Budget 2016 May Address Retrospective Tax Concerns
With retrospective taxation continuing to rile foreign investors, the Budget tomorrow may look to address their concerns with a view to resolving the legacy issues.
In an interview to PTI, Chief Economic Advisor Arvind Subramanian has said that the present government is taking “consistent steps” to deal with the legacy tax issues to regain investor confidence.
Slowly, slowly they (government) are cleaning up the legacy issue. I think they will continue to do so going forward and hopefully so in the Budget. It’s a long drawn agenda that we need to clean up tax system.Arvind Subramanian, Chief Economic Advisor
The continuation of multi-billion dollar tax liability imposed by the previous UPA government using a retrospective legislation, has been a matter of concern for foreign investors who had hoped that the BJP government will quickly resolve them.
Read more here.
Startups Bat for Tax Sops, Investment Incentives in Union Budget
The startup community, which has started facing funds crunch of late, is looking to the Budget for an easy tax regime, relaxation in investment norms and further incentives for innovation.
The country is home to over 18,000 startups, making it the third-largest in the world after the US and England.
“iSpirt has represented to the finance ministry hat a small basket of tax sops merely will not be effective for the existing system which is riddled with several bottlenecks,” co-founder of iSpirt Foundation Sharad Sharma told PTI.
Investors in startups are also expecting rationalisation in capital gains tax and want this should be aligned with the current tax regime for investments in listed companies, he said.
Read more here.
Mann ki Baat: Prime Minister Narendra Modi Says Budget 2016 Presentation is his “Exam”
“I have an exam tomorrow,” Prime Minister Narendra Modi said on Sunday referring to presentation of General Budget in Parliament as he gave a pep talk to motivate students appearing for board exams for which he even roped icons like Sachin Tendulkar and Vishwanathan Anand.
Modi said he was “full of confidence” ahead of his “examination” by 125 crore people, a trait which he wanted students to emulate when they appear for their examinations for Class X and XII starting Tuesday.
In his monthly radio programme ‘Mann Ki Baat’, he emphasised that students should appear for the exams with a “positive approach” having free and calm mind without any anxiety. He also asked parents not to put pressure on them.
Read more here.
What Can Budget do for PSU Banks?: Livemint
A report in the Livemint seeks to outline how critical the Union Budget could be for state-run banks, coping with staggering levels of bad loans. These banks manage over 70 percent of India’s loan assets.
Bad, restructured and written of loans constitute about one-fifth of the loan assets of PSU banks. This level could rise as the RBI is pushing these banks to get more diligent in identifying bad loans and making provisions for them. While infusing fresh capital may be one of the solutions, it is certainly not the only one.
Everybody wants the government to pump in a trillion rupees or more. Large fund infusion will give confidence to the investors and a cushion to the CEOs of many banks to continue with what they have been doing till they retire. However, capital is not the panacea for all ills that are afflicting the state-run banks. The amount could be modest and yet it will not disappoint the market if the government clearly distinguishes between growth and survival capital. Only those banks that have been doing reasonably well and have the right tools in place for risk management and monitoring, among other things, should be given handsome capital to grow, while others can have minimum capital just to survive. Anyway, it will take a while for the investment cycle to start; there is no need to panic for capital overnight.
Read more here.
Corporates Expect Budget 2016 to Lower Cost of Doing Business
India Inc expects the Budget to simplify tax laws and increase compliance, apart from improving both the ease and cost of doing business.
“Just as the government has done a commendable job in improving the ease of doing business, we would like more initiatives to reduce the cost of doing business as well,” Tata Steel Managing Director TV Narendran said, adding that he expects the government to further build on its reform agenda.
Yes Bank Managing Director Rana Kapoor said he expects the Budget to do everything to restart capital formation and investment cycle.
Vikas Oberoi of Oberoi Realty said the Budget should boost the realty sector by expediting the enactment of the Real Estate Bill, as this can go a long way in protecting consumer interests by curbing fraudulent practices.
Read more here.
Rationalise Taxes on Media, Entertainment Sector, Demand Experts
Budget 2016 should rationalise entertainment tax, exempt newsprint from VAT and end double taxation on temporary transfer of movie rights to television channels, experts said.
“Currently, entertainment industry players such as DTH and cable service operators are reeling under the heavy burden of multiple taxation and levies such as licence fee and service tax.
“Moreover, high entertainment tax and lack of uniformity in tax rates across states are adding to the burden of the industry players,” Care Ratings said in a pre-Budget note.
The report noted that the entertainment tax at present ranges from 30 percent to an astronomical 70 per cent across states. It called for a uniform, simplified and single-point taxation across product categories under the purview of GST.
Read more here.
MFs Expect Basic Income Tax Exemption Going up to Rs 3 Lakh
The mutual fund industry is expecting a Rs 50,000 increase in basic income tax exemption limit to Rs 3 lakh in the Budget to be presented tomorrow.
If done so, this can leave an additional liquidity of Rs 50,000 crore in the hands of taxpayers, a part of which can go into investments.
The mutual funds industry also wants that money coming under capital gains to be invested in infrastructure mutual fund products.
“We do hope that the finance minister will increase the basic I-T exemption limit to Rs 3 lakh. If it happens, more fund is likely flow into the mutual fund industry which will help further increase the assets under management which stands around Rs 13.4 trillion,” LIC Nomura Mutual Fund chief investment officer Saravana Kumar told PTI.
Read more here.
Low Expectations Give Room for Post-Budget Bounce in Markets: Livemint
Indian markets have remained edgy ahead of the Budget announcement on Monday. Bond yields have risen, the rupee has depreciated and stocks have underperformed in the last few sessions. Is it possible that the market is setting a floor for the short term, examines a report in Livemint. The report says that’s a distinct possibility though one can’t guarantee that there’s no downside to this market.
While the MSCI World Index has risen around 6 percent from its lows in mid-February, The Nifty has remained flat. Commodities, which have been battered of late, have also risen by 43 percent since 11 February. But so far no respite has been seen in Indian stocks.
Read more here.
Recent Initiatives May Have Set Tone for Budget 2016: Livemint
Recent measures undertaken by the government may give some indication of what what will follow in Jaitley’s Union Budget, according to Livemint.
Ahead of finance minister Arun Jaitley presenting the Union budget for 2016-17, there are enough indications—including in the Economic Survey released on Friday—that Jaitley’s third budget will increase public investment encourage entrepreneurship, facilitate ease of doing business and check the huge subsidy burden.
Besides these steps, the budget is also expected to focus on addressing distress in the agriculture sector. On 18 February, Prime Minister Narendra Modi said the government wants to cover 50 percent of all farmers under a new and revamped crop insurance policy that seeks to shield farmers from weather-related risks.
Read more here.
(At The Quint, we are answerable only to our audience. Play an active role in shaping our journalism by becoming a member. Because the truth is worth it.)