Page 14 - Banking Finance January 2024

ROUNDUP

The compulsory electronic book-keep- from the International Monetary Fund Under the current T+1 settlement sys-
ing of securities even for unlisted large (IMF) that the country's debt to GDP tem, the buyers and the sellers of
private firms, experts reckon, will spur ratio could hit 100% was a worst-case stocks get their stocks in the demat
greater transparency in the financial scenario, and not a "fait accompli". account and the money in their bank
market and force entities to be more The IMF, in a so-called article IV re- accounts a day after the day of trade.
disciplined in revealing their share view, said India's general government Under the T+0 (same day) settlement
structures. system, they will get their stocks and
debt, which includes federal and state
government debt, could be 100% of funds at the end of the day they put in
GST authorities detect Rs. GDP under adverse circumstances by their trades. And under the instant
(real time) settlement system, each
1.51 trillion tax evasion in fiscal 2028. trade will be settled as quickly as pos-
FY 23-24 till October India's debt to GDP ratio, which was 81% sible. Once the T+0 and instant settle-
in 2022/23, may decline to below 70% in
About Rs 1.51 lakh crore of tax evasion ments are implemented, India would
the same period under favourable cir-
was detected by the Goods and Ser- be the first country to move into such
cumstances, the IMF report also said,
vices Tax (GST) authorities till October a stock trading process.
according to the ministry.
in the financial year 2023-24, with
"Therefore, any interpretation that the SC: Unstamped arbitration
Maharashtra, Haryana and Gujarat
report implies that General Govern-
among the states with the highest agreements are enforce-
amount of evasion, data shared by the ment debt would exceed 100% of GDP
Finance Ministry in Parliament showed. in the medium term is misconstrued," able
the ministry added. India's finance A seven-judge Constitution bench of
As many as 71 show cause notices have
ministry said this was "a worst-case the Supreme Court overruled the ver-
been issued to online gaming compa-
scenario and is not fait accompli". dict of a five-judge bench and held that
nies for alleged GST evasion of over Rs
arbitration clauses in unstamped or
1.12 lakh crore during financial years SEBI: Same-day settlement inadequately stamped agreements are
2022-23 and 2023-24, reply to another enforceable.
question by the ministry stated. can be optional
A bench of CJI DY Chandrachud and
Meanwhile, under its special drive, GST Markets regulator Sebi proposed con- Justices Sanjay Kishan Kaul, BR Gavai,
authorities detected tax evasion of Rs current presence of the current T+1 Surya Kant, JB Pardiwala, Manoj Misra
24,010 crore and 21,791 non-existent settlement system in the stock market and Sanjiv Khanna ruled that non-
entities, another reply by Finance Min- along with the proposed T+0 settle- stamping or insufficient stamping of an
ister Nirmala Sitharaman stated. ment system, to be replaced by an in- agreement has nothing to do with the
stant settlement system in a few
Out of the total 21,791 entities whose validity of the document as it is a cur-
months. To arrest any price distortion
GST registrations were discovered to able defect.
that may arise between the two settle-
be non-existent, 11392 entities per- It said an arbitration agreement or its
tained to state tax jurisdictions and ment systems, Sebi also proposed a certified copy are not rendered void or
price band of plus/minus 100 basis
10,399 entities pertained to CBIC juris- unenforceable because it is unstamped
points (100bps = 1 percentage point)
diction. State authorities detected Rs or insufficiently stamped. "Agreements
8,805 crore of tax evasion, while Cen- for the same stock when traded under which are not stamped or are inad-
the two different settlement systems.
tral authorities detected evasion of Rs equately stamped are inadmissible in
15,205 crore during the special drive. It floated a consultation paper which evidence under Section 35 of the
said that investors on Dalal Street will Stamp Act. Such agreements are not
Govt: IMF debt warning a have the option to choose under which rendered void or void ab initio or un-
of the two - T+1 and T+0/instant settle- enforceable. Non-stamping or inad-
worst-case scenario ment - cycles they would put their equate stamping is a curable defect,"
The Indian government said a warning trade. the bench said.

BANKING FINANCE | JANUARY | 2024 | 13