1. Union Cabinet approves alternative mechanism Framework for consolidation of Public Sector Banks.
Finance Minister Arun Jaitley announced that the union cabinet has given approval to the framework for consolidation of public sector banks. The decision was taken at the Cabinet meeting on Wednesday afternoon after State Bank of India chairman Arundhati Bhattacharya called for more consolidation among the public sector banks, saying this could reduce their dependence on government for capital.
“The cabinet approved the constitution of an alternate mechanism that will oversee proposals with regard to consolidation of banks, which will come from the PSBs (public sector banks),” Jaitley said in press conference after the cabinet meeting.
“As of today, there are 20 PSBs plus the State Bank of India (SBI),” he said, adding that the SBI had recently concluded the merger with its associate banks and become a larger consolidated entity.“If any other PSB board gives a consolidation proposal, to oversee that proposal an alternative mechanism will be in place to give in principle approval for the proposal of the banks for a scheme of amalgamation,” Jaitley said.
Explaining that such an alternative mechanism “enables quick facilitation of decisions”, Jaitley said the constitution of the committee would be made by the Prime Minister.
“The decision regarding creating strong and competitive banks will be solely based on commercial considerations,” he said. “Our experience of consolidation has been positive. It increases the entity’s commercial strength, the ability to absorb market shocks,” he added.
The cabinet approval comes in the face of banking operations across the country being hit on Tuesday as over 10 lakh bank employees in more than 1,30,000 branches pan-India struck work protesting against reforms in the banking sector, including proposals of merger of state-run banks.
2. Reserve Bank of India to issue Rs 200 notes.
The central bank will soon issue 200-rupee note the Finance Ministry has confirmed today. The move will help fill the vast demand for cash after the notes ban, which wiped out over 85 per cent of the cash in circulation.
The Finance Ministry, in a notification, said that on the recommendations of the Central Board of Directors of the RBI, "the central government hereby specifies the denomination of banknotes of the value of two hundred rupees".
The Reserve Bank of India (RBI) proposal to bring in 200 denominated bank notes for the first time in history was cleared by the Finance Ministry; the design has reportedly been approved by the Prime Minister`s Office.
The central bank reportedly decided to bring in 200-rupee notes in March, after consulting with the Finance Ministry. The notes are going through multiple checks for security and quality, sources have said.
Finance Ministry sources say the new notes, which are being printed at a government press in Mysuru, will help liquidity.
There is nothing official on its design though images are already in circulation on social media.
This is the fourth new note to be announced since November, when Prime Minister Narendra Modi announced an overnight ban on Rs. 1,000 and Rs. 500 notes, the move aimed at choking tax evaders had people scrambling to return their banned cash and draw new notes from banks and ATMs.
Days later, new Rs. 2,000 and Rs. 500 notes were introduced to ease the cash crunch faced by millions across the country.
Recently, the government also decided to bring back the one rupee note that was discontinued in 1994.
3. 5% GST applicable on selling of space for advertisement in Print media.
The government on Wednesday specified that the Goods and Services Tax rate for selling space for advertisements in the print media would be 5%.
If an advertising agency sells that space to a client, then it too pays 5% GST, but if it sells the space on behalf of the newspaper, it would have to pay 18% GST on the commission charged by the paper.
“Query has been raised regarding GST applicable on selling of space for advertisement in print media,” the government said in a statement. “Selling of space for advertisement in print media is leviable to GST at the rate of 5%. If the advertisement agency works on principal to principal basis, that is, buys space from the newspaper and sells such space for advertisement to clients on its own account, that is, as a principal, it would be liable to pay GST at the rate of 5% on the full amount charged by advertisement agency from the client.”
As an example, the statement added that if a newspaper sells a unit of space for ?85 to an advertising agency, it would have to pay GST of 5% of ?85. If the agency sells that unit to a client for ?100, then it would have to pay GST at 5% on ?100 and would be able to avail of input tax credits (ITC) for the tax paid by the newspaper.
“On the other hand, if the advertisement agency sells space for advertisement as an agent of the newspaper on commission basis, it would be liable to pay GST at the rate of 18% on the sale commission it receives from the newspaper,” the statement added. “ITC of GST paid on such sale commission would be available to newspaper.”
“However, if the advertisement agency supplies any service other than selling of space for advertisement, such as designing or drafting the advertisement, and such supply is not a part of any composite supply, the same would be liable to tax at the rate of18%,” the statement said. “If such supplies are part of any composite supply, the rate applicable for the principal supply shall apply.”
“Therefore, everything depends on the terms of the contract between the newspaper, advertisement agency and the client,” it added.