Economy

Tax Administration Reform Commission

The Government of India approved the proposal for setting up of the TARC (Tax Administration Reform Commission) to remove ambiguity and establish a stable and non-adversarial tax administration. 

The Commission will consist of a Chairman, two full time members and four part-time members, of which at least two part-time members will be from the private sector.

The Commission will review the application of tax policies and tax laws in India in the context of global best practices and recommend measures to strengthen the capacity of the tax system in India that would reflect best global practices. 

NSEL

Q: What is NSEL?

ANS:- NSEL is a national level, institutionalized, electronic and transparent spot market commonly called as national spot exchange limited. It is a structured delivery based market place providing hedging for risk free and hassle free purchase and sell of various commodities across the country. This market is used by the investors to save the cost of indermediation and thus improving the returns and efficiency.

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Q:- What is the NSEL turmoil in today’s economy ?

ANS:- For higher returns many HNI’s institutions and PSU’s has put their money in a strange product in NSEL. Now they fear the money has been stuck. Actually here the investor puts money for 25-30 days on a return higher than 14-15%.  Since the transaction happened on a spot exchange both borrowers and lenders enter into a contract initially for 3 days where lender will give money to borrower and gets a receipt of commodity warehouse and again on the 26th day where the borrower will pay the pre agreed money and will get back his collateral.

Now after that both the two side roll their positions by entering a new contract almost similar to the previous one. The problem started in July when the government asked NSEL not to issue any contract. This brought all trades to get stopped and the money got stucked. Although it was a warning in the previous year but the exchange was into a denial mode.

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Q:- Non Repayment of Money ?

ANS:- Its all because the money has also been parked into non liquid assets like real estate and all which can not  be monetized immediately and their return is also lower than the returns/receipts claimed. The fear is there are so many big investors/Institutions (Almost 13000) that they can go after the brokers. The borrowers are almost 30. Only 150 cr has been paid against a liability of 5500cr.

Now its a government call to put the investors and borrowers into a fix and find a way to get the borrowers an adequate time to pay back the investors their money.