ET Financial Inclusion Summit: For a digital India, rules should aim at desired outcomes

ET Financial Inclusion Summit: For a digital India, rules should aim at desired outcomes

Due to the Covid-19 pandemic and periods of forced self-isolation, digital payments have become the default option for a significant portion of the population.

According to Nikhil Sahni, Mastercard’s division president for South Asia,

The number and value of paper-based instruments such as checks have decreased in the last financial year, while retail digital payments lead by UPI-based transactions have improved.

“In terms of digital payments, internet access, smartphone ownership, and provision for Jan Dhan accounts, which the prime minister himself envisioned, have all been milestones in the right direction.

Paper instruments such as checks saw a 35 percent drop in volume and a 28 percent drop in value in the previous fiscal year. At the same time, retail digital payments increased by 16 percent, with UPI-based payments doubling.

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“Spending on digital infrastructure by the government at a time when private consumption is fundamentally declining would promote economic development and have a multiplier effect, making economic activity considerably more efficient and environmentally sustainable.

To make payments across devices without fear of fraud.

The government must establish a regulatory framework that allows for platform interoperability, allowing people and businesses to make payments across devices without fear of fraud.

Regulations should aim for desirable outcomes regardless of who delivers them, and establish circumstances for competition and collaboration where necessary. We need data protection regulations that encourage ethical behavior while not penalizing individuals or gamers to the detriment of the entire community,” he stated.

GST’s Applicability to the Reverse Charge Mechanism for Service Imports

After offering digital payments to 1 billion people between 2014 and 2020, Mastercard wants to convert 1 billion people and businesses around the world in the next four years.

“Our commitment to financial inclusion is part of a larger social commitment…

Mastercard is excited to work with the government and other stakeholders to make India truly digital,” says the company.

Latest News – Certicom Update

Certicom Updates:

1. The Goods and Services Tax (GST) department has begun to identify instances of tax evasion and frauds identifying mismatches between E-way bills and the radio frequency tags used to cross toll plazas.

GST authorities are now comparing the data given at the time of generating e-way bills for goods movement with the actual movement of vehicles captured at toll plazas and identifying revenue leakages.

GST’s Applicability to the Reverse Charge Mechanism for Service Imports

2. CBDT has notified the new rules regarding computation of short-term capital gains and written down value where depreciation on goodwill has been obtained, potentially increasing tax liabilities on firms that have undergone mergers or acquisitions in recent years. Finance Act, 2021, had amended that ‘goodwill’ will no more be regarded as an “intangible asset” and depreciation would not be available with effect from April 2020.

3. Indirect Tax Department cannot freeze Bank account of assesses if Appeal has been filed with mandatory pre-deposit. As per CBEC Circular No 984/08/2014-CX.

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4. Reserve Bank of India announced the cut-off yield for the new 10-year bond at 6.10% per annum, higher than that of the current benchmark, signalling a slight tolerance for a higher yield after months of trying to keep it at 6% or less.

When does EPF become taxable?

When does EPF become taxable?

As per current law, an employee’s own contribution to the EPF account is not taxable. However, effective from April 1, 2020, onwards, the employer’s contribution to the EPF account can become taxable if it exceeds Rs 7.5 lakh in a financial year.

Though the biggest USP of the Employees’ Provident Fund is its EEE tax status, however, there are certain instances when EPF can become taxable. Here is a look at instances when you are required to pay tax on EPF.

Full withdrawal from the EPF account is allowed if an employee has left his/her job and has not joined any other new job after two months.

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When does an EPF contribution become taxable?

According to a new regulation introduced in Budget 2020, if an employer’s total contribution to an employee’s NPS account, superannuation fund, and EPF account in a financial year exceeds Rs 7.5 lakh, the excess contribution becomes taxable in the hands of the employee.

 

GDP grows 1.6% in Q4, but contracts 7.3% in FY21

 

Case I: When your company contributes more than Rs 7.5 lakh to your NPS, superannuation fund, and EPF account in a financial year.
Assume an employer contributes Rs 1 lakh to the superannuation fund, Rs 5 lakh to the NPS, and Rs 2 lakh to the EPF account in a fiscal year. This is a total donation of Rs 8 lakh, which is Rs 50,000 more than the tax-free maximum of Rs 7.5 lakh. As a result, an employee must pay tax on the extra contribution.

Case II: When a financial year’s contribution to the EPF account exceeds Rs 7.5 lakh and no contributions to the NPS or superannuation fund are made.
Assume a worker does not have an NPS account or a superannuation fund. In a financial year, however, the employer contributes Rs 8.5 lakh to the EPF account. In this scenario, too, the extra amount will be taxable in the employee’s hands.