Budget 2016 India: 4-month window for domestic black money holders to come clean

Government today came out with one time four-month compliance window for domestic black money holders to come clean by paying tax and penalty of 45 percent.

“I want to give an opportunity to earlier non-complaint to move to the category of complaint. I propose a limited period compliance window for domestic tax payers to declare undisclosed income represented in any form of assets and clear up past transgression by paying tax at 30 percent, a surcharge at 7.5 percent, a penalty at 7.5 percent which is total of 45 percent of undisclosed income,” Finance Minister Arun Jaitley said.

Unveiling the Budget for 2016-17, Jaitley said those declaring their assets will get immunity from prosecution.

“There will be no scrutiny or inquiry regarding tax in these declaration under Income Tax Act or Wealth Tax act and declarations will have immunity from prosecution. Immunity from Beneami transaction has been proposed subject to certain conditions,” he said.

The government plans to open the compliance window under the Income Tax Disclosure Scheme from June 1 to September 30 2016 with option to pay amount due within 2 months of declaration.

In the last Budget, the government had come out with similar compliance window for people holding undisclosed assets abroad.

He, however said that tax evasion will be “countered strongly”.

Capability of the tax department to detect tax evasion has improved because of enhanced access to information and availability of technology, the minister said.

Jaitley further said the surcharge levied on undisclosed income called ‘Krishi Kalyan Surcharge’ will be used for agriculture and rural economy.

“We plan to open window under the income tax disclosure scheme from June 1 to September 30, 2016, with option to pay amount due within two months of declaration.

“Our government is fully committed to removing black money from economy… We would like to focus all our resources to bringing back black money to the books,” Jaitley said.

2016/17 Budget ‘in line’ with current rating: Moody’s analyst

India’s Union Budget for the year beginning in April unveiled by Finance Minister Arun Jaitley on Monday “is largely in line” with the country’s current rating and will not shift its current thinking, said an analyst at Moody’s Investors Service.

The comments come even after Jaitley stuck to a fiscal deficit target of 3.5 percent of gross domestic product for the 2016/17 year, sparking gains in bond markets.

“What we’ve heard is largely in line with the current rating and the current outlook. There was nothing too surprising in the budget. This is fairly in line with what we had expected,” said Atsi Sheth, Associate Managing Director, Sovereign Risk Group, Moody’s Investors Service.

“They have stuck to the fiscal deficit target. We always said fiscal consolidation would continue, but slowly, and that’s indeed what the finance minister’s budget is saying,” Sheth said.

Sheth said Moody’s would continue to monitor measures to increase revenue in a sustainable way as well as India’s efforts to reduce debt levels.

Moody’s currently rates India at “Baa3″, its lowest investment grade rating. However, it raised the country’s outlook to “positive” from “stable” in April last year, saying a ratings upgrade, if justified, could come within the next 12-18 months.

Budget 2016 India: India gold futures jump as govt keeps import duty intact

Gold prices in India, the world’s second biggest consumer, jumped 1.4 percent on Monday after Finance Minister Arun Jaitley surprised the market by maintaining the import duty at a record level in the budget.

The market was expecting a reduction of up to 4 percentage points in import duty from 10 percent.

Many consumers had been delaying purchases for over a month hoping for a reduction in the duty, forcing importers to offer a record discount of up to USD53 per ounce over global prices to clear inventory.

At 12.55 p.m., the most active gold futures were trading 0.97 percent higher at 29,621 rupees per 10 grams, after rising to 29,750 rupees earlier in the day.

Shares of major jewellers such as Gitanjali Gems   were down 2 percent, while Titan Company fell 5 percent.

Budget 2016 India: Tax sops for small I-T payers, hike in super-rich surcharge

The Budget for 2016-17 today offered sops for small and marginal income tax payers, hiked the surcharge by 3 percent on earnings above Rs 1 crore, levied a pollution cess on petrol, diesel cars and SUVs and offered a one-time compliance window for domestic black money holders slapping a tax and penalty of 45 percent.

Presenting the third Budget, Finance Minister Arun Jaitley also proposed a ‘Krishi Kalyan’ cess of 0.5 percent on all taxable services to improve agriculture and reduction of duties on project imports for cold room for cold chain, refrigerated containers and a number of other items.

Cigarette and tobacco products will become costlier with the hike in excise duty by 10 to 15 percent.

While the revenue loss on direct taxes will be Rs 1060 crore, his indirect tax proposal will mobilise an additional Rs 20,670 crore. Net revenue gain will be Rs 19,610 crore.

Long-term trend down but average Budget may trigger rally: Pros

With the Union Budget 2016 just round the corner, experts discuss its impact on the markets going forward. According to Ashwani Gujral of ashwanigujral.com, if the Budget is neutral that is there is nothing positive or negative, there could be a pullback rally just because the uncertainty is out of the way but the long-term would continue to be on the downside.

Technically, market is weak but an average Budget could induce 150-200-point rally, he adds.

Neelkanth Mishra, Head-Equity Strategy at Credit Suisse expects the Finance Minister to stay on the fiscal path, meet the deficit target of 3.5%, and hopes that there is no cut in government spending. According to him, the spending could be funded through disinvestments than changing the tax structure and increasing taxes. Government could look at divesting higher market cap public sector undertakings.

Near-term he says market could get impacted if for example long-term capital gain tax was tweaked but fundamentally, global catalysts are more important – Union Budget is not so important for market as much as fundamentals are, says Mishra.

Moreover, the government is also likely to implement the Food Security Act but they need to address the leakages too.

Budget has a limited impact on the economy but in case 7th Pay Commission comes through then it could be an incentive to the housing sector and benefit the NBFCs.

Recapitalisation of public sector banks will also be keenly watched.

SBI, Indian Bank employees to participate in Feb 29 strike

With public sector bank officers threatening to go on strike on Monday, the country’s largest lender SBI today said a section of its employees may take part in the said agitation on February 29 — a day when Finance Minister Arun Jaitley will present the General Budget.

In a filing to the BSE, State Bank of India   (SBI) said, “All India State Bank Officers’ Federation (AISBOF) being affiliated to AIBOC, will also participate in the strike.

“Since the call is for nationwide all bank strike, our Bank will not be separately impacted, if the strike materisliases.” AISBOF claims to represent over 90,000 officers of SBI and its five associates namely State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala, and State Bank of Travancore.

All India Bank Officers Confederation (AIBOC) has threatened to go on strike to protest termination of P V Mohanan, General Secretary of Dhanlaxmi Bank.

Meanwhile, in a separate filing, state-run Indian Bank said, “All India Bank Officers’ Confederation (AIBOC) has given a call for observance of All India Bank Strike on February 29, 2016 in support of their demands.

“If the strike materializes, a section of the Bank’s employees may take part in the proposed strike on the said date, in which case, the normal functioning of the branches / offices of the Bank may get affected.” AIBOC General Secretary Havinder Singh had recently said that members of the Confederation will go on one-day nationwide strike on February 29 as Mohanan, who is also AIBOC’s Kerala State President, was terminated from the services of Dhanlaxmi Bank invoking draconian clause.

Dhanlaxmi Bank   is an old generation private sector bank based out of Kerala.

According to Singh, the association has about 2.75 lakh officers as its members.

Many banks including Bank of Baroda   , Canara Bank   and Andhra Bank   have also issued advisory informing about strike call and inconvenience to customers if it materialises.

LIC hikes stake in NTPC to 12.98%

State-owned Life Insurance Corporation (LIC) has increased its stake in India’s largest power producer NTPC   by 3.90 percent after buying 32.15 crore shares in the open market.

LIC, which had 9.08 percent stake earlier, hiked its shareholding in the company to 12.98 percent by buying shares between July 25, 2014, and February 24, 2016, NTPC said in a filing to the BSE.

LIC’s stake increase in NTPC includes its participation in this week’s offer of sale (OFS) by the government.

Earlier this week, the government raised about Rs 5,030 crore from sale of its 5 percent stake in NTPC, with insurance companies getting almost two-third shares but retail participation was lukewarm amid a free-fall of stock markets.

The public issue of 41.22 crore equity shares was mostly lapped up by FIIs, insurance companies, mutual funds and HNIs, all of which came on the first day of OFS.

About 63 percent of the shares sold were allocated to insurance companies, led by state-run LIC. Retail investors, who were reserved 20 percent of the issue size, got 8.5 percent of the shares.

Shares of NTPC Ltd were trading at Rs 118.55 apiece, up 0.04 percent on the BSE in the afternoon trade.

Macro Economic Survey 2016: Indian markets resilient despite global volatility

Indian stocks are relatively resilient despite volatility in the worldwide financial markets and the country can become a leading investment destination going ahead, the Economic Survey said today.

“The (Indian) market has rebounded time and time again, and it is hoped that as the global financial markets settle down, India can become the leading investment destination owing to its robust macroeconomic fundamentals,” as per the 2015-16 report card of the state of the economy tabled by Finance Minister Arun Jaitley in Parliament today.

“Despite volatility in global financial markets, the Indian equity market has been relatively resilient during this period compared to the other major emerging market economies,” it added.

The Survey also said that the average borrowings by banks have increased significantly in the immediate aftermath of US fed rate hike, resulting in appreciation of the rupee.

However, subsequent to easing of liquidity conditions, the rupee started depreciating. On trends witnessed in capital markets, the Survey said that during the fiscal 2015-16 till December the resource mobilisation through the public and right issues has surged rapidly as compared to the last financial year.

During this period, 71 companies raised Rs 51,311 crore from the capital market compared to Rs 11,581 crore during the corresponding period of 2014-15. Fund garnered by mutual funds also increased substantially to Rs 1,61,696 crore from Rs 87,942 crore.

During 2015-16 so far, the Indian equity market has remained subdued. The BSE’s benchmark Sensex declined by 8.5 percent (till January 5, 2016) over March 2015, mainly on account of turmoil in global equity markets.

The net investment by Foreign Portfolio Investors (FPIs) in the Indian market was at Rs 63,663 crore in 2015 as compared to Rs 2,56,213 crore in 2014.

Railway Budget 2016-17: Prabhu sees FY17 revenue up 10%; to save Rs 8720 cr in FY16

While presenting his second Railway Budget, Railway Minister Suresh Prabhu said this is not his Budget alone, but represents the aspirations of the entire Railway family. He says the Budget has incorporated inputs given to him by the citizens of India (through social media), industry experts and all other stake holders and under the guidance of Prime Minister Narendra Modi.

He said his ministry is doing all it can to to translate the government’s vision into reality and intends to change the thinking of increasing revenue through tariff hike.

Claiming these are challenging times due to the 7th Pay Commission, Prabhu said he is expecting an operating ratio of 92 percent for year 2016-17. He says the rise in operating expenditure because of the Sixth Pay Commission Report six years back was around 32 percent. However in FY17, Prabhu hopes to limit rise in operating expenditure to 11 percent.

He also expects savings of Rs 8,720 crore in FY16.

Prabhu has proposed capital expenditure at Rs 1.21 lakh crore for FY17.

He has pegged FY17 gross traffic revenue target at Rs 1.85 lakh crore, up 10 percent YoY, with passenger revenue target at Rs 51,012 crore, up 12.4 percent YoY. He expects to garner Rs 1.18 lakh crore by way of freight revenue in FY17.

Budget 2016: Indian farmers deep in debt, seek subsidies, help with insurance

Indian government action to increase spending on irrigation and crop insurance is not enough to end a cycle of indebtedness that has led to thousands of farmer suicides, and a complete overhaul of credit and subsidies to farmers is needed, activists said. Drought in many parts of the country has hit rice, cotton and other crops, and lower world commodity prices have added to the farmers’ plight.

More than half India’s farming households are in debt, owing banks and moneylenders hundreds of millions of rupees, despite numerous loan write-offs by successive governments.

Tens of thousands of farmers across the country have killed themselves over the past decade, several farmers’ lobbying groups said.

Finance Minister Arun Jaitley, who presents the federal budget for fiscal 2016-17 on Feb. 29, has to balance stimulating economic growth with aiding farmers and poorer sections of society.

Farmers’ groups have been demanding better monsoon forecasts, bigger fertiliser subsidies and a state-funded insurance scheme for all crops, to help farmers improve yields and help prevent crop failures.

“The need of the hour is a focus on the dying farmer community,” said activist Kishor Tiwari, who heads a task force set up to recommend action to tackle farmer suicides in Maharashtra, which accounted for more than half of all suicides among Indian farmers in 2014.

“Debt is a core issue, and it needs a long-term plan to resolve it,” he said.

While inter-generational bonded labour in the farming community is no longer as common as before, the number of poor and landless workers who are in debt bondage is rising, particularly in agriculture, brick kilns and stone quarries, activists say.

Indian farmers seldom own the land they cultivate, and often take loans to buy seeds and fertilisers. Only about one tenth of India’s 263 million cultivators take out crop insurance because of the high premiums.

Unpredictable weather and low crop yields have made farming unviable for many. Financial assistance provided by the government usually doesn’t cover the losses, and some farmers have migrated to urban areas for low-paid jobs, even selling their blood to make ends meet.

Tiwari, in a plan submitted to the Maharashtra government, has recommended direct cash subsidies for farmers instead of the current indirect agriculture credit.

He also suggested the central and state governments help underwrite full crop insurance cover and promote the adoption of organic farming methods in drought-prone districts, to help restore soil quality and benefit from the higher price of organic produce, even though yields are lower.

A total of 5,650 farmer suicides were recorded in India in 2014, more than half of them in Maharashtra, according to the National Crime Records Bureau. The states of Madhya Pradesh, Telangana, Chattisgarh and Karnataka also had large numbers of farmer suicides.

The cabinet last month cleared a proposal for the country’s first major crop-damage insurance scheme. The government has said it will reduce premiums to be paid by farmers, and ensure faster settlements.

Delays in estimating crop damage and paying claims are a big challenge, said Sunita Narain, director of non-profit Centre for Science and Environment in New Delhi.

The government must encourage the use of new technologies, including remote sensing and mobile-based image capturing systems to improve yield data and claims processing, she said.

“Insurance coverage has to be universal and payouts enough to cover losses,” she wrote in a blog.

Farm output contributes about 15 percent to India’s USD2 trillion economy, and farmers and rural communities are a large and powerful vote bank.

Politicians have often promised to waive farmers’ loan repayments, but have not addressed the underlying reasons for their chronic indebtedness, Tiwari said.

“Loan waivers are not the solution; it is like a simple dressing for a cancer tumour. You need to excise the tumour and address the cause of the disease,” he said.