New Delhi: The Union cabinet on Wednesday cleared the proposal to infuse capital in three public sector general insurance companies Oriental Insurance, National Insurance Company Limited and United India Insurance.
The cabinet meeting chaired by Prime Minister Narendra Modi allowed immediate release of Rs 2,500 crore.
“The government has infused ₹3 lakh crore into public-sector banks in the past three years. Similarly, we will start recapitalisation of general insurance companies in tranches. The government will infuse more capital as and when required," Union minister Prakash Javadekar told media after the cabinet meeting in Delhi.
This is the second round of capital infusion in these three government owned general insurers this year. The government has already provided Rs 2,500 crore to these companies earlier this year.
“The government is infusing capital into these companies so that the solvency ratio becomes acceptable and it fulfils the criteria of IRDA," he added.
Amendment in Tax Avoidance Pact with Sri Lanka cleared
In its bid to strengthen the anti-tax evasion measures, the cabinet also cleared the signing and ratification of the protocol amending the double taxation avoidance agreement with Sri Lanka.
The changes approved on Wednesday are aimed at curbing the income tax evasion. These changes will update the preamble of the agreement and will also insert a Principal Purpose Test in the DTAA with Sri Lanka.
Updation of the preamble text and inclusion of Principal Purpose Test, a general anti-abuse provision in the Double Taxation Avoidance Agreement (DTAA) will result in curbing tax planning strategies which exploit gaps and mismatches in tax rules, a Cabinet statement said.
The existing DTAA between India and Sri Lanka was signed on January 22, 2013 and came into force on October 22, 2013.
India and Sri Lanka are members of the inclusive framework and are required to implement the minimum standards under G-20 OECD (Organisation for Economic Cooperation and Development (OECD) BEPS (Base Erosion and Profit Shifting) action reports in respect of their DTAAs with inclusive framework countries.
Minimum standards under BEPS Action 6 can be met through the multilateral convention to implement tax treaty-related measures to prevent base erosion and profit shifting Multilateral Instrument (MLI) or through bilateral agreement.
India is a signatory to the MLI. However, Sri Lanka is not a signatory to the MLI as of now.
Therefore, the statement said, amendment of the India-Sri Lanka DTAA bilaterally is required to update the preamble and also to insert Principal Purpose Test (PPT) provisions to meet the minimum standards on treaty abuse under Action 6 of G-20 OECD BEPS project.However, it was required to be updated to meet the minimum standards on treaty abuse under Action 6 of G-20 OECD Base Erosion & Profit Shifting (BEPS) Project.
(With inputs from IANS)
