Retail inflation to be below 5% in FY17: Economic Survey

Budget India 2017 - Retail inflation is likely to be well below RBI's target of 5 per cent in the current fiscal as demonetisation would discourage any price headwind, the Economic Survey for 2016-17 said on Tuesday.

The new inflation targeting approach by the Monetary Policy Committee (MPC) and gains from macro-economic stability will help India consolidate gains on price control, meaning prices will be less susceptible to individual whims and caprice of governments, the Survey said.

"The outlook for the year as a whole is for CPI inflation to be below the RBI's target of 5 per cent, a trend likely to be assisted by demonetisation," said the Economic Survey presented in Parliament by Finance Minister Arun Jaitley.

In the current financial year so far, retail inflation stabilised around 5 per cent, while wholesale price-based inflation averaged around 2.9 per cent during April-December.

"Codified the institutional arrangements on monetary policy with the Reserve Bank to consolidate the gains from macroeconomic stability by ensuring that inflation control will be less susceptible to the whims of individuals and the caprice of governments," it said.(Read More)

Fiscal deficit in April-December hits 94% of budget target

Budget india 2017 - Fiscal deficit in the first nine months of 2016-17 touched 93.9 per cent of the Budget target as against 87.9 per cent for the same period a year ago.

In value terms, the April-December fiscal deficit stood at Rs 5.01 lakh crore, or 93.9 per cent, of 2016-17 Budget estimates (BE). The fiscal deficit stood at 87.9 per cent in the corresponding nine months a year ago, as per 2015-16 BE.

Fiscal deficit, the gap between expenditure and revenue for the entire fiscal, has been pegged at Rs 5.33 lakh crore, or 3.5 per cent of the GDP, for the financial year 2016-17.

As per data released by the Controller General of Accounts (CGA), tax revenue came in at Rs 7.52 lakh crore, or 71.4 per cent of the full-year BE of Rs 10.54 lakh crore.

Total receipts from revenue and non-debt capital of the government during the period read Rs 9.68 lakh crore or 67.1 per cent of BE.

The government's Plan expenditure during the fiscal came in at Rs 4.10 lakh core, 74.6 per cent of the full-year budget estimate. During the same period last year, it stood at 74.4 per cent.

The Non-Plan expenditure in April-December of 2016-17 was Rs 10.59 lakh crore, or 74.2 per cent, of the whole-year estimate.(Read More)

Rail Budget to focus on safety, infrastructure development

Budget 2017 - A safety fund of Rs 20,000 crore for railways reeling under a series of deadly derailments, development of new lines, station redevelopment and setting up of Rail Development Authority and high-speed rail authority will be in focus as Finance Minister Arun Jaitley presents the first Rail Budget subsumed in the General Budget tomorrow.

Going ahead with the government's reform agenda, Jaitley will discard the 92-year-long tradition of presentation of a separate Rail Budget and instead make it part of the General Budget earmarking a few paragraphs on the public transporter's finance, projects and the road map for the next fiscal.

Jailtley is likely to give more focus on infrastructure development such as new lines, doubling, station redevelopment, safety upgradation.

Reeling under a series of derailments, the Budget is likely to announce the creation of a separate safety fund of about Rs 1 lakh crore over the next five years out of which Rs 20,000 crore will be earmarked for 2017-18, according to sources.

Railways will also miss the operating ratio target of 92 per cent and is likely to settle at about 94-95 per cent.

The Budget 2017-18 is likely to announce setting up of Rail Development Authority, a regulatory authority for the public transporter. The formation of high speed rail authority with the selection of its managing Director and other directors is also likely to be announced.(Read More)

Budget 2017: Nearly 13 cr poor covered under social security schemes

Budget 2017 - Observing that financial inclusion was the key to poverty alleviation, President Pranab Mukherjee on Tuesday said close to 13 crore poor have been covered under various social security schemes of the Narendra Modi government.

Addressing the customary joint session of both houses of parliament ahead of the budget session, Mukherjee said the core of all government policies was inclined towards achieving welfare of the poor, Dalits, deprived, underprivileged, farmers, workers and the youth.

Enumerating various pro-poor schemes, Mukherjee said the government was guided by the philosophy of 'Antyodaya' (integral humanism).

"To take the banking system to the doorstep of the poor and the unbanked, the Indian Postal Payment Bank was started. An unprecedented 26 crore plus Jan Dhan accounts were opened for the unbanked," he said.

"My government is committed to providing shelter to every houseless poor household through the Pradhan Mantri Aawas Yojana," he said.

Mukherjee said that under the Deen Dayal Antyodaya Yojana, over Rs 16,000 crore have been made available to self-help groups (SHGs) in the current financial year while over Rs 2 lakh crore was provided through 5.6 crore loans sanctioned under Pradhan Mantri Mudra Yojana.(Read More)

Budget 2017: PM Narendra Modi looks forward to 'fruitful' session

Budget 2017 - Prime Minister Narendra Modi on Tuesday ahead of the budget session hoped that the current session will be "fruitful" and all political parties will work together for people's benefit.

"We had discussions with every political party individually and collectively. There should be productive and detailed discussion of the budget during the session," Modi said while addressing the media here.

"I urge all parties to help in smooth functioning of the session. I hope for fruitful discussions. We aim at positive and meaningful debates for public interest.

"I am hopeful all political parties will work together to move forward," he said.

Modi also said: "This is the first time the budget is being presented on February 1."

"Everyone would remember that earlier budget used to take place at 5 pm. This practice was changed during former Prime Minister Atal Bihari Vajpayee's time," Modi said.

"Today (Tuesday) a new tradition will begin. The budget will incorporate the rail budget as well," he added.(Read More)

Staffing industry seeks resolution of tax woes in Budget

Budget 2017 - Wants TDS to be cut from 10% to 2%, and applied on commission earned, not on gross invoice value

The staffing industry, representing companies such as Team Lease and Quess, wants finance minister Arun Jaitley to resolve the tax anomalies it faces, in the upcoming Budget.

The Indian Staffing Federation says that its demand assumes significance since post-demonetisation it is the formal sector which will grow and the staffing industry will play a crucial role in that.

The industry represents contract hiring in organised industry done through tri-partite agreements -- between the company that is hiring, the person hired and the staffing industry.

The Federation said tax deducted at source (TDS) is imposed on the gross invoices received by its members from its client companies, whereas it should be on just the commission received by the staffing companies.

While this amount is adjusted later, it takes about a year to happen, creating cash flow problems for staffing companies, says Suchita Dutta, executive director of the Federation.

At the same time, the Federation said its members topped the list of India staffing firms, as per the recent report published by Staffing Industry Analysts. The report indicated that the Indian staffing industry was estimated to be worth Rs 27,000 crore in 2015 and is forecast to grow by 12 per cent in 2016 and 10 per cent in 2017.

When asked when there is cash flow problems, how come the industry is performing so well, Dutta said the results are based on top lines and not bottom lines.(Read More)

Budget 2017: Govt likely to hike agri-credit target to Rs 10 lakh crore

Budget 2017 - The farm credit target is likely to be raised by a whopping Rs 1 lakh crore to Rs 10 lakh crore in Budget 2017-18 in order to increase credit flow in the agriculture sector.

According to sources, the government may increase the agriculture credit target to Rs 10 lakh crore for 2017-18 fiscal from the existing Rs 9 lakh crore.

During April-September period of 2016-17 fiscal, about Rs 7.56 lakh crore credit has been disbursed to farmers and the total target is likely to be surpassed.

That apart, the government may also allocate Rs 10,000 crore for Pradhan Mantri Fasal Bhima Yojana (PMFBY) in the Union Budget to be presented by Finance Minister Arun Jaitley on February 1.

For this fiscal, the government had allocated Rs 5,500 crore for this scheme, but later it was increased to over Rs 13,000 crore in the revised budget estimate.

The PMFBY, which was launched in April 2016 by Prime Minister Narendra Modi, aims to increase the crop insurance coverage in the country by charging very low premium from farmers and promising full payment of claims.

The government provides short-term crop loans up to Rs 3 lakh at a subsidised interest rate of 7 per cent per annum. An additional incentive of 3 per cent is provided to farmers for prompt repayment of loans within due date, making an effective interest rate for them at 4 per cent.

Recently, the government waived Rs 660.50 crore interest on short-term crop loans for November-December 2016 to provide relief to farmers who reeled under cash crunch on account of demonetisation.(Read More)

Budget 2017: After Health Minister's warning, health budget likely to be up

Budget 2017 - India's health ministry is likely to see a substantial increase in funding, after it warned that its programmes were short of cash and sought more than $1.2 billion in additional money, according to government officials and documents seen by Reuters.

The final numbers could change when Finance Minister Arun Jaitley presents the budget for fiscal 2017-18 on Wednesday. But one official familiar with the numbers said the health ministry is expected to get a $1.5 billion, or 27 per cent, increase in funding to around $7 billion.

The health and finance ministries did not respond to requests for comment.

An increase in the budget allocation, if finalised, would signal an acknowledgement from Prime Minister Narendra Modi's administration that the country needs to ramp up spending on the sector.

Successive administrations have faced criticism from public health advocates for spending only around 1 per cent of India's gross domestic product on public health, less in percentage terms than countries like Afghanistan and Sierra Leone.

More than a million Indian children die every year before reaching the age of five. Hundreds of millions of poor people rely on India's public health programmes which provide basic services like vaccinations, disease prevention and free drugs.

Until May last year, Jagat Prakash Nadda, the union health minister, had publicly maintained that the sector had no funding issues but needed to get better at spending the money it had.(Read More)

Budget 2017 wish list: Young India expects lower fees, cheaper gadgets

Budget 2017 - Curtailment of education fees, cheaper electronic gadgets and more focus on jobs are some of the expectations Young India has from the Budget for fiscal 2017-18 that Finance Minister Arun Jaitley will table in Parliament on Wednesday.

Many students and professionals who spoke said they wanted a youth-oriented budget that will help underprivileged students pursue higher studies and cheaper electronic gadgets to make the government's Digital India initiative a success in a country where almost 47.8 per cent of population is currently aged below 29.

With India set to account for 20 per cent of the world's workforce in the next three years, many young men and women wanted the government to largely focus its resources on how to positively channelise the energy of the youth and make them more productive.

Ankit Mishra, a student pursuing MBBS in Varanasi, said: "I want the government to announce something that can benefit students. It is very difficult for many students who are not privileged to afford higher education fees.

"The fee structure should be normalised. Many times, brilliant students do not study further because of financial issues. That should remain the focus for Arun Jaitley," Mishra said.

Alok Singh, a banker, expected the government to curtail taxes and present a "people-friendly" budget.

"It all depends on the taxation part. The government should seriously think about the common people now. The taxes on everything are so high that one is deprived of basic necessities at times. Already, commoners have suffered a lot due to demonetisation. This time, it should not add to their problems," Singh, 28, said.(Read More)

Budget 2017 may look to soften note ban woes by tax relief

Budget 2017 Date - Finance Minister Arun Jaitley will on Wednesday present his fourth and perhaps the most challenging Budget that may look to soften blow of currency ban with tax and other sops as he seeks to revive growth.

While largely sticking to fiscal consolidation roadmap, Jaitley will present the Budget for 2017-18 amid strong headwinds caused by government decision to invalidate 86 per cent of the currency and newly elected US President Donald Trump making protectionist noises.

Topping the list of sweeteners could be the hike in Income Tax exemption limit to Rs 3 lakh from current Rs 2.5 lakh as the Minister will look at putting more money in hands of people to not just create a feel good atmosphere but also check the disruptive impact of demonetisation on demand, supply chains and cratered credit growth.

Alternatively, he may raise the deduction limit for interest paid on home loans to Rs 2.5 lakh from Rs 2 lakh currently. A higher medical rebate may also be on the cards.

Besides tax break, there could even be a universal basic income in the Budget, industry officials and tax experts said.

But cutting 30 per cent corporate tax rate to lift sagging investments may not be easy given that government's official estimate of 7.1 per cent GDP growth for the current financial year does not take into account the chaos wrought by demonetisation.

While revenue collection targets for the current fiscal may exceed, there are doubts if Jaitley may project any substantial jump in tax receipts in 2017-18.(Read More)

Top 5 biggest life insurance myths

There are several misconceptions about life insurance. It is a popular notion that older or married individuals with kids should invest in one, or that the insurance only offers post-death benefit. Here we debunk some of the biggest life insurance myths… 

Life insurance policy is critical to any financial planning. Yet it is never prioritized and is often considered complicated to decode. But it is always a good idea to invest in life insurance, more so sooner than later. Especially, since not having one when you need it can be devastating.

While there are quite a few common myths about life insurance, here is a list of the five biggest ones.

Myth 1: Single, without dependents. I don't need coverage
Myth 2: Too young to think about coverageMyth 3: Only men need life insurance
Myth 4: Insurance is of no use unless you die 
Myth 5: Better to invest the money rather than lock it up in life insurance of any kind

Read More

Budget 2017: Arun Jaitley may hike service tax to 16-18%

Budget 2017 - Finance Minister Arun Jaitley may hike service tax rate to 16-18 per cent from the current 15 per cent in the Budget, due on Wednesday, as a precursor to the Goods and Services Tax (GST) rollout.

The move, that will make flying, eating out, phone bills and a host of other services expensive, would be an attempt to take the rates closer to the proposed tax slabs for GST.

GST, which will subsume central and state levies like excise duty, service tax and VAT, is scheduled to be rolled out from July 1.

The tax slabs decided for the GST are 5, 12, 18 and 28 per cent and taking service tax closer to one of the slabs is a logical move in the Budget, tax experts said.

Tax experts say, Jaitley, who had in his previous budget hiked service tax rate by 0.5 per cent to 15 per cent, may raise the levy by at least one percentage point to 16 per cent.

Some others feel there could be different service tax rates with a lower 12 per cent for basic services and a higher 18 per cent for the rest.

Also, a higher service tax for April-June will help the government garner more revenue to meet expenses on schemes and programmes it may be planning to contain the impact of demonetisation.

A service tax rate closer to the GST rate will also help consumers avoid a greater price shock when the new national sales tax is rolled out.

While service tax until now is a central levy, it will be equally split between the Centre and states under the new GST regime. Most services, except essential ones like primary healthcare and basic education, will be covered by GST.(Read More)

Six expectations of banking sector from Budget 2017

Budget 2017 Date - With the Union Budget 2017 just a sniffing distance away, banking stocks are on a roll.  

The BSE Bankex, the barometer of banking stocks, has shot up 12% since its December lows in the anticipation of budgetary stimulus to keep demons of demonetisation at bay. 

Since the low 2,0148 hit on December 26, the Bankex has risen 12% to settle at 22,566 last week. This is against an 8% rise in Sensex during the same period.

Bank stocks such as YES Bank (up 27%), Federal Bank (up 26%), Punjab National Bank (up 20%), IndusInd Bank (up 18%) and Bank of Baroda (up 14%) have seen a phenomenal rally in the period mentioned. Others such as Kotak Mahindra Bank, HDFC Bank, ICICI Bank, AXIS Bank and SBI too gained anywhere between 9% and 11%. 

Below are six concerns that market participants hope FM Arun Jaitley will address in Budget 2017:

1) Roadmap and incentives for digital push
2) Credit off-take3) Higher capital infusion4) Tax concessions on bad loans
5) Roadmap for disinvestment in PSU banks6) Higher allocation to infrastructure, housing and urban development

Read More

'Budget 2017 must focus on housing, infrastructure for pro-poor thrust'

Budget 2017 - Considering that the welfare of the poor and middle class is the priority area of the government and the assembly elections manifestos of all the major political parties centre around housing and urban development, this year's budget is expected to give a major thrust on real estate housing & infrastructure.

The 2017-18 budget should be seen in the backdrop of a tough year for real estate and housing, with the problem of weak sales and high unsold inventory getting further precipitated by demonetisation. It's a matter of concern that the sale of housing units declined by 10 percent in the six month period ending September 2016.

This poses a major challenge to NDA government's flagship programme of 'Housing for All', as housing besides infrastructure, is a major booster to GDP especially in a slowdown economy and has a multiplier effect on allied sectors.

It's time to build on the foundation of structural and institutional reforms, addressing the vital issue of seamless implementation of key reforms like Real Estate Regulation Act (RERA), Smart Cities Mission, REITs (real estate investment trusts), GST and Bankruptcy Act and carry out the unfinished reform agenda of 'Ease of Doing Business and Single Window Clearance'.

As the government is rightly giving boost to affordable/low-cost housing for the success of its 'Housing for All' mission,the budget needs to come up with policy initiatives/incentives to give a fillip to affordable and low cost housing by way of direct benefits to home buyers, resulting in enhanced affordability.

In order to widen the scope of interest rebate on affordable housing,there's a need to enhance the 30 sq mtr area limit of houses, especially when the government has already broadened the scope of interest subsidy under Pradhan Mantri Awas Yojana (PMAY) by enhancing the loan eligibility limit from 6 lakh to 12 lakh by creating two additional loan slabs of 9 lakh and 12 lakh with interest subsidy of 4 percent and 3 percent respectively.(Read More)

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

Budget 2017 Date - The government has convened an all-party meeting today ahead of the Budget 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.(Read More)

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

Budget 2017 - 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 2017/18 budget 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.(Read More)

GST to ease loan access for millions of firms: Nandan Nilekani

GST - The implementation of Goods and Services Tax (GST) should drive nearly seven million small businesses to the formal digital economy and help them get easy access to loans, said Nandan Nilekani, the technology entrepreneur and co-founder of Infosys who was tapped by the government to run an ambitious identity-recognition programme, on Friday. 

The new unified taxation system, which is scheduled to be implemented later this year, will bring in millions of unorganised businesses on one platform. This would effectively, Nilekani believes, help them get loans using digitalised data.  

   

Nilekani pointed out, though the country has over 60 million businesses, fewer than one million are incorporated and only a few thousand are listed. A digital trail through GST would help these firms get access to formal credit at a much lower cost, which would help more small enterprises get into the formal economy.

Nilekani headed the empowered group on information technology infrastructure on GST.  

“Digitisation is the basis for credit and credit becomes the attractive reason for businesses to enter the formal economy,” he said, adding that ‘India’s formal economy is small and only 7 per cent of the India’s employment is in the formal sector(Read More)

Also Be Updated On: Budget 2017

Vijay Kelkar says single GST rate easy to administer

GST - Former finance secretary Vijay Kelkar on Friday advocated a single rate for the Goods and Services Tax (GST) as that would it simpler to administer.

The GST Council has already decided on the four-rate structure for the indirect tax regime, besides a cess.

Giving an example, he said it was better to first build a single-rate GST with a low rate, achieve full mastery of this, and then consider more complex possibilities such as high rates and multiple rates.

Delivering the C D Deshmukh lecture, organised by the National Council of Applied Economic Research, Kelkar said policymaking was required to address market failure, improve efficiency and equity in the society. With regard to taxation, he said it should be stable and simple, giving investors confidence to invest.

A task force constituted by the 13th Finance Commission, headed by Kelkar, had recommended that all goods and services should be taxed at the single GST rate of 12 per cent. It could be split as 5 per cent for the central GST and seven per cent for the state GST.

The GST Council, comprising finance minister, minister of state for revenue and state representatives, particularly their finance ministers, have already agreed on four GST rates — 5 per cent, 12 per cent, 18 per cent and 28 per cent — besides a cess above the peak rate on luxury and demerit goods such as tobacco. The item-wise rate will be finalised by committee of officers.

Kelkar said simplicity was the first mantra of policymaking. Right sequencing is another important pillar of policy making.(Read More)

Also Be Updated On: Budget 2017

Budget 2017: Here's how to make the most of market volatility

Budget 2017 - There are two ways to make money in the stock market. Either one rides the growth wave, buy and hold stocks that offer rising earnings and stock prices or play the market volatility — buy a stock when it is rising and sell if it’s falling. The latter, also called momentum trading, can be profitable during periods of heavy news flow, such as before or after the Union Budget.

The run-up to the Budget is full of market-moving news about various sectors and companies, which translates into volatility, providing ample trading opportunities. After the Budget, the focus is on unpacking the financial impact of the finance minister’s proposals on key sectors and companies. Though the market tends to price in the impact of measures on the Budget day itself, traders can still make money by exploiting the gap between the market’s immediate reaction and the long-term impact of the Budget measures.

Historical data suggests that more often than not, the broader market corrects in the run-up to the Budget. For example, the Sensex fell by an average of 4.4 per cent during the 30-day period prior to the Budget. The pre-Budget trade has been a one-way bet, with the index correcting on all past 10 occasions(Read More)

Weekly roundup: Best week in 8-month; Sensex surges a whopping 848 points

Budget 2017 - The market put a stellar show in a holiday-truncated expiry week with benchmark indices rising the most in eighth-month thanks to higher rollovers to February series ahead of Union Budget 2017 as a pre-Budget rally defied the negative results from the companies such as Wipro, Ashok Leyland, HUL and M&M. Positive sentiment in global markets after Dow Jones, Wall Street’s closely-watched index, hit its fresh lifetime high of 20,000-mark, also aided the sentiment. 

During the week ended January 27, the S&P BSE Sensex added 3.1% or 848 points to settle at 26759, while Nifty50 gained 3.5% or 291 points to close the week at 8641. 

Midcap and Smallcap stocks jumped. The BSE Midcap index rose 3%, while the BSE Smallcap index surged 2.8%.

"With signs of FIIs taking interest in Indian equities, and with January derivatives’ expiry witnessing a 5-month high rollover in Nifty, investors continued to chase price higher, with only a few days left before budget is presented. It also helped that Dow continued to close above-20000 mark lending positivity to global markets,” said Anand James, Chief Market Strategist, Geojit BNP Paribas Financial Services.

Sectors and stocks

All sectoral indices settled in green. 

The week saw BSE Metal index gaining 5.9%, followed by the BSE Consumer Durables and the BSE PSU index, which gained 5.5% each.  The BSE Oil & Gas index (4.9%), the BSE Bankex (4.8%) and the BSE Auto (4.5%) were other sectoral gainers.(Read More)

Measures expected from India's annual budget that could impact markets

Budget 2017 - Investors in India are bracing for higher taxes and less incentives from the government's annual budget to be unveiled on February 1 as the focus shifts to wringing out revenues to finance giveaways and higher public investment to support the economy.

Below are the main elements expected in the measures that could impact markets:

Guidelines for General Anti-Avoidance Rules (GAAR)

- Government set to announce additional details behind GAAR, which will be implemented starting on April 2017.

- GAAR is meant to crack down on tax havens, making it harder to claim some tax exemptions.

- The government on Friday said GAAR would not apply for foreign investors based on a jurisdiction because of genuine commercial reasons and not just to benefit from exemptions under India's tax treaties with other countries.

- India also said investors who meet so-called limitation of benefits criteria for individual tax treaties would be exempt from GAAR.

- Limitation of benefits seeks to ensure foreign companies or investors based in countries with special tax treaties with India meet certain criteria such as minimum level of investment and a commercial presence in the relevant jurisdiction.(Read More)

Investors brace for transaction tax hike, less friendly Budget

Budget 2017 Date - Investors in India are bracing for higher taxes and fewer incentives from the government’s annual Budget on February 1, as the focus shifts to wringing out revenues to finance giveaways and higher public investment.

While Prime Minister Narendra Modi’s administration is widely seen as being friendly to businesses and investors, it is not expected to announce any dramatic moves at a time when the economy is under pressure from a cash squeeze. 

Among expected measures are a hike in a transaction tax on stock derivatives trading and a less beneficial approach to long-term capital gains tax exemptions, according to analysts.

India is also set to provide guidelines for new rules in April that will crack down on tax havens, while foreign portfolio investors are seeking clarity behind ‘indirect transfer’ rules that could increase tax liabilities for overseas funds.

But any negative impact from such measures could easily be offset, should the government also lower corporate tax rates or provide incentives to sectors hit by the government’s surprise decision in November to abolish high-value banknotes, analysts said.

“We can certainly see a sensitivity for investor concerns, and the government wants to do things like ease the cost and complexities of doing business, improve India’s competitiveness rankings and attract foreign investors,” said Rajesh H Gandhi, a tax partner at Deloitte Haskins & Sells, adding, “However, at the same time, the government has revenue pressures as it seeks the meet its fiscal targets.”(Read More)

Investors brace for transaction tax hike, less friendly Budget 2017

Union Budget - Investors are bracing for higher taxes and fewer incentives from the government's annual Budget on February 1 as the focus shifts to wringing out revenues to finance giveaways and higher public investment.

While Prime Minister Narendra Modi's administration is widely seen as being friendly to businesses and investors, it not expected to announce any dramatic moves at a time when the economy is under pressure from a cash squeeze.

Among expected measures are a hike in a transaction tax on stock derivatives trading and a less beneficial approach to long-term capital gains tax exemptions, according to analysts.

India is also set to provide guidelines for new rules in April that will crack down on tax havens, while foreign portfolio investors are seeking clarity behind "indirect transfer" rules that could increase tax liabilities for overseas funds.

But any negative impact from such measures could easily be offset should the government also lower corporate tax rates or provide incentives to sectors hit by government's surprise decision in November to abolish high-value banknotes, analysts said.

"We can certainly see a sensitivity for investor concerns, and the government wants to do things like ease the cost and complexities of doing business, improve India's competitiveness rankings and attract foreign investors," said Rajesh H Gandhi, a tax partner at Deloitte Haskins & Sells(Read More)

Budget 2017: Measures that could impact markets

Budget 2017 Date - Investors in India are bracing for higher taxes and less incentives from the government's annual budget to be unveiled on Feb. 1 as the focus shifts to wringing out revenues to finance giveaways and higher public investments to support the economy. For story see

Detailed below are the main expectations of measures that could impact markets:

GUIDELINES FOR GENERAL ANTI AVOIDANCE RULES (GAAR)

- Government set to announce detailed guidelines behind GAAR, which will be implemented starting on April 2017

- GAAR is meant to crack down on tax havens, making it harder to claim some tax exemptions

- Key clarification awaited is whether GAAR will take precedence over individual tax treaties, including Singapore and Mauritius

TAXES UNDER INDIRECT TRANSFER RULES

- Government expected to say whether foreign portfolio investors, private equity funds and venture capitals are liable to pay indirect transfer taxes

- Confusion created after tax department said in December such investors could be liable to pay taxes if more than 50 pct of a fund's or investment vehicle's assets are based in India under some conditions

- Tax department also said indirect transfer tax could be charged under certain ownership and investment levels(Read More)

Farm insurance, credit access schemes expected in Budget 2017: Kakra of PwC

Budget 2017 - In an effort to double the agriculture production by 2020, the government should introduce schemes for greater access to farm credit in Budget 2017, Ajay Kakra, leader (Food and Agriculture) PwC, said. 

Kakra also underlined that Union Finance Minister Arun Jaitley should also introduce policies for incentives towards irrigation and insurance of farm crops. He further highlighted the need for a digitised farming economy in the longer run. 

Kakra was answering questions on what announcements related to the agriculture sector are expected in Budget 2017 during a Business Standard live chat. Excerpts: 

In his New Year's eve speech, Prime Minister Narendra Modi talked about giving certain concessions and incentives to farmers. It is hoped that the government will follow that up with further concessions and incentives for the agriculture sector and the agro-input industry in the coming Budget. What can we expect?

One of the key focus areas of the honourable prime minister is to provide greater access to farm credit. In my view as well this can be a key area of focus to strengthen the farming sector. As far as the agriculture input sector is concerned, access to seed, agrochemical and fertiliser is an essential requirement for ensuring farm output. The Budget can look at strengthening the distribution network of agri-inputs to ensure availability at the time of sowing or beginning of the season. The rabi sowing has been more or less normal while the offtake of fertiliser has also not been dampened due to cash crunch at the time of demonetisation.(Read More)

Nifty's one week pre-budget rally biggest compared to last 9 budgets

Budget 2017 Date - Nifty gained the most in the one-week pre-budget rally as compared to the last 9 budgets as investors remained optimistic about pro-market policies by the Finance Minister Arun Jaitley in Union Budget 2017.

With Budget 2017 four days away, Nifty rallied 3.5% for the week, its highest weekly gain since May 27. The index has gained 6% in the year so far.

Even though, not every Budget is preceded by a pre-budget rally, this year bulls have tightened their grip as government is expected to take measures to boost demand after the demonetization freeze.

The previous biggest pre-budget rally occurred in the election year 2009, during the interim-Budget, when the index rose nearly 4% in the week prior to it. Last year, the 50-share index had lost 2.5%.

Jimeet Modi, CEO, SAMCO Securities believes the market movement in the run-up to Budget depend more on the underlying market conditions, not so much on budget events per se.  

“History suggests that 70% of the time budgets are in line with the underlying market moods, however during other 30% of time markets have turned due to budget events. In reality such turns are caused due the inherent overbought or oversold conditions of the market itself,” said Modi.

“In 2016, there was nothing so great about the budget, but still the indices started to rise smartly because they were in deep oversold conditions.  Similarly in 2015 budget, there was nothing really bad about the first budget of the Modi government, but still the markets made a top and started to roll down because inherently it was heavily overbought mesmerized in too much optimism,” he added.(Read More)