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Friday, January 31, 2020

economic news of india - world economic news - economics news for students - indian economy news

economic news of india - world economic news - economics news for students - indian economy news


Tax slabs tweak, higher exemption likely in bahi khaata

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Booster likely for capital gains on property

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NEW DELHI: In what is being billed as a make or break Budget to revive the economy, the Modi government is likely to introduce heavy duty measures for rationalisation of key equity taxes, including scrapping capital gains on sale of property, shifting tax applicability of dividend distribution tax (DDT) to the receiver and extending the timeline of long-term capital capital gains (LTCG) tax from the current 12 months to 24 months.The breakthrough measure, if it materialises, will be doing away with capital gains on sale of property. The move has the potential to revive the real estate sector, which is in the doldrums and facing immense stress.The government is considering a proposal to do away with capital gains on selling property. Currently, one has to pay 30 per cent capital gains on the sale of a property, if the amount is not re-invested in property within 3 years.If property is sold within 24 months, one has to pay a short-term capital gains tax (STCG) on the gains as per an individual's income-tax slab.After 24 months, one has to pay an LTCG tax, which is charged at 20 per cent with indexation benefits. Section 54 gives an exemption if there is sale of a property and then another one is bought.This exemption is available when the capital gains from property sale are reinvested into buying or constructing maximum two houses.However, the capital gains on the sale of house property must not exceed Rs 2 crore in order to claim exemption for re-investing in two properties. This benefit can be claimed only once in the lifetime.The exemption will be reversed if this new property is sold within three years of purchase and capital gains from sale of the new property will be taxed as short-term capital gains. The new properties must be purchased either one year before the sale or two years after the sale of the property. Alternatively, the new residential properties must be constructed within three years of sale of the property.In addition, the government is likely to change the applicability of dividend distribution tax (DDT) by shifting the tax liability from dividend issuer or the company to the receiver.Currently, dividend distribution tax is levied at an effective rate of 20.56 per cent on the company declaring dividends. This is over and above the corporate tax. Apart from this, resident non-corporate taxpayers need to pay 10 per cent tax on dividends in excess of Rs 10 lakh a year. The DDT was introduced for more efficient collection of dividend tax from the companies rather than shareholders.In a move that will fire up the stock markets, the government is likely to extend the timeline of long term capital gains on shares from the current 12 months to 24 months.Currently, LTCG of 20 per cent is paid by domestic investors if they hold equity for 12 months, and 10 per cent is charged to non-residents if they hold equity for the same period.

Will Budget 2020 make it India's decade?

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Indications from statements made by President Ram Nath Kovind and Prime Minister Narendra Modi at the start of the Parliament's Budget session may presage a Budget woven around the theme of the start of a new decade and the building of a New India.PM Modi kicked off the "new decade" theme on Friday morning in his customary statement before the beginning of the Budget session.He asked the Members of Parliament to work towards laying a strong foundation for a "bright future of the country in the new decade".The Prime Minister called for wide discussions on the economic issues in the country and how to maximise benefits to India in the current global economic scenario."We should focus mostly on economic issues in this session and we should to try to see how India can benefit most out of the present global economic scenario and how it can take forward the country's economy."President Kovind laid even more emphasis on the "new decade" theme, which he said, can make this century India's century.In his address to Parliament, he said: "This decade is extremely important for India. In this decade, we will complete 75 years of our independence. In this decade, we all have to work together with new energy to give impetus to the making of a new India. With the efforts of my Government, a strong foundation has been laid in the last five years, to make this decade India's decade and this century India's century."I am pleased to address the joint sitting of Parliament at the start of the third decade of 21st century. I once again extend my best wishes for the New Year and congratulate all Members of Parliament for being a witness to this historic occasion."With the focus on the new decade and India's opportunity to seize the global economic opportunity, the Union Budget, being the first of the decade, may well herald the second wave of structural reforms which can bring the economy out of the hole its finds itself in.While the Budget is to be presented on Saturday, the budget-making team of the Finance Ministry is short of two key officials, including a full-time Expenditure Secretary.In addition to Expenditure Secretary, the position of Joint Secretary, Budget, one of the key officials in the entire Budget-making process, was also vacant for almost three months. The post of Expenditure Secretary fell vacant after the appointment of G.C. Murmu as the first Lt Governor of the newly-created Union Territory of Jammu and Kashmir. Murmu relinquished the post of Expenditure Secretary on October 29 and subsequently, the additional charge of the Department of Expenditure was given to Atanu Chakraborty. Chakraborty, a 1985-batch IAS officer of the Gujarat cadre, is Secretary, Economic Affairs in the Finance Ministry. In late January, Rajat Kumar Mishra was appointed Joint Secretary, Budget.

CBIC extends GSTR-9 and GSTR-9C filing dates

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The Central Board of Indirect Taxes and Customs (CBIC) late on Friday night extended the due date for furnishing GST Annual Return and Reconciliation Statement (GSTR-9 / 9A and GSTR-9C) for FY 2017-18 in a staggered manner. The last date to file the Returns was January 31, 2020.This came after thousands of taxpayers took to social media complaining about the GST portal not working. "Considering the difficulties being faced by taxpayers in filing GSTR-9 and GSTR-9C for FY 2017-18 it has been decided to extend the due dates in a staggered manner for different groups of States to 3rd, 5th and 7th February 2020 as under," CBIC said in a Tweet. Considering the difficulties being faced by taxpayers in filing GSTR-9 and GSTR-9C for FY 2017-18 it has been decid… https://t.co/Il75gT2JNH— CBIC (@cbic_india) 1580490012000 Accordingly under Group 1, the states of Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Puducherry, Telangana, Andhra Pradesh, Other Territory has been placed and they will need to file their returns by 3rd February 2020. Group 2 includes Jammu and Kashmir, Himachal Pradesh, Punjab, Chandigarh, Uttarakhand, Haryana, Delhi, Rajasthan and Gujarat that have to file by 5th February 2020.Lastly group 3 includes the states of Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Andaman & Nicobar Islands, Jharkhand, Odisha, Chhattisgarh, Dadra and Nagar Haveli and Daman and Diu, Lakshadweep, Madhya Pradesh, and Uttar Pradesh, which now have to file by 7th February 2020.On a day when the Economic Survey acknowledged the fact that both GST system is complex, taxpayers found it impossible to file their returns. By evening of January 31, #gstnfailed was the top trend on Twitter. At 10 30 pm CBIC tweeted the extension dates, but early reports suggest the portal is still not working.

Banking on ESOPs: Just do it and get paid for it

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KOLKATA: The Economic Survey has proposed skin in the game for employees of public sector banks through a stock option plan.Public sector bank employees are paid fixed salaries, which, according to the survey, does not encourage risk-taking and innovation. Although PSBs control 70% of India's banking market, they lag considerably in performance metrics when compared to their peers."Employees can constitute one of the blocks of new owners of PSBs through ESOPs that is conditioned on employee performance," the survey said. "Ownership by motivated, capable employees across all levels in the organisation could give such employees tangible financial rewards for value enhancement, align their incentives with what is beneficial to the PSB, and create a mindset of enterprise ownership for employees."The proposal comes when the Indian Banks' Association and bank unions have been negotiating wage increases. The payslip component for PSB employees is revised every five years.Bank unions agreed only recently to a performance-linked incentive scheme for their members, to be paid over and above the fixed component, in banks that report a minimum 5% growth in operating profit. The incentive scheme is likely to be implemented from FY21.An ESOP, on the other hand, will reward only good performers. The survey said that a portion of the government stake can be transferred to employees exhibiting good performance.

Economic Survey 2020: PSBs need a techtonic shift

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MUMBAI: State-run banks hobbled by soaring bad loans and poor performance can look forward to have a new life with the help of fintechs to fight back and use tools like GPS to conduct better due diligence on borrowers to play a meaningful role in India's march towards a $5-trillion economy, the Economic Survey said.With data and analytics taking the centre stage in almost all industries, state-run banks can pool all their data into one entity like in the case of GST Network, to improve their analytical capabilities that could provide them an edge over their private peers, it said. Data sciences, machine learning and artificial intelligence could help the banks, which have more than 70% market share, to make a difference to the economy, it said."PSBs have many important ingredients in place to cater to this new demand," said the survey. "They have local market insights and relationships based on operating histories spanning many decades. Their geographic footprint is vast. PSBs, however, need significant investments in capabilities to exploit the coming datarich environment in India. Analytics based on market data are quite capable of providing accurate predictions of corporate distress." 73825376 PSBs have been dragged down by bad loans over the past few years and they compare poorly with their private sector peers in terms of returns to investors. Because of this, their market valuations are also lower leading to losses to the government and wasting of taxpayer money.Public banks accounted for 85% of bank frauds, while their gross non-performing assets exceeded Rs 7.4 lakh crore in FY19; an amount which exceeds government's entire infrastructure expenditure in the fiscal. Similarly, just by plugging PSBs' loan losses, which came at Rs 66,000 crore in FY19, the government "could nearly double the nation's budgetary allocation for education," it said. 73825465 Estimates show that every rupee of taxpayer money invested in PSBs in 2019 lost its value by 23 paise, while for the private sector it created value.While banks are getting merged to create bigger ones, the collaboration on data could be a game changer."PSBs will be able to enhance efficiency by fulfilling their role of delegated monitors if all the PSBs can pool their data into one entity," it said. "Private information held by their corporate borrowers leads to contracting problems, because it is costly to assess solvency of a borrower or to monitor her actions after lending has taken place."The survey proposes that these banks stick GPS devices on pledged assets to track the location of assets.

Brokerages see up to 33% upside in SBI stock post record Q3 net

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Brokerages maintained bullish views on the State Bank of India (SBI) stock, after India's largest public sector lender reported highest ever quarterly profit for the December quarter on better margins. The bank expects better profitability in fourth quarter as well, led by improved asset quality, one-off gains from SBI Cards IPO and lower tax.The country's largest lender on Friday reported a 41.18 per cent YoY rise in its standalone net profit at Rs 5,583 crore, driven by an improvement in asset quality and strong interest income.Emkay Global Financial Services maintained a 'Buy' rating on SBI with a 12-month price target of Rs 380."We have raised FY20 estimates by 23 per cent, factoring in earnings beat in Q3, lumpy resolutions and one-off gains from cards IPO, partly offset by residual DHFL/ICA-related provisions," the brokerage said.Gross non-performing assets (NPA) improved to 6.94 per cent from 8.71 per cent YoY while net NPAs stood at 2.65 per cent as against 3.95 per cent. Fresh slippages in the quarter spiked to Rs 16,525 crore from Rs 4,523 crore in the year-ago period, on account of mortgage lender- Dewan Housing Finance (DHFL).Motilal Oswal Financial Services also retained a 'buy' call on the stock with a price target of Rs 425, indicating a 33 per cent upside from the previous close."SBI reported a strong operating performance in a tough quarter, led by NCLT recoveries, improving fee income trends and controlled opex. We believe that SBI has prudently improved PCR over the last few years, and has one of the lowest stressed assets amongst corporate banks, which will drive a sharp decline in credit cost to 1.3 per cent and 1.1 per cent by FY21 and FY22, respectively. Also, further NCLT write-backs or subs monetisation will boost earnings," Motilal Oswal Financial Services said in a report.

Trade setup for Budget day: Nifty has support at 11,900, 11,850

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Falling for a second straight session, NSE Nifty on Friday slipped below the psychologically important 12,000 level and ended 73.70 points or 0.61 per cent lower at 11,962.10. Union Budget, which is on Saturday, is one of the most important events for capital markets. Given the importance of the event and the volatile moves that the market usually makes, it would not be prudent to make a mechanical reading, as technical levels tend to get violated on either side while reacting to such events. It would make more sense if we look at the broader levels that the headline index is dealing with. Nifty on Saturday is expected to make a stable start, but no major directional moves are expected in the morning session. We may see Nifty staying sideways in a defined range until Budget proposals start rolling in, which may increase volatility. There is a large number of short positions in the system. Nifty ended in the negative zone on Friday, but futures saw an open interest (OI) addition of 12.66 lakh shares or 12.46 percent. Options data shows similar amount of Call, uniformly at 12,100, 12,200, and 12,300 strikes. Moreover, despite the index ending below the 12,000 mark, the maximum Put OI remained at 12,000.73812399 The bearish setup is evident on the technical charts, but short positions also indicate possibilities of short covering, if Budget surprises positively. In the event of any downside, technical support exists at 11,900 and 11,850, but may get breached momentarily. On the upside, Nifty has resistance at 12,125 and 12,200 levels. We would again point out that these are merely technical levels, and they might get breached on either side during the volatile reactions to the Budget on Saturday. We would strongly recommend traders to create significant positions only after the Budget is fully presented and entirely digested by the market. Before that, the movements are likely to be absolutely speculative in nature with no sustained directional bias on either side. (Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)

CCI dismisses complaint against Naspers-owned PayU Payments, Wibmo

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New Delhi: The Competition Commission has dismissed allegations of unfair business practices against global internet firm Naspers-owned PayU Payments and Wibmo, citing lack of evidence showing any abusive conduct.The order came after a complaint stated that on acquisition of Wibmo by PayU, the combined entity is directly or indirectly likely to result in unfair or discriminatory conditions in availing e-payment processing gateway services in India.The complainant said that PayU is a dominant player in the market of e-payment processing gateways in India with a high market share in some sectors.It was alleged that PayU has intentionally foreclosed the market for other competitors by denying them proper access to Wibmo in the downstream market and has substantially created entry barriers for new market players by capturing the downstream market through Wibmo so that no other competitor can use a safe pathway to lead customers towards a safe e-payment transaction.However, the regulator noted that no evidence was furnished which could suggest that the opposite parties have indulged in such abusive conduct.It said "while the Act prohibits an abuse of dominant position by an enterprise, mere existence of dominant position, without any prima facie evidence of its abuse, is not recognised as an anti-competitive conduct in the scheme of the Act."It further noted that "the informant has merely stated that there is reduction in transaction time and a more secured payment ecosystem, owing to such integration...Thus, in the absence of any alleged abusive conduct, it will be legally untenable to direct an investigation under the Act".PayU is a fintech company that provides payment technology solutions to online merchants, while Wibmo is a leading technology and service provider for financial services industry, best known for its hosted risk-based authentication, 3D secure, and payment security services.

Economic Survey: How to solve India's jobs crisis, the China way

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The Economic Survey 2019-20, tabled by FM Nirmala Sitharaman in Parliament today, suggested a way to solve India's jobs crisis by taking a leaf out of China's book.The survey cites the example of China to underline how India can become a trade super power by way of exports. During the period between 2001-2006, labour-intensive exports helped China generate 70 million jobs for workers with primary education, it says.The Surveys said that exports growth provides a much-needed pathway for job creation in India. The survey laid special emphasis on the 'Assemble in India for the world' theme. It suggested the integration of this theme into Make In India, which it said can raise India's export market share to about 3.5 % by 2025 and 6 % by 2030.In India's case, a boost in exports helped convert around 8,00,000 jobs from informal to formal between 1999 and 2011. In view of these numbers, the survey suggests that India can follow China's path to find the answers to its job woes.According to the survey, if India is able to corner a sizeable share of the global exports market as envisaged, about 4 crore well-paid jobs would be created by 2025 and around 8 crore by 2030.If these export targets are achieved, it would take India's export of network products to $248 billion by 2025, and would make up about one-quarter of the increase required for making India a $5 trillion economy by 2025, the survey said.

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