PPF, NSC rates to be cut; bank FDs may fetch lower interest

The government is set to reduce interest rates on small savings products such as public provident fund and National Savings Certificate over the next few days - a move that will impact returns on your bank fixed deposits but also pave the way for banks to pare lending rates in the coming months and reduce the EMI burden. 

The new formula will see small savings rates linked to returns on government securities of comparable maturity, with the reduction expected to be up to 50 basis points (100 basis points equal a percentage point). The finance ministry is finalizing product-specific rates and sources said the impact would be higher in case of maturity period of less than five years. There are indications that senior citizens and women will be protected with products such as the Sukanya Samriddhi Yojana spared the the axe, at least for the moment. 

The new rates are expected to be notified over the next few days with the government set to announce quarterly revision instead of an annual reset, which is the norm currently, sources said. 

Banks are expected to follow the small savings rate cut with lower fixed deposit rates, which over a period of a few months may translate into lower lending rates. In the past, lenders have been reluctant to pass on the benefit of lower rates to borrowers. 

The Reserve Bank of India and banks have been seeking a reduction in small savings rates, arguing that PPF and other products offered higher returns when compared with fixed deposits, resulting in a flight of funds to the government schemes. 

As a result, banks have been forced to maintain higher deposit rates, making it difficult for them to pass on the benefits of lower policy rates. Bankers have said higher small savings rates have meant that lending rates have been cut by a lower extent compared to RBI's policy rate reduction of 125 basis points last year. 

Although the move may trigger a fall in returns on your savings, it is seen as a reform move by the government, which recently announced a plan to end subsidies to the high-income segment. The reduction also comes at a time when the middle class has become more comfortable investing in debt and equity mutual funds, which over the past decade have emerged as an attractive savings tool. 

Source:-The Economic Times

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Govt sets up panel on 7th Pay panel's advice

New Delhi, Jan 13 (PTI) Government today decided to set up a high-powered panel headed by Cabinet Secretary P K Sinha to process the recommendations of the 7th Pay Commission which will have bearing on the remuneration of 47 lakh central government employees and 52 lakh pensioners.

The Cabinet has approved the setting up of Empowered Committee of Secretaries to process the recommendations of 7th Pay Commission in an overall perspective, Parliamentary Affairs Minister M Venkaiah Naidu told reporters here.

The implementation of the new pay scales is estimated to put an additional burden of Rs 1.02 lakh crore on the exchequer in 2016-17. Subject to acceptance by the government, they will take effect from January 1, 2016.

The Empowered Committee of Secretaries will function as a Screening Committee to process the recommendations with regard to all relevant factors of the Commission in an expeditious detailed and holistic fashion, an official statement said.

Finance Minister Arun Jaitley had said earlier that he was not worried about fiscal deficit and government would be able to meet its target despite additional outgo on account of higher pay.

He had admitted however that the impact of implementing the recommendations, which will result in an additional annual burden of Rs 1.02 lakh crore on exchequer, would last for two to three years.

Postal department officials suspended for not delivering Ramvilas Paswan's New Year cards

Three postal department officials, including the postmaster of the main post office of Hajipur have been suspended for non-delivery of New Year greeting cards send by Union Minister Ramvilas Paswan to the people of his Hajipur Lok Sabha constituency. 

Acting on the complaint of LJP workers and others that greeting cards send by the Minister was found abandoned on the third floor of the district bar council building, Superintendent of Post Umesh Chand Prasad ordered suspension of the three officials. 

Those suspended included postmaster of Hajipur main post office Lallan Ram, Public Relations Officer Raj Kumar Shrivastava and postman Deonarayan Mahto, Prasad told PTI today. 

Prasad said he received a complaint that more than 450 greeting cards were found strewn on the third floor of the district bar council building and preliminary inquiry found the complaint was true. 

Hence, action was taken, the Superintendent of Post said. 

He said arrangements were being made to distribute the greeting cards to the persons concerned at the earliest. 

A detailed probe was on in this connection and if involvement of more officials come to light, action would be taken against them, Prasad said. 

Source:-The Economic Times

Received a tax notice? Here’s what you do

The number of tax notices under Section 245 of the Income-Tax Act has seen a sharp spurt, specially to those who had claimed a refund in their returns this fiscal. Taxpayers have been receiving "outstanding demand" notifications under the pending actions section of the income-tax filing website. Demands date back to assessment year 2005-06 and range from a meagre Rs 300 to amounts as high as Rs 2-3 lakh. Chartered accountants say the sudden spate in these demands is mainly because the tax department has just completed assessment of old tax records that are being updated now. A spokesperson of the Central Board of Direct Taxes did not confirm the trend but said that "details of outstanding demand have been available on the taxpayers' account in the e-filing portal of the Income Tax Department since April 2014."

"The Central Board of Direct Taxes (CBDT) has issued two press releases on 17 April 2014 and 19 May 2015. However, prior to any adjustment against refunds, Central Processing Centre( CPC ), Bengaluru has been sending emails to taxpayers requesting them to notify in case of any incorrect entry," said Shefali Shah, official spokesperson, CBDT. In cases where the taxpayer has confirmed the demand, the CPC has made the adjustment against refunds.

There can be some data entry errors too because the migration from offline to online is being done manually. "In 60% of these cases it is a tax credit error," Varun Advani, COO, makemyreturns.com. The department is adjusting these demands against the refunds claims that are due to assessees. One has the choice to either accept the demand and pay up or dispute the claim. While for smaller demands, individuals are mostly settling the demand, taxpayers with higher outstanding demands plan to dispute the claim. "We have been getting requests from our customers to dispute the claim and file rectifications," says Advani. "Since the demands are historical, most taxpayers are confused about how the department computed the demand," adds Srini Angadipurram, a Bengaluru-based chartered accountant.

The option to rectify the errors on line is only available from assessment year 2009-10. So, if the demand pertains to a more recent year, the taxpayer can contest it by filing an an electronic rectification under Section 154 for that particular assessment year through the department's website. However, if the demand is for an assessment year where the return was manually filed, the taxpayer would have to get in touch with the jurisdictional assessment officer. "In such cases, the standard practice is to write a letter to your AO clearly stating that the demand raised is in dispute, accompanied by documents that support your claim for negation of the same," says Advani. The rule says, historical demands below Rs 1 lakh can be made only up to past four years while demands above Rs 1 lakh can be made up to past six years. "The department is committed to resolving the issue of outstanding demand, particularly for smaller taxpayers and requests that taxpayers may provide their responses online," says Shah. There seems to be another glitch in the e-verification process. Many individual taxpayers who had e-verified there ITR-Vs this year using electronic verification, are getting reminder notifications from the CPC that the verification is still pending. Moreover, the I-T website is not accepting re-verifications electronically. In fact, the taxpayers are being asked to print, sign and mail the document to CPC Bengaluru before January 31. 

Source:-The Economic Times

CHQ News:- Preparation of Combined All India Seniority List of Inspector Posts for the year 2001 and onwards

Directorate vide memo No. 7-1/2015-SPB-II dated 28/7/2015 have already directed all circles to submit year wise list of Inspectors from 2001 onwards for preparation of combined All India Seniority List. As the Directorate has not received correct information from few circles and therefore reminder was issued on 30th December 2015 to all circles with a direction to submit the required information/documents in the prescribed format on or before 5/1/2016. Today, it is learnt that not a single circle has submitted their circles information to Directorate. 

Post Bank likely to handle DBT schemes

The entire direct benefit transfer (DBT) scheme for distribution of government subsidy is likely to be handled by the Post Bank - the new payments bankwhich will be under the Department of Posts. 

"Earlier initial capital approval sought for setting up Post Bank was about Rs 300 crore which has been increased to Rs 800 crore as there is proposal now that entire DBT scheme should be handled by it as well as saving accounts currently handled by DoP should also be moved under it," an official source told PTI. 

Public Investment Board ( PIB) will consider this proposal in its meeting on January 15 and then send its recommendation to Cabinet Committee on Economic Affairs for final approval, the official said. 

The Reserve Bank of India has granted Payments Bank permit to the postal department, which has 1.55 lakh branches across country and already provides financial services. 

Pilot for the Payments Bank is set to start from January 2017 while full-fledged operations are to start from March 7, 2017. 

Under DBT scheme government directly transfer subsidies in to bank account of people eligible for it. Subsidies of around 35-40 government schemes are covered under it including that provided on domestic LPG connections. 

As per official data, till December 27 around Rs 40,000 crore was directly reaching the beneficiaries through various schemes. 

As many as 40 international financial conglomerates, including World Bank and Barclays, have shown interest to partner with Postal Department for the payments bank. 

The DoP has shortlisted six consultants including McKinsey, KPMG, Ernst and Young and PricewaterhouseCoopers. The postal department expects to finalise consultant for setting up of payment banks by end of this month. 

At the end March 2015, the DoP housed around 20 lakh saving accounts which held total deposit of about Rs 47,800 crore. The payment bank wing of DoP is also proposed to manage these accounts. 

As per RBI guidelines, payments banks would offer a limited range of products such as demand deposits and remittances. 

They will, however, not be allowed to undertake lending activities and will initially be restricted to holding a maximum balance of Rs 1 lakh per individual customer. 

They will be allowed to issue ATM or debit cards as also other prepaid payment instruments, but not credit cards.

Source:-The Economic Times

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Public Investment Board to consider postal department's Rs 800 crore payment bank proposal

The Public Investment Board (PIB) is likely to consider on Janaury 15 a Rs 800-crore proposal from Postal Department for setting up payments bank. 

After the PIB's approval, the proposal will be moved to Cabinet within a month. PIB under the Finance Ministry vets investment proposals by state-run entities. 

"The PIB will consider the DoP's Rs 800-crore proposal for setting up payments bank in its meeting on January 15," an official source told. 

The pilot for payments bank is set to start from January 2017 while full-fledged operations may start by March 2017. 

As many as 40 international financial conglomerates, including World Bank and Barclays, have shown interest to partner with Postal Department for the payments bank. 

The Reserve Bank of India has granted payments bank permit to the postal department, which has 1.55 lakh branches across country and already provides financial services. 

As per RBI guidelines, payments banks would offer a limited range of products such as demand deposits and remittances. They will not be allowed to undertake lending activities and will initially be restricted to holding a maximum balance of Rs 1 lakh per individual customer. 

They will be allowed to issue ATM or debit cards as also other prepaid payment instruments, but not credit cards. 

The DoP has shortlisted six consultants including McKinsey, KPMG, Ernst and Young and PricewaterhouseCoopers to advise it on setting up of payment banks. 

Source:-The Economic Times

Instructions regarding time limit for holding examinations/interviews from the date of advertisment for the post under direct recruitment - reg.

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