Taxation Current Affairs

Cabinet approves protocol amending DTAA between India and Kyrgyz

The Union Cabinet approved protocol amending Agreement between India and Kyrgyz for avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income.

The Protocol amending Double Taxation Avoidance Agreement (DTAA) aims to update Article 26 (Exchange of Information) of DTAA to international standards.

Key Facts

The updated Article 26 of DTAA provides for exchange of information to widest possible extent. The new paragraphs 4 and 5 have been inserted into Article 26 to make mandatory for States to provide information which is requested. Such information cannot be denied on ground that it has no domestic tax interest in that information or held by bank or a financial institution, etc. The Protocol further empowers India to use information received under DTAA for other law enforcement purposes on supplying state authorizing such use.

Background

The existing DTAA between India and Kyrgyz Republic was notified in February 2001. The Protocol amending DTAA for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income has been agreed to be signed between two countries.

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Government doubles import duty on wheat to 20%

The Central Board of Excise and Customs (CBEC) under Union Finance Ministry has doubled import duty on wheat to 20% from 10% to curb cheap shipments and give positive price signal to farmers in ongoing Rabi season. It also imposed import duty of 50% on peas to check cheaper shipments from countries like Canada to boost domestic prices. The import duty on peas has been imposed to curb shipments and boost domestic prices.

Purpose

In the last two years India, world’s second biggest wheat producer has been importing wheat after local production fell due to successive droughts. India had imported 5.75 million tonnes of wheat in 2016/17 fiscal year ended on March. Doubling of import duty aims to give positive price signal and encourage farmers to grow wheat in more area as farmers have started planting of rabi (winter) wheat crop. Moreover, Government does not want wheat growers to follow way of pulses farmers who shifted to other crops this kharif season as prices remained low just before sowing period owing to bumper crop last year.

Pulses Issues

India produced record 22 million tonnes of pulses in 2016-17 crop year which led to fall in domestic prices, even below MSP. Moreover, country also imported about 5 million tonnes of pulses last fiscal.

Import Duty

It is a tax collected on imports and some exports by customs authorities of country. It is usually based on value of goods that are imported. Depending on context, import duty may also be referred to as tariff, import tax, customs duty and import tariff.

The purpose of import duty is to raise income for local government and to give market advantage to locally grown or produced goods that are not subject to import duties. It is sometimes used as tool to penalize a particular nation by charging high import duties on its products.

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