To bridge fiscal deficit, RBI likely to pay govt $5.8 bn interim dividend

The dividend could help Prime Minister Narendra Modi’s administration bridge a widening budget deficit following a drop in tax collections

Interim Budget 2019: The Reserve Bank of India (RBI), having changed management last month following a clash with the government, is likely to transfer an interim dividend of Rs 300-400 billion ($4.32 billion-$5.8 billion) to the government by March, according to three sources with direct knowledge of the matter.

The dividend could help Prime Minister Narendra Modi’s administration bridge a widening budget deficit following a drop in tax collections, and would come after the government pushed the RBI for the additional funds ahead of a national election due by May.

Read Source: Business Standard or BS

Former finance ministry official Shaktikanta Das was appointed as the new governor of the Reserve Bank of India (RBI), following resignation of Urjit Patel last month amid tensions over the dividend payout and other issues.The government and RBI have now appointed a panel to look into the issue around the sharing of the RBI’s reserves.

“We are absolutely sure that an interim dividend of more than 300 billion rupees would be paid before March end,” one of the sources told Reuters.The RBI did not respond to an email seeking comment, while the Finance Ministry declined to comment.

Keep Reading : Budget 2019

Budget relief to middle class, 5% income tax for Rs 2.5-5 lakh earners

 

The Budget2017 gave relief to on personal income tax front, mainly the salaried group in the middle class, by halving the tax to five per cent up to the income of Rs 5 lakh to ease the pains of demonetisation. However, those earning above Rs 50 lakh and up to Rs one crore will have to shell out additional 10 per cent surcharge.

The cut in the tax rate for the lowest slab will also save up to Rs 12,500 for incomes in other slabs, increasing disposable income of the middle class that can provide spur to the slowing down economic growth. The present super rich tax in the form of 15 per cent surcharge will remain for those earning income over Rs one crore. 

The finance minister also put more money in the hands of small and medium enterprises by reducing the corporate tax rate to 25 per cent from the current 30 per cent for annual turnover up to Rs 50 crore. Ninety six per cent of companies which file returns come under this category. 

Besides middle class and SMEs, the finance minister also addressed the concerns of foreign portfolio investors by exempting India-based funds them from the indirect transfer provisions. The government had put on hold the recent rules by the Central Board of direct taxes in this regard.

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Highlights of Jaitley's fiscally prudent Budget 2017

Here are the highlights of Jaitley's budget for the 2017/18 fiscal year that begins on April 1.

FISCAL DEFICIT

* The budget 2017 seeks to pursue prudent fiscal management to preserve financial stability.

*Fiscal deficit at 3.4% 

*Revenue deficit stands reduced to 2.1% in Fy18

GROWTH

* Jaitley says India seen as an engine of global growth

DEMONETISATION

* Demonetisation "a bold and decisive measure", will make GDP bigger and lead to higher tax revenues - finance minister

* Hit to economy from government decision to outlaw high-denomination notes will be "transient", effects of demonetisation not expected to spill over to next year

* Pace of remonetisation has picked up and will soon reach comfortable levels

* Surplus money in the banking system will lower borrowing costs, increase credit flow

INFLATION

*Consumer price index inflation is expected to remain within the central bank's mandated range of 2 to 6%

SPENDING

* India to spend more in rural areas, infrastructure and poverty alleviation

* The government will continue process of economic reforms for the benefit of poor

* Allocation under MNREGA increased to Rs 48,000 cr from Rs 38,500 cr; highest ever allocation

• AGRICULTURE
• Jobs
• Railway
• Tax
• Political Funding
• FINANCE MINISTER COMMENTS

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BUDGET LIVE: Budget on schedule, Cabinet meeting to be held shortly

• 12:05 PM

  IRCTC will be listed on stock exchanges, says FM
  
  

  12:05 PM

  Railway CPSE's such as IRCTC, IRCON to be listed
  
  

• 12:05 PM

  FIPB to be abolished in 2017-18. What it means: Major reforms; removes big headache for foreign investors
  
  

• 12:03 PM

  Increasing India's strategic oil reserves was long-pending move, especially since crude oil prices hit $40/bbl in 2015.
  
  

  12:03 PM

  Railway lines of 3,500 km to be commissioned in 2017-18
  
  

• 12:03 PM

  Proposal: Railways to implement end-to-end connectivity for some commodities with the help of logistics firms. Impact: Logistics stocks rally; Allcargo Logistics, Gati, VRL Logistics up nearly 1%
  
  

  12:02 PM

• 12:02 PM

  Airport Operation Management for tier-II airports via PPP
  
  

• 12:02 PM

  Focus on Swachh Railways: All railway coaches will have bio-toilets by 2019, says Jaitley

BUDGET LIVE: Budget on schedule, Cabinet meeting to be held shortly

• 10:47 AM

  Saddened by E Ahamed ji's demise but Budget will be presented. We have to keep in mind that Budget is a constitutional obligation, will have to be presented: Sumitra Mahajan
  
  

• 10:46 AM

  Budget will be presented today, says Lok Sabha Speaker Sumitra Mahajan.

• 10:44 AM

  Arun Jaitley will present Budget 2017-18 at 11 am today
  
  

• 10:40 AM

  Hits & Misses: Five key capital market announcements from the previous Budget CLICK HERE FOR THE STORY
  
  

• 10:37 AM

  Hits & Misses: Five key capital market announcements from the previous Budget CLICK HERE FOR THE STORY
  
  

• 10:36 AM

  BUDGET EXPECTATION: On the tax revenue front, the government could provide some personal income tax relief to lower income brackets to compensate for the economic slowdown post demonetization, and could also reduce corporate tax rates. In the FY16 budget, the government had announced a lowering of the average corporate income tax rate to 25% from 30% over four years -- GOLDMAN SACHS

Stocks snap climb ahead of Economic Survey, Budget

The Sensex on Monday logged its first drop in five sessions, slipping 33 points, after investors took profit and adopted a cautious line ahead of the Economic Survey and the Union Budget 2017 amid weak global leads.

The Economic Survey is due to be released on Tuesday and the Budget on Wednesday.

Investors across the globe were spooked after US president Donald Trump imposed immigration curbs that sparked criticism, adding to fears that his 'America First' policy may prove destabilising for the world. This led to a lower closing in Asia and a muted opening in Europe, traders said.

The 30-share barometer opened a touch lower and settled down 32.9 points, or 0.12 per cent, at 27,849.56. The index had rallied 848 points in the past four sessions.The 50-share Nifty too dropped 8.5 points, or 0.1 per cent, at 8,632.7. Intra-day, it traded between 8,617.7 and 8,662.6.

"Pressure prevailed due to weak US Q4 gross domestic product data," said Vinod Nair, head of research, Geojit BNP Paribas Financial Services.

The uptrend in the previous four sessions was largely because of fresh foreign inflows, enthusiasm of domestic investors amid optimism on better-than-estimated earnings.Tata Motors took the biggest hit, plunging 2.18 per cent, followed by Tata Steel (1.56 per cent).

Oil and Natural Gas Corporation, State Bank of India, Hero MotoCorp, Bajaj Auto, NTPC, Tata Consultancy Services, Coal India, HDFC Bank, ITC, ICICI Bank, Mahindra and Mahindra, Maruti Suzuki, Hindustan Unilever Limited, Wipro, Adani Ports, and Axis Bank lost too.

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Budget 2017: Post cash ban shock, Modi govt seeks to soothe voters

Finance Minister Arun Jaitley will present the most challenging budget of his tenure on Wednesday, as he seeks to appease voters still hurting from the radical monetary shock therapy that his government has administered.

The budget 2017 comes less than three months after Prime Minister Narendra Modi's bold and risky gamble to outlaw high-value old currency bills, which has slammed the brakes on Asia's third-largest economy and hit the poor particularly hard.

According to one survey, a third of people say their incomes have fallen, with nearly a tenth saying they are much worse off.

Judging how quickly the economy will recover is a tough call, making Jaitley's revenue projections a shot in the dark.

A delay in the launch of a new national sales tax has added to the uncertainty. The Goods and Services tax (GST) is expected to improve tax compliance and check evasion, but the union and state governments have yet to work out its details.

Officials say his fourth budget will likely offer modest tax concessions and ramp up spending to ease the pain caused by Modi's decision in November to scrap 86 percent of the currency in circulation in a bid to purge the cash-reliant economy of illicit "black money" and expose untaxed wealth.

Paying for those giveaways may require Jaitley to slow the pace of fiscal tightening, officials told Reuters.

As well as buoying consumer spending, which contributes nearly 60 percent to gross domestic product, sops to voters could also shore up the fortunes of Modi's nationalist party in five regional elections for which voting begins on Saturday.

The electoral outcome, particularly in the battleground state of Uttar Pradesh that is home to one in every six Indians, is being viewed by analysts as a mid-term "referendum" on Modi.

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Budget 2017: Govt convenes all-party meet today, seeks Opposition's support

The government has convened an all-party meeting today ahead of the Budget 2017 Session of Parliament to seek opposition's support for the smooth conduct of proceedings in both the Houses.

Lok Sabha Speaker Sumitra Mahajan has also called a meeting of leaders of political parties in the House same evening.

The Budget Session will start from Tuesday with President Pranab Mukherjee's address to a joint sitting of the Lok Sabha and the Rajya Sabha.

The Economic Survey will also be presented on the first day of the session. General Budget will be presented on Wednesday.

The two Houses will have a month long recess from February 10 to March 8 to enable the Standing Committees to consider the Demands for Grants of Ministries and Departments and prepare their reports.

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Jaitley may cut taxes, lack of indirect-tax data may make it tough

Battling slump in demand after shock demonetisation, Finance Minister Arun Jaitley may look to spur consumption through lower taxes in next week's Budget 2017 Date , but he faces a peculiar situation as precise projections of indirect tax collection in 2017-18 are unavailable due to GST.

Finance Ministers usually weave around their welfare spending proposals based on projections of direct and indirect tax collections in the fiscal.

Projections of collection in direct taxes, made up of personal and corporate tax, would be available but with the rollout of Goods and Services Tax (GST) deferred till July 1, no reliable projection of indirect tax collection for 2017-18 fiscal is likely to be available, tax experts said.

The GST is also to subsume state VAT.                                                

And typically the Centre would account for roughly half of the total nationwide GST revenues after excise, service tax and VAT are subsumed and weave around its budget.

But this year is peculiar, experts say. "No reliable projection of the GST revenue is available because the GST Council is yet to decide which product or service will be taxed at what rate. In absence of that one cannot have a reliable projection of GST revenue collection," a tax expert said.

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Budget wish list: IT, ITes & e-commerce

Industry size

Approx: $143 bn (IT - ITeS) plus $17 bn (e-commerce)
Employment figure: Approx 3.9 million 
Contribution to GDP: About 9.3% 

Key issues or areas of concern for the sector

Budget 2017 Date| Global political uncertainty due to the recent developments in the US and UK could impact growth for the Indian IT sector as these are one of the largest markets for the Indian IT-ITeS companies. Given that emphasis could be to create jobs in the US could have negative influence on outsourcing of jobs from outside the US, which in turn could have implications on mobility of IT specialists

The new GST law poses multiple challenges for e-commerce firms, especially around compliance and related formalities, with e-commerce platform being liable to collect TCS (tax collected at source) on supply of goods and services by supplier.

Due to significant automation and changes in technology, employees are being re-skilled, and work culture is witnessing a major shift with enhanced focus on digital skills and just-in-time training.

Industry demands
Defer applicability of Place of Effective Management and clarify provisions around claim of foreign tax credit

Definition of Equalisation Levy is ambiguous and clarity is required. There is absence of clarity on availability of credit. Notification has to be issued to clarify that the levy is in nature of tax and eligible for credit.|READ MORE 

Sebi wishlist for Budget 2017: Here are the key points

Ahead of Union Budget 2017, the capital market regulator Securities and Exchange Board of India (Sebi) has sent its list of recommendations to the Finance Ministry. Sebi has asked the government to encourage stock trading and investments in mutual funds by easing tax rules. 

The regulator has also recommended lowering the securities transaction tax (STT) for tax trading and a slew of other measures, a report published in Economics Times said. 

Lower STT for trading 

After its introduction in 2004, STT was fully deductible against the income tax payable. But, after four years, an amendment was made to allow STT as a deductible business expenditure and the rebate under section 88E was also withdrawn. 

Now, Sebi has recommended lowering the STT for tax trading. 

Increase limit for tax-saving equity mutual fund 

For relief under Section 88E, Sebi has recommended an increase in the investment limit for tax-saving equity mutual fund schemes from Rs 1.5 lakh to Rs 2 lakh. 

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Note ban impact on gold buying will wane after Budget 2017: WGC

India's demonetisation drive has impacted gold demand in the short term but buying is showing signs of revival and post the presentation of the national Budget 2017 on February 1, the market will be back to normal, says the India chief of World Gold Council.

"In November and December (during the demonetisation drive) certainly there was some impact. But people have started buying again. We hope soon after the budget, buying will normalise," Somasundaram P.R., Managing Director, India, World Gold Council, told IANS in an interview.

He also said demonetisation will have a positive impact on the gold industry in the long run as it will curb grey market trades substantially. "Overall impact of demonetisation will be positive -- industry will come under organised business. Of course the transition will take some time," he said.

"Business during the demonetisation period was hurt as people were mostly busy exchanging old notes and genuine buyers stayed away, fearing they might come under the tax scanner."

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Budget 2017 Wishlist: Expectations from the telecom sector

Industry size: Total mobile services market revenue in India is expected to touch $37 billion in 2017

Employment figure: About 4 million of direct and indirect employment in India 

Mobile industry contribution to GDP: About 6.5% to India’s GDP in 2015

Key issues or areas of concern for each sector | Budget 2017|

 On sale of recharge coupons/ pre-paid starter packs, the revenue on talk-time need to be deferred for tax purposes over the period of usage

IRU rights acquired, being in the nature of commercial rights, fall within the definition of “intangibles” and, therefore, should be eligible for depreciation for tax purposes. This aspect should be clarified without further delay to end related litigation

Industry asks

1.Clarification on treatment of distributor margins discount given by telecom operators and TDS rate on it to be minimised

2. Under the proposed GST regime, telcos will have significantly higher compliance costs due to multiple-state registrations. This additional burden on the sector should be minimised

>>> Click Here For Full Article <<<

Railways seeks gross budgetary support of Rs 50,000 cr for FY'18

The Ministry of Railways has sought gross budgetary support (GBS) of Rs 50,000 crore for 2017-18, though the Finance Ministry is likely to agree for only Rs 40,000-45,000 crore, a senior government official said.

"They (Railways) have sought Rs 50,000 crore as GBS, and I think they might get Rs 40,000-45,000 crore...In fact, the railways does not have the capacity to absorb more than Rs 30,000 crore," the official said.

Gross Budgetary Support (GBS) of Rs Rs 40,000 crore was announced in the 2015-16 Rail Budget 2017. However, the Finance Ministry for the current year had slashed it to Rs 28,000 crore, citing slow spending pace.

Ending 92-year-old tradition, the government on September 21 decided to merge rail budget with the general budget and agreed in-principle to advance the date of its presentation in Parliament on February 1.

The government has also decided to do away with the Plan/ Non-Plan expenditure classification in Budget 2017-18 and replace it with 'capital and receipt.

Double Income Tax exemption limit, continue with corporate deductions: EY

Government should double the basic I-T exemption limit to Rs 5 lakh per year and continue with incentives and deductions to corporate houses for stimulating consumption demand and propel private investment post demonetisation, a EY survey said.

In a pre-budget survey by tax consultant EY, an overwhelming 81.42 per cent of the respondents felt the corporate tax rate would be reduced to 25 per cent, from the present 30 per cent, excluding surcharge and cess. Budget 2017

In view of the push to 'Make in India', 72 per cent the survey respondents expected the government to continue with sector specific incentives/deductions.

However, majority of respondents felt that to reduce the corporate tax rate, it is imperative to phase out the tax exemptions to meet the fiscal target.

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Weeks before Budget, Arun Jaitley lists out benefit of low tax rates

 

Finance Minister Arun Jaitley, at the National Academy of Customs Excise and Narcotics, said that India economy needs a broader base for which we need a lower level of taxation.

India's peak tax rate, including surcharges, is as much as 35% but the effective rate is only around 23% due to multiple exemptions. Budget 2017 The introduction of the goods and services tax (GST) is also expected to bring down effective indirect taxes, The Economic Times reported.

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Expect an anti-rich Budget 2017; realty buyers should watch out, says Ambit

The Union Budget 2017 this year seems particularly important in the aftermath of the India’s biggest decision of 2016 – demonetisation and preceding elections in UP. A recent report by Ambit capital suggests that Union Budget is likely to be focussed primarily on reinforcing the ‘black money crackdown’ theme with a secondary focus on delivering token payments to the poor as well as income tax cuts.

Even though it was a massive political success, it’s still unclear if the experiment worked for the government in its stated attempt to curb black money or raise the tax base by bringing a larger share of unaccounted income.

According to the report by the brokerage firm, the government is expected to announce an ‘anti-rich’ budget with a secondary focus on: delivering token payments to the poor; and tax cuts for the middle class

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Budget 2017 wishlist: Five expectations from infrastructure secto

The Union Budget 2017 is expected to give an impetus to infrastructure sector in order to boost industrial growth amid global slowdown and lower corporate spending at home. 

A Business Standard report said Finance Minister Arun Jaitley might announce a third straight year of record capital spending, which could be 12-14% higher than the 2016-17 Budget Estimates of Rs 2.47 lakh crore. That would put the 2017-18 capital expenditure at nearly Rs 2.8 lakh crore. 

From more avenues to fund stuck projects, tax holidays to discount in lending rates, below are five things that Sandeep Upadhyay, Managing Director & CEO, Centrum Infrastructure Advisory expect from the Budget 2017: 

1) Given the reluctance of banks to fund infrastructure projects due to increasing non-performing assets (NPAs) in the sector it is imperative that we should have more number of specialised infrastructure financing institutions which as of now is just confined to entities like IIFCL, IREDA, PFC and REC etc. These specialised financing institutions could serve as the much needed complimentary sources of funding infrastructure projects needing long-term funding at subsidised rate. 

<<< Click Here For Full Report >>>

Civil aviation ministry seeks cut in excise duty on jet fuel

Budget 2017 The civil aviation ministry has sought a reduction in excise duty on aviation turbine fuel (ATF), or jet fuel, to eight per cent from 14 per cent, by rolling back an increase made last year.

As global crude oil prices fell to below $30 a barrel, government had raised the duty to compensate for its tax loss. “Excise duty was raised when crude prices were low. Now they are inching up and the government can easily cut excise duty, which will also help shield airlines from a hike in jet fuel prices,” said a government official, who did not want to be named.

Rising fuel cost is a concern for the airline industry, which has started reporting profits after a long spell of losses. A more than 20 per cent increase in air passengers and low fuel prices were the key drivers of the improved performance.

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