Now, Aadhaar- linked accounts to be basis for mobile payments
SURABHI AGARWAL
New Delhi, 7 October
The Supreme Court's recent observation might have left the future of
the Aadhaar- linked Direct Benefits Transfer ( DBT) project hanging in
the balance. But that does not seem to dim the government's focus on
the platform. It is now set to enable an ecosystem where mobile- to-
mobile payments could be singularly effected through the Unique
Identity ( UID) number.
DBT's payment architecture would now be extended to individuals.
And, under the Aadhaarlinked payment bridge, individuals' UID numbers
would be linked with their bank accounts at the back- end. Around 30
million bank accounts in the country had already been seeded with
Aadhaar and 300,000 more are being added each day, a government
official privy to the plan, asking not to be named, told Business
Standard. This payment application is slated for a launch on Wednesday
in Mumbai, with four banks, including state- owned Union Bank of India
and the country's largest privatesector lender ICICI Bank.
"The Aadhaar- based remittance system on mobile will make transferring
money easy by removing the need to remember bank account details, such
as IFSC code, etc, as users will only need their Aadhaar numbers now."
If successful, the SMS- based payment application would lead to a
paradigm shift in India's electronic payment system, the official
added. Putting a layer of security on transactions, a PIN would be
used to authenticate debits. In his first speech after taking over as
the Reserve Bank of India (RBI) governor, Raghuram Rajan had outlined
the potential of mobile payments and called it a game changer. " We
will set up a Technical Committee to examine the feasibility of using
encrypted SMS- based fund transfers using an application that could
run on any type of handset," Rajan had said.
Praveen Chakravarty, chief executive, Anand Rathi Financial Services,
says, the application sounds great conceptually and is in line with
the government's current thrust on financial inclusion. " Of the
600,000 villages in the country, banks are present in only 40,000."
He, however, added it remained to be seen who would take the liability
in the case of a fraud. In what could be another challenge, around 95
per cent of Indian mobile users have pre- paid connection and they
keep changing their numbers. " So, it remains to be seen if the
application works only on the Aadhaar number or mobile numbers also
play a key role." According to the 2011 census, around 53.2 per cent
of the total households in the country have access to mobile phones.
The government official also said that five to six more banks were
likely to launch the application over the next one month. RBI
regulated payment systems under the Payments and Settlements System
Act, and the National Payments Corporation of India ( NPCI) had taken
the necessary approvals from the central bank, the official added.
The Supreme Court had ruled two weeks back that Aadhaar should not be
made mandatory for availing of citizen benefits and the government had
filed a petition for review of the order. Interestingly, the apex
court is expected to take a view on the matter concerning mandatory
linkage of Aadhaar for transfer of welfare payments under the DBT
project on Tuesday.
Around ₹ 480 crore had been transferred directly into the accounts of
beneficiaries under the DBT scheme till early September.
The Cabinet is also likely to take up the National Identification
Authority of India Bill on Tuesday to give the UID Authority of India
a legal backing. After being approved by the Cabinet, the Bill is
expected to be moved to Parliament during its winter session.
A UNIQUE SHIFT
|The SMS- based application extends DBT's payment architecture to
individuals, where their Aadhaar number will be linked to their bank
accounts at the back- end |Around 30 million bank accounts in the
country have already been seeded with Aadhaar and 300,000 more are
being added each day |Application to be launch on Wednesday in Mumbai
with four banks, including Union Bank of India and ICICI Bank |A PIN
will be used for authenticating debits, putting a layer of security on
transactions |The Cabinet is also likely to take up the National
Identification Authority of India Bill on Tuesday to give UIDAI a
legal backing
Institute of Chartered Accountants of India — A Partner in Nation Building
The Institute of Chartered Accountants of India ( ICAI) regulates the
profession of Chartered Accountants in India and since its
establishment in 1949 has been making relentless efforts for bringing
an overall qualitative improvement in the financial reporting. The
profession has lived up to its vision and expectations as one of the
most vibrant forces of socio- economic growth, integral to the success
of the nation.
As a partner in nation building, ICAI assists, advises and coordinates
with the Government's from time to time on various matters of
professional relevance & otherwise.
For protecting the interests of the common investor, Auditors play an
important role in bringing greater transparency in the capital
markets. In the context of the information contained in the
prospectuses on the basis of which companies seek investments from
general public, ICAI in collaboration with Securities and Exchange
Board of India ( SEBI) is devising comprehensive formats of the
auditor's reports on the financial information contained in these
prospectuses.
SEBI had constituted Qualified Audit Review Committee ( QARC) to
review the qualified audit reports of listed enterprises as referred
to it by stock exchanges.
ICAI has been assigned the role to assess the materiality of the
qualification contained in auditor's report, based on which QARC may
even direct the entity to restate its books of accounts. The ICAI
envisages to improve the overall quality of General Purpose Financial
statements which is important for the healthy functioning of business
and markets and thus as making a significant contribution to the
overall economy.
The ICAI, at regular intervals, provides technical advice and
necessary inputs on matters of economic relevance and alike to various
Ministries - Ministry of Corporate Affairs, Ministry of Commerce,
Ministry of Finance, Ministry of HRD etc. ICAI also provides technical
advice to various bodies- Comptroller and Auditor General of India,
Reserve Bank of India, Securities and Exchange Board of India, Central
Board of Direct Taxes, Central Board of Excise &Customs, Insurance
Regulatory &Development Authority etc.
ICAI has recently joined hands with Haryana Govt. in improving the
quality of audit of cooperative societies by helping in development of
literature on cooperative audit. ICAI is also helping the Government
of Haryana in the empanelment of auditors of cooperative audits,
allotment of audits amongst empanelled auditors and also in fixation
of audit fees for these audits.
Following the initiatives undertaken by the ICAI, several departments
of the Central and State Governments like Department of Post,
Municipal Corporation etc. have approached the Institute for utilizing
the services of Chartered Accountants to advice on matters pertaining
to economy, expenditure, development of control mechanism over public
funds and alike.
Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA) is
one of the most ambitious welfare projects of the Central Government.
ICAI is developing technical literature to guide its members in
effective discharge of audit of financial records to report on a
number of other specific aspects relating to implementation of the
Scheme. This reflects the constructive role that the Indian auditing
Profession is playing in ensuring financial propriety in
implementation of suchWelfare schemes.
In the interest of various stakeholders, investors, industry, and the
society at large, ICAI has been an active lead partner in all the
programmes organized under the aegis of the MCA. Since the year 2007
various programmes have been organized by ICAI through its branches
and resource persons.
The ICAI is committed to continue its efforts in helping to
understand, guide and shape the accountancy profession in the country.
Regarded as the backbone of Indian financial system, the ICAI has
truly been a partner in nation building
—Advertorial —
ICAI is also helping the Government ofHaryana in the empanelment of
auditors of cooperative audits, allotmentof audits amongst empanelled
auditors and also in fixation of audit fees for these audits
CA. Subodh Kumar Agrawal, President, ICAI
Tax clarity awaited in new FPI regime
SACHIN P MAMPATTA & SNEHA PADIYATH
Mumbai, 7 October
Market participants are looking to the tax authorities for further
clarity after the Securities and Exchange Board of India ( Sebi)
issued new norms for foreign investors last week.
On Saturday, the stock market regulator consolidated the rules for
foreign entities investing in India. The new rules aim to bring all
foreign investors under a common framework called the Sebi ( Foreign
Portfolio Investors) Regulations, 2013.
However, the existing tax regulations are still under the foreign
institutional investor (or FII) framework and are yet to migrate to
the new FPI regime. Participants are still awaiting a notification to
bring tax laws in line with the new Sebi framework, say experts.
Suresh V Swamy, executive director, tax & regulatory services, at
PricewaterhouseCoopers, said a rewrite of existing tax policy was
required. " Tax regulations will need to be tweaked to reflect the
change in regime from FII to FPI. Till that comes up, there might be
some confusion in the market on the application of the new rules.
While logically it should follow as a function of the change in Sebi
regulations, investors might want to wait till this becomes official,"
he said.
Tejesh Chitlangi, partner at IC Legal, said the new regime would
require some coordination between the different government agencies.
"Smooth implementation of the FPI regime would be the key, which again
will be dependent upon the speed with which multiple regulators put
their acts together for amendments and repeals of the existing laws,"
he said.
The Income Tax Act has a number of references to FIIs, in sections
such as 196D, 194LD and 115 AD. " Any person who is responsible for
paying to a person being a Foreign Institutional Investor… shall, at
the time of credit of such income to the account of the payee… deduct
income tax thereon at the rate of five per cent," according to 194LD.
Similarly section 115 AD deals with capital gains tax.
Interestingly, Sebi has accorded a one- year window for migration of
Qualified Foreign Investors to the new FPI regime. The QFI route was
begun largely as a window for individuals investors from foreign
countries who wished to invest in India.
An overhaul of the tax norms should look to bring entities coming
through the QFI and FII route under the same umbrella, according to
Naresh Makhijani, a chartered accountant.
"Since under the newly approved FPI regime, QFIs and FIIs would now be
combined into a single route, it is recommended that the FII framework
for tax… be adopted for all FPIs ( including QFIs). This would imply
that any investor who is categorised as an FPI as per Sebi would be
accorded a similar tax treatment as currently accorded to an FII," he
said.
Participants seek uniform treatment in regime covering erstwhile FII
and QFI routes TAXING ISSUE
|Sebi moves foreign investment rules from FII to FPI regime |Tax
regulations still under FII framework |Participants to await
notification for clarity |Currently, FIIs have different tax treatment
from QFIs |Participants hope for uniform treatment under new FPI
regime
--
CS A Rengarajan
9381011200
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