Although the recent currency shortage and ATMs running dry, especially in Andhra Pradesh, Telangana, Karnataka, Bihar and Madhya Pradesh, have created a furore, the Reserve Bank of India (RBI) has assured there is no crisis.
RBI Says There's No Cash Crunch
Although the recent currency shortage and ATMs running dry, especially in Andhra Pradesh, Telangana, Karnataka, Bihar and Madhya Pradesh, have created a furore, the Reserve Bank of India (RBI) has assured there is no crisis. In a statement on April 17, it said, "There is sufficient cash in the RBI vaults and currency chests. Nevertheless, printing of the notes has been ramped up in all four note presses. The shortage may be felt in some pockets largely due to logistical issues of replenishing ATMs frequently and the recalibration of ATMs being still underway. RBI is closely monitoring both these aspects." There have been reports of unusually large cash withdrawals while deposits in FY2017/18 had been lowest in the last five decades and hence, the crisis in currency notes. Besides, RBI has also stopped printing `2,000 notes, leading to a cash shortage in some places.
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The Central Board of Direct Taxes has come out with modified ITR forms for AY2018/2019, which will require salaried individuals to provide a detailed break-up of the salary. Those in business will have to give their GST numbers and turnover amounts. The new Sahaj form (ITR Form-1), filed by individuals with income up to `50 lakh, seeks salary break-up in the same format as available in Form 16. Taxpayers must share details of allowances that are not tax-exempt, the value of perquisites, profit in lieu of salary and deductions claimed under Section 16. Earlier, NRIs could also use this form to file their returns. But now they will have to use ITR Form-2. Individuals and HUFs (Hindu Undivided Families) with income under any head other than business or profession can also fill this tax return form. Under ITR-4, taxpayers who have presumptive income from business and profession will have to furnish their GST registration numbers and turnover. However, the IT department has done away with the column that sought details on cash deposits made post demonetisation last year.
Retail inflation in March 2018, which has slipped to a five-month low due to easing food prices. However, it is higher than 3.89 per cent recorded in March 2017 and also above the RBI's medium-term target of 4 per cent. So, it is likely that the central bank will make no changes in the interest rates in the next review due in early June. Consumer inflation stood at 4.44 per cent in February this year. RBI has recently lowered its projection of April-September retail inflation to 4.7-5.1 per cent range from a previous range of 5.1-5.6 per cent released in February. Retail inflation spiked to 5.21 per cent in December 2017, the highest since August 2016.
Big Lenders Hike Interest Rates
Home loan interest rates are heading north as major lenders HDFC and PNB Housing Finance have raised their rates up to 20 and 25 bps, respectively. Faced with tight liquidity, which has led to a rise in interest rates on deposits, cost of funds for the lenders has gone up, and they are hiking interest rates on loans. HDFC, the biggest private lender in home loan space, now charges between 8.4 per cent and 8.7 per cent while PNB Housing's rates range from 8.4 per cent to 11.75 per cent. Indiabulls Housing Finance has also increased its rates up to 20 bps. Employee benefits
GST Slapped On Canteen Food
The Authority of Advance Ruling in Kerala has given a ruling to levy GST on the amount charged by employers for canteen food given to employees. On a plea made by Caltech Polymers, the Authority was asked to clarify whether recovery of food expenses from employees for the canteen provided by the company would come under the definition of outward supplies. The Authority said yes and ruled that it should be brought under the GST Act. Incidentally, it was not a business activity and the employer was doing it without any profit. The order could be taken as a precedent to bring many reimbursements under the GST, but it will be finally decided by the GST Council.