Banking Laws (Amendment) Bill, 2024: The Lok Sabha on Tuesday passed the Banking Laws (Amendment) Bill, 2024, which allows bank account holders to have up to four nominees in their accounts.

Another proposed change relates to redefining ‘substantial interest’ for directorships, which could increase to Rs 2 crore instead of the current limit of Rs 5 lakh, which was fixed almost six decades ago.

The Bill piloted by Finance Minister Nirmala Sitharaman was approved by a voice vote. Replying to the debate on the Bill, Sitharaman said depositors will have the option of successive or simultaneous nomination facility, while locker holders will have only successive nominations.

She also said that since 2014, the Government and the RBI have been extremely cautious, so that banks remain stable. “The intention is to keep our banks safe, stable, healthy, and after 10 years you are seeing the outcome,” Sitharaman said.

The bill proposes to increase the tenure of directors (excluding the chairman and whole-time director) in cooperative banks from 8 years to 10 years, so as to align with the Constitution (Ninety-Seventh Amendment) Act, 2011.

Once passed, the bill would allow a director of a Central Cooperative Bank to serve on the board of a State Cooperative Bank. The bill also seeks to give greater freedom to banks in deciding the remuneration to be paid to statutory auditors. It also seeks to redefine the reporting dates for banks for regulatory compliance to the 15th and last day of every month instead of the second and fourth Fridays.

“The proposed amendments will strengthen governance in the banking sector and enhance customer convenience with respect to nomination and protection of investors,” Sitharaman said while moving the bill for consideration and passing. 

New Delhi: The GST Council will hold its next meeting in Rajasthan’s Jaisalmer on December 21, during which it is likely to take a decision on exempting or lowering the GST rate on health and life insurance.

The council, chaired by Union Finance Minister Nirmala Sitharaman, may also take up the issue of rationalising GST rates on a number of goods consumed by the common man such as bottled drinking water and notebooks for students, to bring them under the 5 per cent slab from 12 per cent at present.

The GST Council has asked the Group of Ministers (GoM) to finalise the report on the GST rate on insurance by the October end. After the GoM meeting on health and life insurance, the council met last month and arrived at a broad consensus on exempting GST on insurance premiums paid for life insurance policies, and senior citizens’ health insurance.

GST on premiums paid by individuals, other than senior citizens, for health insurance of up to Rs 5 lakh, is proposed to be exempted. However, 18 per cent GST will continue on premiums paid for policies with health insurance cover of over Rs 5 lakh.

The GoM on GST rate rationalisation also has suggested that the council rework tax rates on goods such as packaged drinking water, bicycles, exercise notebooks, luxury wristwatches, and shoes.

The GoM on rate rationalisation proposed reducing GST on packaged drinking water of 20 litres and above to 5 per cent from 18 per cent. If the GoM’s recommendation is accepted by the GST council, GST on bicycles costing less than Rs 10,000 will be reduced to 5 per cent from 12 per cent while GST on notebooks used by students will be reduced to 5 per cent from 12 per cent.

The GoM also proposed increasing GST on shoes priced above Rs 15,000 from 18 per cent to 28 per cent. It also proposed raising GST on wristwatches costing above Rs 25,000 from 18 per cent to 28 per cent.

Currently, GST is a four-slab regime. Essential items are either exempted or taxed at 5 per cent while luxury goods face a 28 per cent levy. The 12 and 18 per cent slabs are positioned between the two.

Last Updated:November 18, 2024, 18:50 IST

On inflation, FM Nirmala Sitharaman says a set of three or four perishable commodities is driving the headline inflation, currently, and the rest of it, the core items, are at manageable levels of three or four per cent.

Finance Minister Nirmala Sitharaman speaks at an event organised by SBI.

Union Finance Minister Nirmala Sitharaman on Monday urged banks to make loans affordable and added that the current interest rates are “very stressful”. She was speaking at an event organised by SBI.

At present, India requires industry to ramp up and invest in new facilities, and added that lowering lending rates can help achieve the “Viksit Bharat” aspiration, she added.

“What is important is when you look at India’s growth requirements, and you can have so many different voices coming out and saying the cost of borrowing is really very stressful, and a time when we want industries to ramp up and move (to) building capacities, bank interest rates will have to be far more affordable,” Sitharaman said.

Union Commerce Minister Piyush Goyal last week urged the Reserve Bank of India (RBI) to cut interest rates to boost economic growth. He also suggested looking through food prices while deciding on monetary policy.

It can be noted that most of the commercial banks are tied directly or indirectly to the RBI’s calls on interest rates, with the majority of loans using the repo rate as an external benchmark to which loan prices are pegged.

The consumer price inflation overshot the RBI’s comfort level of 6 per cent, with the 6.2 per cent reading for October dashed hopes of a rate cut soon.

Sitharaman said a set of three or four perishable commodities is driving the headline inflation, currently, and the rest of it, the core items, are at manageable levels of three or four per cent.

The finance minister also made it clear that she does not want to get into the debate of whether food prices should be considered while constructing the inflation indices or to take calls on rates by the RBI’s monetary policy committee.

Inflation is a complex issue which affects The common man, she said, adding that the government has been working on the supply side measures, including edible oils and pulses.

However, she was quick to add that India “cyclically” suffers from supply issues and the government efforts are mainly focused on improving the storage facilities to lessen the volatilities.

Meanwhile, amid widespread concerns about a slowdown in growth, Sitharaman assured that the government is fully aware of the domestic and global challenges and added that there is no need to have “undue concerns”.

She said that a slew of high-frequency indicators are pointing to strong activity on the ground.

Acknowledging that there are voices wondering if the government’s fiscal consolidation is hurting economic activity, the finance minister denied any such thing, saying that growth is a priority for the government.

She also pitched for a rating upgrade, saying it is time for independent rating agencies to take a call on it.

Speaking at the annual business and economic conclave organised by SBI, Sitharaman also asked banks to concentrate on their core function of giving loans while stressing that the “misselling” of insurance products also indirectly adds to the cost of borrowing for an entity.

This is very important from the point of view of increasing people’s trust in the banking sector.

“Trust should be built by the way you offer your portfolios, by the way you offer your service, and by the way you look at each customer’s requirement without clubbing them into one class,” she said.

While banks’ distribution of insurance has led to a deepening of insurance penetration, it has also raised concerns about the misselling of products.

“Misselling…has added or contributed in indirect ways of increased cost of borrowing for the customers. So, banks will have to look at it with a lot more emphasis on their core banking activities and not burden the customers with insurances which they don’t require,” the minister said.

To earn the trust of people, banks must prioritise transparency, ethical practices and clear communication strategies, she added.

Meanwhile, Sitharaman said, small business loans are very important and set an MSME lending target of Rs 6.12 lakh crore for FY26 and Rs 7 lakh crore for FY27, on top of the Rs 5.75 lakh crore she has asked them to do in FY25.

Having achieved the goal of account opening, the next aim for the banking system should be to channelise the savings into risk capital formation as investments, giving insurance covers and also offering wealth management solutions.

Sitharaman expressed her dismay at countries withdrawing from climate change negotiations, terming it as a “worrying” development and reminding all that climate change impacts all. Unilateral measures on promoting conscientious behaviours like the ones imposed by the European Union are also “very worrying”, she said, stressing that the need is to have global agreements.

(With PTI Inputs)

New Delhi: SBI Research in a report has advocated for quicker review of the Income Tax Act as announced in Budget 2024-25.The report recommended that the revised Act be introduced as a money bill so that it can be passed within stipulated 75 days. 

This will not only simplify and streamline taxation process but also aligned with economic growth and inclusivity.The report recommended raising the TDS threshold on bank interest payments from Rs 10,000 to at least Rs 100,000. 

Allowing annual issuance of TDS certificates (Form 16A) instead of quarterly, aligning it with Form 16 for salaries, since Form 26AS is primarily used for credit and a flat tax rate for individuals earning over Rs 8 lakhs, specifically for those aged 60 to 80, with additional provisions for individuals aged 80 and above.

Earlier this month, the Central Board of Direct Taxes (CBDT) has formed an internal committee to oversee a comprehensive review of the Income-tax Act, 1961 (Act), as was announced in the Union Budget 2024-25 by Finance Minister Nirmala Sitharaman. The goal is to make the Act concise, clear, and easy to understand, which will reduce disputes, and litigation, and provide greater tax certainty to taxpayers.

The committee invites public inputs and suggestions in four areas — simplification of the Act; reducing litigation; streamlining compliance; and removal of redundant/obsolete provisions.In SBI Research’s view, this approach is aimed at addressing the practical challenges faced by taxpayers, accountants, and legal professionals, ensuring that their real-world experiences help shape the reforms.

“So, all the stakeholders should participate in evolving tax legislation, which will govern them in future,” SBI Research urged. Further, the SBI Research report authored by SBI’s Group Chief Economic Adviser Soumya Kanti Ghosh said with an increasing alignment with a progressive taxation regime, the contribution of direct taxes to total tax revenue reached 56.7 per cent in the assessment year 2024 (54.6 per cent in 2023), the highest in 14 years. 

The growth rate of Personal income tax (PIT) collections has been surging faster than Corporate tax collections since 2020-21, with PIT increasing by 6 per cent against CIT’s 3 per cent growth.”Direct taxes to GDP ratio inched up to 6.64 % in AY24, highest since 2000-01, vindicating the results of improving tax compliance,” said the report.ITRs filed during 2024 witnessed a phenomenal jump, standing at 8.6 crore (against 7.3 crore in 2022). 

A total of 6.89 crore or 79 per cent of these returns were filed on or before the due date. SBI Research believes the total number of ITRs filing for 2025 could swell to more than 9 crore by the end of March 2025. States such as Maharashtra, Delhi, Gujarat and Karnataka, which have been traditional leaders in income tax base are nearing saturation in ITR filing while UP, Bihar, AP, Punjab and Rajasthan are gaining share in incremental growth of filers.