Hon’ble President of India inaugurates Civil Accounts Day, 2016
Hon’ble President of
India inaugurates Civil Accounts Day, 2016 and emphasizes on the need of
e-Governance initiatives to fulfil the dream of becoming a welfare nation; FM:
against the grim economic situation in the world, India stands-out as a haven
of stability and opportunity.
The President of India Shri Pranab Mukherjee inaugurated the 40th
Civil Accounts Day at Vigyan Bhawan here in New Delhi today. The event
was organized by the Office of the Controller General of Accounts, Ministry of
Finance, Department of Expenditure to mark the foundation day of Indian Civil
Accounts Service. On this day, in the year 1976, the Union Government
Accounts were delinked from Indian Audit and Accounts Service and Indian Civil
Accounts Organisation came into existence.
Speaking on the occasion, the President of India
put the decision of separating accounts from audit in a perspective- ‘The
founding fathers of our Constitution placed significant importance on accounts
and audit of the Union Government and States. Several Constitutional provisions
prescribe for the financial accountability of the Executive to Parliament, and
the financial management of the affairs of the Union and the States.
Government recognized that if the process of
development is to be speeded up, and plans and programs are to be properly
implemented, reforms had become necessary in the field of public financial
administration. Separation of accounts from audit was therefore clearly the
right decision to take.’
He emphasized on the need of e-Governance initiatives
to fulfil the dream of becoming a welfare nation. He said- ‘We must
therefore continue to harness and leverage e-governance capabilities for
improving the lives of the poor and needy, so as to transform India to a more
compassionate welfare society. Our programs and social welfare measures must
reach the poorest of the poor, so as to enable the needy to be partners in the
nation’s growth and development.’
Presiding over the Function, the Finance Minister, Shri
Arun Jaitely appreciated the Civil Accounts Organization for developing
effective tools of PFM. He said- ‘The Public Financial Management System (PFMS)
has evolved into a useful MIS tool for the Central government. It has also
become a successful payment platform for disbursal of funds for the schemes
covered under Direct Benefit Transfer (DBT). Using DBT and PFMS, the Government
has now demonstrated that it can accurately target beneficiaries, reduce
leakages by eliminating duplication, and increase efficiency of the delivery
process. We are now in a better position to target actual beneficiaries and
control expenditures in a transparent manner.’
He urged the CGA to use PFMS as the vital link to
connect the dots of the JAM triad for providing DBT benefits to the intended
sections of our society.
FM stressed the need of major reforms in PEM to
measure the outcomes. Highlighting it, he said- ‘CGA can play an important role
towards improving public expenditure management by commissioning specific
studies that evaluates and measures performance in implementation of national
priority programs. Outputs and outcomes can be measured. What is measurable can
be made accountable. Our objective is to learn from past experiences in the
implementation of major projects and schemes, and rectify weaknesses through
suitable modifications in the design of future projects.’
The Finance Minister, Shri Arun Jaitely further
said that the prevailing economic scenario across the world is challenging and
this year’s Budget was prepared and presented at a time of unusual volatility
in the international economic market. Markets are fearful that the global
recovery may be faltering. Against this grim background, India stands-out
as a haven of stability and opportunity. Its macro-economy is stable,
founded on the government’s commitment of fiscal consolidation and low
inflation. Its economic growth is amongst the highest in the world.
These achievements are remarkable because they have been accomplished in the
face of weak export demand and a second successive season of poor rainfall.
Finance Minister, Shri Arun Jaitely
said that the task now is to sustain them in an even more difficult global
environment. This will require sound economic management. Fiscal
policy will continue to be vital in an uncertain global environment, while
sustaining growth. On the Government’s “reforms-to-transform” agenda, a
series of measures have been enacted which should increase the supply potential
of the economy. We want to create wealth and spread that wealth across
the economy especially to farmers, the vulnerable and disadvantaged
groups. Sabka Saath Sabka Vikas is our guiding philosophy which we will
strive to meet every day.
The Comptroller& Auditor General of India, Sh.
Shashi Kant Sharma briefly touched the background in which accounts were
separated from the audit.
He underlined the provisions of FRBM Act to shape the
paths for some more important disclosures. He said-‘Under the Fiscal
Responsibility and Budget Management Act, there is disclosure on what revenues
the government has to realize and the revenue which is due but not realized.
Similarly, I feel there should be proper disclosure of what the government owes
in terms of unpaid claims for goods and services already supplied or consumed by
it. Similarly, improving the system of asset accounting continues to be part of
the unfinished agenda as it is also an important ingredient of the government’s
obligations under the Fiscal Responsibility and Budget Management Act.’
C&AG informed the gathering about the big data
centre established in his office. Referring to the challenges in dealing with
big data Mr. Sharma said- ‘The potential of using the mass digital data
generated in the process of compilation and consolidation of government accounts
is huge. We have initiated steps to deal with the challenges posed by big data.
One of the biggest databases that would merit the application of advance data
analytics tools is the data on government accounts from the transaction level
to the highly aggregated accounts presented to the Parliament.’
Tracing the outcomes of departmentalized accounts The
Finance Secretary, Shri Ratan P. Watal said- ‘The management accounting
function is now well entrenched in the Executive. Line Ministries and Departments
today take complete responsibility for their spending decisions, and the
resultant outputs and outcomes of budget allocations voted by Parliament.
Prescribed timelines for closure of monthly and annual accounts are complied
with.’
Mr. Watal acknowledged the role of PFMS in DBT and
said- ‘I must specifically mention the role played by the Public Financial
Management System (PFMS) in facilitating timely payments to the poor and needy
people of our country in respect of social sector schemes administered through
the DBT mode. PFMS has become a game changer and has led to significant
efficiency gains for the Government. It is for this reason that Government
intends to further strengthen the capacities and capabilities of PFMS and
transform it to an Integrated Financial Management Information System.’
The Controller General of Accounts, Shri Mohan J.
Joseph, while welcoming the President of India and other guests highlighted
the major initiatives and achievements of the Civil Accounts Organisation in
the 40 years of its existence. Assuring all the stakeholders of continuous
reforms Mr. Joseph said-‘Reforms in public financial management are a
continuous process. From time to time, structural changes take place in the
economy, as well as in the functioning of the government which demand
accounting data on public finances to be available to decision makers, often on
real time basis. This demand for faster information can only be met through
adoption of technology in the banking sector, since banks play a pivotal role
in the treasury operations. Recognizing this need, the Service has since
its inception, been a pioneer in the use of Information Technology in payments,
Accounting and Financial Reporting.’
Later, many officers of the CGA were awarded for their
outstanding performances by the Hon’ble President of India.
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Clarification about
Changes made in the Tax Treatment for Recognised Provident Fund & National
Pension System (NPS)
There seems
to be some amount of lack of understanding about the changes made in the
General Budget 2016-17 in the tax treatment for recognised Provident Fund &
NPS.
The following clarifications are given in this matter:-
(i) The purpose of this reform of making the change in tax regime is to encourage more number of private sector employees to go for pension security after retirement instead of withdrawing the entire money from the Provident Fund Account.
(ii) Towards this objective, the Government has announced that Forty Percent(40%) of the total corpus withdrawn at the time of retirement will be tax exempt both under recognised Provident Fund and NPS.
(iii) It is expected that the employees of private companies will place the remaining 60% of the Corpus in Annuity, out of which they can get regular pension. When this 60% of the remaining Corpus is invested in Annuity, no tax is chargeable. So what it means is that the entire corpus will be tax free, if invested in annuity.
(iv) The Government in this Budget has also made another change which says that when the person investing in Annuity dies and when the original Corpus goes in the hands of his heirs, then again there will be no tax.
(v) The idea behind this mechanism is to encourage people to invest in pension products rather than withdraw and use the entire Corpus after retirement.
(vi) The main category of people for whom EPF scheme was created are the members of EPFO who are within the statutory wage limit of Rs.15,000 per month. Out of around 3.7 crores contributing members of EPFO as on today, around 3 crore subscribers are in this category. For this category of people, there is not going to be any change in the new dispensation.
(vii) However, in EPFO, there are about 60 lakh contributing members who have accepted EPF voluntarily and they are highly - paid employees of private sector companies. For this category of people, amount at present can be withdrawn without any tax liability. We are changing this. What we are saying is that such employee can withdraw without tax liability provided he contributes 60% in annuity product so that pension security can be created for him according to his earning level. However, if he chooses not to put any amount in Annuity product the tax would not be charged on 40%.
(viii) There is no change in the existing tax treatment of Public Provident Fund (PPF).
(ix) Currently there is no monetary ceilings on the employer contribution under EPF with only ceiling being that it would be 12% of the salary of the employee member. Similarly, there is no monetary ceiling on the employer contribution under NPS, except that it would be 10% of salary.
(x) Now the Finance Bill 2016 provides that there would be monetary ceiling of Rs1.5 lakh (Annul) on employer contribution considered with the ceiling of the 12% rate of employer contribution, whichever is less.
(xi) We have received representations today from various sections suggesting that if the amount of 60% of corpus is not invested in the annuity products, the tax should be levied only on accumulated returns on the corpus and not on the contributed amount. We have also received representations asking for not having any monetary limit on the employer contribution under EPF, because such a limit is not there in NPS. The Finance Minister would be considering all these suggestions and taking a view on it in due course.
The following clarifications are given in this matter:-
(i) The purpose of this reform of making the change in tax regime is to encourage more number of private sector employees to go for pension security after retirement instead of withdrawing the entire money from the Provident Fund Account.
(ii) Towards this objective, the Government has announced that Forty Percent(40%) of the total corpus withdrawn at the time of retirement will be tax exempt both under recognised Provident Fund and NPS.
(iii) It is expected that the employees of private companies will place the remaining 60% of the Corpus in Annuity, out of which they can get regular pension. When this 60% of the remaining Corpus is invested in Annuity, no tax is chargeable. So what it means is that the entire corpus will be tax free, if invested in annuity.
(iv) The Government in this Budget has also made another change which says that when the person investing in Annuity dies and when the original Corpus goes in the hands of his heirs, then again there will be no tax.
(v) The idea behind this mechanism is to encourage people to invest in pension products rather than withdraw and use the entire Corpus after retirement.
(vi) The main category of people for whom EPF scheme was created are the members of EPFO who are within the statutory wage limit of Rs.15,000 per month. Out of around 3.7 crores contributing members of EPFO as on today, around 3 crore subscribers are in this category. For this category of people, there is not going to be any change in the new dispensation.
(vii) However, in EPFO, there are about 60 lakh contributing members who have accepted EPF voluntarily and they are highly - paid employees of private sector companies. For this category of people, amount at present can be withdrawn without any tax liability. We are changing this. What we are saying is that such employee can withdraw without tax liability provided he contributes 60% in annuity product so that pension security can be created for him according to his earning level. However, if he chooses not to put any amount in Annuity product the tax would not be charged on 40%.
(viii) There is no change in the existing tax treatment of Public Provident Fund (PPF).
(ix) Currently there is no monetary ceilings on the employer contribution under EPF with only ceiling being that it would be 12% of the salary of the employee member. Similarly, there is no monetary ceiling on the employer contribution under NPS, except that it would be 10% of salary.
(x) Now the Finance Bill 2016 provides that there would be monetary ceiling of Rs1.5 lakh (Annul) on employer contribution considered with the ceiling of the 12% rate of employer contribution, whichever is less.
(xi) We have received representations today from various sections suggesting that if the amount of 60% of corpus is not invested in the annuity products, the tax should be levied only on accumulated returns on the corpus and not on the contributed amount. We have also received representations asking for not having any monetary limit on the employer contribution under EPF, because such a limit is not there in NPS. The Finance Minister would be considering all these suggestions and taking a view on it in due course.
********
Government approves the
proposal of Department of Investment and Public Asset Management for laying
down the Procedure and Mechanism for Strategic Disinvestment of Central Public
Sector Enterprises (CPSEs)
The
Government of India has approved the proposal of Department of Investment and
Public Asset Management for laying down the procedure and mechanism for
strategic disinvestment of Central Public Sector Enterprises (CPSEs)
The Cabinet Committee on Economic Affairs(CCEA), chaired by the Prime Minister Shri Narendra Modi, has given its approval for the procedure and mechanism for strategic disinvestment. This has also been announced by the Finance Minister in his Budget Speech yesterday. Ministry of Finance has issued instructions on procedures and processes for strategic disinvestment.
In the past strategic disinvestment would start with the recommendation of the Disinvestment Commission. In a major departure, in the approved process the NITI Aayog would perform the role of erstwhile Disinvestment Commission. In fact, the role of NITI Aayog is larger as it would also identify CPSEs for strategic disinvestment and suggest methods for valuation of the CPSE apart from advising the Government on mode and percentage of shares to be sold in a CPSE.
Government has also approved the constitution of Core Group of Secretaries on Disinvestment (CGD) headed by the Cabinet Secretary to Supervise and monitor the process of implementation of CCEA decisions on strategic disinvestment.
The Administrative Department/Ministry would be responsible for valuation of the CPSE. They would also appoint asset valuers for strategic disinvestment. An Evaluation Committee (EC) would consider the valuation and fix the Reserve Price. This would be an inter-ministerial committee headed by FA level officer.
The Government would also appoint the Independent External Monitor (IEM) to vet the process and settle grievances
Ministry of Finance has also been authorized to put in place an appropriate mechanism for protection of strategic disinvestment.
The Cabinet Committee on Economic Affairs(CCEA), chaired by the Prime Minister Shri Narendra Modi, has given its approval for the procedure and mechanism for strategic disinvestment. This has also been announced by the Finance Minister in his Budget Speech yesterday. Ministry of Finance has issued instructions on procedures and processes for strategic disinvestment.
In the past strategic disinvestment would start with the recommendation of the Disinvestment Commission. In a major departure, in the approved process the NITI Aayog would perform the role of erstwhile Disinvestment Commission. In fact, the role of NITI Aayog is larger as it would also identify CPSEs for strategic disinvestment and suggest methods for valuation of the CPSE apart from advising the Government on mode and percentage of shares to be sold in a CPSE.
Government has also approved the constitution of Core Group of Secretaries on Disinvestment (CGD) headed by the Cabinet Secretary to Supervise and monitor the process of implementation of CCEA decisions on strategic disinvestment.
The Administrative Department/Ministry would be responsible for valuation of the CPSE. They would also appoint asset valuers for strategic disinvestment. An Evaluation Committee (EC) would consider the valuation and fix the Reserve Price. This would be an inter-ministerial committee headed by FA level officer.
The Government would also appoint the Independent External Monitor (IEM) to vet the process and settle grievances
Ministry of Finance has also been authorized to put in place an appropriate mechanism for protection of strategic disinvestment.
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