1. Levy and collection of ST on Works Contracts; 2. Cenvat Credit Scheme; 3. VCES 2013; 4. Recovery of Arrears in ST; 5. Recovery of Arrears in Central Excise; 6. Entertainment Sectors; 7. Tobacco Products; 8. Plastics and Articles; 9. Commercial Training & Coaching Services; 10. Audit Report No. 4 of 2019 - Chapter III 11. Audit Report No. 4 of 2019 - Chapter IV I I. Central Board of Direct Taxes (CBDT) thoroughly examined by the Audit & Public Accounts Committee (A&PAC) Section of CBDT. The replies/ General Functioning: comments of the Ministry are compiled in consultation (i) Acknowledging the importance of C&AG and Public with the field authorities and then furnished to the C&AG Accounts Committee of Parliament in providing checks and the PAC as the case may be. and balances each observation of the C&AG by way of (ii) The Performance Audit Reports and draft paras Draft Paragraphs (DPs) and System Appraisals is reported by the Comptroller and Auditor General and the 253Annual Report 2019-2020 report of PAC on the subjects selected by the PAC are were sent and draft ATNs were uploaded in some of the examined by A&J Division in the Ministry and Action Taken cases and chapters. It may be mentioned here that all Notes (ATNs) are prepared and furnished to the C&AG 472 draft para cases are in process of settlement to the till they are finally settled. satisfaction of the C&AG during the year. Performance: (iv)Action Taken Reports in two PAC reports [Report No. 103 and Report No.104] have been sent to PAC and in (iii)During the year, compliance Report No. 9 of 2019 Report No. 136 is in process for submission of Report. [Tabled before Parliament on 30/07/2019] having 472 draft paras was dealt. Besides draft paras, there were seven (v) Internal Audit chapters/ long draft paras involving multiple illustrated A statement of Internal Audit Objections with revenue cases. Initial replies in 446 draft paras as well as chapters effect is given below: Objection raised/ settled & balance pending for the period 01.04.2019 to 31/10/2019: Number of objections Amount up to 31/10/2019 (Rs. in Lakh) Opening Balance as on 01/04/19 31,049 11,41,468 Raised 6,592 2,28,293 Total 37,641 13,69,761 Settled 5,068 1,78,630 Outstanding 32,573 11,91,630 (vi)SAC meeting and zonal matters: matters including complaints/ grievances have been regularly attended with active use of CPGRAMS portal. The SAC meetings have been held regularly under the Grievances received manually/ on emails are also chairmanship of the Additional Secretary (Revenue) for regularly attended to for prompt redressal. monitoring the settlement of audit paras. All the Zonal (vii) Summary of important observations included in Audit Reports: S. Year No. of Para/ PA Details of the Para/PA reports on which ATNs are pending No. reports on which No. of ATNs No. of ATNs sent but No. of ATNs which ATNs have been not sent by returned with have been finally submitted to PAC the Ministry observations and vetted by Audit but after vetting by even for the Audit is awaiting their have not been Audit first time resubmission by the submitted by the Ministry Ministry to the PAC 1. 2013 0 0 0 0 2. 2014 0 0 0 0 3. 2015 0 0 0 0 4. 2016 0 0 0 0 5. 2017 418 0 0 0 6. 2018 33 1 0 0 Total 451 1 0 0 This data is as on 04/12/2019 III. INTEGRATED FINANCIAL UNIT (IFU) Sl. Year Details of the Paras/PA reports on which ATNs are pending No. No. of paras/PA reports No. of ATNs not No. of ATNs sent but No. of ATNs which on which ATNs have sent by the returned with observations have been finally been submitted to PAC Ministry even for and Audit is awaiting their vetted by Audit but after vetting by Audit the first time resubmission by the Ministry have not been submitted by the Ministry to the PAC NIL NIL NIL 254Department of Revenue III 255Department of Investment and Public Asset Management IV Chapter - IV Department of Investment and Public Asset Management I. FUNCTIONS ownership through public participation and improving efficiencies of CPSEs through accountability to its As per the present Allocation of Business rules, the shareholders. mandate of the Department is as follows: (ii) To bring in operational efficiencies in CPSEs through 1. (a) All matters relating to management of Central strategic disinvestment, ensuring their greater Government investments in equity including contribution to economy. disinvestment of equity in Central Public Sector (iii) Adopt a professional approach for financial Undertakings. management of CPSEs in the national interest and (b) All matters relating to sale of Central Government disinvestment aimed at expanding public participation equity through offer for sale or private placement in ownership of CPSEs. or any other mode in the erstwhile Central Public Sector Undertakings. IV. ORGANISATIONAL STRUCTURE Note: All other post disinvestment matters, including The Department of Investment and Public Asset those relating to and arising out of the exercise of Call Management (DIPAM) is currently headed by Shri Tuhin option by the Strategic Partner in the erstwhile Central Kanta Pandey, Secretary. He is assisted by one Additional Public Sector Undertakings, shall continue to be handled Secretary, three Joint Secretaries and one Economic by the administrative Ministry or Department concerned, Adviser. The Department functions on the Desk Officer where necessary, in consultation with the Department of pattern and the assigned work is handled at the levels of Investment and Public Asset Management (DIPAM). Joint Secretary, Director/Deputy Secretary and Under 2. Decisions on the recommendations of Administrative Secretary. Ministries, NITI Aayog, etc. for disinvestment including 2. The Organizational Structure of the Department is strategic disinvestment. placed at Appendix -I. 3. All matters related to Independent External Monitor (s) for disinvestment and public asset management. V. POLICY AND APPROACH TO 4. (a) Decisions in matters relating to Central Public DISINVESTMENT OF CPSEs Sector Undertakings for purposes of Government Government has changed the mandate of investment in equity like capital restructuring, Department of Disinvestment from 'Disinvestment to bonus, dividends, disinvestment of government Investment Management' of CPSEs w.e.f 14.4.2016. equity and other related issues. Consequently, the name of the Department has been (b) Advise the Government in matters of financial changed to Department of Investment and Public Asset restructuring of the Central Public Sector Management (DIPAM). The current disinvestment policy Enterprises and for attracting investment in the of the Government comprises the following aspects:- said Enterprises through capital market. (i) Disinvestment through minority stake sale in listed 5. The Unit Trust of India Act, 1963 (52 of 1963) along CPSEs to achieve wider public ownership of CPSE with subjects relating to Specified Undertaking of the Unit shares and to meet minimum public shareholding Trust of India (SUUTI). norms of 25 % as per SEBI regulations. II. VISION While pursuing this objective of disinvestment, the Government will normally retain majority (i) Promote people's ownership of Central Public Sector shareholding, i.e. at least 51% and management Enterprises (CPSEs) to share in their prosperity control of the CPSE. However, Government has through disinvestment. recently 'in-principle' approved reduction of GoI equity (ii) Efficient management of public investment in CPSEs below 51% in select CPSEs while retaining for accelerating economic development and management control, on a case to case basis taking augmenting Government's resources for higher into account government shareholding and the expenditure. shareholding of government-controlled institutions. (ii) Listing of CPSEs to facilitate people's ownership and III. MISSION improve the efficiency of companies through (i) List CPSEs on stock exchanges to promote people's accountability to its stake holders. 257Annual Report 2019-2020 (iii) Strategic Disinvestment by way of sale of substantial Achievements : No listing of CPSEs took place after 2011. portion of Government shareholding in identified The Govt. gave emphasis on listing and approved 18 CPSEs up to 50 per cent or more, along with transfer CPSEs for listing since 2017-18. Further listing of 14 of management control. CPSEs could be completed since 2017-18, which yielded an amount of Rs.27,500 crores. (iv) Efficient management of Government's investment in CPSEs by adopting a comprehensive approach During the current financial year two IPOs namely IRCTC for addressing inter-linked issues such as leveraging and RVNL were successfully listed yielding Rs.1113.86 of assets to attract fresh investment, capital crore, while five more CPSEs namely IRFC, KIOCL restructuring, financial restructuring, etc. (FPO), RailTel, WAPCOS and TCIL are in the process of (v) Asset Monetization: Idle assets lying with CPSEs (and listing (as on 31.12.2019). other organizations) points to economic inefficiency and misallocation of scarce resources that drag down 2. Buyback of shares the growth momentum. In order to release such idle Definition: Buyback is the repurchase by a company of assets and make them available for productive use, its shares from the existing shareholders that reduces the Government is actively pursuing Public Asset the number of its shares in the open market. Management Policy which includes monetization of surplus land and non-core assets through; Objectives: Companies buy back their shares for a number of reasons:  Monetization of assets of companies under strategic disinvestment (i) To increase the value of shares held by promoters.  Monetization of assets of entities other than those (ii) To eliminate any threats by minority shareholders who under disinvestment may be looking for a controlling stake.  Monetization of enemy shares/ lands (iii) For CPSEs, buyback is a tool for Govt. of India to disinvest the equity held by GoI in CPSEs and to Modes of Disinvestment make proper utilization of idle cash left with CPSEs. The various modes of disinvestment are: As per DIPAM guidelines dated 27.05.2016 the criteria 1. Initial/Further Public Offer (IPO/FPO) for identifying potential buyback cases are as under: 2. Exchange Traded Fund (i) CPSE with net worth of Rs.2,000 crore and cash and bank balance of Rs.1,000 crore should mandatorily 3. Offer for sale (OFS) go for buyback. 4. Buyback of shares (ii) Other CPSEs may also go for buyback, based on the merits of each case. 5. Strategic sale of CPSEs including mergers and acquisition of CPSE(s) within public sector space. Achievements : In order to make the use of idle cash lying with CPSEs and for improving the Earning per share, 1. Initial/Further Public Offer (IPO/FPO) Govt. used buyback method effectively. During 2018-19, disinvestment proceeds of Rs.10,670 crore were realized Public Offer: When an issue / offer of shares or convertible from buyback of shares by 10 CPSEs. In the current year, securities is made to new investors for becoming part of the Department is largely in the silent period of buyback. shareholders' family of the issuer, it is called a 'public issue'. Public issue can be further classified into Initial 3. Offer for Sale (OFS) public offer (IPO) and Further public offer (FPO). The significant features of each type of public issue are Offer for sale (OFS) is a simpler method of share sale illustrated below: through the exchange platform for listed companies. The mechanism was first introduced by SEBI in 2012, to make (i) Initial public offer (IPO): When an unlisted company it easier for promoters of publicly-traded companies to makes either a fresh issue of shares or convertible cut their holdings and comply with the minimum public securities or offers its existing shares or convertible shareholding norms by June 2013. The method was securities for sale or both for the first time to the largely adopted by listed companies, both state-run and public, it is called an IPO. This paves way for listing private, to adhere to the SEBI norms of minimum public and trading of the issuer's shares or convertible shareholding. Government often used this route to divest securities on the Stock Exchanges. its shareholding in CPSEs. (ii) Further public offer (FPO): When an already listed Salient features of OFS: company makes either a fresh issue of shares or convertible securities to the public or an offer for sale (i) simple to execute to the public, it is called a FPO. (ii) market-driven 258Department of Investment and Public Asset Management IV (iii) Govt. continues to retain management control disinvestment of these CPSEs would be used to finance the social sector/developmental (iv) Cost-effective programmes of the Government benefiting the (v) Time efficient (completed in 2 trading days) public. The unlocked resources would form part (vi) Transparent allocation based on price-parity basis. of the budget and the usage would come to scrutiny of the public. Achievements : During last five years, through 22 OFS transactions, disinvestment yield of over Rs.69,878 crores  It is expected that the strategic buyer/ acquirer was realised. This included the largest OFS of over may bring in new management/technology/ Rs.22,000 crores in case of Coal India Limited in January, investment for the growth of these companies 2015. and may use innovative methods for their development. Such entities would most likely During the current financial year, OFS of RITES has been perform better in the private hands due to various concluded yielding Rs.729.45 crore, while the employee factors e.g. technology up-gradation and efficient OFS is in process (as on 31.12.2019). The actual timings management practices; and would thus add to of OFS transactions depend on the prevailing market the GDP of the country. conditions and the Government looks for the opportune Procedure: A transparent procedure based on open time to initiate necessary transactions. market bidding is followed. An Independent External Monitor (IEM) exercises oversight functions. 4. Exchange Traded Fund An ETF is a basket of stocks that reflects the composition  CCEA in its meeting held on 17.02.2016, of an Index, like Nifty-50 or BSE Sensex. Govt. introduced approved the procedure and mechanism for ETF has a method of disinvestment of CPSEs in 2014 strategic disinvestment of CPSEs, which by launching CPSE-ETF comprising of 10 CPSEs (with provided for a mechanism for selection of CPSEs 67% weight in favour of energy sectors). Later another for strategic disinvestment, a decision-making ETF, i.e. Bharat-22 was launched in 2017 comprising of mechanism and an Independent External Monitor 16 CPSEs, 3 PSBs and 3 private sector companies. (IEM) for vetting the procedure and for redressal of grievances. The advantages/ benefits of an ETF are:  A three-tier decision-making mechanism was i. Flexibility of trading on real time basis. conceptualized with the CCEA at the Apex level, Core Group of Secretaries on Disinvestment ii. Lower expense ratios and transaction costs. (CGD) as the supervisory and recommendatory iii. Investors are able to diversify exposure across a body and an Evaluation Committee(EC) for number of Public Sector companies through a single advising/assisting CGD on issues such as instrument. valuation, reserve price and for making Achievements : Through various offers of CPSE-ETF recommendations on final price and/or strategic and Bharat-22 ETF, Govt. could realize disinvestment partner(s). NITI Aayog was mandated to identify proceeds of Rs.68,080 crores since 2016-17. The total the CPSEs for strategic disinvestment. receipt through ETF prior to 2014 amounted to Rs.3,000 Streamlining the procedure: crores only.  During the course of ongoing strategic Just like last year, ETFs were the biggest source of disinvestment of CPSEs, certain limitations in the receipts during current year with Further Fund Offer-5 existing procedure were noted. In order to (FFO) of CPSE-ETF fetching Rs.10,000.39 crore and overcome the limitations and to make the FFO-2 of Bharat 22 ETF fetching Rs.4,368.80 crore in procedure expeditious and result-oriented, CCEA July 2019 and October 2019 respectively. In aggregate, on 03.10.2019, approved modification in the ETFs have fetched Rs.14,369.19 crore in 2019-20 (as procedure and mechanism for strategic on 31.12.2019). disinvestment of CPSEs.  In the modified procedure Inter-Ministerial Group 5. Strategic Disinvestment (IMG) chaired by the Secretary, DIPAM and Co- 'Strategic disinvestment' implies sale of substantial portion Chaired by Secretary of the Administrative of the Government share-holding of a Central Public ministry/department concerned will drive the Sector Enterprise (CPSE) of up to 50% or such higher procedure and play a pivotal role in the entire percentage, as the competent authority may determine, process. along with transfer of management control. Status: Economic Rationale: The CCEA has given in-principle approval (on 20.11.2019)  The resources unlocked by the strategic 259Annual Report 2019-2020 for strategic disinvestment of the GoI shareholding in five will enable monetization of identified non-core assets of public sector enterprises along with management control. CPSEs under strategic disinvestment and Immovable These are: Bharat Petroleum Corporation Ltd (BPCL); Enemy Property under the custody of Custodian of Enemy Shipping Corporation of India (SCI); Container Property of India (CEPI), MHA. This Framework is also Corporation of India CONCOR); Tehri Hydro Power available to monetize assets of other CPSEs/PSUs/other Development Corporation (THDCIL), and North Eastern Government Organizations and loss making/sick CPSEs. Electric Power Corporation Ltd (NEEPCO). The strategic 3. Debt ETF sale of THDC, NEEPCO and Numaligarh subsidiary of BPCL will be made to a CPSE buyer. With this, a total of Cabinet Committee on Economic Affairs (CCEA) in its 33 CPSEs/Subsidiaries/Units of CPSEs (including Air meeting held on 4th December, 2019 approved the India) have now been accorded 'in-principle' approval by creation and launch of India's first corporate Debt the government for strategic disinvestment. Exchange Traded Fund (Debt ETF) programme which would create an additional source of funding for Central Achievements Public Sector Enterprises (CPSEs), Central Public Sector The Government strategically divested its stake in 5 Undertakings (CPSUs), Central Public Financial CPSEs (HPCL, REC, DCIL, HSCC & NPCC) in last two Institutions (CPFIs), and other Government organizations years which resulted in a yield of Rs.52,869 crore. and would increase the retail participation in the Indian  Hindustan Petroleum Corporation Ltd. (HPCL) - corporate bond market. The first issue of Bharat Bond acquisition by ONGC - Rs.36,915 Crs. ETF launched on 12th December, 2019 has been successful with Rs.12,000 Crore which is oversubscribed  Hospital Services Consultancy Corporation 1.7 times. (HSCC) - acquisition by NBCC- Rs.285 Crs.  National Projects Construction Corpn. (NPCC)- Benefits of Bharat Bond ETF to investors acquisition by WAPCOS- Rs.79.80 Crs.  Bond ETF will provide safety (underlying bonds  Dredging Corporation of India Ltd. (DCIL)- are issued by CPSEs and other Government acquired by consortium of 4 major ports- owned entities), liquidity (tradability on exchange) Rs.1049 Crs. and predictable tax efficient returns (target  Rural Electrification Corporation (REC): acquired maturity structure). by PFC for Rs.14,500 Crs.  It will also provide access to retail investors to The process for strategic disinvestment in identified invest in bonds with smaller amount (as low as CPSEs in the current year is ongoing. The strategic sale Rs.1,000) thereby providing easy and low-cost of THDC, NEEPCO and Kamrajar port is likely to be access to bond markets. completed during the year.  This will increase participation of retail investors who are currently not participating in bond VI. NEW INITIATIVES markets due to liquidity and accessibility constraints. 1. Reduction of Shareholding in select CPSEs below 51% while retaining management control:  Tax efficiency compared to Bonds as coupons from the Bonds are taxed at marginal rates. Bond In the Budget Speech of 2019-20 the Government had ETFs are taxed with the benefit of indexation announced the decision to modify present policy of which significantly reduces the tax on capital retaining 51% Government stake to retaining 51% stake gains for investor. inclusive of the stake of government controlled BharatBond ETF Benefits for CPSEs institutions. Accordingly the CCEA has given ‘in-principle’ approval (on 20.11.2019) for reduction of GoI paid-up  Bond ETF would offer CPSEs, CPSUs, CPFIs share capital below 51% in select CPSEs while retaining and other Government organizations an the management control, taking into account the additional source for meeting their borrowing Government shareholding post such reduction and the requirements apart from bank financing. shareholding of Government controlled institutions. This  It will expand their investor base through retail policy decision will increase the bandwidth for and HNI participation, which can increase disinvestment through minority stake sale. demand for their bonds. With increase in demand 2. Asset Monetization: for their bonds, these issuers may be able to borrow at reduced cost thereby reducing their Asset Monetization Framework: The Union Cabinet on cost of borrowing over a period of time. 28.2.2019 approved the procedure and mechanism for Asset Monetization of CPSEs/PSUs/other Government  Further, Bond ETF trading on the exchange will organizations and Immovable Enemy Properties'. This help in better price discovery of the underlying 260Department of Investment and Public Asset Management IV bonds. During FYs 2005-14, the average numbers of transactions executed were 4 per annum while during  Since a broad debt calendar to assess the the period FY 2015-19, on an average 21 transactions borrowing needs of the CPSEs would be per annum were executed. This reflects the government's prepared and approved each year, it would efforts in carrying out successful disinvestment exercise. inculcate borrowing discipline in the CPSEs at least to the extent of this investment. Public participation Developmental impact on Bond Markets  Significant public participation was noted in  Target Maturity Bond ETF is expected to create various offerings of DIPAM through IPO, OFS a yield curve and a ladder of Bond ETFs with and ETF in-line with PM's vision of improving different maturities across calendar years. public ownership of CPSEs.  ETF is expected to create new eco-system -  During the last 5 years, 26.26 lakh retail investors Market Makers, Index providers and awareness invested an amount of Rs.4,753 crores in 12 amongst investors - for the launching new Bond IPOs of CPSEs. 13.93 lakhs retail investors ETFs in India. invested an amount of Rs.16,277 crores in 7 ETF  This is expected to eventually increase the size offerings which serves the objective of promoting of bond ETFs in India leading to achieving key public ownership. objectives at a larger scale - deepening bond Disinvestment receipts markets, enhancing retail participation and Rs.18090.94 crore has been collected till date as reducing borrowing costs. disinvestment proceeds. The following transactions have Features of Bharat Bond ETF been successfully completed during the current year:  ETF will be a basket of bonds issued by CPSE/ CPSU/CPFI/any other Government organization Sl. Name of Type of Receipts Bonds (Initially, all AAA rated bonds) No. CPSE Disinvestment (Rs.in Crore)  Tradable on exchange 1 CPSE ETF ETF 10,000.39 2 Bharat 22 ETF ETF 4,368  Small unit size Rs.1,000 3 Rail Vikas Nigam  Transparent NAV (Periodic live NAV during the Limited IPO 475.89 day) 4 IRCTC IPO 636 5 Sale of Enemy Shares  Transparent Portfolio (Daily disclosure on by CEPI Others 1,881.21 website) 6 RITES OFS 729.45  Low cost (0.0005%) Total 18,090.94 VII. RECENT TRENDS IN DISINVESTMENT VIII. INITIATIVES UNDERTAKEN FOR Table 1: Trends in disinvestment transactions in recent PERSONS WITH DISABILITIES, years SCHEDULED CASTES, SCHEDULED Year RE Receipts No. of TRIBES AND OTHER BACKWARD (Rs.Crores) (Rs.Crores) Transactions CLASSES: 2014-15 26,353 24,349 8 The staff strength in the Department along with 2015-16 25,313 23,997 9 representation of Scheduled Castes, Scheduled Tribes, 2016-17 40,000 46,247 24 Persons with disabilities and Other Backward Classes is 2017-18 1,00,000 1,00,057 36 given in Appendix II. 2018-19 80,000 84,972 28 2019-20 IX. INITIATIVES RELATING TO GENDER (Till BUDGETING AND EMPOWERMENT OF Dec., WOMEN 2019) 1,05,000 (BE) 18,090.94 6 The nature of allocated work of the Department does not Total 2,97,712.94 111 have any scope for gender budgeting and empowerment of women. 261Annual Report 2019-2020 X. OFFICIAL LANGUAGE POLICY considering complaints of sexual harassment of women employees in Department of Investment and Public Asset The Department has a full-fledged Official Language Unit Management (DIPAM). to implement the Official Language Policy. The website of the Department is bilingual. XIII. VIGILANCE MACHINERY A Joint Secretary has been designated as part-time Chief XI. E-GOVERNANCE Vigilance Officer in the Department. As a part of good governance through the use of XIV. RIGHT TO INFORMATION ACT, 2005. information technology, the following initiatives have been taken: In order to facilitate dissemination of information under the provisions of the Right to Information Act, 2005, the (i) Website of the Department (www.dipam.gov.in) is following initiatives have been taken by the Department: updated on a regular basis, in both English and Hindi. (i) An RTI Cell has been set up to collect, transfer the The website is compliant with the Guidelines for applications under RTI Act, 2005 to the Central Public Indian Government Websites (GIGW). Information Officers/ Public Authorities concerned (ii) Maintenance of the Payroll Package and to submit the quarterly returns regarding receipt and disposal of the RTI applications/ appeals, to the (iii) Maintenance of File Tracking System Software Central Information Commission. (iv) The following web based monitoring systems are in (ii) Details of functions of the Department along with its place: functionaries etc. have been placed on Department's  Rajya Sabha Question, Answer Monitoring website (www.dipam.gov.in) in compliance with System. Section 4(1)(b) of the RTI Act and is updated from  Public Grievance information system time to time.  Centralized Tender/Procurement Monitoring (iii) One Under Secretary has been designated as the System: tenders are regularly put on the website Nodal Central Public Information Officer and 2 Deputy and e-Publishing in e-procurement portal is being Directors and 9 other Under Secretaries as Central done regularly. Public Information Officers under Section 5(1) of the Act, in respect of subjects handled by them.  Representations of Reserved Categories in Posts and Services in Government of India (RRCPS) (iv) Additional Secretary/Joint Secretaries and Economic Monitoring System (SC/ST Commission Portal). Advisor have been designated as First Appellate Authorities in terms of Section 19(1) of the Act for all  APAR Monitoring system for IAS Officers (JS matters relating to their Divisions. level & above), CSS/ CSSS Officers (US level & above). XV. INITIATIVES FOR GOOD GOVERNANCE  Cadre Management System (for CSS Officers). As per the mandate provided by the Government of India  Pension Portal (Allocation of Business) Rules, 1961, the Department is  RTI Annual Return Information Systems. not involved in the delivery of any public services and thus, does not have any direct interface with the citizens  Quarterly Rolling Plan or public at large. However, the Department has initiated  Data Portal (Data.gov.in). the following measures as a part of good governance: Timelines have been prescribed for disposal of XII. REDRESSAL OF PUBLIC GRIEVANCES transaction related bills to avoid delay and any scope of corruption as also to promote good governance. The Department is using the Centralized Public Grievance Redress and Monitoring System (CPGRAMS). The XVI. AUDIT PARAS/OBJECTIONS website of the Department also has an in built mechanism for receiving grievances from public. A Joint Secretary No CAG or PAC paras/ objections are pending in the has been designated as Director of Public Grievances Department. for the purpose. XVII. INTEGRATED FINANCE UNIT Internal Complaints Committee on Sexual The Integrated Finance Unit works under Additional harassment of women employees Secretary & Financial Adviser (Finance) and deals with In compliance with Supreme Court's Judgment dated 13th expenditure and Budget related proposals of Grant No. August, 1997 in Visakha case relating to prevention of 30 - Department of Investment & Public Asset sexual harassment of women at work place, an internal Management - which includes Secretariat General complaints committee has been put in place for Services covering the establishment budget for the 262Department of Investment and Public Asset Management IV Department of Investment & Public Asset Management. The budget allocation under Grant No. 30 is as under:- (Rs. in crores) Grant No. Budget Estimates 2019-20 Revised Estimates 2019-20 (proposed) Plan Non-Plan Total Plan Non-Plan Total 30 - Department of Investment & ---- 132.08 132.08 ---- 132.08 132.08 Public Asset Management The Integrated Finance Unit monitors all financial and expenditure related proposals of the Department like appointment of consultants, foreign deputation/visits of officers etc. The expenditure trend of the Department is consistently monitored by the IF Unit. All budget related matters including issues concerning Standing Committee on Finance come within the purview of this unit. 263Annual Report 2019-2020 264Department of Investment and Public Asset Management IV 265 II -xidneppAChapter - V Department of Financial Services V Department of Financial Services 1. Work Allocation among Sections non-compliance with standing instructions of the customers, non-payment of term deposits before maturity, 1.1 Banking Operation-I (BO-I) delay in payment to pensioners, including those related to credit cards, ATMs, etc. All kind of complaints received Appointment of Governor/Deputy Governor of from DARPG/DPG relating to Public/ Private Sector/ RBI, Chairman & MDs of SBI, CMDs and EDs of Foreign Banks/FI/Ins. All kinds of complaints received Nationalised Banks, salary allowances and other terms from MPs/VIPs /PMO against Private Sector & Foreign and conditions of Whole Time Directors of PSBs. Banks. Banking Customer Service. Banking Constitution of Boards of Directors of RBI and PSBs: Ombudsman. Coordination of PRAGATI meetings. appointment of Workmen Employee Directors, appointment of Part Time Non Official Directors and 1.4 Banking Operation & Accounts-I (BOA-I) Officer Employee Directors of PSBs. Nomination of Directors on the Board of PSBs. Preparation of annual consolidated review on the working of Public Sector Banks (PSBs) and laying it on 1.2 Banking Operation-II (BO-II) the Tables of both Houses of Parliament. Pattern of accounting and final accounts in Public Sector Banks. Administration of all Acts/Regulations/Rules Study and analysis of the working results of PSU Banks. related to Financial Systems like the Negotiable Taxation matters of PSBs/FIs. Dividend payable to Central Instruments Act, 1881, the Chit Funds Act, 1982 and the Government by PSBs. Scrutiny of the annual financial Price Chits and Money Circulation Schemes (Banning) reviews of PSBs conducted by RBI under Section 35 of Act, 1978, etc., Banning of Unregulated Deposit Scheme the Banking Regulation Act, 1949 and follow up action. Act, 2019. Deposit Insurance and Credit Guarantee Capital restructuring of PSBs (including restructuring of Corporation (DICGC), Act, 1961. Payment and Settlement weak PSBs) and Government’s contribution to share System Act, 2007. Factoring Regulation Act, 2011. capital, public issue of banks. Release of externally aided State Legislations – Protection of Interest of grants to ICICI Bank under USAID. Disputes and Depositors Acts of State Governments. Matters relating arbitration between PSBs and between PSBs and other to Multi-level Marketing and Ponzi Schemes. Setting up Govt. Departments/PSEs. Appointment of advocates in of IFSC – GIFT. International Relations (Banking) / PSBs. Residuary matters of Portuguese Banks in Goa. Bilateral issues. International Cooperation in. WTO, Opening and shifting of administrative offices of banks. RCEP, JCCII and CEPAs/CECAs/FTAs of India with All Policy matters related to Banking Operation such as bilateral and multilateral partners. Matters relating to Licensing, amalgamation, reconstruction, moratorium Financial Sector Development Council and its Sub- funds, and acquisition of private sector banks. Functioning committees. Matters relating to Central Economic of PSBs. Notification regarding exemption from various Intelligence Bureau (CEIB). Matters relating to office of sections of the Banking Regulation Act, 1949 and Court Liquidator, Kolkata. Work relating to Government appointment of appellate authority to hear appeals under Agency Business. Financial Action Task Force (FATF). BR Act and Banking Companies (Acquisition and Transfer Setting up of Currency Chest by banks in border districts of Undertakings) Act of 1970 and 1980. Administration (within 80 KMs of International Border). Rationalization of all Acts/ Regulations/ Rules related to Public Sector of Bank Holidays / declaration of bank holidays under Banks, RBI and State Level Banks. Laying of annual section 25 of the Negotiable Instruments Act, 1881. Know reports and audit reports etc., of PSBs in Parliament Your Customer (KYC) matters – AML and CFT matters 1.5 Banking Operation & Accounts-II (BOA-II) 1.3 Banking Operation-III (BO-III) Credit Information Companies (CICs). Works Customer Service in Banks/FI/Ins. All kinds of relating to monitoring of NPAs and Recovery including complaints/representations received from individual/ compromises and OTS of all PSBs. Parliament matters, associations for redressal of their grievances in these VIP/PMO references, complaints and other matters institutions such as delay in clearance of cheques, non- relating to above works. All matters related to NPA/ payment/non-issue of drafts, non issue/delay in issue of Stressed Assets (other than Sectoral Stress), including duplicate drafts, misbehaviour / rude behaviour/ relief measures by banks in area affected by natural harassment on the part of staff of the Institution, non calamities. Stressed Assets Stabilization Fund (SASF). settlement/delay in settlement of deceased accounts, Audit of banks, appointment and fixation of remuneration non-transfer/delay in transfer of accounts from one office of auditors of PSBs/FIs. Bank guarantees, Letters of to another, non opening/delay in opening of new accounts, Credit and Letters of Undertaking / Comfort by PSBs and 267Annual Report 2019-2020 related complaints. Citizen’s Charter of PSBs/RBI. Correspondents/Business Facilitators, Mobile Banking Acquisition/Leasing/Renting/Vacation of premises, Estate etc., matters relating to e-Governance in all FIs and Officers under Public Premises Act, 1971. Operation of e-Payments in banking system and computerisation of foreign banks in India (including IDC and FDI Policy PSBs. Matters relating to Payment Regulatory Board matters). Banking Sector Reforms (including EASE Index (PRB) constitution and matters related to PRB. Matters and PSB Reforms Agenda). NBFCs and Appellate relating to Minimum deposit balance, cash handling & Authority on NBFCs. Operational risk management (other digital payment charges; On-boarding of merchants on than cyber-security and digital payments security), digital payment platforms other than cards. Banking including frauds and fugitive offenders. Administration of matters relating to digital payment platforms; Pradhan all Acts/Regulations/Rules related to NBFCs and CICs. Mantri Jan Dhan Yojana (PMJDY), Mission Office. All Statement of Intent / Key Performance Indicators / matters related to Stand Up India (SUI). Performance evaluation of whole-time Directors. 1.9 Industrial Relations (IR) Insolvency Bankruptcy Code (IBC). Overseas branches of Indian banks. Service matters of PSBs including IDBI/ RBI, Pension matters of NABARD. Industrial Disputes Act matters, HR 1.6 Agriculture Credit (AC) matters relating to PSBs and RBI Unions and Credit flow to Agriculture and allied sectors. Associations in the Banking Industry, Bipartite settlements Agricultural Debt Waiver and Debt Relief Scheme, 2008. of policy of transfer, promotion, and HRD in banks. IB Matters relating to NABARD (except pension matters), reports about political activities of bank employees. Pay Agriculture Finance Corporation(except Service matters), and Allowances of bank employees in overseas branches. State Legislations on the subject, Co-operative Banks HR Reforms. (including Urban Co-operative Banks), external aided projects relating to rural/agriculture credit, appeals made 1.10 Coordination (Coord.) by co-operative banks, financial assistance to persons Organisation of FM’s meetings with CEOs of affected by natural calamities, riots disturbances, etc. PSBs and regional consultative committee meetings. Staff Bank credit to KVIC, handloom and handicraft sector. Citizen Charter of NABARD. Appointment of CMDs & Meeting of Secretary (FS)/ Senior Officers Meeting Directors of NABARD. Kisan Credit Card (KCC) Scheme. (SOM). Monitoring & Review of disposal of VIP Secretarial assistance to the designated appellate references, PMO references, coordination of RBI pending authority in regard to appeal by Urban Cooperative banks matters. Parliament Questions regarding VIP references. against cancellation of license by RBI. Monthly DO letter to Cabinet Secretary from Secretary (FS). Appointment of CPIOs, ACPIOs, AA and Nodal 1.7 Regional Rural Banks (RRB) Section for RTI matters of DFS and to deal with CIC for Legislative matters with regard to RRB Act, 1976 Annual Report etc. Updation of Induction Material for DFS; and framing of rules there under. Nomination of non- Co-ordination of VIP, PMO, President-Secretariat etc., official directors on the Board of RRB, appointment of references involving more than two Divisions of DFS. Chairman, Recommendation of RRBs, review of 1.11 Establishment (Estt.) performance of RRBs, wage revision, manpower planning. Laying of Annual Reports of all RRBs along Matters pertaining to the Officers and Staff of DFS with review thereof. Formation of Staff Service Regulation including RRs, appointment, ACRs, deputation (including and Promotion Rules for employees and officers of RRBs, abroad), training, IWSU, SIU, welfare, review of officers IR matters of RRBs. Citizen’s Charter of RRBs. under FR 56(J), internal vigilance, staff grievances, pension, etc.. Grant of various advances to officers and Priority Sector Lending, Micro Finance and other staff, payment of fees to advocates, settlement of medical related matters which includes lending to weaker sections claims and CGHS matters, family welfare programme. including SC/ST, PM’s New 15 Point Programme for the Welfare of Minorities, Credit to minorities, Follow up action 1.12 General Administration (GA) of Select Parameters recommended by Sachar Committee, DRI Scheme. Housekeeping/Security matters, cleanliness, stores, canteen, R&I, library. Staff Car Drivers, vehicles 1.8 Financial Inclusion (FI) to the officers of DFS. Purchase of Computer Hardware Work relating to financial inclusion, coordination and maintenance of Computers, Printers and other with other sections, offices, institutions etc. on Financial equipments. Maintenance of furniture and electricity inclusion. Branch expansion of banks. Lead Bank items. Logistic support for arranging farewell of staff of Scheme and Service Area Approach. District and State DFS. Providing of Identity Cards to the Staff of DFS and Level Bankers’ Committee (SLBC). Regional imbalances CMDs/EDs/PROs of Public Sector Banks/Financial of banking network, matters related to Business Institutions/Insurance companies, etc. 268Department of Financial Services V 1.13 Parliament Ltd, IDFC Ltd, Winding up matter related of IIBI Ltd, and other related matters. Board level appointments-Whole Collection, identification and marking of Time Directors- IIFCL, EXIM, IFCI Ltd and their personnel Parliament Questions, Notices, admitted Questions, and matters. Government Nominee Directors-EXIM Bank, getting the files approved from the Minister. Preparation IIFCL, IFCI Ltd. and IDFC Ltd. Non-Official Directors/ of facts and replies for pads of Ministers. Keeping track Independent Director in -EXIM Bank, IIFCL and IFCI Ltd. and record of pending Assurances, Special Mentions and Sector-specific matters like infrastructure, power, textiles, References under 377 and other matters as mentioned exports; steel, telecom, road, shipping (added) etc. in the Induction Material. Presidential address to the Joint matters related to sectoral issues. Laying of annual Session of Parliament. Compilation and submission of reports of IIFCL, EXIM Bank, IFCI Ltd and Liquidator’s material for Parliament Questions to other Ministries/ report of IIBI Ltd. before the Parliament. Matters related Departments. Parliamentary Committee Matters to Ratnagiri Gas and Power Pvt. Ltd (RGPPL). Citizen’s 1.14 Hindi Charter of EXIM Bank and IIFCL. All matters related to resolution and registration issues of Asset Reconstruction Implementation of Official Language Policy of the Company (ARC) and to track the activities of the ARCs. Government. Translation work relating to Parliament All matters related to National Investment and Questions, Standing Committees, Minutes of the Infrastructure Fund. Appointment of Statutory Auditor Meetings. Hindi Teaching Scheme and other pertaining to DFS in EXIM Bank. Media and Publicity miscellaneous work as mentioned in induction material related matters of DFS. Project Monitoring Group (PMG) of DFS. Meeting. Partial Credit Guarantee Scheme (PCGS). 1.15 Welfare Section (SCT) 1.18 Industrial Finance-II (IF-II) Matters relating to recruitment, promotion and welfare Administration of National Housing Bank Act, measures of SC/ST/OBC/ PH and Ex-servicemen in 1987. Administration of Small Industries Development Public Sector Banks/Financial Institutions and Public Bank of India Act. Administration of State Financial Sector Insurance Companies (PSBs/FIs/PSICs). Matter Corporation Act. Operational, Policy and Budgetary matter of policy regarding reservation for these categories in relating to SIDBI and NHB. Matters relating to NHB and PSBs/FIs/PSICs, reservation matters in RRBs etc. Housing finance. Matters relating to winding up of BIFR Inspection/examination of Reservation Roster for SCs/ & AAIFR. Matters related to credit to Micro, Small and STs/OBCs in PSBs/FIs/PSICs. Medium Enterprises (MSMEs), TreDS National Credit Guarantee Trustee Company (NCGTC), Credit 1.16 Data Analysis (DA) Guarantee Fund for Micro and Small Enterprises, Reserve Bank of India Credit Policy - Busy CGFMU, CGFSI, CGFF, Credit Guarantee Scheme and Season - Slack Season and selective credit control. other related matters on the subject. Citizens Charter of Financial sector assessment and sectoral credit analysis. NHB and SIDBI. All matters related to Educational Loans Banking Statistics regarding bank deposits and advances. including Vidyalakshmi Portal, Credit aspects of Govt. Deposits and advances of banks. Rates of interest on Sponsored Schemes-PMEGP, Education, employment bank deposits and advances. Dissemination of results generation scheme of SJSRY, SGSY and other poverty and important information relating to RBI, IBA, studies alleviation programmes and other related matters. on banking reforms. Analysis of other international reports Appointment and all personnel matters of Whole Time relevant to banking sector in India. Analysis of Reports Director in SIDBI and NHB. Appointment of Non Official/ of committees on Financial Sector Reforms etc. Independent Directors and Government Nominee Management Information System - collection, collation Directors in SIDBI and NHB. Laying of annual reports of of data relating to Banking Industry. Result Framework SIDBI and NHB before the parliament. All matters related Document (RFD), Speeches of FM/MOS on different to Pradhan Mantri Mudra Yojana (PMMY) and MUDRA occasions. Audit Paras. UN e-Government Index & Digital Ltd. Matter related to psbloansin59minutes portal. Matters Services. Work related to committee of Financial Sector related to Micro Finance Institutions and Legislation Statistics. Coordination of budget proposals of DFS. thereon, Self Help Groups as well as NABARD’s Micro Matters related to Budget Announcements, Output- Finance, etc. outcome Monitoring Framework. Sustainable 1.19 Vigilance Development Goals – Indicators pertaining to DFS. Consultation with CVC/CTE. Nomination of CVOs for 1.17 Industrial Finance-I(IF-I) PSBs/FIs/PSICs. Correspondence with CBI. Annual Administration of the Export-Import Bank Act-1981 and Action Plan on Anti-Corruption measures. Investigation Scheme for financing Viable Infrastructure Projects of cases of frauds by CBI & RBI. Matters under Prevention (SIFTI) of IIFCL, Operational/Policy/Budgetary matters of Corruption Act. Preventive vigilance. Vigilance systems relating to Exim Bank and IIFCL. Matters related to IFCI and procedures in RBI/PSBs/FIs and Insurance 269Annual Report 2019-2020 Companies PFRDA and IRDAI/RBI. Inquiry into Implementation of social security schemes viz. PMJJBY complaints against GMs/EDs and CMDs of PSBs/FIs/ & PMSBY. Convergence of life and personal accident PSICs/PFRDA and IRDAI/RBI and Vigilance Surveillance insurance schemes to PMJJBY & PMSBY. Managing over them. Major frauds in PSBs (in India and abroad). Mission Office for monitoring & implementation of PMO references on anti-corruption measures. Bank PMJJBY & PMSBY. All Government sponsored/ security, robberies & loss prevention in banks. Sanction supported schemes in insurance except crop insurance of prosecution in case of ED/CMDs. War Book Matters. schemes. Senior Citizens’ Welfare Fund. Other Social Annual Reports of CVC. Conduct Regulation in PSBs/ Security Group Insurance Schemes under LIC. Central FIs, employment after retirement regulations in PSBs. Government Employees Group Insurance Scheme. CVC/CBI references relating to DRTs/DRATs. Vigilance Postal Life Insurance Scheme. All Government clearance, sanction of prosecution and any other matter sponsored/ supported schemes in life insurance. Any of Board level appointees of PSBs, FIs, PSICs, PFRDA, other life insurance or social security products/ scheme IRDA and RBI. Vigilance matters of Officials in DFS, proposals. Others: Appellate Authority constituted under Officers of Office of Custodian and Government Officials Section 110H of the Insurance Act, 1938. in DRTs/DRATs. Joint Parliamentary Committee (JPC) Coordination work relating to the following (which enquired into irregularities in securities Committees: Committee for the Welfare of Women; transactions). Disciplinary action against bank Committee for the Welfare of SC/ST; Estimates employees/executives involved in irregularities in securities transactions. Establishment matters relating Committee, Committee on Subordinate Legislation. to Special Courts/Office of the Custodian. All issues Appointments- LIC - Selection & appointment of pertaining to continuation of posts, budget matters of the Chairman/ MDs, LIC, appointment of Directors on the O/o Custodian and Special Court including extension of Board of LIC, appointment of ex-officio members on the the O/o Custodian and appointment of Custodian. subsidiaries of LIC; Permission for foreign deputation/ 1.20 Debts Recovery Tribunals (DRT) tour of Chairman and MDs of LIC; Permission for commercial Employment after Retirement for Chairman/ Establishment of DRTs/DRATs under the MDs, LIC and other executives of LIC; IRDA - Recovery of Debts due to Banks and Financial Institutions Appointments of Chairperson and Members of IRDA; Act, 1993. Administration of Recovery of Debts and Service condition of Chairman, Members and employees Bankruptcy (RDB) Act, framing or amending rules for of IRDA; Budget and Funds of IRDA; Other matters implementing of the provisions of the Act. Filling up of relating to Brokerage agencies, entry of new companies the posts of Chairpersons, Presiding Officers, Registrars, and regulations of IRDA. Assistant Registrars, Recovery officers, and other posts in DRTs/DRATs. Issuing clarifications/guidelines etc. on Service Matters (LIC) - Service matters, rules and administrative matters/review. Progress and disposal of regulations, representations on service matters by cases by DRT/DRATs. Budget provisions, monitoring, etc employees in LIC, Service matters of Development relating to DRTs/DRATs. Administration of SARFAESI Act, Officers/ Agents/Intermediaries; Wage Revision/ Bonus/ appointment of Registrar/MD & CEO, CERSAI, ease of VRS in LIC / Public Sector General Insurance Cos; doing business agenda- flowing from recent Implementation of Pension Scheme/ policy matters on amendments. CKYC matters under Prevention of Money commercial employment. Citizen’s Charter of LIC. Laundering Act, 2002. Policy matters relating to Central Registry of Securitisation Asset Reconstruction and Institute of Actuaries of India - Administration of Security Interest (CERSAI), a PSU, including the Central the Actuaries Act, 2006, Framing of Rules / regulations Registry under the SARFAESI Act, 2002 under the Actuaries Act 2006. Constitution of Quality Review Board, Appellate Authority, nominations on the 1.21 Insurance-I (Ins.-I) council of IAI. Administration of LIC Act, 1956, Administration 1.22 Insurance-II (Ins.-II) of IRDA Act, 1999, LIC Business -Review of the performance of LIC, Laying of Reports of LIC in Insurance Sector Reforms - All matters relating Parliament, Opening/ winding up of branches of LIC in to reforms in insurance sector; Reforms related India. Appointment of Auditors for LIC. Administration of amendments to Insurance Act, 1938, GIBNA, 1972, PP Act in LIC and references relating to Estate matters Implementation of Law Commission Reports. in LIC. Foreign operations/ subsidiaries of LIC. References on Social Security Schemes and other life Appointments - Policy issues concerning insurance schemes. Review of performance and making selection of Chief Executives in the PSU insurance budgetary provisions for various GOI funded schemes companies including AICL and GIC; Appointment on the such as Janashree Bima Yojana, Shiksha Sahayog Boards of public sector non-life companies including Yojana, Varishatha Bima Yojana and Framing rules and AICL; Foreign deputation of Insurance executives; 270Department of Financial Services V permission for Chief Executives of non-life companies Committees:- Standing Committee on Finance; including AICL. Committee on Subordinate Legislation; Petitions Committee; Committee on Public Undertaking (COPU). General Insurance: Review of the performance of General Insurance Companies including AICL; Matters Others - WTO multi-lateral/ bilateral agreements; relating to Insurance Schemes of Public Sector General Inter-Government agreement between India and any Insurance Companies including AICL and audit paras other country. Matters related to IIISLA & NIA Pune. FDI thereon; Computerization of public sector general in Insurance Sector. Matters related to crop insurance. insurance companies; References relating to Surveyors and Agents of non-life PSICs; Foreign operations of public 1.23 Pension Reforms (PR) sector general insurance companies; Reference relating to Re-insurance, Third Party Administrators, Tariff The administration of Pension Fund regulatory Advisory Committee; Opening/ winding up of branches ; and Development Authority (PFRDA) Act, 2013, and Administration of War Risk (Marine Hull) Reinsurance administrative matters relating thereto viz. framing Rules Schemes, 1976; Reference from RBI on permission for and PFRDA Act, 2013 and appointments on the Board of release of foreign exchange for insurance policy abroad; PFRDA, CVO in PFRDA. Providing legislative and policy Laying down of Annual reports of General Insurance prescriptions to PFRDA. Companies/ GIC/ AICL; Administration of PP Act in non- life insurance companies and references relating to Estate Coordinating and introducing Pension Reforms. matters in those companies. Opening and winding of Introduction of National Pension System and extension branches of PSGICs. Service matter, rules and of its coverage to State Governments and unorganised regulations of PSGICs, including GIC & AICIL sector and implementation of the Co-Contributory Swavalamban Scheme. Atal Pension Yojna (APY). Coordination- Work relating to Budgeting, Tax Creation of a Non-statutory Interim Pension Fund proposals, Budget Announcements relating to insurance, Annual Report, Economic Survey, India Reference Regulatory and Development Authority and administrative Annual, Economic Editors Conference, PMO/ Cabinet matters relating thereto. Formulation of the Pension Fund References, CII & FICCI, within Insurance Division, matter Regulatory and Development Authority Bill, 2011 and its related to e-payments in Insurance Companies, passage through the Parliament. Matters relating to the computerization of Insurance Companies. Party Investment Pattern for Non-Government Provident Administrators, Tariff Advisory Committee;; Administration Funds, Superannuation Funds and Gratuity Funds. of War Risk (Marine Hull) Reinsurance Schemes, 1976; Employees’ Provident Fund Scheme. Reference from RBI on permission for release of foreign exchange for insurance policy abroad; Laying down of 1.24 IT Cell Annual reports of General Insurance Companies/ GIC/ Work related to the website, information AICL; Administration of PP Act in non-life insurance technology, digitalization, Digital India initiative, liaison/ companies and references relating to Estate matters in those companies. coordination with NIC, etc. Matters related to Cyber Security and e-office. Grievances - Public grievances against services provided by Public Sector Insurance Companies including 1.25 GST Cell GIC, AICL and other than on service matters; Periodical Overseas preparedness of all institutions under meetings of Public Grievances Officers of public sector DFS to implement GST, to provide inputs to the “ Banking, insurance companies; Functioning of internal public Financial and Insurance” Sectoral Group with reference grievances redressal machinery in public sector insurance companies; Functioning of external redressal machinery to GST. Other matters related to coordination, rollout and like Consumer Courts, Ombudsmen, Lok Adalats, MACT implementation of GST w.r.t institutions under and Courts etc; Appellate Authority constituted under administrative control of DFS etc. Section 110H of the Insurance Act 1938. Citizen’s Charter 1.26 Surplus Cell of Non-Life Insurance Companies. Framing of rules, appointment and service matter related to Insurance All service matters and day-to-day administrative Ombudsman. matters related to surplus staff of AAIFR & BIFR including Housekeeping - Care taking and maintenance their redeployment, consultation with DoPT, handling of of computers, furniture, photocopiers etc. in Insurance court cases of surplus staff. RTI and personal matters Division. I-card for staff and executives of Insurance of surplus staff such as leave, retrial benefits, perks & Companies. allowances etc. 271Annual Report 2019-2020 Performance and Significant Developments Commercial Banks (SCBs), particularly in rural and semi- urban areas. PSBs play an important role in fuelling 2. Overview of banking investment needed for the country’s economic development, with a share of over 65 percent of SCBs’ PSBs are the mainstay of the Indian banking deposits and 60 percent of their outstanding credit, as industry. PSBs and PSB-sponsored Regional Rural Banks on 31.12.2019. In absolute terms, PSBs have a total (RRBs) have dominant market presence and constitute deposit of Rs.88 lakh crore and total advances amounting the major proportion of the bank network of Scheduled to Rs.63.63 lakh crore, as on 31.12.2019. Public Sector Banks (PSBs) in India have played FY 2013-14), lack of robust lending practices, wilful a pivotal role in transforming the Indian economy from defaults, and misconduct in certain cases, the total one characterised by low savings and credit-to-GDP stressed assets of PSBs rose to 12.0% by March 2015. rates of 11.2% and 12.2% respectively at the time of With recognition of stress since 2015 and progressive bank nationalisation to current levels of 29.4% and withdrawal till early 2018 of restructuring schemes that 56.0% respectively, powering India’s growth story. enabled stress to remain hidden, the adverse impact However, over the first half of the last decade, they of the hidden stress on key financials became manifest. witnessed excessive build-up of stress in their loan Clean-up began with transparent recognition of stressed portfolios, although this remained hidden till transparent assets as NPAs, issuance of a proactive fraud detection recognition of stressed loans as NPA began in 2015. Owing, inter alia, to aggressive lending and frauds (with framework for high-value loans and recapitalization credit growth averaging 18% and fraud incidence under Indradhanush in 2015, followed by fundamental averaging 0.65% of advances between FY 2009-10 and reform in recovery through IBC in 2016. 272Department of Financial Services V 2.1 Comprehensive banking reforms A PSB Reforms Agenda in January 2018 for publically reported, independently measured and With the extent of legacy bad loans becoming benchmarked reforms was pursued through a unique fully known by FY 2017-18, Government initiated Enhanced Access & Service Excellence (EASE) Reforms comprehensive reforms in PSBs. For this, it announced Index that enabled objective and benchmarked progress an unprecedented 2.11 lakh crore recapitalisation in on all key areas in PSBs — viz., governance, prudential October 2017, through infusion of capital by the lending, risk management, technology- and data-driven banking, and outcome-centric HR. Government and raising of capital by banks from the markets. In the budget for FY 2019-20, Rs. 70,000 crore Root causes of weaknesses in PSBs have been was provided for capital infusion in banks, of which Rs. systematically addressed through the annual EASE 69,169 crore has been infused, including Rs. 4,557 crore Reforms Index for FY 19 and FY 20 (EASE 1.0 and EASE in IDBI Bank Limited which was recategorised as private 2.0). These have equipped Boards and leadership for sector bank by RBI w.e.f. 27.1.2019. Till date, effective governance, instituted risk appetite frameworks, created technology and data-driven risk assessment and Government has infused Rs.2.63 lakh crore in PSBs prudential underwriting and pricing systems, set up loan since October 2017 and an additional amount of management systems for faster processing and tracking, Rs.79,505 crore has been mobilised by banks from introduced Early Warning Signals (EWS) systems and FY 2017-18 till December 2019. Thus, PSBs including specialised monitoring for time-bound action in respect of IDBI Bank Limited have been recapitalised to the tune stress, put in place focussed recovery arrangements, and of Rs.4.07 lakh crore since March 2014. established outcome-centric HR systems. 273Annual Report 2019-2020 Building on earlier governance reforms in terms of arm’s effectiveness of non-official directors, and initiated length selection of top bank management through Banks leadership development and asked bank Boards to institute Board Bureau and introduction of non-executive succession planning for the senior executives. In larger chairpersons, during the year Government widened the nationalised banks, Executive Director strength has been talent pool for such selections, empowered bank Boards, increased and Boards empowered to introduce Chief strengthened the Board committees system, enhanced General Manager level to cater to increased business. Stressed assets management verticals for Loan Management Systems for reduced loan turnaround focused slippage prevention and recovery in large-value time, PSBloansin59 minutes.com and TReDS for digital stressed loans have been set up. There has been sharp lending, and OTS platforms and e-B#ÉEªÉ stressed assets fall in stressed loans.PSBs have adopted tech-enabled, auction platform for effective recovery. smart banking in all areas, setting up retail and MSME 274Department of Financial Services V 2.2 Turnaround in performance of PSBs  Record recovery of Rs.2.04 lakh crore in during the period from FY 2018-19 to FY 2019-20 Since the institution of comprehensive reform in (till December 2019); the second half of FY 2017-18 following the completion of recognition of legacy stress as NPA, PSBs have  Reduction in the number of PSBs placed under returned to profitability with sound financial health and RBI’s Prompt Corrective Action framework from durable technology-enabled systems to prevent 11 to 4; recurrence of past weaknesses. This is reflected in–  As many as 12 PSBs reporting profits in the first 9 months of FY 2019-20, amounting to Rs. 508  Gross NPAs reducing from Rs.8.96 lakh crore crore; (14.6%) in March 2018 to Rs.7.16 lakh crore (11.3%) in December 2019;  The Capital to Risk-weighted Assets Ratio (CRAR) being 341 basis points above the  Sharp decline in fraud amount by occurrence regulatory minimum of 10.875%, at 14.28% in from 0.65% of advances during the period from December 2019; and FY 2009-10 to FY 2013-14, to 0.20% during the period from FY 2017-18 to FY 2019-20  The highest provision coverage ratio in 7¾ years (till December 2019); at 77.5% in December 2019. 275Annual Report 2019-2020 Thus, over the last five years, PSBs have not only instituting robust systems across PSBs, the potential for cleaned up legacy stress and addressed underlying systemic inter-bank synergy and scale benefits has been weaknesses, but have emerged stronger as a result of harnessed through the merger of six banks into State comprehensive and institutionalised EASE reforms. Bank of India and amalgamation of Bank of Baroda, Vijaya Bank and Dena Bank, which has significantly 2.3 Amalgamation of Public Sector Banks improved the operating efficiency of the consolidated With reforms strengthening the banks and banks. Government approved in-principle amalgamation of 10 and services, enhanced lending capacity and improved PSBs into 4 PSBs. This would enable investments in operating efficiency. technology, better customer reach, wider array of products 2.4 Measures taken to support credit address credit concerns and facilitate lending, a number of steps have been taken, including, inter alia, the Following default in a large infrastructure non- following: banking financial company (NBFC) in September 2018, the growth of credit from the NBFC sector slowed down (A) To address concerns related to credit default,— to 16.0% by September 2019 (as per RBI’s Report on (i) Overall positive liquidity has been maintained in Trend and Progress of Banking in India 2018-19). To the financial system. 276Department of Financial Services V (ii) The NBFC sector has received liquidity support (ii) An Advisory Board for Banking and Financial through— Frauds has been set up for distinguishing between commercial failure and criminal act in (a) National Housing Bank’s Liquidity Infusion cases of suspected frauds over Rs. 50 crore, Facility (LIFt) for refinance to Housing before initiation of investigation by the Central Finance Companies (HFCs) for affordable Bureau of Investigation. housing; (b) Substantial increase in credit extended by (C) To facilitate and incentivise lending— banks; (i) By reduction in lending rates, for which— (c) Partial Credit Guarantee Scheme for (a) successive cuts were effected in the purchase of high-rated pooled assets of benchmark Repo rate since February 2019, NBFCs; resulting in the weighted average lending (d) Bank credit to NBFCs for on-lending being rate of banks on fresh loans reducing by 69 classified as priority sector; and basis points till December 2019, (e) Banks co-originating loans with NBFCs. (b) fresh floating loans for retail and micro, small and medium enterprises (MSME) lending (iii) Financing for stalled housing projects in the have been linked to an external benchmark affordable and middle-income housing sector has been enabled through an Alternate Investment rate, and Fund. NBFCs, including HFCs, are also eligible (c) RBI announced relief in the Cash Reserve for such finance. Ratio requirement of banks on incremental (iv) Mechanism for resolution of stress in NBFCs has outstanding loans for automobiles, been created by empowering RBI to take action residential housing and MSMEs between in this regard through amendments effected to 31.1.2020 and 31.7.2020; the Reserve Bank of India Act, 1934 and bringing (ii) To MSMEs, measures taken include— NBFCs with asset size of Rs. 500 crore and above within the ambit of resolution under the (a) introduction of a scheme for restructuring Insolvency and Bankruptcy Code, 2016 (IBC). of loans, (v) Concerns in lending to stressed entities in respect (b) up to 25% enhancement by PSBs in existing of which market perception regarding risk of working capital limits in standard MSME credit default is higher have been addressed by accounts, improvements made in respect of resolution under IBC, in terms of— (c) launch of an MSME Outreach Initiative by (a) Protecting the primacy of secured creditors PSBs, in realisation from secured assets; (d) online bill discounting via Trade Receivables (b) Bringing the resolution and bankruptcy of electronic Discounting System (TReDS) personal guarantors of corporate debtors platform, and within the ambit of the resolution process; (e) time-bound in-principle approval on the and PSBloansin59minutes.com platform; (c) Ring-fencing resolved corporate debtor in (iii) For export, measures taken include— favour of successful resolution applicant, from criminal proceedings against offences (a) expanding the eligibility for classification of committed by previous management/ such credit as priority sector lending, and promoters. (b) infusing capital in Exim Bank; (B) To address concerns related to incidents of fraud,— (iv) For retail, measures taken include— (i) The Prevention of Corruption Act, 1988 has been (a) reduction in risk weight on consumer loans amended to prohibit conduct of inquiry/ other than on credit cards, and investigation of offences relatable to decision taken by public servant in discharge of functions, (b) introduction of in-principle approvals for retail without previous approval of the authority lending through PSBloansin59minutes.com; competent to remove him. and 277Annual Report 2019-2020 (v) For infrastructure, equity support has been universal banking services for every unbanked provided to India Infrastructure Finance household, based on the guiding principles of banking Company Limited (IIFCL) to enable it to borrow the unbanked, securing the unsecured, funding the and finance infrastructure projects. unfunded and serving the unserved and underserved areas. 2.5 Ensuring security of depositors 3.1. Access to banking To ensure security of depositors across banks, insurance coverage for depositors in insured banks has Banking Service Points: PMJDY aimed at been increased from Rs. 1 lakh to Rs. 5 lakh per providing banking service points throughout rural India depositor. Further, in the Budget speech on 1.2.2020, an by mapping over 6 lakh villages into 1.6 lakh Sub Service announcement has been made regarding to amendments Areas (SSAs). Each SSA typically comprised of 1,000- to the Banking Regulation Act. The aim is to protect the 1,500 households. Out of 1.6 lakh SSAs, 1.3 lakh SSAs interests of depositors and strengthen cooperative banks are covered through interoperable, online BCs and by improving governance and oversight for sound banking remaining 30,000 are covered through bank branches. through RBI, and by ensuring professionalism and BCs deployed in rural areas also provide interoperable enabling their access to capital. Aadhaar Enabled Payment System (AePS) banking 3. Financial Inclusion services. The Government initiated the National Mission The strength of bank branches and ATMs has for Financial Inclusion (NMFI), namely, Pradhan Mantri been augmented over the years. The number of bank Jan Dhan Yojana (PMJDY) in August, 2014 to provide branches, ATMs are as under: Table1 : Number of bank branches of Scheduled Commercial Banks AS ON RURAL SEMI-URBAN URBAN METROPOLITAN TOTAL 31.03.2015 45,068 34,965 22,232 23,386 125,651 31.03.2016 48,180 37,673 23,812 24,824 134,489 31.03.2017 49,790 39,121 24,860 25,898 139,669 31.03.2018 50,768 39,690 25,155 25,825 141,438 31.03.2019 51,566 41,154 26,106 26,491 145,317 30.06.2019 51,658 41,264 26,182 26,528 145,632 Source: RBI Table2: Number of ATMs of Scheduled Commercial Banks (SCBs), Small finance Banks (SFBs), Payment Banks (PBs) and White Label ATM Operators As on Off-site ATMs On-site ATMs Total ATMs 31.03.2014 76676 83379 160055 31.03.2015 92337 89061 181398 31.03.2016 97149 101950 199099 31.03.2017# 112666 # 109809 222475# 31.03.2018# 115471 # 106776 222247# 31.03.2019# 115323# 106380 221703# 30.09.2019# 118467# 109419 227886# Source: RBI # includes ATMs deployed by White Label ATM Operators. The number of card acceptance devices of Point 2014 to 45.90 lakh in September 2019. The growth in the of Sale (POS) has increased from 10.7 lakh in March number over the years is given in the graph below. 278Department of Financial Services V Source: RBI 3.2 Performance of PMJDY holders, about 58.68% accounts are in rural and semi-urban areas. Approximately 29.80 crore RuPay The result of the consistent and coordinated cards, with an inbuilt accidental insurance coverage have efforts of the Government in respect of FI related also been provided to PMJDY account holders. interventions in the country is reflected in terms of 37.83 crore Jan-Dhan accounts opened till 01.01.2020 under Major trends under PMJDY in terms of opening PMJDY, with a deposit balance of over Rs.1,10,161 crore. of accounts, deposit balance, average deposit balance, While there are 53.31% women Jan-Dhan account etc. over the time are as under: PMJDY–Foundation of Financial Inclusion laid PMJDY Accounts (in crore) Deposits under PMJDY (in Rs. crore) 37.83 35.27 31.44 110161 28.17 96107 78494 21.43 62972 14.72 35672 15670 Mar'15 Mar'16 Mar'17 Mar'18 Mar'19 01.01.2020 Mar'15 Mar'16 Mar'17 Mar'18 Mar'19 01.01.2020 Deposits per a/c (Rs.) Number of Rupay Debit Cards issued in PMJDY accounts (in crore) 2912 2725 2235 2497 21.99 23.65 27.91 29.8 1665 17.75 13.15 1065 Mar'15 Mar'16 Mar'17 Mar'18 Mar'19 01.01.2020 Mar'15 Mar'16 Mar'17 Mar'18 Mar'19 01.01.2020 3.2.1 RuPay Debit cards: 29.80 crore RuPay debit PMJDY, accounts opened by women accounts constitute cards have been issued till 31.12.2019 to PMJDY 53.31% of the total Jan Dhan accounts as on 01.01.2020. account-holders. Apart from banking convenience, these 3.2.4 Rapid growth in deposits in the PMJDY cards come with an inbuilt accident insurance cover of accounts: As against an average balance of Rs.1,065 Rs.2 lakh. As on 20.12.2019, a total 5,894 accidental in accounts opened under PMJDY in March 2015, the claims under this RuPay card linked insurance coverage average balance has grown to Rs.2,912 as on 31.12.2019 have been paid. with an overall balance in PMJDY accounts of 3.2.2 Overdraft facility for PMJDY account holders: Rs.1,10,161 crore. An overdraft facility up to Rs.5,000 ( since enhanced 3.2.5 Enablement of interoperable, speedy and to INR 10,000 ) after satisfactory operation in the accurate transactions, through linking of accounts account for six months is available to provide hassle with Aadhaar number: With 80.7% operative accounts free credit to the beneficiaries under PMJDY. opened under PMJDY seeded with Aadhaar number on 3.2.3 Rapid financial inclusion of women: Under user consent basis, customers have been enabled for 279Annual Report 2019-2020 interoperable and immediate Aadhaar-enabled i. UPI: there were 733 crore transactions transactions, including those for direct benefit transfer. amounting to Rs.12,840 crore. 3.2.6 With a view to further deepening the financial ii. RuPay Debit card at POS and E-Commerce: inclusion interventions in the country, PMJDY has been there were 96 crore transactions amounting to extended beyond 14.8.2018 with the focus on opening of Rs.1,136 crore. accounts shifting from “every household” to “every iii. IMPS: there were 160 crore transactions unbanked adult” with added emphasis on usage of amounting to Rs.14,933 crore. accounts by enhancing Direct benefit (DBT) flows through these accounts, adoption of social security schemes, Further, there were 56.26 crore inter-bank promoting digital payments, etc. Some other modifications transactions through Aadhaar Enabled Payment System were also made to the existing schemes which are as (AePS). follows: 3.5. Jan Dhan Darshak, a mobile application, was i. Existing Over Draft (OD) limit of Rs. 5,000 revised launched in 2018 to provide a citizen centric platform for to Rs.10,000; locating banking touch points such as bank branches, ATMs, Bank Mitras, Post Offices, etc. in the country. Over ii. There will not be any conditions attached for OD 6 lakh banking touchpoints have been mapped on the upto Rs.2,000; GIS App. The facilities under Jan Dhan Darshak App could iii. Age limit for availing OD facility revised from 18- be availed as per the need and convenience of common 60 years to 18-65 years; and people. The web version of this application could be accessed at the link http://findmybank.gov.in. The Jan iv. The accidental insurance cover for new RuPay Dhan Darshak App is also being used for identification of card holders raised from existing Rs.1 lakh to unbanked inhabited villages not having a banking touch Rs.2 lakh to new PMJDY accounts opened after point through the GIS mapping facility available through 28.8.2018. this App and thereupon opening banking touch point within 3.3 A digital pipeline has been laid for the a distance of 5 km of the identified villages. implementation of PMJDY through linking of Jan-Dhan 4. Schemes account with mobile and Aadhaar [Jan Dhan-Aadhaar- Mobile (JAM)].This infrastructure pipeline is providing the 4.1 Pradhan Mantri Mudra Yojana necessary backbone for DBT flows, adoption of social An important aspect of financial inclusion is security/pension schemes, facilitating credit flows and enabling the flow of credit to small businesses. In promoting digital payments through use of Rupay Cards pursuance of the announcement in the Union Budget and thereby accelerating the pace of attaining the goal of 2015-16, the Pradhan Mantri Mudra Yojana (PMMY) a secured, insured, digitalized and a financially launched on 8th April, 2015 and the Micro Units empowered society. Around 8 core PMJDY accounts are Development Finance Agency (MUDRA) Ltd. was receiving Direct Benefit Transfers (DBTs) credits under established as a wholly owned subsidiary of SIDBI. various schemes of the Government. The Department is regularly monitoring the issue of rejection/failure cases For achieving sustained expansion in the flow of under DBT on account of avoidable cases, as identified credit to the non-corporate small business sector, loans by National Payments Corporation of India (NPCI) with up to Rs. 10 lakh without collateral are extended to objective to minimise the failure rate so that eligible borrowers under PMMY. These loans are extended beneficiaries receive timely DBT credit. through partner Member Lending Institutions (MLIs) – such as Scheduled Commercial Banks, Non-Banking 3.4 Promotion of Aadhaar-based biometric Financial Companies (NBFCs) and Micro-Finance authentication and digital payment solutions: Institutions (MFIs). In turn, MUDRA Ltd. offers refinance A digital revolution is in the making with more to MLIs for PMMY loans extended by them. than 125 crore digital identity generated through Aadhaar; The loans under PMMY are categorized as further, mobile seeding in bank account enables them to Shishu (up to Rs.50,000), Kishore (Rs.50,000 to Rs.5 authenticate and carry out financial transactions. Using lakh) and Tarun (Rs.5 lakh to Rs.10 lakh). Activities biometric ID, highly cost-effective payments solutions allied to agriculture and services supporting these have been created both for banking services and for retail (excluding crop loans, land improvement such as canals, payments. There has been significant growth in digital irrigation, wells) have also been included under PMMY transactions- Unified Payments Interface (UPI), from April 2016. Immediate Payment Service (IMPS), RuPay Debit card etc. in the financial year, 2019-20 (till November’19) which PMMY credit rose from Rs.1,37,449 crore in is illustrated as under: 2015-16 to Rs.3,21,722 crore in 2018-19. More than 18 280Department of Financial Services V crore loans were extended of which 89% loans were Rs.1,69,374 crore. Since the inception of the scheme, under SHISHU Category, 70% loans to Women & 52% 21.59 crore loans have been sanctioned amounting to loans to SC/ST/OBC. During 2019-20, till 27.12.2019, Rs.10,62,750 crore. 3.33 crore loans were sanctioned amounting to Table3 : Pradhan Mantri Mudra Yojana (Year-wise data) PMMY 2015-16 2016-17 2017-18 2018-19 2019-20 Total (as on (till 27.12.2019) 27.12.2019) No. of Accounts (in crore) 3.49 3.97 4.81 5.99 3.33 21.59 Loan Amount Sanctioned 1,37,449 1,80,528 2,53,677 3,21,722 1,69,374 10,62,750 (Rs. in crore) PRADHAN MANTRI MUDRA YOJANA Empowering Enterprising Women, Strengthening the Nation (As on 29.11.2019) 14.73 crore loansto women Male:-31 % 69% beneficiaries under MUDRA are women PRADHAN MANTRI MUDRA YOJANA Financial Inclusion for All (As on 29.11.2019) (53% beneficiariesare from SC/ST/OBC categories) 30% 47% General 5% 18% SC ST % of accounts under various social categories OBC Share of New Enterpreneurs/Accounts (As on 29.11.2019) (5.40 crore New Enterpreneurs/ Accounts) New Enterpreneurs/ Accounts:-25% Existing Enterpreneurs/Acc ounts:-75% 281Annual Report 2019-2020 4.2 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 India Up India (CGFSI). The scheme is built on the concept of scheme on 5th April, 2016. Stand Up India scheme aims providing handholding support to those borrowers who to promote entrepreneurship amongst women, SC & ST might have a project in mind but lack the confidence and category i.e those sections of the population understood capability to start a new enterprises. Apart from providing to be facing significant hurdles due to lack of advice/ credit facility, Stand Up India Scheme also envisages mentorship as well as inadequate and delayed credit. The extending handholding support to potential borrowers. It Scheme intends to leverage the institutional credit also provides for convergence with Central/State structure to reach out to these underserved sectors of Government schemes. Applications under the scheme the population in starting Greenfield enterprise. The can also be made online, on the Stand Up India portal Scheme facilitates bank loans between Rs.10 lakh to Rs.1 (www.standupmitra.in). crore to at least one Scheduled Caste/ Scheduled Tribe borrower and at least one Woman borrower per bank The total number of SC/ST and Woman branch of Scheduled Commercial Banks for setting up borrowers extended loans under Stand Up India scheme Greenfield enterprises in trading, manufacturing and and the total sanctioned amount as on 31.12.2019 and services sector. since inception are tabulated below. Table 4: Stand Up India as on 31.12.2019 (cumulative) Performance under Stand Up India Scheme (Amount. in Rs. Crore) SC ST Women Total Date No Of Sanctioned No Of Sanctioned No Of Sanctioned No Of Sanctioned A/Cs Amt. A/Cs Amt. A/Cs Amt. A/Cs Amt. 31.12.2019 12,271 2,509.26 3,561 755.66 70,808 16,186.58 86,640 1,9451.50 4.3 Social Security Schemes Yojana and (b) Pradhan Mantri Jeevan Jyoti Yojana and (c) Atal Pension Yojana. In order to move towards creating a universal social security system for all Indians, especially the poor 4.3.1 Pradhan Mantri Suraksha Bima Yojana and the under-privileged, three ambitious Jan Suraksha (PMSBY) Schemes or Social Security Schemes pertaining to The Scheme is available to people in the age Insurance and Pension Sector were announced by the group 18 to 70 years with a bank / Post office account Government in the Budget for 2015-16. The schemes who give their consent to join / enable auto-debit on or were launched on 9th May, 2015, for providing life & before 31st May for the coverage period 1st June to 31st accident risk insurance and social security at a very May on an annual renewal basis. The risk coverage under affordable cost namely (a) Pradhan Mantri Suraksha Bima the scheme is Rs.2 lakh for accidental death and full 282Department of Financial Services V disability and Rs.1 lakh for partial disability. The premium on similar terms with necessary approvals and tie up with of Rs.12 per annum is to be deducted from the account Banks and Post Offices for this purpose. holder’s bank / Post office account through ‘auto-debit’ As on 31st December, 2019 the gross enrolment facility in one instalment. The scheme is being offered by by banks subject to verification of eligibility criteria is about Public Sector General Insurance Companies or any other 17.37 crore under PMSBY and 36,896 claims of General Insurance Company who are offering the product Rs.737.92 crore have been disbursed. PMSBY-Accidental Insurance Scheme as on 31.12.2019 PMSBY –Pradhan Mantri SurakshaBimaYojana : InsuranceSchemefordeathordisabilitybyaccident. Coverage: AccidentaldeathorfulldisabilityisRs.2lakh Partialdisability–Rs.1lakh Eligiblity:18-70years Annualpremium:Rs.12 Total Enrollments 17.37 crore No of claimssettled 36,896 ClaimedAmount Rs. 737.92 crore 4.3.2 Pradhan Mantri Jeevan Jyoti Bima Yojana period, payment of pro-rata premium has been allowed (PMJJBY) at a considerable low premium. Thus, if the enrolment takes place during the months of – The scheme is available to people in the age group of 18 to 50 years having a bank / Post office account  June, July & August –Annual premium of Rs.330/ who give their consent to join / enable auto-debit. The life - is payable. cover of Rs.2 lakhs is available for a one year period stretching from 1st June to 31st May and is renewable.  September, October & November –3 quarters Risk coverage under this scheme is for Rs.2 Lakh in case of premium @ Rs.86.00 i.e. Rs.258/- is payable. of death of the insured, due to any reason. The premium  December, January & February – 2 quarters of is Rs.330 per annum, which is to be auto-debited in one premium @ Rs.86.00 i.e. Rs.172/-is payable. instalment from the subscriber’s bank / Post office account as per the option given by him on or before  March, April & May – 1 Qly premium @ Rs.86.00 31st May of each annual coverage period under the is payable. scheme. The scheme is being offered by Life Insurance Corporation and all other life insurers who are offering As on 31st December 2019 the gross enrolment the product on similar terms with necessary approvals by banks, subject to verification of eligibility criteria, is and tie up with Banks and Post Offices for this purpose. about 6.52 crore people under PMJJBY; and 1,65,090 To facilitate all those getting enrolled under claims amounting to a total of Rs.3,301.80 Crore have PMJJBY for the first time during the middle of the policy been disbursed. 283Annual Report 2019-2020 4.3.3 Atal Pension Yojana will be available for those eligible subscribers, who join APY before 31st March, 2016. The Atal Pension Yojana (APY) was launched by the Central Government co-contribution shall be Hon’ble Prime Minister on 9th May, 2015, and is being available for a period of 5 years, i.e., from implemented with effect from 1st June, 2015. The Scheme Financial Year 2015-16 to 2019-20. aims to provide monthly pension to eligible subscribers not covered under any organized pension scheme. APY  If the actual returns during the accumulation is open to all bank and post office account holders in the phase are higher than the assumed returns for age group of 18 to 40 years. Under this Scheme, any minimum guaranteed pension, such excess will subscriber can opt for a guaranteed pension of Rs.1,000 be passed on to the subscriber. to Rs.5,000 (in multiples of Rs.1,000) receivable at the  The contributions can be made at monthly / age of 60 years. The contributions to be made vary based quarterly / half yearly intervals through auto debit on pension amount chosen and the age at time of facility from savings bank account/ post office enrolment. The key features of APY are as under: savings bank account of the subscriber. The  Any Indian Citizen between 18-40 years of age monthly / quarterly / half yearly contribution can join through their savings bank account or depends upon the intended / desired monthly post office savings bank account. pension and the age of subscriber at entry.  Minimum pension of Rs.1,000 or Rs.2,000 or Major steps have been initiated by the Government Rs.3,000 or Rs.4,000 or Rs.5,000 is guaranteed to popularize create awareness about APY: by the Government of India to the subscriber at  Simplification of default penal charges. the age of 60 years, with a minimum monthly contribution (for those joining at age 18) of Rs.  The mode of payment has been changed from 42 or Rs. 84 or Rs.126 or Rs.168 and Rs.210, monthly to monthly, quarterly and half yearly respectively. keeping in consideration the seasonal income earners.  After the subscriber’s demise, the spouse of the subscriber shall be entitled to receive the same  Removal of closure of account clause after 24 pension amount as that of the subscriber until months and continuation of the account till the the death of the spouse. time corpus is available in the account.  After the demise of both the subscriber and the  Periodic advertisements in print and electronic spouse, the nominee of the subscriber shall be media. entitled to receive the pension wealth, as accumulated till age 60 of the subscriber.  Capacity building of bank branch officials through various training programs.  The subscribers in the eligible age, who are not income-tax payers and who are not covered  Participating in town hall meetings, SLBC under any statutory social security scheme, are meetings. entitled to receive the co-contribution by Central As on 31st December, 2019, the number of Government of 50% of the total prescribed subscribers under APY is 2.06 Crore with contribution of contribution, up to Rs.1,000 per annum, and this Rs.8,818 crore uploaded by banks. Atal Pension Yojana - Social Security Scheme as on 31.12.2019  Launched on 9thMay 2015 –for unorganized sector workers.  Depending on contribution, fixed pension between Rs. 1000 - Rs. 5000  Pension starts at the age of 60 years.  Eligibility: 18 –40 years APY Subscribers 2.06 crore Entry age Pension amount Monthly Premium 18 years Rs. 5000 Rs. 210 25 years Rs. 5000 Rs. 376 39 years Rs. 5000 Rs. 1318 Contribution chart 284Department of Financial Services V 4.4 Pradhan Mantri Vaya Vandana Yojana scheme was Rs.1.5 lakh per family for a minimum pension of Rs.1,000/- per month and the maximum Pradhan Mantri Vaya Vandana Yojana was purchase price was Rs.7.5 lakh per family for a maximum launched by the Government to protect elderly persons pension of Rs.5,000/- per month. aged 60 years and above against a future fall in their interest income due to the uncertain market conditions, In pursuance to Budget Announcement 2018-19, as also to provide social security during old age. The the Pradhan Mantri Vaya Vandana Yojana has been scheme is implemented through the Life Insurance extended up to 31st March, 2020. The limit of maximum Corporation of India (LIC) and provides an assured return purchase price of Rs.7.5 lakh per family under the scheme of 8% per annum for 10 years. Mode of pension payment has also been enhanced to Rs.15 lakh per senior citizen. under the Yojana is on a monthly, quarterly, half-yearly or Accordingly, the maximum pension admissible under the annual basis depending on the option exercised by the scheme is now Rs.10,000/- per month. The minimum subscriber. purchase price under the scheme is Rs.1.5 lakh for a minimum pension of Rs.1,000/- per month. As on The scheme was initially open for subscription 15.12.2019, a total number of 4,14,351 subscribers for a period of one year i.e. from 4th May, 2017 to 3rd May, consisting corpus of Rs.32,356.78 Crore are being 2018. Further, the minimum purchase price under the benefited under PMVVY. 5. Agriculture Credit whereas RBI monitors the scheme in respect of Commercial Banks. In order to boost the agriculture sector with the The facility of KCC along with interest subvention help of effective and hassle-free agriculture credit, the has been extended to Animal Husbandry farmers and Government has been fixing annual targets for ground Fisheries to help them meet their working capital level agriculture credit by Scheduled Commercial Banks, requirements. Regional Rural Banks (RRBs) and Cooperative Banks. 5.2 Rural Infrastructure Development Fund As against the annual target of Rs.11,00,000 (RIDF) crore for 2018-19, agriculture credit to the tune of Rs.12,56,829.62 crore was disbursed during 2018-19, The Government of India had set up Rural registering 114.26 % achievement. As on 30th Sept 2019, Infrastructure Development Fund (RIDF) in NABARD with Rs.7,05,417 crore was disbursed (Provisional) against the objective of providing low cost fund support to the annual target of 13,50,000 crore, registering 52.25 % States to facilitate quick completion of ongoing rural achievement in the first six months. infrastructure projects, which were languishing for want of resources. RIDF, with 37 activities under its scope, 5.1 Kisan Credit Card has emerged as a dependable source of public funding The Kisan Credit Card (KCC) scheme was of impactful rural infrastructure projects. introduced in 1998-99, as an innovative credit delivery The annual allocation of funds under RIDF has system aiming at adequate and timely credit support from gradually increased from Rs.2,000 crore in 1995-96 the banking system to the farmers for their cultivation (RIDF I) to Rs.28,000 crore in 2019-20 (RIDF XXV). As needs including purchase of inputs in a flexible, against the allocation of Rs.28,000 crore made during convenient and cost effective manner. The Scheme is 2019-20 for RIDF under Tranche XXV, sanctions to the being implemented by all Cooperative Banks, Regional tune of Rs.7,841.28 crore were accorded to various State Rural Banks (RRBs) and Public Sector Commercial Governments(Projected/estimated to be Rs.28,000 crore Banks throughout the country. NABARD monitors the by 31 March 2020). scheme in respect of Cooperative Banks and RRBs, 285Annual Report 2019-2020 The aggregate allocation till 30 November 2019 lending commitment under various Government initiatives has reached Rs.3,48,500 crore, including Rs.18,500 crore including the flagship programmes i.e. PMAY-G, LTIF and for the Bharat Nirman component sanctioned to National Swatch Bharat Mission. Total paid up capital as on Rural Roads Development Agency (NRRDA) under 30.11.2019 in respect of NABARD is Rs.14,080 crore. RIDF XII-XV. 5.7 Role of NABARD in Government of India Impact evaluation studies on projects funded Initiatives under RIDF have revealed diverse positive socio- 5.7.1 Long Term Irrigation Fund (LTIF) economic developmental outcomes in rural areas. These projects have brought about an improvement in quality The Government of India, in the Department of of rural life and income levels, besides strengthening the Water Resources, River Development and Ganga rural banking system and credit absorption capacity. Rejuvenation, Ministry of Jal Shakti (earlier Ministry of Water Resources) has taken a major initiative to complete 5.3 Short Term Cooperative Rural Credit (Refinance) Fund various stalled major/medium irrigation projects in the country, for which a Long Term Irrigation Fund (LTIF) was The Short Term Cooperative Rural Credit- set up in NABARD. As on 30 November 2019, against STCRC (Refinance) Fund was set up in NABARD in the total estimated amount of Rs.77,908 crore for the 99 2008-09 with an initial corpus of Rs.5,000 crore to provide identified projects, NABARD sanctioned amounts to the Short Term refinance to Cooperative Banks so as to tune of Rs.70,654.44 crore for 99 identified projects, ensure increased and uninterrupted credit flow to farmers Rs.6,381.54 crore for the Polavaram Irrigation project, at concessional rate of interest. NABARD provides Rs.1,378.61 crore for North Koel Reservoir Project, refinance to Cooperative bank at an interest rate of 4.5% Rs.485.35 crore for Shahpurkandi Dam and Rs.826.17 per annum for crop loans upto Rs.3.00 lakh disbursed crore for Relining of Sirhind and Rajasthan Feeder. The by cooperative banks at an interest rate of 7% per annum cumulative amount released against sanction of 99 to ultimate borrowers. An allocation of Rs.45,000 crore identified projects stood at Rs.30,549.66 crore. Similarly has been made for the STCRC (Refinance) Fund during for Polavaram Irrigation project, North Koel Reservoir 2019-20. As on 30.11.2019, Rs.26,193.33 crore has been Project and Shahpurkandi Dam Project, cumulative utilised out of STCRC (Refinance) Fund during 2019-20. releases stood at Rs.5,814.15 crore, Rs.659.70 crore for and Rs.60.00 crore, respectively. 5.4 Short Term Regional Rural Bank (Refinance) Fund 5.7.2 Pradhan Mantri AwaasYojana- Gramin (PMAY-G) The Short Term Regional Rural Bank (Refinance) (STRRB) Fund was set up with an allocation of Rs.10,000 The Government of India in the Ministry of Rural crore in 2012-13, so as to enable NABARD to provide Development launched ‘Pradhan Mantri Awaas Yojana- Short Term refinance to RRBs to meet their crop loan Gramin’ (PMAY-G) on 1st April 2016, with an objective to lending obligations. NABARD provides refinance to RRBs ensure “Housing for All” by 2022. Under the scheme, one at an interest rate of 4.5 % per annum for crop loans crore houses were to be constructed in Phase-I, over a upto Rs.3.00 lakh disbursed by RRBs at an interest rate period of 3 years, viz., 2016-17 to 2018-19, for which of 7% per annum to ultimate borrowers. The allocation Central Share requirement was estimated at Rs.81,975 under STRRB Fund was at Rs.10,000 crore during 2019- crore, out of which Rs.21,975 crore was to be raised 20. As on 30.11.2019, Rs.4,991.04 crore has been utilised through borrowing from NABARD. As on 30th November out of STRRB (Refinance) Fund during 2019-20. 2019, the cumulative amount sanctioned and released by NABARD under PMAY-G stood at Rs.21,975 crore 5.5 Long Term Rural Credit Fund (LTRCF): and Rs.18,008.23 crore respectively. This fund has been set up for the purpose of 5.7.3 Swachh Bharat Mission – Gramin (SBM-G) providing long-term refinance support to Cooperative Banks and Regional Rural Banks for their lending towards The Government of India in the Ministry of Jal investment activities in agriculture. Government has Shakti (earlier Ministry of Drinking Water & Sanitation), allocated Rs.15,000 crore to this fund during 2019-20. launched SBM-G on 2nd October 2014 with the goal to As on 30.11.2019, Rs.5,062.38 crore has been utilised achieve universal sanitation coverage in rural areas by out of LTRCF during 2019-20. 2nd October 2019. For the construction of around 3 crore Individual House Hold Toilets, 1500 Community Sanitary 5.6 Strengthening the Capital Base of NABARD Complexes and Solid & Liquid Resources Management works during 2018-19, the total fund requirement towards NABARD Amendment Act 2018 has been notified Central Share was estimated at Rs.30,343 crore, out of on 19.01.2018 which empowers the Government to which Rs.15,000 crore was to be raised through borrowing increase the authorised capital of NABARD from Rs.5,000 from NABARD. As on 30 November 2019, NABARD has crore to Rs.30,000 crore and to increase it beyond sanctioned loan of Rs.15,000 crore for the purpose, Rs.30,000 crore in consultation with RBI as deemed against which Rs.8,698.20 crore has been released. necessary from time to time. This will enable NABARD to potentially increase its borrowing in future for funding 6 Regional Rural Banks the large investments being made in rural infrastructure in sectors like irrigation, housing, universal sanitation, Revitalizing Regional Rural Banks (RRBs) dairy, fisheries etc. With a view to strengthening the RRBs for playing During 2019-20, equity support of Rs.1,500 crore a greater role in agriculture, rural lending and financial has been provided to NABARD to enable it to fulfil its inclusion, many measures were taken. 286Department of Financial Services V 6.1 Branch Network of Regional Rural Banks Karnataka, Madhya Pradesh, Tamil Nadu & Uttar Pradesh. Furthermore, amalgamation of Baroda Uttar The number of branches of RRBs has increased Pradesh Gramin Bank, Kashi Gomti Samyut Gramin from 21,747 as on 31st March, 2018 to 21,871 branches Bank and Purvanchal Gramin Bank in the state of Uttar as on 31st March, 2019 covering 683 districts. During the Pradesh will be effecting from 1st April 2020 and shall year 2018-19, 124 new branches have been opened by be named as Baroda UP Bank. RRBs. All branches of RRBs are on CBS Platform. It is expected that amalgamation of RRBs will 6.2 Capital Infusion for Improving CRAR bring about better efficiency of scale, higher productivity, The Government of India has approved the robust financial health of RRBs, improved financial proposal of Recapitalisation of Regional Rural Banks inclusion and greater credit flow to rural areas. (RRBs) to continue the process of recapitalisation of RRBs up to 2019-20, for the RRBs who are unable to 6.4 Pension Scheme for Employees of RRBs maintain minimum Capital to Risk Weighted Assets Ratio (CRAR) of 9%. Consequent upon adoption of RRB Pension Scheme & Regulations 2018, by the Board of Directors During 2019-20, as on 30th September 2019, of all RRBs and publication /notification of the Regulations Government of India has released recapitalisation assistance in respect of 3 RRBs. They are Madhyanchal in the Gazette of India, all RRBs have started the payment Gramin Bank (Rs.35.5969 crore), Utkal Gramin Bank of pension to eligible pensioners/family pensioners. (Rs.103.6431 crore) and Odisha Gramin Bank (Rs.41.2 crore). It is worthwhile to mention that the recapitalisation 6.5 Medium of examination for direct recruitment assistance sanctioned by GoI is met by GoI, Sponsor to certain levels in Regional Rural Bank Bank and the concerned State Government in the proportion 50:35:15. With a view to provide a level playing field and to expand employment possibilities for local youths, it has 6.3 Amalgamation of RRBs been decided that examination for direct recruitment of With a view to enable Regional Rural Banks Officers (Scale-I) and Office Assistant (Multipurpose) in (RRBs) to minimize their overhead expenses, optimize RRBs will be conducted in 13 regional languages in the use of technology, enhance the capital base and area addition to English and Hindi. These 13 regional of operation and increase their exposure, a roadmap for languages are Assamese, Bengali, Gujarati, Kannada, amalgamation of RRBs within a state was prepared in consultation with NABARD. The roadmap proposes to Konkani, Malayalam, Manipuri, Marathi, Oriya, Punjabi, bring down the number of RRBs to 38 from 56. Tamil, Telugu and Urdu. The candidates will, in addition to English and Hindi, also have the option to choose the Government of India, in FY 2019-20, has carried regional language of the State that they have opted for, out the amalgamation of RRBs within a state as per the roadmap proposed by NABARD, which has brought from among the above languages, as their medium of down the number of RRBs to 45 with effect from 1st examination.This change has been implemented from April 2019 from the 53 RRBs which were present on the Mains examination of CRP RRB VIII (2019) onwards. 31st March 2019 by amalgamating 16 RRBs into 8 RRBs in seven States of Assam, Gujarat, Jharkhand, 6.6 Financial Performance of RRBs (Amount in Rs. crore) As on 31st March 2019 As on 30th September 2019 Owned Funds 32,141 33,003 Deposits 4,34,444 4,46,873 Loans & Advances 2,80,755 2,84,433 Non Performing Assets (NPAs) 30,317 31,819 6.6.1 Profitability & Accumulated Losses 7. Priority Sector Lending (PSL) During 2018-19, 39 RRBs earned profit of Rs. A target of 40 percent of Adjusted Net Bank 1759 crore. However, 14 RRBs incurred losses during Credit (ANBC) or Credit Equivalent amount of Off- the year aggregating to Rs.2,411 crore. Therefore, RRBs Balance Sheet Exposures (OBE), whichever is higher, as an entity incurred a net loss of Rs.652 crore during as of preceding March 31st, has been mandated for 2018-19 as against a net profit of Rs.1,501 crore earned lending to the priority sector by domestic scheduled during 2017-18. commercial banks and foreign banks with 20 branches and above. Within this, sub-targets of 18 percent, 10 The number of RRBs that had accumulated percent and 7.5 percent of ANBC or Credit Equivalent losses remained the same at 11 RRBs as on 31st March, amount of OBE, whichever is higher, as of preceding 2019 as was the case on 31st March, 2018. The aggregate March 31st, have been mandated for lending to amount of accumulated losses of RRBs increased from agriculture, weaker sections, and micro enterprises, Rs.1,866 crore as on 31st March, 2018 crore to Rs.2,887 respectively. Within the 18 percent target for agriculture, crore as on as on 31st March, 2019. 287Annual Report 2019-2020 a target of 8 percent of ANBC or Credit Equivalent amount overall cost of the dwelling unit in the metropolitan centre of OBE, whichever is higher, is prescribed for lending to and at other centres does not exceed Rs. 45 lakh and small and marginal farmers. Domestic scheduled Rs. 30 lakh, respectively. commercial banks and foreign banks with more than 20 The outstanding priority sector advances of branches are also required to ensure that their share of Public Sector Banks increased from Rs. 21,99,972 crore lending to non-corporate farmers does not fall below the as on March 31, 2018 to Rs. 23,62,471 crore as on system wide average of the last three years of direct March 31, 2019, registering a growth of 7.4 per cent. lending to non-corporate farmers. Advances to agriculture by PSBs amounted Rs. 9,82,117 For Foreign Banks with less than 20 branches, a crore constituting 18.12 percent of ANBC, as on March target of 40 percent of Adjusted Net Bank Credit (ANBC) 31, 2019. Whereas for the quarter ended September 2019 or Credit Equivalent amount of Off-Balance Sheet priority sector advances outstanding for public sector Exposures (OBE), whichever is higher, as of preceding banks is Rs. 23,74,216 crore and agriculture outstanding March 31st has been mandated for lending to the priority is Rs. 10,04,074 crore. sector, which has to be achieved in a phased manner by 7.1 Lending to Weaker Sections and Credit to the year 2020. Minorities: As per the MSME Act, enterprises under both As per extant guidelines of Reserve Bank of India (RBI) MSME Manufacturing and Services are classified as per on Priority Sector Lending (PSL), all Scheduled respective investment under plant and machinery/ Commercial Banks (SCBs) including Foreign Banks with equipment. . Presently, bank loans to MSMEs engaged 20 and above branches are required to lend 10 per cent in services or manufacturing without any credit cap, are of Adjusted Net Bank Credit (ANBC) or Credit Equivalent eligible for PSL classification. amount of Off-Balance Sheet Exposure whichever is Earlier, housing loans up to Rs.28 lacs in metro higher to the weaker sections. centres and Rs.20 lacs in other centres were eligible for To achieve inclusive growth, priority sector loans priority sector status, provided the overall cost of the to distressed persons (other than farmers) not exceeding dwelling units in metro centres and other centres did not Rs. 1,00,000 per borrower to prepay their debt to non- exceed Rs.35 lacs and Rs.25 lacs, respectively. Since institutional lenders and loans to individual women the limits were fixed in 2015, it was decided to review the beneficiaries up to Rs. 1,00,000 per borrower are allowed limits and align them with the Affordable Housing scheme to be categorized under Weaker sections. of the Government of India. Accordingly, the housing loan limits for eligibility under priority sector lending have been The performance of PSBs on lending to Weaker revised w.e.f. June 19, 2018 to Rs.35 lakh in metropolitan Sections as on March 2017, March 2018, March 2019 centres and Rs. 25 lakh in other centres, provided the and September 2019 is as under: (Amount in Rs. crore) As at the year ended Amount outstanding % to ANBC March 2017 6,00,841.08 11.27 March 2018 6,08,318.12 11.36 March 2019 6,39,874.74 11.29 September 2019 7,01,317.02 12.24 In order to ensure smooth flow of credit facilities To ensure adequate flow of credit to minority to Minority Communities, Reserve Bank of India issued communities banks have also been advised as below: a Master Circular dated July 1, 2019 to all Scheduled  A Special Cell should be set up in each bank to Commercial Banks (SCB) including Small Finance Banks ensure smooth flow of credit to minority (SFB). These banks have been advised to monitor credit communities and it should be headed by an flow to Minorities in 121 Minority Concentration Districts officer holding the rank of Deputy General (MCD) having at least 25% minority population, excluding Manager/Assistant General Manager or any other those States / UTs where minorities are in majority (J & similar rank who should function as a ‘Nodal K, Punjab, Meghalaya, Mizoram, Nagaland and Officer’. Lakshadweep). 288Department of Financial Services V  The Lead Bank in each of the minority Total outstanding loans to minority communities concentration districts should have an officer who as on March 31, 2019 in the 121 identified Minority shall exclusively look after the problems Concentration Districts stood at Rs.1,42,645 crore which regarding the credit flow to minority communities. is 17.39% of total priority sector advances in the identified It shall be his responsibility to publicize among Minority Concentration Districts. the minority communities various programmes 7.2 Economic Empowerment of Women of bank credit. To help overcome the hurdles faced by women in  The Lead Banks in the identified districts having accessing bank credit and credit plus services, the concentration of minority communities may Government of India had drawn up a 14-point action plan involve the State Minority Commission / Finance (now 13-point action plan) in the year 2000 for Corporation in the extension work including implementation by PSBs. The PSBs were advised to creating awareness, identification of earmark 5 per cent of their ANBC for lending to women. beneficiaries, preparation of viable projects, As reported by PSBs, as on March 31, 2019, the amount provision of backward and forward linkages such outstanding towards credit to women was Rs.5,37,139.51 as supply of inputs/marketing, recovery etc. crore, forming 10.40 per cent of ANBC of public sector banks. The Insurance Companies provide various  There should be good publicity about various anti- insurance products exclusively for women e.g. poverty programmes of the Government where Bhagyashree Child Welfare policy, Mother Teresa Women there is large concentration of minority & Children Policy, Mahila Suraksha Bima Policy, Sakhi- communities and particularly in the districts with Tata AIG maternal care, New India Asha Kiran Policy, a concentration of minority communities. SBI Life Dhanrashi Insurance Scheme (Ladli), LIC Aadharshila etc. Total loans outstanding to minority communities as on March 31, 2019 stood at Rs. 3,84,680 crore which The women account holders/beneficiaries under is 11.73% of total priority sector advances. the schemes of this Department are as under. (As on December, 2019) Name of Schemes Total Accounts/ Enrollment/ Women Accounts/ Beneficiary enrollment/ Beneficiary Pradhan Mantri Jan Dhan Yojana (PMJDY) 37.83 Cr. 20.17 Cr.(53%) Pradhan Mantri Suraksha Bima Yojana(PMSBY) 17.37 Cr. 6.04 Cr. Claims Disb. – 36,896 Claims Disb. – 22,467 Pradhan Mantri Jeevan Jyoti Bima Yojana 6.52 Cr. 1.84 Cr. (PMJJBY) Claim Disb.-1,65,090 Claim Disb. – 96,040 Atal Pension Yojana (APY) as on 11.01.2020 206.96 Lac 89.63 Lac Pradhan Mantri Mudra Yojana (PMMY) 21.59 Cr. 14.98 Cr. Amount– Rs.10.62 Lac Cr. Amount–Rs.4.77 lac Cr. Stand Up India (SUI) 86,640 70,808 Amount-Rs.19,451 Cr. Amount-Rs.16,186 Cr. 7.3 Education Loan last revision of the Model Educational Loan Scheme was carried out on 17.08.2015 and circulated to Banks. The Every meritorious student should have access main features of the revised Model Educational Loan to bank credit to pursue higher education, if they so desire. Scheme are as under. Indian Banks’ Association (IBA) had prepared the Model Educational Loan Scheme and circulated to banks in the a) Provision for charging of differential interest rates year 2001. The Scheme is for all students including based on status of collateral, employability and students belonging to the economically weaker sections reputation of institutions. and those below the poverty line. Indian Nationals who b) Relaxation in margin and security for loans have secured admission to a higher education course in guaranteed by NCGTC. a recognised Institution in India or abroad through an entrance test/merit based selection process are eligible c) Extension of repayment period (after moratorium) for educational loans under the Scheme. upto 15 years for all loans. The Scheme has been modified from time to time d) Uniform one year moratorium for repayment after keeping in view the changing needs of the students. The completion of studies in all cases. 289Annual Report 2019-2020 e) Provision for moratorium taking into account 7.3.4 Interest Subsidy Scheme for Education Loans spells of unemployment/under-employment, say Ministry of Human Resource Development had two or three times during the life cycle of the loan. formulated, in May, 2010, a Central Scheme to provide Moratorium may also be provided for the ‘Interest Subsidy’ for the period of moratorium on incubation period if the student wants to take up educational loans taken by students of economically a start-up venture after graduation. weaker sections from scheduled banks under the 7.3.1 Service Area Norms for Education Loans- RBI Educational Loan Scheme of the Indian Banks’ guidelines Association. The scheme is applicable to the following categories of loans. RBI has advised the banks on November 09, 2012 that Service Area Norms are to be followed only in the  Educational loan disbursed/availed after 1st April, case of Government Sponsored Schemes, circulated vide 2009 from Scheduled Banks which follow IBA their circular dated December 8, 2004 and are not Model Educational Loan Scheme; applicable to sanction of educational loans. Hence, banks  Students belonging to economically weaker have been advised not to reject any educational loan sections, i.e, whose parental income from all application for reasons that the residence of the borrower sources do not exceed Rs.4.5 lakhs per annum; does not fall under the bank’s service area.  The scheme is applicable starting from academic 7.3.2 Performance of Education Loans year 2009-10, disbursement starting on or after The total outstanding education loans of Public 01.04.2009, irrespective of date of sanction; Sector Banks (PSBs) as on March 31, 2019 stood at Rs. 8. Financial Institutions 72,800 crore in 21,94,977 accounts which have further increased to Rs 75,939 crore in 20,16,525 accounts as 8.1 Export –Import Bank of India (EXIM Bank) on 31.12.2019. This reflects increase of Rs. 3,139 crore in total outstanding loans over March, 2019. Export-Import Bank of India (Exim Bank) was set up for “providing financial assistance to exporters and 7.3.3. Vidya Lakshmi Portal importers, and for functioning as the principal financial Vidya Lakshmi Portal is a first of its kind portal institution for coordinating the working of institutions providing single window for Students to access engaged in financing export and import of goods and information and make application for Educational Loans services with a view to promoting the country’s provided by Banks. The Portal has the following features: international trade”. The flagship programmes of the Bank is Buyer’s Credit, both commercial and under the National i. Information about Educational Loan Schemes of Export Insurance Account (NEIA); Project Export Finance, Banks; and Overseas Investment Finance. It is also the operational vehicle for Government of India (GoI) Lines ii. Common Educational Loan Application Form for of Credit. Students; Exim Bank’s support has led to creation of iii. Facility to apply to multiple Banks for Education opportunities for Indian project exporters, enabling them Loans; to expand their global footprint. It is a matter of pride that iv. Facility for Banks to download Students’ Loan Indian companies are able to bid for and secure a larger Applications; number of international contracts of increasing values, through stringent processes of international competitive v. Facility for Banks to upload loan processing bidding. It has facilitated increased exports from India, status; besides creating additional avenues for employment vi. Facility for Students to email grievances/queries within the country. relating to Educational Loans to Banks; As on 06.12.2019, 297 Lines of Credit vii. Dashboard facility for Students to view status of aggregating USD 30.53 billion have been extended to their loan application various countries across Asia, Africa, LAC, CIS and Oceania region. Besides LOCs, under the Bank’s other viii. Linkage to National Scholarship Portal for flagship product-Buyer’s Credit under National Export information and application for Government Insurance Account (BC-NEIA), the Bank has sanctioned Scholarships. an aggregate amount of USD 2.13 billion for 23 projects. As regards Overseas Investment Finance, during Banks have been requested to give wide publicity 2018-19, the Bank sanctioned funded and non-funded to this Portal so that students wanting education loans assistance aggregating Rs.1,136 crore to 13 Indian can apply for it and indicate their bank of choice. corporates for part financing their overseas investments 290Department of Financial Services V in 8 countries. As on November 30, 2019, the Bank’s net 8.3 IFCI Ltd. loans and advances stood at Rs. 96,447 crore, while the IFCI Ltd. is a systemically important Non-Deposit non-fund portfolio of the Bank was at Rs. 15,371 crore. taking NBFCs and also a Public Financial Institutions The Bank has made a net profit of Rs 81,64,75,448 under Section 2(72) of Companies Act, 2013. Set up in (approx 81.65 Crore) during 2018-19. 1948 as the first Development Financial Institution of the 8.2 India Infrastructure Finance Company Ltd Country as a Statutory Corporation to provide medium (IIFCL) and long term finance to industry. IFCI became a Public Limited Company registered under the Companies Act, Government has announced its intention to invest 1956 after repeal of “IFC Act” in 1993. Currently, the Rs. 100 lakh crore in infrastructure over the next five Government of India is holding 56.42% stake in the total years. This investment is crucial for maintaining the paid-up share capital of IFCI. growth momentum of Indian economy vis-via its global 8.4 National Housing Bank peers. It will not only generate growth & employment but also lift people out poverty and is expected to enable NHB on August 2, 2019 introduced Liquidity India to graduate into the category of developed Infusion Facility (LIFt) scheme of Rs.30,000 crore for economies. This large investment needs a focused HFCs to infuse liquidity in to the housing finance system and also to cater the demand of HFCs to address the approach both from financing and institutional housing finance requirements in the affordable housing perspective. finance sector. This scheme supports HFCs in creating The Union Budget 2005-06 conceptualized IIFCL individual housing loan portfolio that falls under the priority as a dedicated institution for financing infrastructure in sector, as defined by RBI. the country with focus on PPP projects. IIFCL, registered 8.4.1 Operational Highlights during FY 2018- with the RBI as ND-SI-NBFC-IFC, has been playing a 19(01.07.2018 to 30.06.2019) key role in bridging the funding gap in the infrastructure sector through its long-term loans as well as other · NHB has been nominated as a Central Nodal Agency for Pradhan Mantri Awas Yojana (Urban) – Credit innovative initiatives like Takeout Finance & Credit Linked Subsidy Scheme and Rural Housing Interest Enhancement. On a standalone basis, till 30th September Subsidy Scheme under the Housing for All Mission by 2019, IIFCL has made cumulative gross sanctions of 2022. Rs.1,29,594 crore under Direct lending, Takeout Finance and Refinance schemes. This includes cumulative gross  Subscribed Equity share capital of NHB stood at sanctions of Rs. 88,955 crore to 492 projects under Direct Rs.1,450 crore as on 30.06.2019. Lending. The Company has made cumulative  Outstanding Loans & Advances of NHB stood at disbursements of Rs.67,428 crore, including Rs.69,805 crore as on 30.06.2019, showing a disbursements of Rs.11,721 crore under Refinance and growth of 21% on Y-o-Y (Rs.57,684 outstanding Rs.15,413 crore under Takeout Finance till September as on 30.06.2018). 2019. The company, excluding its subsidiaries, made a net profit of Rs.101.66 crore during 2018-19.  Disbursements of Rs.25,177 crore were made during the period. IIFCL’s financial support has assisted around  Cumulatively, NHB has made disbursement of 27,500 km of roads, about 57,000 MW of power Rs.2,39,110 crore till 30.06.2019. generation capacity and around 800 MTPA of port capacity, in addition to development of several urban 8.4.2 Financing FY 2019-20 (01.07.2019 to infrastructure projects, station redevelopment as well as 31.12.2019) redevelopment of Delhi and Mumbai airports.  The total sanctions made by NHB during IIFC (UK), a wholly-owned subsidiary of IIFCL, 01.07.2019 to 31.12.2019 were Rs.23,935 crore headquarter in London, provides foreign currency loans of which Rs.8,827 crore were sanctioned under for financing import of capital equipment by infrastructure LIFt scheme. projects in India. Till 30th September 2019, IIFC (UK) 8.4.3 Promotion & Development (as on 30.11.2019) has made cumulative disbursements of USD 2.06 billion. IIFC (UK) enjoys a USD 5 billion line of credit facility from  NHB has been nominated as a Central Nodal the RBI. Apart from RBI line of credit, IIFC(UK) is Agency for Pradhan Mantri Awas Yojana (Urban) continuously exploring new sources of funds with a view – Credit Linked Subsidy Scheme and Rural to further supplementing financial resources for Housing Interest Subsidy Scheme under the infrastructure development in India. Housing for all Mission by 2022. 291Annual Report 2019-2020  Till 30.11.2019, 235 Primary Lending Institutions which is a first-ever effort to deliver “affordable credit” to (PLIs) have signed MoU under Pradhan Mantri the small entrepreneurs, especially women, at the bottom Awas Yojana(Urban)-Credit Linked Subsidy of the pyramid. Total fund of Rs.1063.53 crore has been Scheme (PMAY-CLSS) for EWS/LIG and 226 allocated under the scheme. As on November 30, 2019, PLIs have signed MoU with NHB as Central the Bank has entered into agreements with 9 partner Nodal Agency(CNA), under PMAY-CLSS for MIG. institutions for limits aggregating Rs.495 crore and arrangements with 8 are fully operational.  Till 30.11.2019, NHB has disbursed interest subsidy of Rs.12,103.36 crore to 5,20,384 8.5.3 Digital Interventions households under PMAY-CLSS for EWS/LIG, and On PSBLoansin 59 minutes portal, as on Rs.4,977.99 crore to 2,35,374 households under November 30, 2019, 2.01 lakh MSMEs have obtained PMAY-CLSS for MIG. in-principle approval in less than 59 minutes from the 8.5 Small Industries Development Bank of India lenders out of which 1.68 lakh MSMEs have obtained (SIDBI) final sanction. Disbursements have been made in respect of 1.46 lakh proposals amounting to Rs.39,654 Crore. Small Industries Development Bank of India has UdyamiMitra portal hosts more than 138 lenders and been established under an Act of the Parliament in April 26,963 handholding agencies. During FY 2020 (till 02, 1990. SIDBI is mandated to serve as the Principal November 30, 2019), 4.57 lakh loan applications Financial Institution for executing the triple agenda of promotion, financing and development of the Micro, Small registered on the portal, which resulted in submission of and Medium Enterprises and co-ordination of the 85,485 loan applications, of which 6,012 loan applications functions of the various Institutions engaged in similar were sanctioned Rs.1,009 crore. activities. 8.6 Partial Credit Guarantee Scheme 8.5.1 Performance of SIDBI The Cabinet has approved “Partial Credit The significant financial achievements of the Guarantee Scheme”, to be offered by the Government Bank continued to create new milestone during the year, of India (GoI) to Public Sector Banks (PSBs) for epitomizing the renewed Vision 2.0 of the Bank in purchasing high-rated pooled assets from financially progress. The Asset Base of the Bank registered annual sound Non-Banking Financial Companies (NBFCs) / growth of 43.2%, reaching a new peak of Rs.1,55,861 Housing Finance Companies (HFCs), with the amount crore as on March 31, 2019 and stood at Rs.1,67,883 of overall guarantee being limited to first loss of up to 10 crore as on September 30, 2019. per cent of fair value of assets being purchased by the banks under the scheme, or Rs. 10,000 crore, whichever Net Profit of the Bank scaled an all-time high of is lower. The proposed Government Guarantee support Rs1952 crore during FY 2019 at growth rate of 36.5% and resultant pool buyouts will help address NBFCs/ over FY 2018 and was Rs 986 crore during the first half HFCs resolve their temporary liquidity or cash flow year of FY 2020. mismatch issues, and enable them to continue 8.5.2 Addressing financial gaps contributing to credit creation and providing last mile lending to borrowers, thereby spurring economic growth. The MSME financing agenda of SIDBI is discharged mainly through bulk Indirect Lending. Loans As on 10.01.2020, approval for issue of & Advances of the Bank grew by 42.9% to touch Rs guarantee for purchase of pools worth Rs.7,290 crore 1,36,230 crore as at the end of FY 2019 and stood at Rs has been accorded. 1,44,347 crore as at September 30, 2019. During FY 9. Insurance Sector 2019, the Bank has launched a pilot scheme to finance new-age fintech NBFCs. 9.1 Overview SIDBI supports the enterprise promotion agenda Insurance, being an integral part of the financial by extending venture capital assistance to start-ups sector, plays a significant role in India’s economy. Apart through its Fund-of-Funds operations. Under India from protecting against mortality, property and casualty Aspiration Fund (IAF), Fund of Funds for Startups (FFS) risks and providing a safety net for individuals and and ASPIRE Fund (AF), the Bank has provided enterprises in urban and rural areas, the insurance sector assistance to the tune of Rs 1,200 crore to 78 AIFs, encourages savings and provides long-term funds for against the aggregate commitment of Rs. 4,107 crore, infrastructure development and other long gestation as on September 30, 2019. projects of the Nation. The development of the insurance During the year, a strategic shift was made in sector in India is necessary to support its continued Microfinance operations through the PRAYAAS initiative, economic transformation. 292Department of Financial Services V 9.2 Legislative Framework governing the 9.4 New entrants in the insurance industry Insurance Sector Since its opening up in 2000 the number of The Government promulgated an Ordinance participants in the Insurance industry has gone up from namely - the Insurance Laws (Amendment) Ordinance, seven insurers (including the Life Insurance Corporation 2014 on 26th December, 2014 to make amendments to of India [LIC], four public-sector general insurers, one the Insurance Act, 1938, the General Insurance Business specialized insurer, and the General Insurance (Nationalization) Act, 1972 and the Insurance Regulatory Corporation as the Indian re-insurer) in 2000 to seventy and Development Authority Act, 1999 in accordance with insurers as on 31st March 2019 operating in the life, the Insurance Laws (Amendment) Bill 2008 as reported general, health and re-insurance segments; of which 24 by the Select Committee of the Rajya Sabha. The are life insurers, 27 are general insurers, 7 are standalone Ordinance was replaced by the Insurance Laws health insurers and 12 are re-insurers including foreign (Amendment) Act, 2015. With the coming into force of reinsurance branches and Lloyd’s India. Of the 70 the Insurance Laws (Amendment) Act, 2015, the foreign insurers eight are in the public sector and the remaining investment cap in an Indian Insurance Company has gone sixty two are in the private sector. Two specialized up from 26% to 49% with the safeguard of Indian insurers, namely Export Credit Guarantee Corporation ownership and control. of India Limited and Agricultural Insurance Company of India Limited, one life insurer namely LIC of India, four in The Insurance Division is responsible for policy general insurers and one in re-insurance namely GIC are formulation and administration of the following Acts: in public sector. Twenty-three life insurers, twenty-one a) The Insurance Act, 1938 general insurers, seven standalone health insurers and eleven reinsurers including foreign reinsurance branches b) The Life Insurance Corporation Act, 1956 and Lloyd’s India are in private sector. During the financial year 2018-19, 1 Standalone health insurance company c) The General Insurance Business under private sector, 1 foreign reinsurers’ branch and 1 (Nationalisation) Act, 1972 Service Companies of Lloyd’s India have been granted d) The IRDA Act, 1999 certificate of registration. e) The Actuaries Act, 2006 9.5 Insurance Industry Statistics f) The Securities and Insurance Laws (Amendment Insurance Penetration and Insurance Density and Validation) Act, 2010. The potential and performance of the insurance 9.3 Reforms in the Insurance Sector sector are generally assessed on the basis of two parameters, viz., Insurance Penetration and Insurance The insurance sector was opened up for private Density. The measure of insurance penetration and participation with the enactment of the Insurance density reflects the level of development of insurance Regulatory and Development Authority Act, 1999. The sector in a country. While insurance penetration is Authority consist of a Chairperson, not more than five measured as the percentage of insurance premium to whole-time members and not more than four part-time GDP, insurance density is calculated as the ratio of members. As on 31st March, 2019 Authority has premium to population (measured in US$ for convenience Chairman, 4 full-time members and 3 part-time members. of international comparison). The Authority is functioning from its Head Office at Hyderabad, Telangana. The core functions of the Insurance penetration which was 2.71% in 2001, Authority as mentioned in Section 14 of Insurance Act increased to 3.70% in 2018 (Life 2.74% and Non-Life include (i) licensing/registration of insurers and insurance 0.97%). The Insurance density in India which was intermediaries; (ii) financial and regulatory supervision; US$11.5 in 2001 increased to US$ 74 in 2018 (Life-55 (iii) regulation of premium rates; and (iv) protection of US$ and Non-Life -19 US$). the interests of the policyholders. Life Insurance Industry With a view to facilitating development of the The post liberalization period has been witnessed insurance sector, the Authority has issued regulations on to sharp growth in the insurance industry, more particularly protection of the interests of policyholders; obligations in the life segment. The New business premium is towards the rural and social sectors; micro insurance and measured as total of first year premium and single registration of agents, licensing/registration of corporate premium underwritten by the life insurers. During 2018- agents, brokers and third party administrators. IRDAI 19, this was Rs.2,15,003 crore as compared to has also laid down the regulatory framework for Rs.1,94,154 crore in 2017-18 registering a growth of registration of insurance companies, maintenance of 10.74% against 10.82% during the previous year. In terms solvency margin, investments and financial reporting of linked and non-linked business during the year requirements. 293Annual Report 2019-2020 2018-19, 12.74% of the new-business premium was IRDAI/F&A/OR/FA/148/06/2017 under section 52 B (2) underwritten in the linked segment while 87.26% of the of the Insurance Act, 1938. Hence, Sahara India Life is business was in non-linked segment as against 13.46% not considered for Rural and Social Sector Obligations). and 86.54% in the previous year. The total premium, The life insurers underwrote 66.37 lakh policies which includes new-business premium and renewal in the rural sector, viz., 23.2% of the new individual policies premium during 2018-19, was Rs.5,08,132 crore as underwritten (286.48 lakh policies) by them in 2018-19. compared to Rs.4,58,809 crore in 2017-18 registering a All life insurers including LIC (except Sahara life) were growth of 10.75% against 9.64% in the previous year. Of compliant with their social sector obligations in terms of the new business premium underwritten, LIC accounted number of lives covered. for Rs.1,42,336 crore (66.20% market share) and the private insurers accounted for Rs.72,667 crore (33.80% 9.8 Micro Insurance market share). The market share of these insurers was 69.36% per cent and 30.64% respectively during the year In order to facilitate penetration of insurance to 2017-18. the lower income segments of population, IRDAI had notified the micro insurance regulations, 2005 which was General Insurance Industry further amended in 2015. They provide a platform to distribute insurance products, which are affordable to the The general insurers had underwritten gross rural and urban poor and to enable micro insurance to direct premium of Rs. 1,69,448 crore in 2018-19, as play its role in financial inclusion. In micro-insurance-life, against Rs.1,50,662 crore in 2017-18 registering a growth the individual new business premium for the year of 12.47%. This premium excludes the business done 2018-19 was Rs.32.10 crore through 8.65 lakh new outside India by the public sector insurers. The private policies and the group business amounted to Rs.3,205.74 sector (including standalone health insurers) had crore premium for 12.13 crore lives. Individual death underwritten Rs.92,641 crore as against Rs.73,734 crore claims paid under micro insurance portfolio for the year in the previous year achieving a growth rate of 25.64% 2018-19 amounted to Rs.14.76 crore on 9,395 policies whereas the public sector (including specialized insurers) and in the group category Rs.875.01 crore was paid as had underwritten premium of Rs.76,801 crore as against death claims on 2,99,451 lives. There were 72,857 micro Rs.76,928 crore in the previous year with a negative insurance agents operating in the micro insurance sector growth rate of 0.16%. The market share of the public at the end of 2018-19. and private insurers stood at 45.33% and 54.67% during the year 2018-19 as against 51.06% and 48.94% Micro insurance being a low price-high volume respectively in 2017-18. One of the benefits of opening business, its success and sustainability depends mainly up of the insurance sector has been the extension of on keeping the transaction costs down. Section 32B and health cover to a wider cross-section of the society. Health 32C of the Insurance Act, 1938 and IRDAI (Obligations premium accounted for 30% (Rs.50,834 crore) of the of insurers to Rural and Social sectors) 2015, stipulate gross direct premium of the general insurance industry obligations of insurers in respect of rural and social sector, within India (including standalone health insurance which has also contributed substantially to the companies) in 2018-19 as against 27.86% (Rs.41,981 development and promotion of micro insurance products crore) in 2017-18. in India. 9.6 Investments of the Insurance sector Total number of general insurance policies As on 31st March, 2019 the accumulated total procured by Micro Insurance Agents (excluding Micro investments held by the insurance sector was insurance policies issued by Standalone health insurers) Rs.38,47,474 crore. During 2018-19, Assets under in the year 2018-19 are 14,124. Management (AUM) had grown by 11.26%. Life insurers continue to contribute a major share with around 91.83% 10 Pension Sector of the total investments held by the insurance industry. 10.1 National Pension System (NPS) Similarly, public sector insurers continue to contribute a major share of 76.40% in total investments though With a view to provide adequate retirement investments by private sector insurers are growing at a income on cost effective basis. It was made mandatory fast pace in recent years. for all new recruits to the Government service (except armed forces) with effect from 1st January, 2004. NPS 9.7 Rural and Social Sector Business has also been rolled out for all citizens with effect from During 2018-19, Twenty-two private sector life 1st May, 2009, on voluntary basis. It has been designed insurance companies had fulfilled their rural sector giving utmost importance to the welfare of the subscribers obligations. (M/s Sahara India Life Insurance Co. Ltd. with aim of maximising outreach. The Scheme offers two was directed not to underwrite any kind of new business types of accounts, namely Tier-I and Tier-II. The Tier-I from 24th June, 2017 vide the IRDAI order reference account is the Pension account, while the Tier-II account 294Department of Financial Services V is a voluntary withdrawable account which is allowed only Regulatory and Development Authority and when there is an active Tier-I account in the name of the empanelled by PFRDA. Amount utilized for subscriber. Presently, a Government employee under purchase of annuity is not taxable. Further, NPS has to mandatorily contribute 10% of pay and amount utilised for purchase of annuity is Dearness Allowance (DA) and 14% of pay and DA is exempted from GST. contributed by the Government to the employee’s Tier-I (B) Tier II: account. Contribution by the Government employees There are a number of benefits available to the under Tier-II of NPS is now covered under employees under NPS. Some of the benefits are listed Section 80 C of the Income Tax Act, 1961, for below: deduction up to Rs. 1.50 lakh for the purpose of (i) NPS is a well designed pension system income tax at par with the other schemes such managed through an unbundled architecture as GPF, CPF, EPF, and PPF provided that there involving intermediaries appointed by the Pension is a lock-in period of three years. Fund Regulatory and Development Authority (iv) Freedom of choice for selection of Pension (PFRDA) viz. pension funds, custodian, Central Funds and pattern of investment to Recordkeeping and Accounting agency (CRA), government employees as under: National Pension System Trust, trustee bank, points of presence and Annuity service providers. (a) Choice of Pension Fund: As in the case of It is regulated by PFRDA which is a statutory subscribers in the private sector, the regulatory body established to promote old age Government subscribers are also allowed income security and protect the interests of NPS to choose any one of the pension funds subscribers. including Private sector pension funds. They could change their option once in a year. (ii) Dual benefit of Low Cost and Power of However, the current provision of Compounding- The pension wealth which combination of the Public-Sector Pension accumulates over a period of time till retirement Funds will be available as the default option grows with a compounding effect. The all-in-costs for both existing as well as new Government of the institutional architecture of NPS are among subscribers. the lowest in the world. (b) Choice of Investment pattern: The following (iii) Tax Benefits presently available under NPS : options for investment choices are offered (A) Tier I: to Government employees: - a) To ensure parity of tax treatment between (1) Government employees who prefer a NPS and various retirement products such fixed return with minimum amount of as General Provident Fund (GPF), risk have an option to invest 100% of Contributory Provident Fund (CPF), the funds in Government securities Employees Provident Fund (EPF) and Public (Scheme G). Provident Fund (PPF), the limit of tax (2) Government employees who prefer exemption under section 10(12A) of the higher returns have the options of the Income Tax Act in respect of the amount following two Life Cycle based withdrawn as lump sum to the extent of 40% schemes. of the total accumulated balance has been enhanced to up to 60% of the total (i) Conservative Life Cycle Fund with accumulated balance at the closure of maximum exposure to equity account. With this, the entire withdrawal (i.e. capped at 25% at the age of 35 60% of accumulated balance) is now exempt years and tapering off thereafter from income tax. (LC-25). b) Interim/ Partial Withdrawal from NPS Tier I (ii) Moderate Life Cycle Fund with up to 25% of the contributions made by NPS maximum exposure to equity subscriber is tax free. capped at 50% at the age of 35 years and tapering off thereafter c) Minimum 40% of the amount is to be (LC-50). mandatorily utilized for purchasing an annuity from the Annuity Service Provider The existing scheme in which funds are registered and regulated by the Insurance allocated by the PFRDA among the three 295Annual Report 2019-2020 Public Sector Undertaking fund managers contribution as well as to enable the SIP based on their past performance in facility. accordance with the guidelines of PFRDA (vii) The status of NPS as on 30th November, 2019, for Government employees will continue as is as under: the default scheme for both existing and new subscribers. Sector No. of Assets Under subscribers Management (in (v) Partial withdrawal- Subscribers can withdraw (in lakhs) Rs Crores) up to 25% of their own contributions at any time Central Government 20.54 1,31,120 before exit from NPS Tier I for a maximum of State Government 46.05 1,97,637 three times during the entire tenure of subscription under NPS for certain specified Corporate 9.00 98,695 purposes such as marriage of children, purchase All Citizen Model 10.58 11,815 of house, medical treatment etc. The requirement NPS Lite 43.36 3,728 of minimum period under NPS for availing the Total 129.53 3,82,995 facility of partial withdrawal from the mandatory Tier-I account of the subscriber has been 11. Legislative reduced from 10 years to 3 years from the date of joining w.e.f. 10th August, 2017. The minimum 11.1 The Banning of Unregulated Deposit gap of 5 years between two partial withdrawals Schemes Act, 2019 has also been removed w.e.f. 10th August, 2017. The Banning of Unregulated Deposit Schemes (v) eNPS - PFRDA introduced eNPS online portal Act, 2019 received the assent of the President on on 07.12.2015 whereby the Permanent Account 31.07.2019. The Act has come into existence with effect Number (PAN) and savings bank account of new from 21.02.2019 i.e. from the date on which the Banning subscribers to NPS who are already customers of Unregulated Deposit Ordinance, 2019 had come into of the banks are accepted as KYC with active force. The Act seeks to effectively tackle the menace of participation of the banks acting as POPs for illicit deposit taking activities in the country. It will opening of accounts under NPS. significantly impact poor and gullible people who are being duped by illicit deposit schemes launched by rapacious  Opening of account online using PAN and operators. Deposit raising entities which are regulated net banking of the selected bank- In this by and accountable to the Government or Regulators case KYC verification is done by the Bank. established by the Government will also be benefited  Opening of account online using Aadhaar through the Act by increasing public faith in them. No. issued by Unique Identification Authority 11.2 The Chit Funds (Amendment) Bill, 2019 of India (UIDAI)- In this case authentication is done through one time password (OTP) To facilitate orderly growth of the Chit Fund received on the registered mobile of the Sector, to remove bottlenecks being faced by the subscriber from UIDAI. registered Chit Funds industry, and to enable greater financial access to people, The Chit Funds (Amendment) (vi) Major measures/steps undertaken under Act, 2019 received the assent of the President on NPS/eNPS: 5th December, 2019. The main beneficiaries of the a) UPI has been added as a mode of payment amendments will be the subscribers to Chit Funds as on eNPS platform besides credit card, debit well as the Registered Chit Funds industry. card and net banking 12. Miscellaneous b) A number of Annuity Literacy Programs across the country have been conducted for 12.1 Debts Recovery Tribunal the prospective retiring subscribers and As per data made available by DRTs, a total nodal offices for spreading awareness on number of 15,812 cases (Original Applicants) involving seamless exits from National Pension Rs. 54,473 crores approximately were disposed off by System 39 DRTs during 1.4.2019 to 30.9.2019 c) NPS Lite subscribers have been enabled to e-DRT Project:- The e-DRT project to digitize make contribution online. the functioning of all 39 Debts Recovery Tribunal (DRTs) d) Efforts have been made to offer direct and 5 Debts Recovery Appellate Tribunals (DRATs) has remittance facility to NPS subscribers for been implemented through the National Informatics reducing the time involved in investment of Centre (NIC). The e-DRT project has automated the full 296Department of Financial Services V cycle of workflow of DRATs and DRTs, which has bought DPG and strengthen their grievance redressal transparency and increased their efficiency. The project mechanism and carry out regular monitoring/ has ensured online availability of case and access to e- review at senior level. filing and e-payment. In the Department of Financial Services, a large e-B#ÉEªÉ: Banks Common e-auction facility- number of grievances/complaints concerning Banking This Department coordinated with Indian Banks’ and Insurance Sectors are received directly from citizens, Association (IBA) and Allahabad Bank for development both online and by post. The postal grievances are also of a common landing platform with property search digitized and processed through CPGRAMS for its onward features and navigational links to all PSB e-auction sites transmission to the designated Nodal Officers i.e. Deputy that was launched in January, 2019. The property details General Manager/General Manager (DGM/GM) of on e-B#ÉEªÉ are structured and segregated for an enhanced concerned Public Sector Banks/Public Sector Insurance user experience through seamless single–window Companies (PSBs/PSICs) for its redressal within a access to information by search across Banks or maximum time limit of 60 days. All organisations under limited to a selected Bank, based on the type and DFS have made efforts to maximise the use of technology location of property. In the second phase, a common for reducing the grievance redressal time to one month e-auction portal, for all the PSBs has been developed from the existing two months. These directions are in this financial year, with access through the e-B#ÉEªÉ followed by all organisations under the Department of website https://ibapi.in . Financial Services. Action taken reports are uploaded on the system and a scanned copy of the reply is provided 12.2 Representation of SCs, STs, OBCs and PWDs. to the complainant as pdf file that can be viewed by the The Representation of SCs/STs/OBCs and complainant online. Replies through post are also sent Persons with Disabilities (PWDs) in Public Sector Banks/ to those complainants who have lodged their grievances Financial Institutions and Insurance Companies is at physically. Annexure I&II respectively. The Banks and Insurance Companies have 12.3 Disposal of Public Grievances grievance redressal mechanism in place and are also hosted on their respective websites for information and Timely redressal of public grievances relating to usage by the customers. The first level of grievance banking and insurance Sectors is an important tool redressal is Branch Manager in Banks and Insurance towards upgrading the quality of customer service in this Companies followed by Zonal Managers and then very crucial segment of financial sector. Department of General Manager (Customer Care) in Head Office. The Administrative Reforms and Public Grievances (DARPG) grievances concerning private banks and private has established CPGRAMS (Centralised Public insurance companies are resolved through Reserve Bank Grievance Redressal and Monitoring System), an online of India (RBI) and Insurance Regulatory and Development web-based system to resolve public grievances. Authority (IRDA) respectively. The PSBs have also established Ombudsman for settlement of grievances. To ensure that individual grievances are resolved within a maximum time limit of 60 days and the petitioners Grievances received from PMO are attended are informed of the action taken, the following instructions promptly and present status is being uploaded on portal have been issued to PSBs and Insurance Companies. by concerned Banks/ Insurance companies. Most of the grievances related to ATM, Pension, Loan Applications,  All PSBs/FIs/PSICs were requested to ensure Bank transactions and fraud cases, which can be easily that complainants are informed about the handled by Bank / Insurance officers. Grievances are incomplete details in the application by sending monitored regularly and followed by periodical reminders a reply to the complainant and a copy of the reply through emails to the concerned Nodal Public Grievance be uploaded on CPGRAMS. Officers in Banks and Insurance Companies and concerned Sections in the Department.  As per directions of DARPG, necessary instructions were issued to PSBs/FIs/PSICs that The Reserve Bank of India (RBI) has set up 20 public grievances are required to be resolved Banking Ombudsmen across the country under Banking within 1-2 months from the date of its initiation. Ombudsmen Scheme 2006 and also set up 21 Ombudsman for Digital Transactions. Similarly, there are  Grievance Redressal Mechanism and contact 17 Insurance Ombudsmen set up by IRDAI. In case the details of Nodal Officers of all PSBs updated on petitioners are not satisfied with the kind of disposal by DFS website. the concerned Banks/Insurance Companies, they can file  All PSBs/IRDA/PFRDA/RBI/PSICs were their complaints with the Banking Ombudsmen concerned requested to ensure prompt resolution of all for the settlement of their grievance through mediation pending grievances including those referred by and passing of awards. 297Annual Report 2019-2020 As per CPGRAMS database the details of period 01.04.2019 to 30.11.2019 in respect of banking receipt, disposal and pending grievances during the and insurance sectors are as follows: Sector Brought Received Disposed Pending as % of Less More Forward on 30.11.2019 Disposal as than 60 than 60 on days days 30.11.2019 old old Banking 9191 82508 82416 9283 89.88% 8356 927 Insurance 309 9224 8748 785 91.77% 730 55 Total 9500 91732 91164 10068 90.04% 9086 982 Status of public grievances on PG Portal for the period 01.04.2019 to 30.11.2019 is as under: Total Grievances Grievances Balance % of Average time of received Disposed Off disposal disposal 101232 91164 10068 90.04 24 days The present status of public grievances for the schemes launched by the Government is as under: period 01/04/2019 to 30/11/2019 relating to social security Name of the scheme Total Grievance Grievance % of Grievance disposed pending disposal Atal Pension Yojna 66 56 10 84.85 Pradhanmantri Jan Dhan Yojna 234 224 10 95.73 Pradhanmantri Mudra Yojna 3421 3247 174 94.91 Pradhanmantri Suraksha Bima Yojna 236 214 22 90.68 Pradhanmantri Jeevan Jyoti Bima Yojna 281 265 16 94.31 The present status of public grievances 30.11.2019 is as under: received from PMO for the period 01.04.2019 to Name of the Total Grievances Grievances % of disposal Sector Grievances disposed pending Banking 37400 33906 3494 90.66 Insurance 3567 3230 337 90.55 12.4 Vigilance attachment and freezing of all assets of parties suspected to be involved in the scam and (c) a reasonable and 12.4.1 Organisations under Vigilance Section equitable distribution of the property. (a) Special Court The Special Court has been sanctioned four posts of judges. To support their day to day functioning, the The Special Court (Trial of offences relating to office of the Special Court functions with a staff of 49 Transactions in Securities) Act, 1992 came into force on officials at various levels. These are renewed on a year- 06.06.1992. The Act was necessitated by reasons of the to-year basis by DFS, Ministry of Finance with the unprecedented situation wherein very large amount of approval of IFU. public monies had been siphoned off into private pockets. The legislature sought to set up a Special Court through Further, The Special Court has stated that the this Act for (a) speedy trial of offences (b) immediate total no. of Pending Matters as on 31.12.2019 were 126 298Department of Financial Services V which include Suits – 06 and Special Cases shares with current value of Rs. 1,995.35 crore, 5.55 (Criminal) – 2. crore are traded shares and 1.52 crore are untraded shares. A total of 185 immovable properties of notified (b). Office of the Custodian parties had been attached by the Custodian out of which To assist the Custodian in discharging the duties 149 have been disposed to realize a value of Rs.173 under the Special Court (TORTS) Act, 1992, at present crore. Rs.6.49 crore has been realized by sale of there are three offices — with headquarters at New Delhi, jewellery items through Customs department / SBI. Cash office at Mumbai mainly attending to the Court matters balance in the attached accounts and fixed deposits of on day to day basis and third one at Bangalore mainly to notified parties as on 30th November 2019 is Rs. 1,236.32 deal with matter relating to Fairgrowth Financial Services crore. Ltd (FFSL) and Fair Growth Investment Ltd (FGIL), 12.4.2 Vigilance Division Performance Bangalore based notified firms. Office of the Custodian has been sanctioned 29 posts including Custodian and a) The Vigilance Division of the Department two posts of Directors. These are renewed on a year-to- monitors the progress on disposal of year basis by Ministry of Finance, DFS with the approval complaints received from various sources of IFU. and pendency of disciplinary / vigilance cases regularly and meeting with CVOs is Since inception, a total of 13,348 cases were filed undertaken in this Department at appropriate in the Special Court, which were defended/contested by intervals. the Custodian and 13, 227 cases have been disposed of b) During the period of 01.01.2019 to by the Special Court, leaving a balance of 121 cases for 31.12.2019 a total no. of 15 CVOs have been their disposal as on 31st October, 2019. Similarly, a total appointed in PSBs/PSICs/FIs. of 495 appeals were filed in the Supreme Court, of which 466 cases have been disposed of, leaving 29 cases c) Instructions have been issued from time to pending (31st October, 2019). As on 30th November, 2019, time as and when any gap in the system is while the outstanding liabilities of notified parties totaled observed to strengthen the preventive to Rs. 37,338.57 crore, the assets were only to the tune vigilance in these organisations. of Rs.2,986.46 crore. Till 30th November, 2019, Rs. 9,767 d) Vigilance Awareness Week was observed crore has been recovered by the Custodian out of which, from 28.10.2019 to 02.11.2019. Rs. 6,339 crore has been distributed to Income Tax Department, Banks etc. 12.5 Audit Paras Out of a total of 23.77 crore attached shares, A Summary of Audit observations made available 16.70 crore shares have been sold and a sum of by the Office of C&AG pertaining to DFS is at Rs.3,344.69 crore realized. Of the remaining 7.07 crore Annexure III. 299Annual Report 2019-2020 300Department of Financial Services V 301 secivreS laicnaniF fo tnemtrapeDAnnual Report 2019-2020 302 III eruxennA secivreS laicnaniF fo tnemtrapeDDepartment of Financial Services V 303 secivreS laicnaniF fo tnemtrapeD fo trahC lanoitasinagrOFor Public Contact Purposes: Ministry of Finance Department of Economic Affairs North Block, New Delhi – 110001 Phone : 23095120, 23092453 Website: http://www.finmin.nic.in/the _ministry/dept_eco_affairs/index.asp Department of Expenditure North Block, New Delhi – 110001 Phone : 23095661, 23095613 Website: http://www.finmin.nic.in/the _ministry/dept_expenditure/index.asp Department of Revenue North Block, New Delhi – 110001 Phone : 23095384, 23095385 Website: http://www.finmin.nic.in/the_ministry/dept_revenue/index.html Department of Investment and Public Asset Management Block 11 & 14, CGO Complex, Lodhi Road, New Delhi – 110003 Phone : 24368528, 24368523, 24368044 Website: http://www.gov.in Department of Financial Services Jeevan Deep Building, Parliament Street, New Delhi – 110001 Phone : 23748721, 23748734 Website: http://www.finmin.nic.in/the-_ministry/dept_fin_services/fin_services.asp i