Centre for Internet and Society

Comments on the RBI's Consultation Paper on Peer to Peer Lending

sumandro — 2016-06-01T20:21:13Z

The Reserve Bank of India published a Consultation Paper on Peer to Peer Lending on April 28, 2016, and invited comments from the public. CIS submitted the following response, authored by Elonnai Hickok, Pavishka Mittal, Sumandro Chattapadhyay, Vidushi Marda, and Vipul Kharbanda.

1. Preliminary

1.1. This submission presents comments and recommendations by the Centre for Internet and Society (“CIS”) on the Consultation Paper on Peer to Peer Lending (“the consultation paper”) by the Reserve Bank of India (“RBI”) [1].

2. The Centre for Internet and Society

2.1. The Centre for Internet and Society, CIS [2], is a non-profit organisation that undertakes interdisciplinary research on internet and digital technologies from policy and academic perspectives. The areas of focus include digital accessibility for persons with diverse abilities, access to knowledge, intellectual property rights, openness (including open data, free and open source software, open standards, open access, open educational resources, and open video), internet governance, telecommunication reform, digital privacy, and cyber-security. The academic research at CIS seeks to understand the reconfiguration of social processes and structures through the internet and digital media technologies, and vice versa.

2.2. This submission is consistent with CIS’ commitment to safeguarding general public interest, and the interests and rights of various stakeholders involved. The comments in this submission aim to further the concerns of citizens’ and users’ rights in the context of products, services, and transactions facilitated by digital media technologies, the , the principle that regulation should be defined around functions of the acts concerned, and not the technologies of delivery. Our comments are limited to the clauses that most directly have an impact on these concerns.

3. Response

3.1. Whether there is a felt need for regulating peer to peer lending platforms?

3.1.1. Peer to peer (“P2P”) lenders are platforms serving as marketplaces for the lenders and the borrowers of funds to connect. Their very business model does not render them as a provider of finance, as they aspire to function as pure intermediaries to enable lending and borrowing.

3.1.2. The Section 45I.(f)(iii) of the RBI Act, 1935 [3], provides RBI the authority to classify any financial institution as a non-banking financial company (“NBFC”) “with the previous approval of the Central Government and by notification in the Official Gazette.” Since the P2P lending platforms do not provide any finance themselves, undertake acquisition of financial instruments, deliver financial and/or insurance services, or collect financial resources directly, the only ground for classifying such companies as “financial institutions” [4] appears to be their involvement in “managing, conducting or supervising, as foreman, agent or in any other capacity, of chits or kuries as defined in any law which is for the time being in force in any State, or any business, which is similar thereto” [5]. P2P lending platforms can be considered to be brokers and thus there are other aspects that merit scrutiny such as antitrust issues, obligations of either party, company activities and the transactional system involved, as we will discuss in this document.

3.1.3. The consultation paper itself states that the balance sheet of the platform cannot indicate any borrowing / lending activity, which entails that the platform cannot itself provide finance or receive any funds for the provision of loans to others. Platforms are not allowed to determine the interest rates as they are not a party to the transaction. Neither would they be liable in cases of default by the borrower. These rules, standard for P2P platforms in other jurisdictions as well, confirm the assumption that the platform itself is not providing finance and thus, cannot be entrusted with any liability, obligation from the transaction.

3.1.4. Further, with RBI raising the threshold asset size for an NBFC to be considered systemically important (NBFC-ND-SI) from Rs. 100 Crores to Rs. 500 Crores [6], and Economic Times reporting that one of the biggest Indian P2P lending platform’s enterprise valuation (which can be taken as indicative of its net assets) is Rs 50 Crores [7], we may assume that most P2P lending platforms will have net assets worth less than 500 crore, at least in the near future; although there is a possibility for exponential growth with some companies.

3.1.5. Given the limited sphere of operation, restricted ability (by design) of these platforms to shape interest rates and other features of financial instruments, and their generally non-systemically-important nature, we would submit that the regulation of such P2P lending platforms are kept to an absolute minimum, so that their economic viability is not undermined, and at the same time the key risks associated with their operations are addressed by RBI.

3.2. Is the assessment of P2P lending and risks associated with it adequate?

3.2.1. CIS observes that the following are the key risks involved with the operations of the P2P lending platforms, and these are being respectively addressed by, or can be addressed by RBI in the following manners.

Insufficient information about the conditions of lending, leading to defrauding of the borrower: The borrower may not receive appropriate information about the terms of the loan, and/or the P2P lending platform may not act in a “fair” manner (say, in case of collusion between the P2P lending platform and the lender, or the lending platform and the borrower), which may lead to defrauding and/or economic loss of either party. By classifying P2P lending platforms as NBFCs, RBI will ensure that these companies follow the Guidelines on Fair Practices Code for NBFCs [8], which extensively addresses concerns related to this type of risks.
Insufficient information about the borrower, or her/his ability to repay the loan, may lead to non-repayment and economic loss of the lender: If the P2P lending platform allows the lender to offer loans to borrowers without acquiring and/or providing sufficient information to the lender about the borrower’s credit history and/or ability to repay the loan, modes of formulating security for loans, this may heighten the risks of non-repayment of loans. By classifying P2P lending platforms as NBFCs, RBI will ensure that these companies follow the Master Circular – 'Know Your Customer' (KYC) Guidelines – Anti Money Laundering Standards (AML) - Prevention of Money Laundering Act, 2002 - Obligations of NBFCs [9], which extensively addresses concerns related to this type of risks.
Credit-related information of the lenders and the borrowers collected by P2P lending platforms may not be made available to other financial institutions and that will lead asymmetry in credit information available across various actors in the sector: Credit information, related to both lending and borrowing practices of entities using the platform concerned, is a key asset of the P2P lending platforms. Lack of sharing of such information with Credit Information Companies, for economic reasons or otherwise, may however, lead to information asymmetry within the financial sector, which will structurally weaken the entire sector (with pieces of credit information being distributed across actors and not being shared internally). By classifying P2P lending platforms as NBFCs, RBI will ensure that these companies follow the Credit Information Companies (Regulation) Act, 2005 [10], which extensively addresses concerns related to this type of risks.
P2P lending platforms diversifying their financial operations without informing RBI and hence without appropriate regulatory control: It is possible that P2P lending platforms may decide to diversify their activities. There have been similar examples in other related sectors, say e-commerce marketplaces, that have started their own product re/selling companies that use the same online marketplace concerned. By classifying P2P lending platforms as NBFCs, RBI will ensure that these companies provide RBI with detailed and regular reports of their economic activities and investments, which is expected to address concerns related to this type of risks.

3.3. Are there any other risks which ought to be addressed?

3.3.1. CIS observes that as part of the usual transaction related activities of the P2P lending platforms, the companies will come into possession of what has been defined as “sensitive personal data or information” by the Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011 [11]. The concerns related to this type of risk is directly addressed by the Rules concerned, and may not require additional attention from the RBI.

3.3.2. CIS observes that as borrowers and lenders start using specific P2P lending platforms, the data regarding their credit histories and/or “financial reputation” will be owned by these companies. While such information might be shared internally within the financial sector through the Credit Information Companies, the borrowers and lenders themselves may not get direct access to such data. Hence, the borrowers and lenders will not be able to move easily and smoothly to a new P2P lending platform and make use of their existing credit information and/or “financial reputation” when accessing services offered via the new P2P lending platform. In other words, the borrowers and lenders may face a service provider lock-in, and inability to move between P2P lending platforms easily, without explicit access to their own credit history/reputation, and will not have the ability to migrate such information from one P2P lending platform to another (or to any other agency, for that matter). CIS submits that RBI must provide a mechanism to allow users to migrate between platforms as it has not been discussed in the consultation paper.

3.4. Is the proposed approach to regulating these platforms adequate?

3.4.1. CIS observes that while classification of P2P lending platforms will appropriately address key risks associated with their operations (as listed in 3.2.1. A-D), it will not address a major risk emerging out of their operations that is unique to the technological basis of the business concerned (as mentioned in 3.3.2.), and further, it will impose substantial financial and management obligations that have a very high probability of undermining the economic viability of this emerging and niche sector of intermediated direct lending and borrowing.

3.4.2. CIS observes that these financial and management obligations may involve the following topics among others discussed: 1) minimum net worth requirement for registration, 2) minimum investments required to be made government securities, 3) transferring of minimum percentage of net profits to RBI, 4) guidelines regarding corporate governance [12], etc.

3.4.3. Given this, CIS submits that instead of classifying P2P lending platforms as “Misc NBFCs,” a new sub-classification is created under the category of NBFC for such platforms, that directly addresses the key risks associated with businesses of P2P lending platforms, and protects lenders as well as borrowers while enhancing transparency in operations. This new sub-classification of P2P lending companies should also be divided into systemically-important and non-systemically-important like other NBFCs, and requirements regarding financial operations and corporate management should only be enforced for the former category of P2P lending companies.

3.5. Any other relevant issues pertaining to P2P lending

Beyond the issues already discussed above, CIS seek clarity from the RBI around the following aspects:

Transactional system pertaining to P2P lending:
1. What are the requirements and prerequisites for mandating the collection of user identity?
2. Establishing a maximum sum that can be transferred per transaction.
Company activities:
1. Fees that can be charged by platforms.
2. How data security can be best addressed.
3. How the financial transactions are brokered.
4. Modes of redressal.
5. Restitution to users if something goes amiss in the transaction.
6. Insurance that the company has to buy or capital on hand to support.

Endnotes

[1] See: https://www.rbi.org.in/scripts/bs_viewcontent.aspx?Id=3164.

[2] See: http://cis-india.org/.

[3] See: https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/RBIA1934170510.pdf.

[4] See Section 45I.(c) of RBI Act, 1923, last amended on January 07, 2013.

[5] See Section 45I.(c)(v) of RBI Act, 1923, last amended on January 07, 2013.

[6] See: https://rbidocs.rbi.org.in/rdocs/content/pdfs/PNNBFC200315.pdf.

[7] See: http://economictimes.indiatimes.com/small-biz/startups/faircent-com-raises-pre-series-a-funding-of-250k/articleshow/47630279.cms.

[8] See: https://rbi.org.in/scripts/NotificationUser.aspx?Id=7866.

[9] See: https://rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=8168.

[10] See: http://www.incometaxindia.gov.in/Pages/acts/credit-information-companies-act.aspx.

[11] See: http://deity.gov.in/sites/upload_files/dit/files/GSR313E_10511%281%29.pdf.

[12] See: https://www.rbi.org.in/scripts/BS_NBFCNotificationView.aspx?Id=3706.

For more details visit https://cis-india.org/raw/comments-on-the-rbi-consultation-paper-on-peer-to-peer-lending

Digital Humanities in India – Concluding Thoughts

sneha-pp — 2016-06-30T04:48:27Z

An extended survey of digital initiatives in arts and humanities practices in India was undertaken during the last year. Provocatively called 'mapping digital humanities in India', this enquiry began with the term 'digital humanities' itself, as a 'found' name for which one needs to excavate some meaning, context, and location in India at the present moment. Instead of importing this term to describe practices taking place in this country - especially when the term itself is relatively unstable and undefined even in the Anglo-American context - what I chose to do was to take a few steps back, and outline a few questions/conflicts that the digital practitioners in arts and humanities disciplines are grappling with. The final report of this study will be published serially. This is the final section.

Sections

01. Digital Humanities in India?

02. A Question of Digital Humanities

03. Reading from a Distance – Data as Text

04. The Infrastructure Turn in the Humanities

05. Living in the Archival Moment

06. New Modes and Sites of Humanities Practice

07. Digital Humanities in India – Concluding Thoughts

Concluding Thoughts

This exercise in mapping ‘digital humanities’ in India has brought to the fore several learnings and challenges, especially in trying to locate the domain of enquiry even as our understanding of what constitutes new objects, methods and forms of research and pedagogy constantly undergo change and redefinition. As some of the people interviewed in the course of this study remarked, DH, with its interdisciplinary approach and porous boundaries is like a moving target that becomes increasingly difficult to define as it is constantly evolving into something new, which then adds another dimension to what is already understood about the field. This is not to say that there is a consensus on what is DH, globally or in India, but just to emphasise that the object or domain of enquiry is not fixed, or demarcated clearly.

Even as I wrap up this study, some of the key questions or problems of definition, ontology and method remain with us, as the ‘field’ – if there is such a thing – is incipient in India, as with other parts of the world. What it does for us immediately is throw open several questions about how we understand the idea of the ‘digital’, and what may be new areas of enquiry for the humanities at large, post the advent of the digital. This study therefore is not interested in the question of whether there is a field called DH in India, but rather in what questions are raised by and for DH and DH-like projects by a range of practices and scholarship in the humanities post the digital.

We began with the understanding that DH is a new space of interdisciplinary research, scholarship and practice with several possibilities for thinking about the nature of the intersection of the humanities and technology. The term was a little more than a found term of sorts, in the context of this study, which since then has taken on various meanings and undergone some form of creative re-appropriation. The history of the term in the context of “humanities computing” in the Anglo-American context has helped in locating and defining the field globally within the ambit of certain kinds of practices and scholarship in the contemporary moment. In India, this has been relatively complex endeavour, given that DH, or engagements with humanities-after-digital and/or with digital-through-humanities come out of a different chequered history of humanities and technology. As most of the literature around DH even globally has pointed out, the problem with arriving at a definition is ontological, more than epistemological. The conditions of its emergence and existence are yet to be completely understood, although if one is to take into account the larger history of science and technology studies or the more recent cyber culture and digital culture studies, these ‘epistemic shifts’ have been in the making for some time now. In India particularly, where a clear picture of the ‘field’ as such is still to emerge in the form of a theorisation of its key concerns, it is only through a practice-mapping that one may locate what are at best certain discursive shifts in the way we understand content, structures and methods in the humanities, within the context of the digital. These changes may be visible across only a few domains – particularly in the multi-layered technological landscape in India, and lack a wider consensus in terms of whether they really constitute a larger epistemic shift or new direction of thought. The first couple of chapters in this report tried to lay out ways of understanding the current state of ‘digitality’ that India is in, and the lack of an indigenous framework to theorise or understand it better. The layered technological and media landscape that we inhabit today, where both the analogue and digital co-exist serving various purposes, and access and usage are still contentious points of debate, provides an interesting and dynamic context to understand what are new practices of humanities research and scholarship today.

The fundamental premise of the nature of the digital and its relation to the human subject still lacks adequate exploration which would be required to define the contours of the field. The inherited separation of humanities and technology further makes this a complex space to negotiate, when the term may now actually indicate the need to decode the rather tenuous relationship between the two supposedly separate domains. If one may locate the question even earlier, the separation of the natural and social sciences lies above this segregation of disciplines, and needs further exploration. There is a need therefore to understand the growth of a ‘technologised’ history of humanities to examine whether this almost forced coming together of two historically separated domains may in itself be something novel, or create new and qualitatively different kinds of practices for humanities. Even so, the disciplinary contexts of the usage of the term DH in India open up certain questions of ontology and method more broadly for humanities research and practice in the digital space. These include changes in the nature of cultural artifacts brought about by digitisation, in a landscape where the analogue and digital co-exist but also are in a state of transition from the first to the second. One example is the digitisation of objects like film posters, lobby cards and other paraphernalia around a film text, which although analogue objects, can now be layered onto a digital film object in online archivel like Indiancine.ma, thus also changing the object or opening it up for more questions. The digital object or image, is a new object of study that also demands a different kind of analysis. The change in the nature of the archival object and the challenges to archival practice are some of the related questions stemming from this context. As mentioned by Dr. Indira Chowdhury in the chapter on archival practice, oral history archives and the practice of creating and maintaining them is fraught with many challenges because of a change in the archival object itself. A digital audio file has its own protocols of storage, retrieval and use, given the problems of format and technological obsolescence. Further the classification of such files, its copies in different formats, and their preservation also demands changes in archival practice. This points to some of the larger challenges that have emerged for archival practice in India today, which include – storage and preservation of materials, cross-referencing and meta-data standards, conditions and structures of access, roles and forms of curation, re-usage of archival materials in research and pedagogy, and the constraints to digitization of archival materials, particularly in terms of rare materials and those in Indian languages. The challenge of working with materials in Indian languages (see section on Data as Text) are several, and will form one of the significant areas of work in DH.

The question of methodology comes in as the next most important aspect here, as the method of DH is yet to be clearly defined. The proliferation of new disciplines and conflict over methodology is not new, the Gulbenkian Commission report published in 1996 titled ‘Open the Social Sciences’ documents some of these and other concerns with the growth and segregation of disciplines, and the debates it generated both internally, seen in the rise of cultural studies, and in the natural sciences as complexity studies as well (Wallerstein et al 1996). At present DH seems to be a combination and creative appropriation of methodologies drawn from different disciplines and creative practices. The change in the methodology of the humanities and social sciences itself as no longer remaining discipline-specific has been a contributory factor to the evolving methodology of DH as well. This has raised several methodological questions, as outlined by some of the people interviewed in the study. The foremost is the challenge in rethinking the notion of the text as a digitally mediated object, and the blurring of boundaries between film, audio and print and archival materials as they are transformed into digital objects. The existing methods of reading these texts then are inadequate. An example is the Bichitra variorum at Jadavpur University, or online archives like Indiancine.ma or Pad.ma, where you need new tools to navigate the vast corpus of material on these platforms, and to work with them. The notion of text and textual analysis also demands some rethinking in the light of new terms such as ‘distant reading’ that have come up in the DH discourse. Bichitra and Pad.ma or Indiancine.ma would facilitate some form of such ‘distant reading’ as they involve a method of reading the print or film text using a large number of texts, something possible only with a computer, but also with other kinds of ancillary material, like marginalia, errata, posters, pamphlets and lobby cards of a film. This brings up not just new ways of contextualizing the digital object, but also asking questions of it in terms of its material aspects. Working with collaborative online archives, while creating a new analytical and creative space for work using different kinds of film and film-related material, also pose questions of authorship and privacy. The lack of better transcription tools and other methods to work with sound in the digital space, has posed significant methodological challenges in oral history work as well, as outlined in earlier sections of this report.

The use of computational methods for humanities research is one of the important shifts that forms part of the growth of DH in India, although there is very little work being done in this area in academic spaces except for a few institutions. The Tagore variorum and the online film archives Indiacine.ma and Pad.ma are two examples in this study that have done some work with computational tools and a large corpus of material. The collation guide in Bichitra, and the use of different tools and filters in the film archives like Pad.ma and Indiancine.ma have been able to add another dimension to the analysis of humanities texts, but whether they help ask any qualitatively new questions still remains open to debate. The other spaces studied as part of this report, such as work on digitisation and archives at the School of Cultural Texts, Centre for Public History, or SPARROW, or media art work at CAMP, have been more engaged with exploring what the digital turn has meant for certain humanities research. Some of the more recent courses offered in DH, such as the master’s programme at Srishti School of Art Design and Technology, and the certificate course at University of Pune, do engage with some form of building or ‘material making’, by offering workshops and some practical sessions, as well as topics like data mining, and textual computing. As such the skills and infrastructure needed to work with large data sets and new technologised processes of interpretation and visualisation still remain outside the ambit of the mainstream humanities. Through an exploration of allied fields such as media, archival practice, design and education technology, the study tries to locate how certain practices in these areas inform what we understand of DH today.

The archive, media and now to a certain extent art and design have become the sites for most of the discussions around DH in India, primarily because of the nature of institutions and people who have engaged with the question so far. Archival practice has seen a vast change with the onset of digitisation, and the growth of more public and collaborative archival spaces will also bring forth new questions and concepts around the nature of the archive and its imagination as a dynamic space of knowledge production. The Centre for Public History at the Srishti School focuses on some of these questions, by trying to build more collaborative, online and public archival spaces, and involving in the process a rather diverse group of practitioners and researchers. The objective is also to make not only archives, but history, and oral histories as a discipline more accessible, and dynamic. he notion of the archive as a metaphor, and the possibility of looking at the archive as a database are some new questions which would inform the growth of DH in India. The growth of an open, distributive and collaborative archive, such as Indiancine.ma and Pad.ma also asks questions about the changes in film as an archival object, in its transition to the digital space. The availability of the film text for study, and the layering of different kinds of ancillary material around the film, such as posters, advertisements, literature and errata, opens up possibilities of reading the film text differently. At a more abstract level, the nature of the text as an unstable object itself, now increasingly being mediated and negotiated in different ways through digital spaces, tools and methods would be one way of locating an object of enquiry in DH and tracing its connection to the humanities, which are essentially still seen as ‘text-based disciplines’.

What has been a definite shift is the emphasis on process which has become an important point of enquiry, and one of the many axes around which DH is constructed. The rethinking of existing processes of knowledge production, including traditional methods of teaching-learning, and the emergence of new tools and methods such as visualisation, data mapping, distant reading and design-thinking at a larger level would be some of the interesting prospects of enquiry in the field. Though there is little conversation in the above areas in DH in India (even among the institutions and people mentioned in this study), and some work in other fields like the natural sciences, media and communication, its seems to not be part of the larger discourse developing around DH yet. The collation tool developed for the Tagore variorum, or the editing and annotation tools used in Indiancine.ma and Pad.ma are some examples of the tools and methods presently used in what could be DH or DH-like work in India. The method of DH is however, necessarily collaborative and distributed at the same time, as evidenced by its practice in these various areas and disciplines. A lot of the work done on both these platforms has been through collaboration among people across diverse domains of expertise, in the arts and humanities and technological fields. As the description of the variorum suggests, it needed the expertise of people from Computer Science, Library and Information Sciences, English and Bengali departments to set up such a platform. The method of using or working with Indiancine.ma and Pad.ma is necessarily collaborative and distributed, because everything from the primary film material to the annotations and editing is in some way user-generated, as the archive itself is open to different groups of people ranging from the film enthusiast to the film studies scholar.

The complex and somewhere problematic history of science and technology in India and the growth of the IT sector also forms part of this context, and will inform the manner in which DH grows as a concept, area of enquiry or even as a discipline. DH is yet another manifestation of changes that we have seen in the existing objects, processes, spaces and figures of learning, particularly the open, collaborative and participatory nature of knowledge production and dissemination that has come about with the advent of internet and digital technologies. More importantly, they also point towards the larger changes in what were earlier considered unifying notions for the university, and the humanities as disciplines founded on the ideas of reason and culture. The idea proposed by Bill Readings that the university is no longer concerned with the production of a radical or liberal subject is also an important one, as it points to a further question of the nature of the subject produced, and who the process of knowledge production is to be aimed at (Readings 1997). If one may extend this argument to DH, the subject of this new discourse around the digital is also now rather unclear.

One could explore the notion of the 'digital humanist,' or in a more abstract manner the digital subject as one example of this lack of clarity, which is also why it has been of much concern for several scholars, DH and otherwise. As Prof. Amlan Dasgupta says, it is difficult to identify such a category of scholars, although a person who is able to situate his work in the digital space with the same kind of ease and confidence that people of a different generation could do in manuscripts and books would perhaps fit this description, and he is sure that such a person may be found. For example someone who knows Shakespeare well and can write a programme, and he is sure a day will come when this is a possibility. It is a familiarity in which the inherent distance between these two pursuits becomes lesser – DH is at that moment - a composite of these two approaches rather than the difference. While many scholars concur with this explanation, others find the term misleading – humanities scholars do not call themselves ‘humanists’. Also, by virtue of being a digital subject, anybody engaged with some form of digital practice is already a digital humanist of some sort. The problem also is in the rather unclear nature of the practice, all of which is not unanimously identified as DH, as a result of which not many scholars would want to identify with the term. This poses another question about the skills required of a humanities scholar in the near future, will she have to learn how to code etc. Additionally there is also a concern, as pointed out by some scholars, about the loss of criticality as a result of a relying on algorithms to work with a corpus of texts, among other things.

However, many of these alternate or liminal spaces have always existed; they are perhaps becoming more visible and acknowledged now. This is also indicative of the larger changes in the landscape of work in the humanities, whether creative, academic or pedagogic. With the advent of the internet and new digital technologies, the nature of cultural artifacts has also been altered significantly, thus demanding a new mode of enquiry and analysis, which often goes beyond interpretation and representation. How these digital objects are constituted, are they ever complete or finished, such as the text in the variorum or the film in the archive which continue to take on layer upon layer of annotation to generate a plethora of meanings, are related questions. They pose a challenge to the existing methods of the humanities, and along with the distributed, collaborative, and networked structures of practice and research that the internet has engendered, they have opened up several possibilities for the humanities. DH, with its emphasis on interdisciplinarity and different kinds of knowledge drawn from a diverse set of practices definitely opens up space for a new mode of questioning; whether all of these different modes of questioning can coalesce as a new discipline or interdisciplinary field in itself will remain to be seen.

More importantly, it also indicates the changes taking place in the university system in India, which is trying to address multiple anxieties at a larger political and the every-day administrative levels, reflected in problems with quality, equity and access to education (Misra and Singh 2015; Academics for Creative Reforms 2015). The digital turn has been one of the sources of concern, as it has pushed for the need to rethink the role of technology, particularly internet, in teaching and learning practices, both within and outside the classroom. The internet, and the different challenges posed by it in terms of methods, objects and contexts of learning, has contributed greatly to the emergence of some of the digital practices discussed in this study, which also take some of the questions they pose about knowledge production, pedagogy or scholarship, outside the ambit of the classroom or university space. The emergence of DH can be seen as a coming together of these anxieties in some manner, and perhaps indicative of a distinct ontological basis for such a discipline or area of study in India. This is not to conflate the discourse with the narrative of a ‘crisis’ in the university (something that exists in the Anglo-American context of DH) but rather to highlight the changes that it is undergoing, where the internet and digital technologies continue to play a crucial role. In the absence of a history or established traditions for the growth of disciplines like media studies, software/internet studies or digital cultural studies in India, apart from the work done by research programmes like the Sarai programme at CSDS, it is imperative to ask if the emergence of DH is then a push to trace such a history, to understand better its ontological and political stake, and more importantly to explore what the ‘digital’ means not just for the humanities, but for a larger processes of knowledge production today.

References

Academics for Creative Reforms ‘What Is To Be Done About Indian Universities? In Economic and Political Weekly, Vol. 50, Issue No. 24, 13 Jun, 2015.

Misra, Rajesh and Supriya Singh ‘Continuum of Ignorance in Indian Universities’ in Economic and Political Weekly, Vol. 50, Issue No. 48, 28 Nov, 2015

Readings, Bill. The University in Ruins. Cambridge: Harvard University Press, 1997

Wallerstein, Immanuel et al. Open the Social Sciences: Report of the Gulbenkian Commission on the Restructuring of the Social Sciences. California: Stanford University Press, 1996, http://www.binghamton.edu/fbc/archive/iwstanfo.htm.

For more details visit https://cis-india.org/raw/digital-humanities-in-india-concluding-thoughts

Policy Shaping in the Indian IT Industry: Recommendations by NASSCOM, 2006-2012

Pavishka Mittal — 2016-07-04T08:11:05Z

This is the first of a series of three blog posts, authored by Pavishka Mittal, tracking the engagements by NASSCOM and iSPIRT in suggesting and shaping the IT industry policies in India during 2006-2016. This posts focuses on the policy activities of NASSCOM in 2006-2012 with specific reference to Special Economic Zones, E-Commerce Industry and Transfer Pricing, along with a few other miscellaneous important recommendations.

1. Introduction

2. Tax Reforms in Special Economic Zones (SEZs)

3. E-Commerce Industry

4. Transfer Pricing Issues

5. Other Recommendations

5.1. Concerns with the Union Budget Proposals

5.2. Request for Clarity in Classification of Transactions and Guidelines

5.3. New Retrograde Obligations under Law

6. Endnotes

7. Author Profile

1. Introduction

The National Association of Software and Services Companies (NASSCOM) was established in 1988 as a non-profit, global trade association registered under the Indian Societies Act 1860 representing the interests of the IT Industry, now with over 1500 members. Its objective is to facilitate trade in the software development and services, software products, IT enabled/BPO services and e-commerce. It also undertakes research projects for facilitating innovation in advanced software and maintains data on industry trends, even a national database of registered and verified knowledge workers in the industry. Nevertheless, its role of policy advocacy cannot be over emphasized. It regularly interacts with the Government of India to bring about a favourable business environment for the IT Industry.

This blog post, the first part in a series, discusses NASSCOM’s major issues with policies of the Government of India in the period 2006-2012. The concerns of the IT industry, as highlighted by NASSCOM in the period aforementioned are with reference to the Special Economic Zones, E-Commerce Industry and Transfer Pricing broadly along with other miscellaneous important recommendations. The subsequent blog posts will focus on specific tax issues post 2012 and will elaborately discuss transfer pricing related concerns.

2. Tax Reforms in Special Economic Zones (SEZs)

The ITes and BPO industry constitutes a sizable portion of the number of SEZs in the country [1] so much so that it has been argued that the IT industry alone reaps the benefits of the SEZs and STPIs to the exclusion of the other sectors [2].

The most salient incentive in the SEZ Act enacted by the Government of India in 2005 had been income tax exemption of export profits which contributed to the scheme’s success in attracting major investments [3]. Further, exemption from minimum alternate tax had been provided under section 115JB of the Income Tax Act. However, in 2011, the government decided to impose a Minimum Alternate Tax upto the rate of 18.5% on the book profits of SEZ’s developers and units through the Finance Act 2012 by introducing amendments to the Income Tax Act 1961, to be effective from April 2012 [4]. NASSCOM took a strong stance against equality in corporate tax liability as such tax is sought to be imposed upon income derived from investments made with a commitment of tax exemption. The intention of the government in making such policies having regressive outcomes will be judged if key promised characteristics of SEZs were differential economic laws from the remaining domestic territory. For all practical purposes, they are deemed to be foreign territories for the levy of trade duties and tariffs [5]. In the case of Mindtree Limited v. Union of India [6], software company Mindtree argued that the imposition of MAT in SEZs was against the concept of promissory estoppel and the doctrine of legitimate expectation, which rendered such taxes constitutionally invalid [7]. Even though a time limit was not prescribed for the above tax exemption, it was argued that SEZ policy was predicated on tax relief and the subsequent change in policy was arbitrary and unfair. Individual taxpayers and undertakings should not be affected by subsequent laws if they make sizable investments, modify business models and bear the added expenses of moving into or developing a SEZ. It cannot be disputed that this argument is untenable keeping in mind that the legislature cannot be bound by past promises in line with practical considerations and their independence with regard to the effective discharge of public functions. It was held that the legislature cannot be bound by the doctrine of promissory estoppel [8].

The Adani group had also challenged the imposition of MAT in the Gujarat HC in 2011 on the ground that that any amendments to the SEZ Act can only be brought about by amendments to the SEZ Act itself, and not through the Finance Act [9]. The SC in Madurai District Central Cooperative Bank Ltd. [10] held that the parliament has the authority to introduce a new charge of tax even by incorporating it in any other statute other than the act. However, the fact remains that such policies lead to a volatile business environment and the importance of stable business policies cannot be overemphasized. In 2011, NASSCOM recommended that MAT be withdrawn as it is opposed to the government’s long term policy of SEZ’s growth [11]. Alternatively, it stated that the imposition of MAT be withdrawn to ensure the continued economic viability of the SEZs which have already been notified by the government [12]. It also stated that international norms should be applied for the determination of the MAT rate, which was 1/3rd of the corporate tax rates [13].

Another concern highlighted by other stakeholders was the prescribed period of ten years for the setting of the MAT against regular tax liability. This MAT credit may expire or be on the verge of expiration for participants in SEZs who enjoy tax holiday for a prescribed number of years when they start operations due to absence of initial tax liability. Foreign investors will face difficulties in claiming tax benefits in their home jurisdictions for MAT paid in India. Further, the exemption granted to SEZ developers as to the levy of Dividend Distribution Tax @ 15% has been revoked by the Finance Ministry in 2011 severely affecting the IT industry.

The government finally took note of the increased disinvestment as a consequence of such taxes and proposed to make the imposition of MAT and Dividend Distribution Tax inapplicable to SEZ’s in 2015 [14].

3. E-Commerce Industry

NASSCOM in 2012 suggested the lowering of the interchange tax rate on debit cards transactions by the RBI. Debit cards possess lower risk in comparison to credit cards, the transactions being concluded immediately and the same should be reflected in the form of differential taxes. A standard 1-2% interchange/transaction fees were generally levied by banks. NASSCOM also recommended the introduction of a 2% tax incentive on the purchase of products online to facilitate increased purchases and encourage consumers to even undertake small value transactions online. Further, it emphasized that the base of e-commerce users have to be expanded. It commented on the differences in the Internet usage costs between China and India, USD 10 and USD 15-20 respectively. High internet usage costs can only be indicative of reduced Internet access. However, this is not to state that the E-commerce industry is unsuited for India due to infrastructural inefficiencies. NASSCOM has stated that India as of 2012 possesses over 100 million Internet users. Technology has to be developed which would reduce dropout rates of transactions. Further it suggested the creation of an online receipt repository which would store all online transaction receipts, accessible through mobile phones or the internet. It would contribute in increasing customer confidence by enabling tracking of payment, delivery etc.

The RBI in response to the recommendations of NASSCOM and the Online Payment Advisory Group [15] and in consultation with all concerned stakeholders, decided to put a maximum limit on the Merchant Discount Rate (MDR) for transactions undertaken with a debit card [16].

4. Transfer Pricing Issues

Transfer Pricing has become the dominant international tax issue affecting multinational corporations operating in India [17]. As noted by NASSCOM, a steep rise in litigation and the number of transfer pricing adjustments with the Indian Revenue Authority (IRA) has been observed due to ‘increased scrutiny’ by the IRA who has been rejecting the profit declared by foreign companies accruing to Indian subsidiaries by applying very high markups in this sector. Increased complications in setting valid prices through this process have arisen due to the rising presence of ‘highly complex transactions’ involving intangibles and multi-tiered services across the world. The Finance Act 2012 extended the applicability of domestic party transactions to certain related domestic parties, if the aggregate value of such transactions exceeds INR 5 crore, to any expenditure with respect to which deduction is claimed while calculating profits and to transactions related to businesses eligible for profit-linked tax incentives, including SEZ units under section 10AA [18].

NASSCOM has proposed a three pronged approach to the problem of backlog of cases and absence of certainty of price of transactions:

Implementation of Safe Harbour provisions to resolve existing disputes.
Introduction of Advance Pricing Agreements [19] to set fair and transparent prices.
Initiation of review of the structure and procedure of the Dispute Resolution Panel [20].

The Finance Act 2009 introduced section 92CB [21] in the Income Tax Act 1961 which provided for the subjection of the arms length price determined under section 92C or section 92CA to Safe Harbour Rules, to be declared by the Central Board of Direct Taxes (CBDT). For the valid determination of such a transfer price, the minimum transfer price that a taxpayer is expected to earn for international transactions is prescribed along with certain specific norms for particular transactions. The safe harbour transfer price for eligible transactions is subject to certain prescribed minimum ceilings [22]. A price determined in accordance with such guidelines would be deemed to be an Arms Length Price (ALP). To that extent the safe Harbour Rules are in the nature of ‘presumptive taxation’ and incentivises IT firms to avoid unnecessary litigation by opting for the same. Unilateral, bilateral and multilateral Advance Pricing Agreements, binding on the taxpayer and the revenue authorities for five consecutive years have been introduced with effect from 1 July 2012. Certain domestic transactions are inapplicable for APA’s in the absence of other monetary conditions/stipulations under law for entering into an APA. Documentation on comparables is required to be maintained to substantiate compliance with arms length principle.

The concerns of the prescribed rates include non-representation of industry benchmarks and economic realities in as much as the prescribed rates exceed the actual arms length prices, often leading to the risk of double taxation in foreign jurisdictions. The division of IT services into two components has also been criticized as many of the activities might overlap. NASSCOM has stated that it is not clear how the existing current issues are proposed to be resolved. The introduction of domestic parties as applicable parties to be subject to the transfer pricing regulations will only increase the complexity in the law. There has been subsequent judicial development involving the establishment of some principles for the valid determination of comparables for the purpose of identifying an acceptable transfer price which will be discussed in the next blog post.

5. Other Recommendations

5.1. Concerns with the Union Budget Proposals

NASSCOM summarized that the Union Budget Proposals 2012-13 focus on the reduction of the fiscal deficit through higher taxation rather than expenditure management. More specifically, it focuses on the following concerns of the IT Industry:

The issues of tax simplification have not been resolved as no roadmap for the implementation of the Direct Taxes Code and the Goods and Services Tax Bill has been provided.
The increase in the Current Account Deficit should have incentivized the government to introduce measures which facilitate high value exports, which has been wholly ignored from the budget.
Increase in indirect taxes, namely excise duty and service tax is a retrograde policy measure.
Restrictive conditions in the SEZ Act 2005 which do not facilitate the setting up of small companies, have to be modified.
There is no mention of reduction of Tax Deducted at Source (TDS) for SMEs and introduction of non-profit linked incentives in the form of employment benefits etc. in the proposal.
Similar provisions should also be introduced for Tier II and III cities in the country.
Some announcements as to the simplification of service tax refund and the removal of the provisions involving dual levy of service tax and VAT are not sufficient to resolve ambiguities in law. NASSCOM, in light of the increasing delays of service tax, suggested exemption of export activity from such tax and the applicability of a simplified mechanism similar to CENVAT wherein exemption will be provided to exporters in proportion of their exports to total sales.

5.2. Request for Clarity in Classification of Transactions and Guidelines

NASSCOM in its pre-budget recommendations had suggested that in light of the confusion of the characterization of software as goods or services and the resultant dual taxation, in the form of taxes paid to both the Central and the State Governments, the provision of software, whether customized or packaged should be treated as a service irrespective of the media and mode of transfer with the assurance from the States that no VAT shall be leviable on software. Further, guidelines have to be outlined for various e-commerce transactions like database subscription, cloud computing, webhosting and data warehousing. Onsite exporter of services are being denied the benefits of certain tax exemptions due to the sunset of STPI provisions, thus forming the need for a formal clarification by the government deeming these activities to be an integral component of the IT services industry.

5.3. New Retrograde Obligations under Law

NASSCOM emphasized that the introduction of certain provisions, related to GAAR, related party transactions and the withholding of tax in the Finance Bill, some of these retrospective in nature, enhance the difficulties faced by the IT industry. Increased obligations on the corporate tax payers in the form of imposition of additional taxes will only increase the scope of multiple interpretations of the provisions which will lead to the exercise of discretionary powers by the tax authorities.

6. Endnotes

[1] As of September 2011, a significant majority of the 143 operational SEZs in the country belonged to the IT/ITeS and electronic hardware as per data released by the Ministry of Commerce and Industry.

[2] See: http://articles.economictimes.indiatimes.com/2012-02-25/news/31099874_1_sez-unit-sez-promoters-multi-product.

[3] Section 10AA of the Income Tax Act provides for 100% income tax exemption on export income for SEZ units for the first five years, 50% for the next five years and 50% of the ploughed back export profit for the next five years.

[4] See: http://www.business-standard.com/article/economy-policy/govt-imposes-18-5-mat-on-sez-developers-units-111022800153_1.html.

[5] See: http://articles.economictimes.indiatimes.com/2005-07-08/news/27506703_1_special-economic-zone-act-sez-act-sez-bill.

[6] (2013)260CTR(Kar)146.

[7] The doctrines of promissory estoppel and legitimate expectation, arising from legal relationships and reasonable expectation, respectively, are flexible equitable reliefs not defined in any statute. Judicial decisions have held that a party would not be entitled to go back on a clear and unequivocal promise which was intended to create legal relations, knowing or intending that it would be acted upon by the other party to whom the promise was made and acted upon by the other party under the doctrine of promissory estoppel. Legitimate expectation of a certain treatment arises against representation by an administrative authority, whether express (through promises), or implied (through consistent past practice) despite absence of any right otherwise.

[8] It was held that the action of the government is legal as every tax exemption provision should also incorporate a sunset clause. The deletion of the exemption under law would only reduce the erosion of the tax base.

[9] See: http://articles.economictimes.indiatimes.com/2011-05-11/news/29532409_1_sez-act-minimum-alternative-tax-mat.

[10] Madurai District Central Cooperative Bank Ltd. v. ITO (1975) 101 ITR 24(SC), the form and method of introduction of a legislation is not of importance provided the requirement of competence by the legislature to pass the deemed law with respect to its subject matter is satisfied. An amendment of a taxing statute, by an unconventional method of incorporation through an act of a different pith and substance is not unconstitutional. The primary purpose of the Finance Acts is to prescribe tax rates for taxes specified in the Income Tax Act. However, the above fact does not restrain the freedom of the legislature to impose an altogether new tax through the Finance Act or any other deemed legislation besides the Income Tax Act.

[11] See: http://www.nasscom.in/nasscom-prebudget-recommendations.

[12] Ibid.

[13] Ibid.

[14] See: http://articles.economictimes.indiatimes.com/2015-02-13/news/59119589_1_sez-developers-and-units-minimum-alternate-tax-special-economic-zones.

[15] Formed in 2012 to examine the challenges faced by the E-commerce Industry in India and to recommend changes needed to facilitate the creation of a vibrant online payment sector.

[16] Not exceeding 1 percent for transaction amount for value above 2,000. The directive was issued under section 18 of the Payments and Settlement Systems Act, with effect from July 1, 2012.

[17] See: http://www.pwc.com/gx/en/international-transfer-pricing/assets/india.pdf.

[18] This amendment would extend to any other transaction as may be specified and would be applicable for FY 2012-13 and subsequent years.

[19] An Advance Pricing Agreement, generally covering multiple years, entered into between a taxpayer and at least one tax authority lays down the method of transfer pricing to be applicable to the taxpayer’s inter-company transactions which eliminates the need for transfer pricing adjustments for enclosed transactions provided the terms of the agreement are complied with.

[20] The Finance Act 2009 inserted section 144C in the Income Tax Act which provides for the constitution of an alternative dispute resolution mechanism for transfer pricing taxation matters, namely a DRP (Dispute Resolution Panel) consisting of three commissioners rank officers.

[21] Section 92CB defines Safe Harbour to be ‘circumstances under which the income tax authorities shall accept the transfer pricing declared by the assessee.’ The procedure for adopting safe harbour, the transfer price to be adopted, the compliance procedure upon adoption of safe harbours and circumstances in which a safe harbour adopted may be held to be invalid is specified in the new rules in 10TA to 10AG issued by the CBDT on 18th September 2013.

[22]

Provision of software development services and information technology enabled services with insignificant risks- upto rs 500 crore- 20% or more on total operating costs, above rs 500 crore- 22% or more on total operating costs.
Provision of knowledge processes outsourcing services with insignificant risks-25% or more on total operating costs.
Provision of specified contract R & D services wholly or partly relating to software development with insignificant risks- 30% or more on total operating costs.

7. Author Profile

Pavishka Mittal is a law student at West Bengal National University of Juridical Sciences, Kolkata and has completed her second year. She takes contemporary dance very seriously and hopes to contribute to the dance community in India. Other than dancing, she indulges in binge-watching in her spare time.

For more details visit https://cis-india.org/raw/policy-shaping-in-the-indian-it-industry-recommendations-by-nasscom-2006-2012

Data for Governance, Governance of Data, and Data Anxieties

sumandro — 2016-07-03T05:59:48Z

The Center for International Media Assistance (CIMA) organised a panel discussion on 'The Data Explosion – How the Internet of Things will Affect Media Freedom and Communication Systems?' at Deutsche Welle's Global Media Forum 2016, held in Bonn, Germany during June 13-15, 2016. Sumandro Chattapadhyay was invited as one of the panelists.

Introduction to the Panel

The emerging Internet of Things (IoT) will result in a vast network of Internet-connected devices that generate enormous volumes of data about human behavior and interactions. This data explosion will potentially reshape how media organizations both collect and report news, while at the same time fundamentally shifting how communications networks are organized worldwide. Yet currently most of the discussion about the IoT has focused on its spread in developed countries via the popularization of Internet-connected consumer devices.

In this panel we will discuss how the IoT may develop differently in the Global South and how it could present either a threat to open access to data and information, or an opportunity to improve media systems worldwide. We will also examine the impact of the data explosion in developing countries and what mechanisms need to be created in order to ensure the huge new mountain of data is used and governed responsibly.

The discussants were Carlos Affonso Souza (Director, Institute for Technology and Society of Rio de Janeiro, Brazil), Lorena Jaume-Palasi (Director for Communications, European Dialogue on Internet Governance, or EuroDIG, Switzerland), and Sumandro Chattapadhyay (Research Director, the Centre for Internet and Society, India); and the conversation was led by Mark Nelson (Senior Director, Center for International Media Assistance, or CIMA, USA).

Source: Deutsche Welle.

Audio Recording

Things/Writings I have Mentioned

For more details visit https://cis-india.org/raw/data-for-governance-governance-of-data-and-data-anxieties

Policy Shaping in the Indian IT Industry: Comparative Analysis of Recommendations by NASSCOM and iSPIRT, 2013-2016

Pavishka Mittal — 2016-07-04T09:34:43Z

This is the second of a series of three blog posts, authored by Pavishka Mittal, tracking the engagements by NASSCOM and iSPIRT in suggesting and shaping the IT industry policies in India during 2006-2016. This post conducts a detailed comparative analysis of NASSCOM’s and iSPIRT’s specific policy recommendations from 2013-2016. To facilitate comparison, the blog post is written thematically on the lines of major issues highlighted by market players in the IT industry.

1. Introduction

2. Taxation Issues in the Software Industry

2.1. Issue of Double Taxation in the Software Industry

2.2. NASSCOM's Tax Concerns

2.3. iSPIRT's Tax Concerns

3. Concerns with Respect to the Regulatory Mechanism for E-Commerce (B2B Commerce)

4. Other Policy Recommendations

5. Endnotes

6. Author Profile

1. Introduction

Indian Software Product Industry Roundtable, or iSPIRT, is a think tank formed in early 2013 by about 30 product companies and individuals to protect the interests of the Indian software product industry. The organization believes that the market for software products is bound to grow in the future, both globally and locally, whose benefits should be derived of through cost efficiencies and resource optimization through the mechanism of free markets. This blog post, second in a series on ‘policy shaping in the Indian IT industry’, conducts a detailed comparative analysis of NASSCOM’s and iSPIRT’s specific policy recommendations from 2013-2016. The author has examined the more contentious issues due to difficulties in stating all the policy recommendations of these organizations over a period of four years in a single post. The law is explained, wherever necessary. Further, in the absence of reliable data on a particular policy position of either organization, no assumptions regarding the same have been made. To facilitate comparison, the blog post is written thematically on the lines of major issues highlighted by market players in the IT industry. Transfer pricing issues will be examined in the next blog post.

2. Taxation Issues in the Software Industry

2.1. Issue of Double Taxation in the Software Industry

There has been a general practice of the payment of both VAT and Service Tax on sale of software, which involve the provision of maintenance services etc along with the product. The applicable law on taxation has been explained below for a better understanding of the policy positions of the deemed organizations. Section 65B(44) of the Finance Act 2012, which defines ‘services’ includes ‘declared services’ under section 66E [1] and excludes ‘deemed sales’ under Article 366(29-A)(b) [2] of the Constitution involving a transfer of title in goods. A combined reading of all the provisions reveal that every transfer of goods on lease, license, hire under section 66E(f) does not result in the transfer of right to use goods under Article 366. It has been held that the transfer of right to use the goods under Article 366 involves a transfer of possession and effective control over the goods [3]. Thus, a license to use software which does not transfer ‘the right to use software’ would not qualify to be a sale/ deemed sale under law and would be governed by section 66E(f). Thus, from a general reading of the law, it can be concluded that the terms of the agreement involving transfer of pre-packaged or canned software under a license to use the software would have to be examined to decide the applicability of article 366 of the Constitution, that is, to decide whether the license to use packaged software involves the ‘transfer of right to use’ the deemed software.

The Madras HC in Infotech Software Dealer Association v. Union of India [4] held that licensing agreements involving the transfer of rights to use software to a licensee who is not permitted to sell, license or distribute the software by the licensor who retains copyright and hence ownership rights in the goods will not be sale or ‘deemed sale’ transactions as per article 366(29A)(d) of the Constitution as no transfer of software is made out from the transaction. The test of effective control as to the transfer of right to use the goods has been followed by the Madras HC. In the present case, it was held that software owner while retaining copyright protection entered into master end use licensing agreements which enabled the petitioner association to market the software to individual end users, thus, Article 366(29A)(d) was not attracted in the absence of transfer of software. Restraints/ conditions on the free enjoyment of the software in the licensing agreement indicate service tax liability. Any imposition of service tax on ‘goods’ would not be deemed to be unconstitutional without examination of the transaction. The source of confusion remains in the fact that notwithstanding software are goods, the transaction involving its transfer would have to be examined for taxation purposes. Manner of delivery is also of consonance in the determination of character of the transaction. It has been held that delivery of online content would only be a service in contrast to transfer of software through media, or embodied in the computer itself.

To summarise, jurisprudence and legislations have recognized packaged or canned software as tradable goods for the purposes of VAT/Sales Tax. “IT Software’ has also been recognized as goods under the Indian Central Excise Tariff Act. Further, Packaged or canned software is recognized as a ‘packaged commodity’ for the purposes of the Legal Metrology Act, 2009 on the basis of which the manufacture of such is generally subject to Central Excise valuation on an MRP/Retail Sales Price basis in accordance with s 4A of the Central Excise Act, 1944. This is in contradiction to the premise that software supplied digitally is a service. The argument remains that basic operational character, marketability and commercial value of software remains unchanged, whether it is supplied over the counter in a shop or supplied digitally.

2.2. NASSCOM's Tax Concerns

NASSCOM in its pre budget recommendations for the year 2013-2014 suggested that deviations from the existing provisions should be allowed for matters that warrant the adoption of an alternative approach for tax reform. Consultative groups such as the Tax Administration Reform Commission (TARC) should continue to operate. The IT Industry possesses certain specific tax concerns due to its unique business models which aim to overcome geographical distances. Software product companies are practically SME’s which struggle to maintain cash flow due to imposition of additional tax. All firms, including SMEs are forced to hire a specific employee for tax compliance alone. Further, they prefer to pay the deemed penalty rather than opt for litigation due to added costs, which is not sustainable in the long run.

The CBEC’s Guidance Notes dated 20th June, 2012 clarified many issues arising out of the new provisions in the Service Tax law introduced on 1st July 2012. As laid down by the SC in TCS v. State of AP [5], ‘sale’ of prepackaged/ canned/shrink wrapped software would not be a provision of service. NASSCOM’s earlier request for a clarification as to the taxation of onsite services was fulfilled with the guidance notes treating development of onsite software under the category of development of Information Technology Software as a declared service under section 66(e)(d) of the Finance Act.

NASSCOM suggested clarity in the deemed provisions which allow for dual taxation and ambiguity in the characterization of the transaction. VAT should be levied on the product alone and the service tax should only be payable on the additional services rendered, if any. New business models involve the provision of services along with the product which further increase the possibility of dual taxation. Provision of standard software, including license to use such software, whether electronically or on a media, should not be subject to dual levies, and in case VAT is applied, it would not be liable to Service tax. For software transactions which involve both a product and associated services, the services component should be subject to service tax alone, and the product value should be subject to VAT only. Given the stand taken by the Central Government on the treatment of software supplied electronically, it may be clarified that service tax is applicable on sale of software which is downloaded electronically and Central Sales Tax is not applicable on the same if the transaction is interstate transaction. Other recommendations included:

The Finance Act 2012 introduced certain retrospective amendments which are unfair to the industry involving TDS and associated penalties arising out of royalty implications. The introduction of payment of royalty on Internet downloads of software, services of maintenance, upgrade and telephone services has to be aligned with International standards.
The 10% TDS payable by SMEs and startups in the IT Industry is high due to the low profitability of such ventures and the cash flow crunch faced subsequent to such payment due to the need for investment prior to the start of operations in the product development industry. Often, the actual tax liability is lower than the TDS liability, which results in income tax refunds later while reducing liquidity in operations before. NASSCOM suggested reduction of TDS liability and adjusting pending refunds to future TDS liability. Further, banks should offer loans to software companies by treating the pending TDS refunds as book debts taken by the state. The ideal approach would be the complete exemption of the software industry from TDS u/s s 194J of the Income Tax Act.
Section 194J of the Income Tax Act prescribes that TDS @10% has to be deposited on payment made for the acquisition of software for amount greater than Rs 30,000 in a financial year. NASSCOM recommended that the prescribed limit for the computation of the TDS liability is not indicative of the pricing trends in the current business environment and thus the minimum threshold limits be increased to 3 lakh in a financial year. Further, the relevant criteria of setting these limits should be released in the public domain which would enable the industry to share data for the timely updation of the prescribed limits.
Clause 4 of the second explanation to Sec 9(1)(vi) of the Income Tax Act, 1961 states that Royalty would include consideration for the rendering of services which include the imparting of any information concerning technical, industrial, commercial or scientific knowledge, experience or skill. Royalty indicates consideration for ‘user rights’ rather than ownership rights. NASSCOM in 2014 stated that Software Ancillary Services such as AMC’s, Upgrade Fees, Subscriptions, etc. which do not involve transfer of rights, or grant of license but involve only payments of consideration for services is deemed to be “Royalty” for the purposes of the Income Tax Act and demanded that a clarification be issued under this regard.
Abatement of 15% is allowed from Retail Sale Price (RSP) to arrive at the value of Packaged Software or Canned Software, for payment of excise duty [6]. This notified abatement of 15% does not take into account the incidence of taxes on the product [7]. The taxes on the product amount to ~22% of the RSP and the notified abatement of 15% is not adequate. NASSCOM recommended that the abatement of 15% allowed under the said notification be increased to 30%. High Packaged/Canned software products are sold through a multilayer dealer/distribution chain through which they are delivered to the ultimate consumer. High trade discounts are incurred due to the presence of multiple intermediaries in the supply chain.
The IT Act in recognition of the compulsions and limitations of the SME and start-ups have notified several thresholds below which provisions are not applicable. Unfortunately, these are not revised and lose their relevance in the evolving business environment. NASSCOM requested for the institutionalization of a periodic review mechanism, which would ensure that the thresholds are revisited at predefined frequencies and altered accordingly.
Review of the foreign tax credit provisions are necessary in light of emerging Indian MNCs. The existing tax treaties need to be reevaluated to delete differential tax treatment discouraging domestic investment and contributing to the increased round tripping in the economy.
A separate regulatory approach with respect to Angel Investments needs to be formulated as they serve as the key source of funding for IT firms in the absence of access to public financial institutions.
NASSCOM has also highlighted multiple procedural issues in its prebudget recommendations for the year 2015-16 [8].
NASSCOM expressed its disappointment over the manner of implementation of the Fringe Benefit Tax bringing a lot of legitimate business expenditure on employee welfare in the tax net, resulting in non-investment in the long term benefit of workers by businesses [9].

2.3. iSPIRT's Tax Concerns

iSPIRT stated that the Indian government by adopting a piecemeal approach to the taxation system in the country has contributed to its increased fragmentation. The present tax structure cannot deal with the evolution of the digital economy in India which is increasingly using innovation in its business models.

All prepackaged software are considered to be goods due to an associated tariff code (ITS/HS Code). All other categories of software, are to be treated as services by default through a logic of exclusion, (other than customized software) by virtue of not being included in the tariff code list. There is no recognition of other models of SaaS, PaaS etc. The central government has not given adequate remedies to the issue of the charging of VAT by the State governments. Even when software is defined as a service, its transfer is often held to be deemed sale as per Article 366(29A) of the constitution. ‘SaaS’ software is taxed only under the service tax component when procured through a service partner, as against service tax plus VAT when procured directly. Differential taxation treatment of the same product/service creates immense frictions for ease of doing business for digital goods and services.

iSPIRT identifies the root cause for such confusion to be the non-recognition of intangibles to be at par with tangibles. Technically, by treating them to be ‘goods’ and subjecting them to the Sale of Goods Act, they cannot be treated as services by definition. However, the result of the piecemeal approach is the non recognition of software products as products (effectively), due to their intangible nature. This can be seen by the imposition of royalty from income derived from the sale of software under the Finance Act 2012, which indicates that the transaction of sale of software is considered to be one of transfer of copyright rather than a sale of product.

iSPIRT gave arguments as to the inefficiency of the proposed GST bill to deal with the taxation issues in the software industry, the bill not taking cognizance of the root cause of absent definition of a digital good which treats intangibles at par with tangibles. Practical challenges will arise due to differences in the value chain of use and consumption of ‘goods’ and ‘services’. The tax structuring is not done exclusively for the either software or the digital business. The tax authorities are prone to provide for differential rates under pressure of lobbying in the presence of new sectors in the industry which leads to amendments of rules and increased confusion. With the non-deletion of Clause (29A) of Article 366 in the proposed constitutional amendment, the concept of sales and deemed sales may be misused or may not give way to the concept of supply as envisaged in the GST Bill. Further, the CBEC is expected to use the existing frameworks even if the GST bill is proposed to be passed to the detriment of the software industry.

iSPIRT’s solution involved the transfer of focus to ‘digital’ products and services. It formulated the COG-TRIP test which can be used to define software products as distinct from software services [10]. Software products would be pervasive in the future and would be an essential component of the ‘digital economy’. Software is not necessarily a standalone computer program and may work with either data, audio or video products. Hence software products, sounds, images, data, documents or combinations of them may exist as a ‘digital product/goods’. This ‘digital economy’, would be overwhelmed with trade of not only ‘digital goods’ and ‘digital services’, but also the trade of ‘right to use’ or ‘transfer of right to use’ just as there is ‘deemed sales’ or ‘transfer of right to use’ of tangible goods. Due to inevitable inseparability of software and digital products, the taxation issues of Software product industry should be dealt in a unified ‘digital economy’ domain to prevent the formulation of a temporary, patchwork solution. Focusing on ‘digital’ will provide strategic solution to the problem at policy formulation level.

iSPIRT thus proposed a ‘digital goods’ and ‘digital services’ definition in the tax system [11]. These “digital goods,” or intangible goods have to be awarded the status of “goods” as defined in Article 366(12) of the Constitution. The digital goods, though intangible in nature, exhibit all properties of tangible goods generally acceptable in legal parlance viz. durability (perpetual or time bound), countability (number of pieces, licenses or users etc.), identifiability (standardised), movability and storage, ownership (IP or right to use), reproducibility, and marketability/tradability using an MRP as per the proposed COG TRIP test formulated by ISPIRT. This would be further related to the Sale of Goods Act 1930 and related article 366(29A) aspects. This would also be beneficial for the SaaS Industry which can now be defined under the product (digital goods) category as an industry. Once SaaS is recognized as Product (intangible goods) the next issue to be solved is asking for one single clear tax on a transaction be it “goods” or “services” based on the transaction. Other recommendations included the inapplicability of ‘royalty income’ under the garb of attached ‘copyrights’ in the Income Tax act to digital goods. This binding of ‘royalty income’ on software and ‘intangible/digital’ goods is a bottleneck to trade in a digital economy. Also, the tax system has to be digital in all aspects, i.e., ability to track transactions, levy of a clear single tax and digital collection—including taxes on international online transactions. it also recommended the commencement of taxation of online B2C sales by foreign companies.

iSPIRT expressed its disappointment in its post budget response over no attention being given to easing taxation norms of software companies where there is significant friction, the confusion on “goods” verses “service” tax on online downloads, TDS on sale of Software products and competition from foreign selling B2C products without any tax in India. Tax relaxation should be provided to startups on the basis of profitability rather than exemption in the initial 3 years of operations, when startups may not possess tax liability anyway. Loss making startups should not have to part with liquidity in the form of TDS payments which get refunded later. Relaxation in capital gains tax should not be just confined to investment in government schemes.

iSPIRT in its article dated November 24, 2014 [12] briefly explained the problem of duality of taxes on services. The constitutional framework regarding Indirect Taxes specifies that the manufacturing and services should be taxed by the centre and anything that is traded should be taxed by the states. Services are not tradable in nature in contrast to ‘rights to services’ which are tradable commodities. An example would be a vendor selling a recharge coupon. The actual service would be provided by the Telco, he is just selling the right to service. This would be tradable until the service is consumed. This transaction qualifies for both Service tax, imposed by the centre and the tax on tradable commodities imposed by states. ISPIRT had not yet proposed the digital goods and services definition to resolve these issues and its budget recommendations were similar to those of NASSCOM. It proposed that clarity is needed on the issue of tradability of service as “goods” and “service delivery” as “service”. Only after such clarity is achieved, the GST would be able to resolve the issues of duality of taxes.

Its article classified the taxation issues into direct and indirect.

Direct Tax Issues:

According to the Finance Act 2012, any income arising out of the sale of software amounts to royalty, irrespective of the medium of sale making the said transaction liable for TDS deduction under s 194J. All software sold carries a license for end use without transfer of copyright in the software. The software product and the associated license is sold as a tradable commodity and not as a copyright. International practice treats the sale of software depending on how the rights/copyrights are transferred. This rights based approach shall distinguish between the nature of rights transferred in exchange for consideration.
A transfer of “copyright” would indicate that the payer is permitted to commercially exploit the copyright that would otherwise be the sole privilege of the copyright holder and would constitute infringement of copyright without such transfer. The payer, now the copyright holder, is permitted to reproduce, copy, modify, adapt or prepare derivative works based on the copyrighted software for sale or profit. This transaction is subject to payment of royalty in contrast to a transaction which only involves the transfer of a “copyrighted article”. The payer in this case is only permitted to operate the software product for personal consumption or for use within his business operations. Such payment should be treated as business income and not as royalty.
iSPIRT proposed the repeal of the said amendment and introduction of provisions which differentiate between ‘copyright’ and ‘copyrighted articles’ for the purposes of determination of royalty impositions. Further, it proposed specific exclusion through the addition of an explanation to the deemed provision for income arising from the sale of ‘copyrighted articles’ including shrink wrap software, software licenses, downloadable software, software bundled with hardware. It also recommended that the term copyright be defined in the IT Act for royalty purposes to remove dependency on sections 14 and 52 of the Indian Copyright Act, with the exception of the applicability of the Indian Copyright Act in case of copyright infringement. If software product companies are being subject to a TDS there should be Tax credits available on service tax. It also stressed on the need for a mechanism to speed up the process of TDS refunds.

Indirect Tax Issues:

iSPIRT demanded the amendment of the Mega Notification No. 25/2012 dated June 6, 2012 to provide that electronic delivery of packaged software through telecommunication networks are excluded from the ambit of service tax. Alternatively, an explanation could be attached to s 66E of the Finance Act to provide that the development of software under subclause (d) is “only in relation to customized software and any packaged software delivered online or downloaded on the Internet is specifically excluded from the provisions of section 66E and should not be chargeable to service tax.” Additionally, the “Taxation of Services: an Educational Guide” dated June 20, 2012 issued by the Central Board of Excise and Customs needs to be amended along with the addition of an explanation to chapter 85 of schedule I of the Central Excise Tariff Act stating that packaged software delivered online or downloaded from the internet is also included in the meaning of ‘IT Software’ for the purposes of heading 8523.
iSPIRT made the same recommendation as NASSCOM as to the inadequate rate of abatement from RSP to arrive at the value of packaged/canned software, falling under the Central Excise Tariff Heading, 85239020 of the Central Excise Tariff Act, 1985, for payment of excise duty under s 4A of the Central Excise Act, 1944. It recommended that serial No. 93A in Notification No. 49/2008 dated December 24, 2008 be amended to increase the abatement from the existing 15% to 35%.

3. Concerns with Respect to the Regulatory Mechanism for E-Commerce (B2B Commerce)

The existing FDI norms in India do not permit FDI in multi-brand retail companies. The new rules indicate that 100% FDI is permitted in online retail of goods and services under the ‘market place model’ through the automatic route, rendering legality to the many present e-commerce businesses in India. Since the business entity in focus is only an intermediary which provides the sellers of the goods with a platform for the sale of their products, online retail in the form of the inventory model remains illegal, excepting single brand retail [13]. The present FDI policy aims to convenience sellers who can take advantage of the services of e-commerce giants including, but not confined to, warehousing, logistics, order fulfillment, call centre and payment collection [14].

NASSCOM has suggested keeping the FDI norms for B2C Commerce at par with B2B Commerce. Further, the stipulations in the circular issued in 2015 by the DIPP which provided for the same conditions on SBRT applicable to brick and mortar stores be applicable to online stores which provided for 30% sourcing from local sources for retailers which had more than 51% FDI was opposed by NASSCOM, which reiterated that unviable regulations only restrict trade and development. It stated that e-commerce can be aligned to the objectives of national development by providing impetus to manufacturing sector, order consolidation and distribution, facilitating and supporting SMEs, improving outreach and access to buyers/sellers, bringing traceability and transparency in transactions, empowering consumers with information and data and finally creating new job opportunities. E-commerce has only enabled the creation of unique businesses which has created demand resulting in greater private consumption and market demand in inaccessible areas in consonance with the ruling governments ‘Make in India’ scheme. Further, a transparent audit trail and the resulting efficient tax collection can be better ensured through the medium of online banking and credit cards.

As companies have no control on consumer buying behaviour and will have no say in the choices made by them, there should be no mandate to conclude sale of products sourced from India. Instead, companies will continue to offer local products on their website, but linking it to buying behaviour would be unfair and difficult to comply with. Hence, the policy should stipulate that companies should offer 30% locally sourced products, without any criteria related to sourcing from SMEs.

The government should recognize and support the growth of e-commerce companies who are dedicated to Indian ethnic products, helping MSMEs and artisans to expand their outreach. Presently, the FDI in retail policy gives power to the states to decide. In the context of e-commerce, any geographical limitations will go against the basic tenet of outreach and market access that e-commerce promises. Further any restrictions imposed by states will serve to deprive it from the inherently efficient processes and infrastructure development opportunities, contributing to employment and revenue generation opportunities. Market development is an important priority for the Internet economy and is akin to infrastructure development in the physical world. NASSCOM has been actively engaging with the government to evolve a policy concerning Foreign Direct Investment (FDI) in e-Commerce that encourages smaller technology players to foray into the market.

It recommended:

Allowing 100 per cent FDI in B2C e-Commerce, as in the case of B2B e-Commerce.
Removing the ‘minimum investment threshold’ and conditions of investment in the back-end since e-Commerce requires investment in technology and supply chain for promised efficiencies. Since there is no investment required in creating physical store fronts, there is no need for such a stipulation.
Allowing existing e-Commerce firms to raise capital, in addition to permitting investment in greenfield projects.
Removing geographical limitations that go against the basic tenet of outreach and market access that e-Commerce promises.

NASSCOM also suggested the following restrictions to exclude organisations that are:

Receiving orders on the telephone, facsimile or conventional email.
Are not complying with the rules on FDI in retail in toto.
Pure play e-Commerce ventures that are foraying into physical retail, but not complying by the rules on FDI in retail.

4. Other Policy Recommendations

iSPIRT stated that the complex procedures for share allotment etc should be revised to enable the software companies to concentrate on core business functions.
In May 2016, ISPIRT cautioned the use of patents in India, citing the overuse of patents in USA with corporations whose sole purpose of existence is to register patents and demand royalty payments from unsuspecting users. If India allows software patents under the Patent Cooperation Treaty, it would have to give priority to the existing patents filed in other countries and would enable MNCs to exclude Indian companies from using their ‘inventions’. To enable the Indian software industry to innovate without worrying about patent lawsuits, software patents should not be permitted. iSPIRT lauded the revised guidelines issued by the Indian Patents Office in 2016 which prevent the digital colonization of India by MNCs. order issued by the Controller General of Patents, Designs and Trademarks dated February 19, 2016 finalising the guidelines for Examination of Computer Related Inventions lays down clear tests for recognizing patents.
India has to build a favourable business environment to retain the software products business and its intellectual property, which is highly mobile, within its domestic territory. Among the solutions are liberalized ownership rules with exemptions from regulatory filings and specific regimes (FDI/VCI/FII, etc.), specific exemptions from capital gains and dividend taxes for investors and tax exemption on foreign income of Indian software product companies. The idea of a fully liberalized virtual special economic zone for ownership and operation of software product companies, with India signing an iron-clad double-taxation avoidance agreement should not be rejected.
As was the case with Flipkart, larger buyers and clients withhold payment intentionally until suppliers are forced to grant unreasonable discounts. Large buyers are aware that suppliers would not act upon their rights to preserve business relationships and to avoid unnecessary time consuming and expensive litigation. According to iSPIRT, 98% of Indian SMBs extended goods and services on credit to their clients in 2015 leading to a situation wherein the most exclusive businesses can demand payments upfront. Giving the example of IMAI, which has proposed the establishment of a payment recovery mechanism for the digital communication service industry which would enforce meaningful out of court payment protections, iSPIRT has asked for solutions to the problem at hand in its article dated May 18 2016.
iSPIRT formulated a Stay-in-India checklist as a part of its Startups Bridge India campaign which identifies 34 key issues to be resolved to prevent startups from relocating abroad [15]. The Checklist includes requests for favourable IP tax regime, harmony in taxation of listed and unlisted securities, relaxed external commercial borrowing norms, faster incorporation and liquidation processes, and permitting convertible notes, indemnity escrows, and deferred consideration in foreign investment transactions.
NASSCOM applauded the National Intellectual Property Rights policy, approved by the cabinet on 13 May 2016 [16]for comprehensively covering all aspects of the domain including IPR awareness, generation, legislative framework, administration, commercialization, enforcement and adjudication, human capital and incorporating the suggestions of the associations on IPR policy made last year. According to the policy, the Department of Industrial Policy and Promotion (DIPP) would become the nodal point department for all IPR related developments in India, while respective ministries or departments will be responsible for actual implementation. NASSCOM commented that this single umbrella approach will help leverage linkages between various IP offices. The proposal for a simple loan guarantee scheme to encourage start-ups based on IPRs as mortgage-able assets; financial support and securitization of IP rights for commercialization by enabling valuation of IP rights as intangible assets, the promotion of free and open source software and the support for IPR generation for information and communications technology , including those relating to cyber security for India are welcome. NASSCOM stated that it would partner with DIPP in the modernization efforts support an innovation led Industry in India.
NASSCOM in 2016 urged the SC to reconsider the ban on diesel taxis in the capital highlighting unresolved issues of the safety of the women workforce working in the IT industry and the lack of an adequate CNG infrastructure. Stating that the ban may cost the industry $1 billion, it suggested a deferred timeline for shifting diesel cabs to CNG or a phased implementation.

5. Endnotes

[1] The following activities are ‘declared services’ under section 66E of the Finance Act:

Section 66E (c) of the Finance Act, 1994 - Temporary transfer or permitting the use or enjoyment of an intellectual property right.
Section 66E(d) - Development, design, programming, customization, adaption, upgradation, enhancement, implementation of information technology software. (IT software has been defined in section 65B of the Act as “any representation of instructions, data, sound or image, including source code and object code, recorded in machine readable form, and capable of being manipulated or providing interactivity to a user, by means of a computer or an automatic data processing machine or any other device or equipment.)
Section 66E(f)- Transfer of goods by way of hiring, leasing, licensing or in any such manner without transfer of right to use such goods.

[2] Article 366(29-A) (b) of the Constitution states that a tax on the sale or purchase of goods includes a) a tax on the transfer of property in goods, b) a tax on the delivery of goods on hire purchase or any system of payment by installments, c) a tax on the transfer of the right to use any goods for any purpose, and d) a tax on the supply of goods. Such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made.

[3] State of A.P. v. Rashtriya Ispat Nigam Ltd. MANU/SC/0163/2002, BSNL v. UOI, MANU/SC/1091/2006: 2006 2 STR 161 S.C.

[4] The petitioner in the above case relied on TCS v State of Andhra Pradesh, (2005) 1 SCC 308 which held that software are goods, whether customized or non-customized, to argue that the Finance Act 2012 was unconstitutional to the extent that it imposed service tax on software. Since the states were imposing VAT on such transactions, the consequent levy of service tax by the Central government was unconstitutional. The dominant intention of the parties, as laid down in the BSNL case, would not have to be examined in such a situation. The Madras HC agreed with the contention that software is a ‘good’, as it is an article of value having regard to its utility and is capable of transmission, delivery, storage, possession and of being brought and sold and did not deviate from the position of law as laid down in the TCS case, its own earlier decision in the case of Infosys Technologies Vs. CTO (2008) TIOL 509 as well as the decision of the Karnataka High Court in Antrix Corporation Ltd. Vs. Assistant Commissioner of Commercial Taxes (2010) TIOL 515.

[5] On making and marketing copies of software, the transaction would be subject to sales tax despite the retention of the copyright with the originator of the programme. The sale is not just of the media, but of the Intellectual Property stored on the media. As it is impossible to separate the transaction, the sale of software would be governed by the Sale of Goods Act 1930, being a ‘good’ under law. Goods sold can be both tangible, intangible/incorporeal. The test is whether they are capable of abstraction, consumption, use, transfer, transmission, delivery, storage, possession etc, fulfilled in the case of software.

[6] This was notified in 2008, Serial No 93A of Notification No 49/2008-CE (NT) dated 24.12.2008, for valuation under Section 4A of the CEA, 1944.

[7] VAT/CST rates ranging from 5.5% to 6.6%; Octroi/Entry Tax of 5.5% in State of Maharashtra; excise duty from 10% ad valorem and Education Cess.

[8] See: http://www.nasscom.in/sites/default/files/policy_update/NASSCOM%20pre-budget%20recommendations%20-%20Procedural%20issues.pdf.

[9] See: http://articles.economictimes.indiatimes.com/2005-09-05/news/27476122_1_fbt-nasscom-kiran-karnik.

[10] Given below is the framework of COG-TRIP:

1. Countability - Number of licenses/users/subscribers
2. Ownership and intellectual property rights
3. Qualification as an intangible good
4. Tradability: The software products (goods) can be sold through different delivery modes
5. Right of service / Right of Use
6. Identifiability
7. Production/development cost: All software production costs are capitalized and subsequently reported at the lower of unamortized cost or net realizable value

[11] DIGITAL GOOD: The term 'digital good' means any software or other good that is delivered or transferred electronically, including sounds, images, data, facts, or combinations thereof, stored and maintained in digital format, where such good is the true object of the transaction, rather than the activity or service performed to create such good.

DIGITAL SERVICE: The term 'digital service' means any service that is provided electronically, including the provision of remote access to or use of a digital good.

For purpose of above definitions, the term:

'Digital Goods' means 'Goods' as defined in 366(12) of the Constitution,
'Digital service' means a 'service' and that which is not a 'Digital Good,'
'Delivered or transferred electronically' means the delivery or transfer by means other than tangible storage media,
'Provided electronically' means the provision remotely via electronic means,
'Software' is a representation of instructions, data, sound or image, including source code and object code, recorded in a machine readable form, and capable of being manipulated or providing interactivity to a user, by means of a computer or an automatic data processing machine or any other device or equipment, and
'Software Product” is a standardised set of such software bundled together as a single program or a Module that directs computer's processor to perform specific operations, exhibiting the properties of an intangible good that can be traded.

EXPLANATORY NOTE: In legal parlance, the 'goods' exhibit the following properties as established under the COG TRIP test: 1) Durability - perpetual or time bound, 2) Countability – traded commodity can be counted as number of pieces, number of licenses used, number of users etc., 3) Identifiability – identified as a standardised product, 4) Movability and storage – can be delivered and stored and accounted as an inventory, 5) Ownership of the right to use, 6) Produced/reproduced through a process, and 7) Marketable/tradable - can be marketed and sold using standard marked price (except when volume discounts, bid pricing and market promotion offers are applicable).

[12] See: http://pn.ispirt.in/tax-challenges-of-the-spisoftware-product-industry-and-budget-recommendations-made-by-ispirt/.

[13] The guidelines issued in November 2015 permitting a select 15 categories in Single Brand retail to sell their products online were further altered in March 2016 by the Department of Industrial Policy and Promotion to allow single brand retail by brick and mortar stores operating in India and Indian manufacturers. The impact of FDI policy on businesses can be understood with cases of alteration of business structure and distancing of e-commerce companies with their subsidiary sellers on allegations of violation of existing norms. The DIPP submitted to the Delhi HC that the ‘market place’ business models adopted by Amazon, Flipkart and Snapdeal etc were not recognized under law as they had resorted to direct sales to customers. Further, the legality of promotional funding would also be questioned on the ground that an intermediary cannot facilitate any scheme of discounts by bearing the difference in the price of the goods sold as to that extent, it is acting as the seller. This would not be in the interests of the consumers, who could earlier take advantage of the various discounts offered in the form of marketing cost reimbursement, bonus schemes etc. With such strong policies, the possibility of equality of prices between online and brick and mortar stores cannot be discarded.

[14] http://www.livemint.com/Politics/hglep85yZOQzChj6KRrrCK/Govt-allows-100-FDI-in-ecommerce-marketplace-model.html.

[15] See: http://pn.ispirt.in/sign-startup-bridge-petition-and-promote-stay-in-india-checklist/.

[16] See: http://articles.economictimes.indiatimes.com/2016-05-14/news/73083932_1_nasscom-software-industry-body-ip-rights.

6. Author Profile

For more details visit https://cis-india.org/raw/policy-shaping-in-the-indian-it-industry-recommendations-by-nasscom-and-ispirt-2013-2016

How are Indian Newspapers Adapting to the Rise of Digital Media?

sumandro — 2016-07-06T14:28:13Z

How are Indian newspapers adapting to the transition to digital news production, distribution, and consumption? How are they changing their journalistic work, their newsroom organisations, and their distribution strategies as digital media become more important? These are the questions we are pursuing in a joint pilot project with the Reuters Institute for the Study of Journalism, University of Oxford.

Cross-posted from the Reuters Institute for the Study of Journalism.

The Indian newspaper market is vibrant and diverse, and rising print circulation has so far shielded it from the digital disruption the industry has faced in many high income countries.

But internet access and use is rapidly growing in India, driven especially, by cheap smartphones and mobile web access. And both attention and advertising is moving to digital media.

How are Indian newspapers adapting to this change? How are they changing their journalistic work, their newsroom organisations, and their distribution strategies as digital media become more important? These are the questions we are pursuing in a joint pilot project with the Reuters Institute for the Study of Journalism, University of Oxford.

As part of the project we are interviewing editors and journalists working with newspapers in English, Hindi and Malayalam (one newspaper for each language) to better understand how different Indian newspapers are adapting to the rise of digital media.

The study will result in a joint report published by the Reuters Institute for the Study of Journalism at the University of Oxford that we hope will help Indian journalists and newspapers as they navigate their digital transition, their colleagues elsewhere in the world facing similar issues, and academics and media policy makers keen to understand how the development of digital media—and the ways in which other actors respond to these developments—are reshaping our information environment.

We expect to publish the report in December 2016. The research team includes Zeenab Aneez and Sumandro Chattapadhyay from CIS, and RISJ Director of Research Rasmus Kleis Nielsen. Vibodh Parthasarathi from CCMG, Jamia Millia Islamia, will contribute to the study as an advisor.

The project builds on a recently completed study of "Digital Journalism Start-Ups in India" conducted by Arijit Sen and Rasmus Kleis Nielsen.

For more details visit https://cis-india.org/raw/how-are-indian-newspapers-adapting-to-the-rise-of-digital-media

RBI and Regulation of Digital Financial Services in India, 2012-2016

Shivalik Chandan — 2016-07-11T06:27:23Z

The Reserve Bank of India (RBI) published its first guideline on mobile banking in 2008, and the conversation on integrating Aadhaar numbers with bank account numbers on one hand and mobile numbers on the other started as soon as UIDAI was established. However, it is the post-2010 period, with rapid growth of the e-commerce sector in India, that saw rise of digital financial services and intermediaries, and hence the demand for regulatory intervention in the sector. This essay by Shivalik Chandan tracks RBI policies and guidelines responding to and shaping the regulatory framework of the digital financial sector in India, including both mobile banking and online transactions.

1. Introduction

2. Mobile Banking in India

2.1. Customer Enrolment Issues identified by the RBI

2.2. Technical Issues identified by the RBI

2.3. The Way Forward

3. Online Payments in India

3.1. Regulatory Response to Online Payment Instruments

3.2. Infrastructure for Online Payments between Private Parties

3.3. Infrastructure for Online Payments involving the Government

3.4. The Way Forward

4. Peer-to-Peer (P2P) Lending

5. Conclusion

6. Endnotes

7. Author Profile

1. Introduction

The advent of new technology usually leads to innovation in industry. Regardless of the sector, new technology is almost always adopted to make tasks easier and more efficient, and this applies to the financial sector as well. Advancements such as credit cards and ATMs have fundamentally changed the process of banking and finance. The past few years have seen some major innovation in the sector, leading to a shift in the way people interact with the financial system of the country. Pursuant to the same, the Reserve Bank of India has responded to these advancements to make sure that they do not go unchecked.

The e-commerce industry in India has seen unprecedented growth over the last few years, largely because of a higher level of internet penetration among the population. From a worth of $3.9 billion in 2009, the worth of the Indian e-commerce market went up to $12.6 billion in 2013 [1]. The number of online shoppers was 35 billion in 2014, and is now expected to cross 100 million by the end of this year [2]. The newfound presence of the e-commerce industry in the country has led to a new form of payment: the online wallet. A more convenient method than using a credit card for every transaction, it is expected to achieve a compound annual growth rate of 68% this year [3].

A priority of the RBI since the mid-2000s has been financial inclusion. The term is usually defined with respect to financial exclusion, which is construed as the inability to access necessary financial services in an appropriate form due to problems associated with access, conditions, prices, markets, or self-exclusion. In contrast, financial inclusion is the delivery of financial services at affordable costs to disadvantaged sections of society. There is no single metric that can determine the amount of financial inclusion, and specific indicators such as number of bank accounts and number of bank branches only provide a partial picture [4].

In 2013, CRISIL launched an index (Inclusix) to measure the status of financial inclusion in India. The index combines branch penetration, deposit penetration, and credit penetration into one metric. The report was the first regional, state-wise, and district-wise assessments of financial inclusion ever measured, and the first analysis of inclusion trends over a three-year period. Some key conclusions found in the report were [5]:

The all-India CRISIL Inclusix score of 40.1 is low, though there were clear signs of progress – this score had improved from 35.4 in 2009.
Deposit penetration is the key driver of financial inclusion – the number of savings accounts (624 million), is almost four times the number of loan accounts (160 million).

2. Mobile Banking in India

Perhaps the biggest change in banking in recent times has been the introduction of mobile banking. The RBI issued its first set of regulatory guidelines to do with mobile banking in 2008, where banks were permitted to transfer funds from one bank account to another through the mobile platform. From 2010 to 2012, the number of users of mobile banking services grew 277.68% (from 5.96 million to 22.51 million) and the value grew a whopping 875.6% (from Rs. 6.14 billion to Rs. 59.90 billion). These figures clearly indicate that mobile banking in the country is growing at a very high rate. Yet, as of 2014, there were 350 to 500 million unique mobile subscribers and only 22 million mobile banking customers [6].

The RBI clearly recognised the potential for a widespread increase in mobile banking as well as the opportunity of increasing financial inclusion in the country, and made recommendations for “addressing the consumer acquisition challenges as well as the technical aspects” [7]. Recommendations such as alternate channels for mobile registration such as ATMs, uniformity in the mobile registration process across banks, and standardisation and simplification of the MPIN generation process were made by the RBI. Despite the potential in mobile banking as a channel for financial services, and financial inclusion, the RBI identified several challenges with the platform, which were of two types – customer enrolment related issues, and technical issues.

2.1. Customer Enrolment Issues identified by the RBI

The following customer enrolment issues were identified by the RBI:

Mobile Number Registration: In order to avail mobile banking services, the customer needs to go to a branch of the bank or an ATM of that bank to register their mobile number. The RBI recommended that registration be made possible through other channels as well, and that registration forms be made uniform to ease the customer experience.
MPIN Generation: The process for MPIN generation is different across banks, and requires a visit to the bank branch in some cases. The RBI recommended that the process be standardised and that the MPIN be intimated to the customer through their handset without necessitating a visit to the bank.

These recommendations were implemented by the RBI in its Master Circular issued in December 2014 [8].

2.2. Technical Issues identified by the RBI

One of the major technical issues identified by the RBI was the fact that there is a large disparity in the type of mobile handset, and consequentially, the technology most customers have. The majority of handsets in the country are GSM or CDMA enabled, and a comparatively small number have GPRS technology. The RBI identified three major ways of mobile banking utilised by most banks as SMS, USSD, and application based banking. The problems the RBI identified with the SMS method were that the service is not encrypted, and that it may become inconvenient for customers to remember the syntax required for the commands. The USSD system solves the complexity issue, as it presents an interactive menu and is much faster than SMS. However, it is still not a secure means of communication. A big step forward for the USSD system has been the implementation of the National Unified USSD Platform by the National Payments Corporation of India with a single short code (*99#) to utilise the common USSD channel for mobile banking for all banks [9].

The RBI conceded that application based mobile banking is the best way to offer the service both in terms of user friendliness as well as security, but stated that developing these applications requires a large amount of research and development due to the extremely high number of permutations and combinations of handsets and operating systems available on the market, and that smartphones are in the minority as far as type of handsets go. To resolve these issues, the RBI suggested that banks continue offering all three services, so that the largest number of people can take advantage of mobile banking services. The RBI also recommended that all banks implement a uniform mobile banking system across all three architectures (SMS, USSD, and applications) for the ease of consumers [10].

2.3. The Way Forward

In the two years since these recommendations were published, smartphones and GPRS connections (both required for application-based mobile banking) have become a lot cheaper and have permeated a larger section of the Indian society. Hopefully, this trend will gradually reflect in the banking sector and lead to a boom in application-based mobile banking. The next challenge that the RBI will face in the coming years in the field of mobile banking is the replacement of credit cards with smartphones. Both Apple and Google (with Apple Pay and Android Pay) are utilising NFC technology in smartphones to enable customers to store their credit card information on their smartphone and simply tap it onto a terminal to complete the transaction, and even though it is available in a small number of countries presently, it is only a matter of time before it is introduced in India, and this development has been addressed by the RBI in the ‘Vision 2012-2015’ document, where they have addressed the requirement of updating all PoS terminals at the merchant ends, as well as developing an open standard for all NFC transactions, regardless of the payment system operators [11].

The RBI has announced its intention to review the guidelines for mobile banking to address issues relating to customer registration, safety and security of transactions, risk mitigation, and customer grievance redressal measures, with the intention of promoting mobile phones as access channels to payment and banking services. The policy efforts will also focus on ensuing that mobile banking services are provided to non-smartphone users across the country as well [12].

3. Online Payments in India

The National Payments Corporation of India was set up in 2009 as an umbrella organisation for all retail payment systems (under section 25 of the Companies Act) with the core objective of consolidating and integrating the multiple systems with varying service levels into a nation-wide, uniform, and standard business process for all retail systems [13, 14]. In 2012, the RBI, in its Vision 2012-2015 document, recognised the development of new e-payment systems and the increasing proportion of transactions taking place through these systems. The introduction of technology such as cloud computing, mobile telephony, service oriented architecture, and an increasing popularity of the virtual world would, according to the RBI, lead to significant changes in the way payments would be processed in the future. The document elucidated the possibility of the movement away from cash transactions to electronic transactions, leading to their goal of a ‘less-cash economy’ [15]. The RBI set the objective of innovating towards the convergence of products and services which should be available across all delivery channels to all, in a low-cost, safe, and efficient manner. The RBI held that its regulatory stance would be to promote innovation to achieve the goals of inclusion, accessibility, and affordability, while remaining technology neutral [16].

3.1. Regulatory Response to Online Payment Instruments

The introduction of online wallets has provided consumers with a simpler and more efficient method to complete online transactions across a wide variety of merchants, and is growing at a considerable rate. A master circular was issued by the RBI in December 2014, outlining the guidelines that these wallets (which are considered a part of ‘pre-paid payment instruments’) must follow. In the circular, RBI defined three types of payment instruments or wallets.

Closed wallets can be issued by a company to a consumer for buying goods exclusively from that company, such as Flipkart or Amazon. They do not need any sort of permission or regulation from the RBI as they do not permit cash withdrawal or redemption, and hence are not classified as payment systems.
Semi-closed wallets can be used to purchase goods and services at clearly identified merchant locations which have a specific contract with the issuer to accept the payment instrument. NBFCs can issue semi-closed wallets which need to be authorised by the RBI. The most commonly known online wallets (such as Paytm and Mobikwik) fall under this category.
Open wallets can be used for the purchase of goods and services (including financial services) at any card accepting merchant terminal and can also be used for cash withdrawal at ATMs. However, these can only be issued by banks with approval from the RBI [17].

The RBI has classified three categories of pre-paid payment instruments that can be issued:

Up to Rs. 10,000, by accepting the minimum details of the customer, provided that the amount outstanding at any time does not exceed Rs. 10,000 and the total value of reloads per month does not exceed Rs. 10,000. These can only be issued in electronic form.
From Rs. 10,001 to Rs. 50,000, by accepting any ‘officially valid document’ defined under rule 2(d) of the PML Rules, 2005, which are amended from time to time. These are to be non-reloadable in nature.
Up to Rs. 1,00,000 with full KYC, and these can be reloadable in nature. The balance in the PPI should not exceed this amount at any time [18].

3.2. Infrastructure for Online Payments between Private Parties

Pursuant to the goal of enabling infrastructure for financial transactions between private parties, the NPCI implemented the Immediate Payment Service (IMPS) in 2010. The service offers an instantaneous, 24x7 interbank electronic fund transfer service, which can be utilised through mobile, internet, or an ATM. This service is superior to the previously used NEFT service, as NEFT transactions are settled in batches and hence are not in real time. Also, the NEFT service is only available during the working hours of the RTGS system, while the IMPS can be used at any time [19].

Building on the IMPS service, the NPCI has developed the Unified Payments Interface (UPI), which will allow customers to transfer money and make payments almost as easily as they send messages. Multiple bank accounts can be linked to one application, and the need for sharing sensitive information such as bank account numbers, OTPs, or mobile numbers has been eliminated. This interface has been touted to have a large impact on the payment space, and help the economy move closer to a ‘less-cash’ economy [20]. On launch of the Interface in April of this year, 29 banks concurred to provide UPI services to their customers, and 21 of those banks have already joined the UPI as payment service providers.

On downloading the UPI application of a bank, a ‘virtual identifier’ is generated by the application which works as a payment identifier for sending and collecting money, and is protected by a single click two-factor authentication. The virtual ID is an email ID-like format: for example, if a customer named ABC had an account in HDFC bank, his virtual ID would be ABC@hdfc. However, the customer has the choice to use his/her mobile number or Aadhar number in place of the name. In order to protect the customer’s privacy, there is no account number mapper anywhere except the customer’s bank. When a customer selects UPI as the payment mode for an online transaction and the request reaches the merchant’s server, it is immediately passed onto the acquiring bank’s server where a UPI collection transaction is initiated on the customer’s virtual identifier. This request reaches the customer’s phone through the UPI server on the basis of the virtual identifier, and the customer authenticates it using the MPIN to complete the transaction [21].

The UPI can be utilised for real-world transactions as well. Instead of handing over cash, the customer can simply tell the cashier his/her virtual ID. The cashier can then initiate a pay request through the UPI, and the customer can authenticate it on his/her phone, leading to the completion of the transaction [22].

3.3. Infrastructure for Online Payments involving the Government

In the ‘Vision 2012-2015’ document, the RBI outlined an opportunity of developing a bill payment system for payments toward insurance premiums, utility payments, taxes, school fees, etc. To this end, a committee was set up to analyse the potential for an electronic GIRO (General Interbank Recurring Order) payment system in India. Under the recommendation of the Committee, a Giro Advisory Group (GAG) was set up with the objective of defining a framework which enables the creation of pan India touch points for bill payments, which submitted its report in March 2014. The GAG recommended a tiered system for bill systems in the country – a central unit which would set the standards, and various operating bodies which would work in accordance with the standards set by the central body. Draft guidelines for the Bharat Bill Payment System (BBPS) were published on the RBI website in August 2014 for public comments. Based on recommendations, the RBI published guidelines for the implementation of the BBPS in November 2014.

The BBPS will consist of two types of bodies, which will carry out distinct functions:

Bharat Bill Payment Central Unit (BBPCU): The single authorised body which will set the necessary technical, operational, and technical standards for the entire system and its participants, and will also undertake clearing and settlement activities. The NPCI will serve as the BBPCU.
Bharat Bill Payment Operating Units (BBPOU): The authorised operational units, which will work in adherence to the standards set by the BBPCU.

The objective of the BBPS is to implement an integrated bill payment system which offers interoperable and accessible bill payment systems to customers through a network of agents, enabling multiple payment modes, and providing instant confirmations of the payments. Hence, the RBI decided that all existing players (both banks and non-banks) catering to the requirement of bill payments as well as the aggregation of payment services will be a part of the BBPS [23]. Initially, the BBPS is expected to cover repetitive payments for everyday utility services such as electricity, water, gas, telephone, and DTH. The plan is to gradually expand the scope to include other types of repetitive payments like school/university fees, municipal taxes, etc.

On 20 October, 2015, the RBI issued a press release inviting applications from entities engaged in bill payments, for authorisation to operate as BBPOUs, stating the function as “facilitating collection of repetitive payments for everyday utility services, such as, electricity, water, gas, telephone and Direct-to-Home (DTH)” [24].

As of May 2016, 33 companies were reportedly approved by the RBI to function as BBPOUs. PayU India, PayTm, Oxigen, SBI, ICICI bank, HDFC bank, Kotak Mahindra Bank, Bank of Baroda, Axis Bank and RBL Bank and TechProcess have confirmed their BBPOU license [25]. The system is expected to launch in July this year [26].

3.4. The Way Forward

The RBI, in its ‘Vision 2018’ document, has outlined the future plans relating to pre-paid instruments. With an increase in the number of entities authorised to issue PPIs, there has been a growth in their usage for the purchase of goods and services as well as transfer of funds. The RBI plans to review the provisions relating to PPIs about KYC requirements, customer-facing aspects such as safety and security, risk mitigation measures, complaint redressal mechanisms, forfeiture of unutilised balances, and fraud monitoring. The RBI also plans to monitor developments in technology which impact the financial services industry, such as distributed ledgers, blockchain, etc. and develop regulatory frameworks as required [27].

4. Peer-to-Peer (P2P) Lending

Another new development in the banking and finance sector is the introduction of peer to peer lending (hereinafter referred to as P2P lending). P2P lending is a form of crowdfunding which is essentially an online platform designed to bring together lenders and borrowers. A fee is charged from both and this fee goes to providing services such as collecting loan repayments and doing a preliminary assessment on the trustworthiness of the borrower. The RBI issued a consultation paper on this in April 2016 and invited responses from the various stakeholders.

The RBI identified that even though there is no credible data on the total lending through P2P platforms, close to 20 P2P lending platforms were launched in the last year, and there are presently around 30 such platforms in the country. After looking at the operational business model of these companies, the RBI found that the major regulatory concerns would relate to KYC and recovery practices.

After holding that regulation might lend credibility to P2P lending and therefore cause low-awareness lenders to make high-risk investments, and might stifle the growth of an innovative and efficient avenue for borrowers who either do not have access to or have been rejected by traditional loan mechanisms, the RBI argued for regulation in the following ways. Firstly, they held that in its nascent stage, the industry might disrupt the financial sector and it would be better to avoid such disruption. Secondly, the lower operational costs might lead to a softening of lending rates, and the RBI feels that it would benefit the P2P lending platforms if they were regulated. Thirdly, they identified the potential for unethical practices being adopted by any of the players in the market in the absence of regulation. Finally, the RBI held that borrows and lenders which are brought together by the P2P platform might be perpetrating an illegality under Section 45S of the RBI Act if they are unregulated.

Based on these considerations, the RBI recommended regulations on the P2P platforms in order to “facilitate the orderly growth of this sector so that its ability to provide an alternative avenue for credit for the right kind of borrowers is harnessed.” Some of the regulations proposed by the RBI were the limiting of P2P lending platforms to the role of an intermediary between lenders and borrowers, a requirement of a minimum capital of Rs. 2 crore and prudential limits on the maximum contribution by a lender (since they may include uninformed individuals), and the enforcement of adequate risk management systems to ensure smooth operations [28].

5. Conclusion

The RBI, setting out a goal of financial inclusion and a less-cash economy, has kept up with developing technology in the financial sector, in order to ensure that consumers can glean the benefits of these advancements, and the goals it set out can be achieved.

Mobile banking is one of the largest opportunities for financial inclusion in countries, and the RBI, through its policy efforts, is trying to ensure that it reaches maximum penetration in the country. E-commerce is growing in the country, leading to a new financial space being created, which the RBI is privy to. The NPCI has been a boon in this sector, achieving a considerable amount since it was launched. P2P lending, a new and relatively untested development is gaining momentum in the country, and the RBI has begun to take concrete steps to make sure it does not get out of hand.

Technological advancements will continue to change all industries, including the financial services industry, and it is the task of the RBI to make sure that these advancements are utilised to the best of their abilities, so as to benefit the customers in the country as best as possible.

6. Endnotes

[1] PwC, (2014). Evolution of E-commerce in India. [online] Available at: http://www.pwc.in/assets/pdfs/publications/2014/evolution-of-e-commerce-in-india.pdf [Accessed 6 Jul. 2016].

[2] The Times of India. (2014). "Online shoppers in India to cross 100 million by 2016: Study."[online] Available at: http://timesofindia.indiatimes.com/tech/tech-news/Online-shoppers-in-India-to-cross-100-million-by-2016-Study/articleshow/45217773.cms [Accessed 6 Jul. 2016].

[3] Singh, A. (n.d.). "Mobile Wallets – Market, Opportunities and Challenges." [online] Altimetrik.com. Available at: http://www.altimetrik.com/wisdometrik/mobile-wallets-market-opportunities-and-challenges/ [Accessed 6 Jul. 2016].

[4] Thorat, Usha. (2008). "Financial Inclusion and Information Technology". Keynote address by Deputy Governor of the Reserve Bank of India, at the "Vision 2020 – Indian Financial Services Sector" event hosted by NDTV, in Mumbai, September 12. Available at: http://www.bis.org/review/r080917d.pdf [Accessed 6 Jul. 2016].

[5] CRISIL, (2013). "Finance Minister launches ‘CRISIL Inclusix’." [online] Available at: http://www.crisil.com/Ratings/Brochureware/News/CRISIL-Inclusix-launch-pr_250613.pdf [Accessed 8 Jul. 2016].

[6] Reserve Bank of India, (2014). Mobile Banking - Report of the Technical Committee. [online] Available at: https://rbi.org.in/scripts/PublicationReportDetails.aspx?UrlPage=&ID=760 [Accessed 6 Jul. 2016].

[7] Ibid.

[8] Reserve Bank of India, (2014). Master Circular - Mobile Banking Transactions in India - Operative Guidelines. [online] Available at: https://rbidocs.rbi.org.in/rdocs/notification/PDFs/65MNF052B434ED3C4CE391590891B8F3BE66.PDF [Accessed 8 Jul. 2016].

[9] National Payments Corporation of India. (n.d.). "Overview of *99# Service." [online] Available at: http://www.npci.org.in/Product-Overview-NUUP.aspx [Accessed 8 Jul. 2016].

[10] Supra note [6].

[11] Reserve Bank of India, (2012). Payment Systems in India: Vision 2012-15. [online] Available at: https://www.rbi.org.in/Scripts/PublicationVisionDocuments.aspx?Id=678 [Accessed 6 Jul. 2016].

[12] Reserve Bank of India, (2015). Payment and Settlement Systems in India: Vision 2018. [online] Available at: https://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/VISION20181A8972F5582F4B2B8B46C5B669CE396A.PDF [Accessed 6 Jul. 2016].

[13] National Payments Corporation of India. (n.d.). "About Us - National Payments Corporation of India." [online] Available at: http://www.npci.org.in/aboutus.aspx. [Accessed 6 Jul. 2016].

[14] See also: Bihari, D. and Chandra, S. (2015). "The Electronic Banking Revolution in India." Journal of Internet Banking and Commerce, [online] (20), p.110. Available at: http://www.icommercecentral.com/open-access/the-electronic-banking-revolution-in-india.php?aid=59261#corr [Accessed 8 Jul. 2016].

[15] The term ‘less-cash economy’ was possibly first used in the context of national regulatory framework by the Bank Indonesia in 2006, and was implemented through the ‘Ayo ke Bank’ program [http://www.adb.org/sites/default/files/publication/156004/adbi-wp149.pdf]. Its usage by the European Payments Council in 2009 [http://www.sepaitalia.eu/uploads/making_sepa_a_reality_v.3.pdf], and the Aite Group in context of the USA [http://aitegroup.com/report/less-cash-society-forecasting-cash-usage-united-states] gave it international attention. RBI first used the term in its 'Payment Systems in India: Vision 2012-15' document.

[16] Supra note [8].

[17] Reserve Bank of India, (2014). Master Circular – Policy Guidelines on Issuance and Operation of Pre-paid Payment Instruments in India. [online] Available at: https://rbidocs.rbi.org.in/rdocs/notification/PDFs/116MCPPI20062014FL.pdf [Accessed 6 Jul. 2016].

[18] Supra note [9].

[19] National Payments Corporation of India. (n.d.). "IMPS - Background." [online] Available at: http://www.npci.org.in/aboutimps.aspx [Accessed 6 Jul. 2016].

[20] Nair, V. (2016). "NPCI’s unified payment interface to start in April." [online] Available at: http://www.livemint.com/Industry/ZA9pPkeGdY9wrChh1BDQhN/NPCIs-unified-payment-interface-to-start-in-April.html [Accessed 6 Jul. 2016].

[21] Mathew, G. (2016). "Unified Payments Interface system: Faster, easier and smoother."[online] The Indian Express. Available at: http://indianexpress.com/article/technology/tech-news-technology/unified-payments-interface-upi-payment-system-faster-easier-and-smoother-2754125/ [Accessed 7 Jul. 2016].

[22] The Hindu. (2016). "RBI's Unified Payments Interface makes payments easier than ever." [online] Available at: http://www.thehindu.com/business/Economy/unified-payments-interface/article8470746.ece [Accessed 7 Jul. 2016].

[23] Lakshminarasimhan, P. (2016). "Bharat Bill Payment System likely to be launched in July." [online] The Financial Express. Available at: http://www.financialexpress.com/article/industry/companies/bharat-bill-payment-system-likely-to-be-launched-in-july/257040/ [Accessed 7 Jul. 2016].

[24] Reserve Bank of India, (2015). "RBI invites Applications for authorising Bharat Bill Payment System Operating Units (BBPOUs)." [online] Available at: https://www.rbi.org.in/Scripts/FS_PressRelease.aspx?prid=35274&fn=9 [Accessed 7 Jul. 2016].

[25] Srivastava, V. (2016). "RBI Grants License to 33 Companies For Bharat Bill Payment System." [online] Thetechportal.com. Available at: http://thetechportal.com/2016/05/17/rbi-grants-license-33-companies-operate-bharat-bill-payment-system/ [Accessed 7 Jul. 2016].

[26] Supra note [23].

[27] Supra note [10].

[28] Reserve Bank of India, (2016). Consultation Paper on Peer to Peer Lending. [online] Available at: https://rbidocs.rbi.org.in/rdocs/Content/PDFs/CPERR280420162D5F13C3A2204F4FB6A2BEA7363D0031.PDF [Accessed 6 Jul. 2016].

7. Author Profile

Shivalik Chandan is a student at National Law University, Delhi, who has completed two years of the B.A. LLB course. He enjoys watching movies, playing the drums, and listening to (almost all genres of) music in his spare time.

For more details visit https://cis-india.org/raw/rbi-regulation-digital-financial-services-in-india-2012-2016

Metaphors of Work, from ‘Below’

Aayush Rathi and Ambika Tandon — 2023-07-03T12:29:29Z

Aayush Rathi and Ambika Tandon authored a chapter that describes platforms as more than technological interfaces. The chapter invokes some of the metaphors that gig workers use to make sense of platforms. This chapter was part of an edited volume published by Springer. This chapter forms part of the ‘Labour Futures’ research project, hosted at the Centre for Internet and Society, India, and supported by the Internet Society Foundation.

Various disciplines have produced literature on digital platforms—broadly categorised as technological interfaces enabling the exchange of goods and services — with little consensus on what platforms are and how they impact economic and labour systems. Features that are commonly associated with platforms include their role in increasing efficiency in supply chains, their deployment of cutting-edge technology, and their ability to ‘disrupt’ existing modes of provision of services and goods (Jarrahi & Sutherland, 2019). The use of metaphors and carefully curated taxonomy has been crucial in cementing this idea of the digital platform as a technological layer objectively matching supply and demand (Gillespie, 2017). This chapter seeks to document and understand how workers experience different types of digital platforms, and how workers’ imaginaries of platforms differ from popular and academic conceptions.

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For more details visit https://cis-india.org/raw/springer-platformization-and-informality-chapter-metaphors-of-work-from-below