The Indian economy is the fourth largest economy of the world on the basis of Purchasing Power Parity (PPP). It is one of the most attractive destinations for business and investment opportunities due to huge manpower base, diversified natural resources and strong macro-economic fundamentals. Also, the process of economic reforms initiated since 1991 has been providing an investor-friendly environment through a liberalised policy framework spanning the whole economy.

The growth and performance of the Indian economy in the world market is explained in terms of statistical information provided by the various economic parameters. For example, Gross National Product (GNP), Gross Domestic product (GDP), Net National Product (NNP), per capita income, Gross Domestic Capital Formation (GDCF), etc. are the various indicators relating to the national income sector of the economy. They provide a wide view of the economy including its productive power for satisfaction of human wants.

In the industrial sector, the Index of Industrial Production (IIP) is a single representative figure to measure the general level of industrial activity in the economy. It measures the absolute level and percentage growth of industrial production.

The four main monetary aggregates of measures of money supply which reflect the state of the monetary sector are:- (i) M1 (Narrow money)= Currency with the public + demand deposits of the public; (ii) M2= M1 + Post Office Savings deposits; (iii) M3 (Broad money)= M1 + time deposits of the public with banks; and (iv) M4= M3 + Total post office deposits.

Price movement in the country is reflected by the wholesale price index (WPI) and the consumer price index (CPI). WPI is used to measure the change in the average price level of goods traded in the wholesale market, while the Consumer Price Index (CPI) captures the retail price movement for different sections of consumers. There are at present four consumer price indices covering different socio-economic groups in the economy. These four indices are Consumer Price Index for Industrial Workers (CPI-IW); Consumer Price Index for Agricultural Labourers (CPI-AL); Consumer Price Index for Rural Labourers (CPI -RL) and Consumer Price Index for Urban Non-Manual Employees (CPI-UNME).

All such economic indicators not only measure/analyse the present performance of an economy but also help in predicting and forecasting its future growth prospects.

Value Added Tax

VAT is the indirect tax on the consumption of the goods, paid by its original producers upon the change in goods or upon the transfer of the goods to its ultimate consumers. It is based on the value of the goods, added by the transferor. It is the tax in relation to the difference of the value added by the transferor and not just a profit.

All over the world, VAT is payable on the goods and services as they form a part of national GDP. It means every seller of goods and service provider charges the tax after availing the input tax credit. It is the form of collecting sales tax under which tax is collected in each stage on the value added of the goods. In practice, the dealer charges the tax on the full price of the goods, sold to the consumer and at every end of the tax period reduces the tax collected on sale and tax charged to him by the dealers from whom he purchased the goods and deposits such amount of tax in government treasury.

Method of Collection

There are two methods for collection of VAT in India. In the first method, tax is charged separately on the basis of the tax which is paid on purchase, and the tax that is payable on the sale (shown separately in the invoice). Therefore, the difference between the tax paid on purchase and the tax payable on sale as per the invoice is the VAT.

In the second method, tax is collected and charged on the aggregate value of the tax payable on sale and purchase, by applying the rate of tax applicable to the goods. Therefore, the difference between the sale price and purchase price would be VAT. It means VAT is the tax which consumers ultimately face, which is collected at each stage.

Sales Tax

Sales tax is levied on the sale of a commodity, which is produced or imported and sold for the first time. If the product is sold subsequently without being processed further, it is exempt from sales tax.

Sales Tax is a levy on purchase and sale of goods in India and is levied under the authority of both Central Legislation (Central Sales Tax) and State Governments Legislations (Sales Tax). The government levies Sales Tax principally on intra-state sale of goods. States also levy tax on transactions which are “deemed sales” like works contracts and leases.

In addition to Sales Tax, some states also levy additional tax, surcharge, turnover tax and the like. Ordinarily, Sales tax is recovered from the buyer as a part of consideration for sale of goods.

Sales tax is paid by every dealer on the sale of any goods made by him in the course of inter-state trade or commerce, despite the fact that no liability to tax is raised on the sale of goods under the tax laws of the appropriate state.

Sales Tax ID number

A state Sales Tax ID number is essentially a business version of your Social Security number, under which you collect and pay tax for any service or product you sell, which in turn, qualifies for taxation in your state.

The rule of thumb for Sales Tax is that most services are exempt and most products are taxable except for food and drugs, though recent history reflects that states have been gradually adding to the list of services that are taxable.

Service Tax

Service tax is a tax levied on services rendered by a person and the responsibility of payment of the tax is cast on the service provider. It is an indirect tax as it can be recovered from the service receiver by the service provider in course of his business transactions. Service Tax was introduced in India in 1994 by Chapter V of the Finance Act, 1994 . It was imposed on a initial set of three services in 1994 and the scope of the service tax has since been expanded continuously by subsequent Finance Acts. The Finance Act, extends the levy of service tax to the whole of India, except the State of Jammu & Kashmir.

The Central Board of Excise & Customs (CBEC) under Department of Revenue in the Ministry of Finance, deals with the task of formulation of policy concerning levy and collection of Service Tax. In exercise of the powers conferred, the Central Government makes service tax rules for the purpose of the assessment and collection of service tax. The Service Tax is being administered by various Central Excise Commissionerates, working under the Central Board of Excise & Customs. There are six Commissionerates located at metropolitan cities of Delhi, Mumbai, Kolkata, Chennai, Ahmedabad and Bangalore which deal exclusively with work related to Service Tax. Directorate of Service Tax at Mumbai over sees the activities at the field level for technical and policy level coordination.

Registration

• A person liable to pay service tax should file an application for registration within thirty days from the date on which the service tax on particular taxable service comes into effect or within thirty days from the commencement of his activity.
• Every service provider of a taxable service is required to take registration by filing the Form ST-1 (External website that opens in a new window) in duplicate with the jurisdictional Central Excise Office (External website that opens in a new window).
• A ‘registered’ service provider is referred to as an ‘assessee’.
• A single registration is sufficient even when an assessee is providing more than one taxable services. However, he has to mention all the services being provided by him in the application for registration and the field office shall make suitable entries/endorsements in the registration certificate.
• A fresh registration is required to be obtained in case of transfer of business to another person.
• Any registered assessee when ceases to provide the taxable service shall surrender the registration certificate immediately.
• In case a registered assessee starts providing any new service from the same premises, he need not apply for a fresh registration. He can simply fill in the Form S.T.1 for necessary amendments he desires to make in his existing information. The new form may be submitted to the jurisdictional Superintendent for necessary endorsement of the new service category in his Registration certificate.

In case of Individuals or Proprietary Concerns and Partnership Firm, service tax is to be paid on quarterly basis. The due date for payment of service tax is the 5th of the month immediately following the respective quarter. (Quarters are : April to June, July to September, October to December and January to March). However, payment for the last quarter i.e. January to March is required to be made by 31st of March itself. In case of any other category of service provider than specified above, service tax is to be paid on a monthly basis, by the 5th of the following month. However, payment for the month of March is required to be made by 31st of March itself. Service tax is to be paid on the amount realized / received by the assessee during the relevant period ( i.e. a month or a quarter as the case may be).

The unique feature of Service Tax is reliance on collection of tax, primarily through voluntary compliance. System of self-assessment of Service Tax Returns by service tax assesses was introduced w.e.f. 01.04.2001. The jurisdictional Superintendent of Central Excise is authorized to cross verify the correctness of self assessed returns. Tax returns are expected to be filed half yearly. Central Excise officers are authorized to conduct surveys to bring the prospective service tax assesses under the tax net.

Service tax is payable @ 10% of the ‘gross amount’ charged by the service provider for providing such taxable service. The Education Cess is payable @ 2%, and Secondary and Higher Education Cess payable @ 1% of the service tax payable.

Service Tax Exemptions

The Central Government can grant partial or total exemption by issuing an exemption notification. But it cannot be granted by the Government with retrospective effect. The general exemptions are :-

• Small service providers whose turnover is less than Rs.4 lakhs per annum are exempt from service tax.
• There is no service tax on export of services.
• Services provided to UN and International Agencies and supplies to SEZ(Special Economic Zones) are exempt from service tax.
• Service tax is not payable on value of goods and material supplied while providing services. Such exclusion is permissible only if Cenvat credit on such goods and material is not taken.

Wealth Tax

The Wealth Tax Act is an important direct tax legislation, which came into existence on 1 st April 1957. Wealth tax is levied on the benefits derived from property ownership. The tax is to be paid year after year on the same property on its market value, whether or not such property yield any income.

An assessee or a person, who is liable to pay wealth tax under the Wealth Tax Act, includes legal envoy, perpetrator or administrator of a deceased person and a person deemed to be an agent of a non-resident. Under the Act, tax is charged on the following persons in respect of the wealth held by them during the assessment year:

• A company.
• A Hindu Undivided Family (HUF), which is a type of assessee recognised under the Act, consisting of all persons lineally descended from a common ancestor and deriving income from joint family corpus. Hindu, Jain, Buddhist, and Sikh families have been so recognised.
• An association of persons or a body of individuals.
• Non-corporative taxpayers whose accounts are to be statutorily audited.
• Those who fall in the 1-by-6 category (External website that opens in a new window).

Chargeability to tax also depends upon the residential status of the assessee and the citizenship of a person.

It may be noted here that productive assets like shares, debentures, bank deposits and investments in mutual funds are exempt from wealth tax. The non-productive assets include jewellery, bullion, motorcars, aircraft, urban land, etc. Foreign nationals are exempt from wealth tax on non-Indian assets. The details of Wealth Tax can be accessed through Acts and Rules as framed by the Constitution. Click on the links below for more:

• Wealth Tax Act (External website that opens in a new window)
• Wealth Tax Rules (External website that opens in a new window)

To file your Wealth Tax Returns, you need to fill Form BA, Form A and Form B. Visit the link below to download these forms.

Download forms for Return of Net Wealth

ISO (International Organization for Standardization) is the world’s largest developer and publisher of International Standards. ISO is a network of the national standards institutes of 158 countries, one member per country, with a Central Secretariat in Geneva, Switzerland, that coordinates the system.

ISO 9001 is a quality management system standard which standardizes and documents the various activities of the organization like purchase, stores, sales, processing, it focuses on customer needs and fulfilling the same hence enhancing the satisfaction levels and laying and implementing the systems for continual improvement.

ISI

ISI  is Indian Standards Institute, an  ISI mark means the product conforms to respective national product standard the customer has to accept the same.

BIS HALLMARK

BIS CERTIFICATION SCHEME FOR HALLMARKING OF GOLD JEWELLERY

Government of India’ has identified BIS a sole agency in India to operate this scheme. BIS hallmarking Scheme is voluntary in nature and is operating under BIS Act, Rules and Regulations. It operates on the basis of trust and thus it is desirable that aspect of quality control are in built in the system responsible for managing quality.

The BIS Hallmarking Scheme has been aligned with International criteria on hallmarking (Vienna Convention 1972). As per this scheme, licence is granted to the jewellers by BIS under Hallmarking Scheme. The BIS certified jewellers can get their jewellery hallmarked from any of the BIS recognized Assaying and Hallmarking Centre. The recognition to an Assaying and Hallmarking Centre is given against BIS criteria Doc: HMS/RAHC/GO1 which is in line with International criteria on Marking and Control of Precious metals.

A Hallmark, consists of five components i.e. BIS Mark, the Fineness number (corresponding to given caratage), Assaying and Hallmarking Centre’s Mark, Jeweller’s identification Mark and year of Marking denoted by a code letter and decided by BIS (e.g. code letter `A’ was approved by BIS for year 2000, `B’ being used for the year 2001 and `C’ for 2002 and ‘J’ for 2008). The marking is done either using punches or laser marking machine.

The BIS hallmark, a mark of conformity widely accepted by the consumer bestow the additional confidence to the consumer on the purity of gold jewellery.

General Motors India launched the much-awaited diesel version of its dynamic and elegant Chevrolet Beat today at a ceremony presided over by GM India Vice President P Balendran. The all-new Beat Diesel sports the 1.0 XSDE SMARTECH engine developed specifically for India by the GM Technical Centre in Bangalore in collaboration with GM Power-train Europe.

“Offering a diesel engine developed for Indian consumers in our most popular model is a momentous achievement for GM India,” said Mr. Balendran during today’s launch. “We are confident that with its best-in-segment design, performance and safety, the Beat Diesel will set a new industry benchmark and be a winner with local car buyers.”

The Beat Diesel’s three-cylinder DOHC engine features state-of-the-art Common Rail Fuel Injection technology for outstanding emission performance and fuel economy. Its electrically controlled throttle body further reduces carbon emissions.

GM India Launches Chevrolet Beat Diesel

The engine’s Fixed Geometry Turbocharger with vacuum operated wastegate ensures efficient operation. Combined with Advanced Insta-Torque Boost (AIB), it provides added torque when overtaking. Despite its high efficiency, the engine’s power per litre (62.5 PS/L) and torque per litre (160.3 Nm/L) are best in class in India’s diesel mini-hatchback market.

As an added benefit, the engine is the quietest powerplant in its segment and provides outstanding performance in stop-and-go traffic conditions. It also incorporates an advanced technology maintenance free timing chain drive system and added anti-corrosion protection. The engine oil only needs to be changed every 15,000 km or 1.5 years, for lower maintenance costs.

Mahindra & Mahindra (M&M) has renamed its Logan car as Verito.

Anup Bagchi  has taken over as the MD and CEO of ICICI Securities.

Veteran banker K.V. Kamath has been appointed as the Chairman of Infosys, in place of founder N.R. Narayana Murthy. S.D. Shibulal has been elevated as the CEO and MD.

According to International Monetary Fund (IMF) India’s economic growth rate will moderate to 8.2 per cent in 2011, mainly because of tight monetary policy measures

Standard rate of excise duty held at 10 percent; no change in CENVAT rates.

• Personal income tax exemption limit raised to Rs 180,000 from Rs 160,000 for individual tax payers.
• For senior citizens, the qualifying age reduced to 60 years and exemption limit raised to Rs 2.50 lakh.
• Citizens over 80 years to have exemption limit of Rs 5 lakh.
• To reduce surcharge on domestic companies to 5 percent from 7.5 percent.
• A new revised income tax return form ‘Sugam’ to be introduced for small tax papers.
• raise minimum alternate tax to 18.5 percent from 18 percent.
• Iron ore export duty raised to 20 percent
• Nominal one per cent central excise duty on 130 items entering the tax net. Peak rate of customs duty maintained at 10 per cent in view of the global economic situation.
• Service tax widened to cover hotel accommodation above Rs 1,000 per day, A/C restaurants serving liquor, some category of hospitals, diagnostic tests.
• Service tax on air travel increased by Rs 50 for domestic travel and Rs 250 for international travel in economy class. On higher classes, it will be ten per cent flat.
• Works of art exempt from customs when imported for exhibition in state-run institutions; this now extended to private institutions.

• Subsidy bill in 2011-12 seen at 1.44 trillion rupees.
• Food subsidy bill in 2011-12 seen at 605.7 billion rupees.
• Revised food subsidy bill for 2010-11 at 606 billion rupees.
• Revised fertilizer subsidy bill for 2010-11 at 550 billion rupees.
• Revised petroleum subsidy bill in 2010-11 at 384 billion rupees.
• State-run oil retailers to be provided with 200 billion rupee cash subsidy in 2011-12.

• Fiscal deficit seen at 5.1 percent of GDP in 2010-11.
• Fiscal deficit seen at 4.6 percent of GDP in 2011-12.

• Total expenditure in 2011-12 seen at 12.58 trillion rupees.
• Plan expenditure seen at 4.41 trillion rupees in 2011-12, up 18.3 percent.

• Gross tax receipts seen at 9.32 trillion rupees in 2011-12.
• Non-tax revenue seen at 1.25 trillion rupees in 2011-12.
• Corporate tax receipts seen at 3.6 trillion rupees in 2011-12.
• Tax-to-GDP ratio seen at 10.4 percent in 2011-12; seen at 10.8 percent in 2012-13.
• Customs revenue seen at 1.52 trillion rupees in 2011-12.
• Service tax receipts seen at 820 billion rupees in 2011-12.

• Economy expected to grow at 9 percent in 2012, plus or minus 0.25 percent.
• Inflation seen lower in the financial year 2011-12.

• Disinvestment in 2011-12 seen at 400 billion rupees.
• Government committed to retaining 51 percent stake in public sector enterprises.

• Net market borrowing for 2011-12 seen at 3.43 trillion rupees, down from 3.45 trillion rupees in 2010-11.
• Gross market borrowing for 2011-12 seen at 4.17 trillion rupees.
• Revised gross market borrowing for 2010-11 at 4.47 trillion rupees.

• To create infrastructure debt funds.
• FDI policy being liberalized.
• To boost infrastructure development with tax-free bonds of 300 billion rupees.
• Food security bill to be introduced.
• To permit SEBI registered mutual funds to access subscriptions from foreign investments.
• Raised foreign institutional investor limit in 5-year corporate bonds for investment in infrastructure by $20 billion.
• Setting up independent debt management office; Public debt bill to be introduced in parliament soon.
• Bills on insurance, pension funds, banking to be introduced.

• To allocate more than 1.64 trillion rupees to defence sector in 2011-12.
• Corpus of rural infrastructure development fund raised to 180 billion rupees in 2011-12.
• To provide 201.5 billion rupees capital infusion in state-run banks in 2011-12.
• To allocate 520.5 billion rupees for the education sector. Rs.21,000 crore for Sarva Shiksha Abhiyan.
• To raise health sector allocation to 267.6 billion rupees.
• Rs.500 crore more for national skill development fund.
• Rs.54 crore each for AMU (Aligarh Muslim University) centres at Murshidabad and Mallapuram.
• Rs.58,000 crore for Bharat Nirman; increase of Rs.10,000 crore.
• Mahatma Gandhi National Rural Employment Guarantee Scheme wage rates linked to consumer price index; will rise from existing Rs.100 per day.
• Infrastructure critical for development; 23 percent higher allocation in 2011-12.

• Removal of supply bottlenecks in the food sector will be in focus in 2011-12.
• To raise target of credit flow to agriculture sector to 4.75 trillion rupees.
• 3 percent interest subsidy to farmers in 2011-12.
• Cold storage chains to be given infrastructure status.
• Capitalisation of National Bank for Agriculture and Rural Development (NABARD) of 30 billion rupees in a phased manner.
• To provide 3 billion rupees for 60,000 hectares under palm oil plantation.
• Food storage capacity to be augmented; 15 more mega food parks to be set up in 2011-12; of 30 sanctioned in previous fiscal, 15 set up.
• Comprehensive policy on further developing PPP (public-private-partnership) model.

• To move towards direct transfer of cash subsidy for kerosene, LPG and fertilizers.
• Financial Sector Legislative Reforms Commission, headed by former Supreme Court judge B. Srikrishna, to complete its work in 24 months; to overhaul financial regulations.
• Five-fold strategy against black money; 13 new double taxation avoidance agreements; foreign tax division of CTBT strengthened; strength of Enforcement Directorate increased three-fold.
• Bill to be introduced to review Indian Stamp Act.
• New coins carrying new rupee symbol to be issued.
• Anganwadi workers salary raised from Rs.1,500 to Rs.3,000.
• Housing loan limit for priority sector lending raised to Rs.25 lakh.

China has emerged as the world’s largest economy, surpassing Japan, which had held on to the position for over four decades. At the end of 2010, Japanese economy was estimated to be worth about $5.5 trillion and that of China $5.8 trillion. USA continues to be the largest economy of the world with the economy worth $14.6 trillion.

Floating Debt: Generally, any short-term debt, specifically, the part of the national debt that consists of short-term borrowing.Fringe benefits: Rewards for employment over and above the wager paid. e.g. goods at a discount, subsidized meals, arrangements, etc.

Fiscal Policy: that part of government policy which is concerned with raising revenue through taxation and deciding on the level and pattern of expenditure.

Fixed Costs: Costs which in the short run do not vary with outputs. These costs are borne even if no output is produced.

Asset: Anything of monetary value that is owned by a person. Assets include real property, personal property, and enforceable claims against others (including bank accounts, stocks, mutual funds, and so on)

Base year: In the construction of an index, the year from which the weights assigned to the different components of the index is drawn. It is conventional to set the value of an index in its base year equal to 100. Bear: An investor with a pessimistic market outlook; an investor who expects prices to fall and so sells now in order to buy later at a lower price. A Bear Market is one which is trending downwards or losing value.

Bid price: The highest price an investor is willing to pay for a stock.

Bill of exchange: A written, dated, and signed three-party instrument containing an unconditional order by a drawer that directs a drawee to pay a definite sum of money to a payee on demand or at a specified future date. Also known as a draft. It is the most commonly used financial instrument in international trade.

Bond: A certificate of debt (usually interest-bearing or discounted) that is issued by a government or corporation in order to raise money; the bond issuer is required to pay a fixed sum annually until maturity and then a fixed sum to repay the principal. Bonds guide.

Collateral security: Additional security a borrower supplies to obtain a loan.

Compound interest: Interest paid on the original principal and on interest accrued from time it became due.

Consumer Surplus is the difference between the price a consumer pays and what they were prepared to pay.

Direct tax: A tax that you pay directly, as opposed to indirect taxes, such as tariffs and business taxes. The income tax is a direct tax, as are property taxes. See also Indirect Tax.

Double taxation: Corporate earnings taxed at both the corporate level and again as a stockholder dividend

Exchange rate: The price of one currency stated in terms of another currency, when exchanged.

Inflation is the percentage increase in the prices of goods and services.

Repo rate: This is one of the credit management tools used by the Reserve Bank to regulate liquidity in South Africa (customer spending). The bank borrows money from the Reserve Bank to cover its shortfall. The Reserve Bank only makes a certain amount of money available and this determines the repo rate. If the bank requires more money than what is available, this will increase the repo rate – and vice versa.

Revenue expenditure: This is expenditure on recurring items, including the running of services and financing capital spending that is paid for by borrowing. This is meant for normal running of governments’ maintenance expenditures, interest payments, subsidies and transfers etc. It is current expenditure which does not result in the creation of assets. Grants given to State governments or other parties are also treated as revenue expenditure even if some of the grants may be meant for creating assets.

Subsidy : Financial assistance (often from the government) to a specific group of producers or consumers.