Pay Panel gives 'Report'

Pay Commission Report
The 6th Central Pay Commission (CPC) has submitted its report and thanks to RTI-age, the report has been made available in the virtual medium also. The positives of the Report are

• It has given its Report in time though the same is due to political events on the horizon
• The Report has been made available immediately as also most of the discussions are hosted by the CPC in its portal marking rare transparency for a govt. committee
• Reduction of holidays to 3 with increase in Restricted Holidays to 8 (in all likelyhood this will not be accepted by the govt.)
• A reasonably good hike in pay for top level officers ( who are relatively least affected by inflation)

As usual a body set up in the era of 'new economic order' can only be anti-worker as the negative points far outweigh the good ones:

• Starting pay or the pay at the lowest level was demanded as Rs.10,000 while the CPC has recommended around Rs.6000
• Introduction of Pay Band concept thus reducing the number of pay scales - effecting bunching of several cadres pay-wise leading to demoralisation
• Increment fixed at 2.5% which is far less than the demand of 5% (even the previous Pay Commn had given around 2.3%)
• To divide the workers, sops recommended for women employees - can come late to office, take 2 or 3 years leave after delivery, etc
• Advances like House Building Advance or HBA being given to banks with govt bearing an interest subsidy of 2% (which will eventually be abolished)
• Suggestion to abolish Group D posts - call for using labour on contract
• Use of technical or fancy jargons like running pay band, Performance Related Incentive Scheme (PRIS), etc thus obfuscating the real issues of stagnation, better facilities and a decent pay.

Sub-prime mess

Cross-currents in the gale

The Financial Express Posted online: Wednesday, March 19, 2008 at 2326 hrs IST

Your article (‘Surviving the subprime gale’, Mar 19) provided a specious analysis of the crisis. The statistics are fine, but the prescription of opening more windows is ill-advised. We need to determine how many and how far to open. The suprime mess in the US was the result of poor regulation, refusal to recognise the crisis early and, of course, corporate irresponsibility. The article concedes that public sector banks are awaiting NPAs and there could be more in the crash than meets the eye. We need to learn from others’ mistakes. The 1997 East Asian crisis was triggered by a similar property bubble burst, excessive dependence on short-term foreign capital and hasty financial liberalisation. Common sense dictates that things too good to be true are not. The informed and uninformed alike chase the Sensex or sumptuous financial products without applying conventional wisdom. The government’s or regulators’ action is always corrective, never preventive. Yet, it is these so-called “autonomous” banks that we turn to for interest rate relief to help the economy.
—Subhashree Kishore, New Delhi

Write-up about GNK in Dinamani 9th March 2008

Pl. check the link below for an article on Gandhiadigal Narpanik Kazhagam, a voluntary organisation in Kumbakonam with which we are associated.

http://www.dinamani.com/NewsItems.asp?ID=DNK20080306011454&Title=Kadhir&lTitle=%A7%5DU%A6+L%A7o&Topic=0&dName=No+Title&Dist=0

Budget Impact - Service Tax

Budget 2008-09 and Service Tax
By Dr. G. Gokul Kishore

The grand annual event of Budget on the nation’s financial theatre has been staged with a neat performance by the hero our F.M. The pre-budget expectations heavily leaned on populist theory due political factors and events on the horizon. Budget 2008-09 has turned out to be a mixed bag and a preliminary assessment can lead to terming it as fair. It has caused ripples in certain quarters but then economics is hardly a ‘please all’ matter. The upward revision of slabs in case of personal income tax has made the FM darling of the middle class though it has been battered by rising inflation. The backbone of the nation viz., the farming class increasingly dominated by preference to death over life has been taken note of. Leaving direct taxes and other macro issues aside, this article attempts to take stock of Budget 2008-09 changes in the case of Service Tax.

Small Scale Exemption hike – Is it too little?

Small Scale Service Providers enjoy value-based exemption upto Rs. 8 lakhs. In the last Budget this exemption limit was raised from Rs. 4 lakhs to Rs. 8 lakhs i.e. 100% hike. This year it has been increased to Rs. 10 lakhs, effective from 1st April 2008. Such threshold limits would have made some sense when the number of services taxed was less and sundry services were also brought under the levy. Today, you can hardly have a Works Contract with such meagre amounts. With the proposal to tax cash-rich IT industry by bring new entry in this budget, the nature of taxable services has become diverse with several services involving huge stakes. The limit is not in consonance with industry transactions and it certainly merits far more. But then, the government hurriedly taxes but holds up exemptions on some pretext or the other. Anyhow, a hike in such petty threshold limit shall do a world of good for administration too. It need not waste resources on surveys for netting potential assessees or those outside the net and collection cost should come down further.

No rate change but Works Contract bears the brunt

The fear over rate increase for eventual merger with GST rate in 2010 (GST rate is widely believed to be around 20%) can abate for now. The general rate of Service tax remains unchanged at 12% and with no new Cess proposed/imposed, it remains at 12.36%. But the Works Contract industry has been hit with a 100% hike. Many opted for Composition Scheme as it provided a profitable rate of 2%. With the increase in 4% from 1st March 2008 and with absence of clarification on applicability of new rate to on-going contracts, such optees are certain to experience nightmares now. A sovereign pledge by the FM on the floor of the Parliament to bring WC under the net last year like 2% rate is breached now. Such changes midway do not inspire confidence among the honest tax payers over the designs of the government.
For more pl. see 1st March 2008 Service Tax Review (S.T.R.)