Tag: Union Budget 2020

India has the world’s best taxation for businesses, says Vedanta’s Anil Agarwal

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Anil Agarwal, founder and chairman of Vedanta as a resident of the UK was positive about Brexit and as an Indian was appreciative of the budget. He said that 2020 would be one of the best years for Vedanta.

Sharing his views on the just concluded union budget 2020, he said, “For the salaried class, there was definitely a relief. The taxation that we have in India is world’s best taxation. If somebody wants to do business in a democratic country, India is the best place.”

“There isn’t a single budget in 30 years where they have appreciated and said that ‘wealth creators’ would be appreciated. Entrepreneurs are the heart and soul of this country. We are very much like America where we have entrepreneurs. So I welcome it. They have done whatever best they can do,” he said in an interview with CNBC-TV18.

On Brexit, he said, “I am very positive about Brexit, at least decision has been taken. I am very hopeful that in another 12 months, things will settle down and will take its own shape. Year 2020 will be the best year for Vedanta. We will be the second-largest oil and gas producer in India. We will be the largest zinc producer in the world at the lowest cost, said Anil Agarwal, founder and chairman of Vedanta.He is making sure the local employment should be given a priority, which is very important. At the same time he is trying to make England as a priority destination for the investment.”

“Year 2020 is very spiritual and will be good for everybody. This will be one of the best years for us ever. We we will be the second-largest oil and gas producer in India. We will be the largest zinc producer in the world at the lowest cost. We are aiming to be the largest silver producer in the world. We are also looking to produce 3 million tonne of aluminium and government is very liberalised,” he further mentioned.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Market rally unlikely to be broad-based, would reward earnings, says Atul Suri of Marathon Trends PMS

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

We are just playing out a very massive equity bull market globally and  the genesis of the bull market is in the US bond yields. Easy money is just sloshing around. We do have headwinds like the coronavirus fear, and markets don’t like uncertainty. China is going to be struggling but there is liquidity in the market and you have to respect that, said  Atul Suri, CEO, Marathon Trends PMS.

“I think that there is a big surge of global liquidity and we (Indian markets) are part of global equity bull market. So, I feel that we have a lot more legs globally to move on,” he said in an interview with CNBC-TV18.

Talking about the performance of the market, he said it is across the board and it is not about midcap or largecaps but it is all about performance. In the last month and half the midcap index has outperformed the Nifty.

“To make a sustainable bull market, we have to see consistent earnings. So in a market that is oversold, you will see pullback rallies but to have a sustainable bull market, to have a trend ultimately you will have to see sustainable earnings, ” said Suri, adding that you will find blips, but you have to be very careful.

“As an investor you have to be able to bifurcate that are these short covering rallies or pullbacks for you to exit some of your dead stocks or if there is a tailwinds of earnings, then that makes a case for a sustainable upmove. So, ultimately we have to see the fundamental factors playing out, we have to see earnings play out,” said Suri.

When asked if he though the pharma index had bottomed out and  made multi-year bottom, he said, “I don’t think so because some of the largecap names, which are the mover of the index have not given you that kind of earnings momentum. What you see in the pharma is very selective stocks are performing. As a trend investor, I would deviate or have those spaces in my portfolio where you are seeing consistent earnings but selectively.”

“I think the market is not going to be very broad-based in terms of everything is going to move up, it is going to reward earnings,” said Suri.

In terms of Nifty levels, he said, “I have been talking about 13,500 and it is a year to a year and a half target. From here also we can have a 12-13-14 percent upmove but I play for longer-term trends. We are seeing this big global liquidity surge, so ultimately we are in an uptrend, and there is money to be made. We will have budgets and virus of whose outcome we don’t know but the fact is that global markets are on a tear .”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Budget 2020: Start-up ESOPS – How big a booster is it?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Union budget 2020 seems to have fulfilled several wishes of the small and medium enterprise (SME) sector. The start-up community, specifically, welcomed many of the budget proposals. The biggest of these was the proposal to defer the tax on employee stock options (ESOPs) that start-ups provide to their employees.

In her speech, finance minister Nirmala Sitharaman noted, “Currently, ESOPs are taxable as perquisites at the time of exercise. This leads to cash-flow problems for the employees who do not sell the shares immediately and continue to hold the same for the long-term. In order to give a boost to the start-up ecosystem, I propose to ease the burden of taxation on the employees by deferring the tax payment by five years or till they leave the company or when they sell their shares, whichever is earliest.”

So, where start-up employees previously had to pay taxes on the ESOPs allotted to them, they will now no longer have tax deducted at source and can pay this tax after five years or when they decide to sell their ESOPs – whichever happens first.

Read Between the Lines

At first glance, the announcement looks like an excellent move to promote India’s start-up ecosystem. However, when one reads the fine print, the joy wanes somewhat – many who had hoped that ESOPs would become tax-free realised that the tax payment had merely been postponed.

Taxing ESOPs is a somewhat complicated affair. Basically, an ESOP is an option given to an employee to own equity in the company. If the employee exercises that option, depending on how the ESOP scheme is structured, the employer deducts tax at source. Since the employee is given the option to buy the shares at a lower rate than market value, the difference between the buying price and the market value is treated as a prerequisite and TDS is deducted on that.

Taxation rates are further affected based on when the employee decides to sell the shares, and whether the company is publicly listed or not. In case the company is listed, having bought shares under ESOP, the employee can decide to sell within a year, in which case a 15 percent short-term capital gains (STCG) tax comes into effect. If the shares are held for more than a year, then 10 percent long-term capital gains (LTCG) tax is levied. So, holding shares for more than a year could be beneficial.

However, in the case of unlisted companies, when the employee decides to sell within less than 24 months, the income from the sale is taxed according to the individual’s income tax slab. If the shares are sold after 24 months, LTCG tax applicable is 20 percent, which is much higher as compared to listed companies.

Great Move but There is Room for Improvement

So, what does the finance minister’s announcement really mean? It simply means that the employee can exercise the stock option without paying tax at the time of buying. However, the tax comes into effect when the employee decides to sell or leave the company. There’s also some confusion about which start-ups will qualify for this.

Deferring tax on start-up ESOPs doesn’t seem like much, so why are entrepreneurs praising this move? For one, it is a significant step for the government to acknowledge that start-up employees need different tax treatments compared to the rest of their peers.

However, when employees exit the company, their cashflows are generally not in a great position and burdening them with capital gains tax on ESOPs may not be a good idea. The government should instead look at taxing employees only when they liquify their shares.

Having said that, many are hopeful that deferring the TDS could pave the way for the entire removal of capital gains tax on the exercise of options – something investors have wanted for a long time.

Pushkar Mukewar, co-founder and co-CEO, Drip Capital.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

By mid-February, government to bring direct tax dispute resolution scheme rules

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The rules to resolve direct tax disputes under No Dispute but Trust Scheme – ‘Vivad Se Vishwas’ Scheme would be notified by mid-February offering taxpayers option to settle disputes out of legal forums.

“Sabka Vishwas scheme (for closing indirect tax disputes) was open for months. The Vivad Se Vishwas Scheme will start from the second week of February and taxpayers will have almost five months time for this scheme. The window would be open until June. If taxpayers pay the disputed tax amount by March, they will get more benefit,” revenue secretary Ajay Bhushan Pandey said.

Asked if the big taxpayers would avail the scheme given that they did not participate in Sabka Vishwas scheme, he said he was hopeful that they will find it attractive.

“Who will come and who will not come depends on taxpayers. This is a voluntary scheme and we are quite hopeful that most people will find it attractive and useful. If one particular industry or taxpayer feels that they have a stronger case, they can continue with the legal route,” Pandey said.

On expected revenue from the proposed scheme, the top revenue officer said that the basic purpose of the scheme is to help business and industry to come out of litigation.

“The main purpose of the scheme is to help the industry and the business to come out of litigation and not so much about how much amount we are going to get. The revenue will be a by-product,” he said.

Currently, there are 4,83,000 direct tax cases pending in various appellate forums such as Commissioner (Appeals), ITAT, High Courts and the Supreme Court. Tax experts have claimed that the window available under the direct tax dispute resolution scheme is very short.

Proposing the scheme in the Budget on Saturday, finance minister Nirmala Sitharaman had said that those who avail this scheme after March 31, 2020, will have to pay some additional amount. Further, taxpayers in whose cases appeals are pending at any level can benefit from this scheme.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Budget’s 16 point program for agriculture is a good roadmap: Siraj Hussain

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Former agricultural secretary Siraj Hussain on Tuesday said 16 point program for agriculture mentioned in the budget 2020 presented by union finance minister Nirmala Sitharaman is a good roadmap.

“Allocations do not really bother me as PM Kisan’s Rs 75,000 crore is not easy to spend. The thing is that the number of landholders is not really known. People who hold land in different states and who are eligible to get money under PM Kisan is not really known. So, we may not reach that number, we may not be able to spend Rs 75,000 crore even next year,” Hussain said.

He further added, “The main thing is that the budget speech and the documents do not give any roadmap as to what will happen if the states do not implement the model act. So, these kind of details are missing. Probably, we will get to see them later in the year.”

“I have not seen the National Agriculture Market (eNAM) getting implemented on the ground. Recently, I was in a mandi in Ahmedabad and I found that eNAM is a non-starter. It is absolutely zero on the ground. However, that should not worry us too much as the auction of various agricultural commodities was taking place there but they were using their own software. So, eNAM may not really happen but the other reforms in the agricultural marketing system they are waiting to happen,” Hussain said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

GST cut for autos unlikely; new tax regime to boost urban consumption, says Enam Holdings

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Sridhar Sivaram, investment director at Enam Holdings is a bit disappointed that the budget did not announce more spends on the rural schemes but said that it is an annual event and just a financial budgeting numbers that are announced.

He said, “We have seen with this government – many of the bigger policy announcements have come outside the budget. So a lot of people are disappointed and many sectors felt as if nothing got announced but if they were expecting all reforms to be announced in one budget, there are more speeches to come.

“I would have expected the government at least spent a bit more on the rural schemes which they have done quite well be it the Pradhan Mantri Gram Sadak Yojana (PMGSY), Pradhan Mantri Awas Yojana (PMAY) or even Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). Many of the allocations for rural programmes have been at best flat or marginally down. I would have expected that they would increase the allocation for many of these,” he said, adding that the government’s defence is if there is more demand, we will provide.

From a market perspective, he said the house is positive on the broader market than just the ten stocks that have taken the market up for the last year or so. With the broader market valuations having substantially come down, the opportunity to invest is there if there is a greenshoot, he said in an interview with CNBC-TV18.

“Broadly we are working with the theory that the growth will come back but it is not going to be the roaring growth of 7-8 percent. I would doubt even if the 6 percent number comes. However one should keep in mind that we were at 4.5 percent and possibly even the current quarter may not be that great. So from there, the expectation for the next year definitely looks much better.”

According to him, this is a great period for banks where competition is less. Upbeat on the banking sector in general, he said, “I would just sit on many of them right through this period of the next 18 months where they could surprise the markets on the upside.”

Talking about the new tax regime announced in the budget, he said, the way to look at this is not how much tax you save but the fact that if you are not going to invest Rs 50000, which you earlier had to invest, it would be that much extra money in the hand to spend, and this could help boost consumption. So, any urban consumption related themes will be a beneficiary of this. People are currently underestimating the impact, he added.

Speaking about auto sector, Sridhar said, “I am not sure if the government is in any position to reduce goods and services tax (GST) at this stage given the way the GST collections have been. So the industry will have to brace through this transition with possibly some reduction in the margins and move forward. If at all there is a GST cut, it will be only possibly 12 months from now if and when the GST collection stabilise.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Investors look forward to RBI monetary policy after disappointing union budget

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

After venting its disappointment over the Union Budget, the Indian equity market is now looking forward to the RBI’s forthcoming monetary policy announcement, which will be the central bank’s first one of 2020.

The Reserve Bank of India (RBI), after the bi-monthly meeting of its Monetary Policy Committee (MPC) on Thursday, February 6, will announce its decision on its key lending rates – repo rate and the reverse repo.

A cut in the repo, or its short-term lending rate for commercial banks, would bring cheers to the market as it would eventually result in lower interest rates.

However, in the way the central bank maintained status quo at its last MPC meeting in December, it again holds the rates, especially with inflation rising significantly, according to analysts.

Market experts feel that after the 1,000-point slump on the Sensex and the 300 point slump on the Nifty50 on Saturday because the Budget could not live up to investors’ expectations, on Monday too, the indices may take a beating, but would eventually stabilise later in the week and move upwards.

“It is a disappointment completely because we all were hoping for (abolishing of) LTCG but it didn’t happen,” said Rahul Sharma, Business Head of Equity99.

“Monday maybe another day of decline, but in another 3-4 days, the market will get stable. The China market would also open after that the shutdown due to spread of coronavirus,” he added.

Analysts also said that the new optional income tax regime announced by finance minister Nirmala Sitharaman, although it comes with lower tax rates, would dissuade people from investing in tax saving instruments such as mutual funds and insurance, among others. Stocks of mutual funds, asset management companies and insurance companies eroded significantly on Saturday.

Monthly sales numbers of automobile companies for January, corporate earnings and India PMI January manufacturing data and PMI services would also be keenly observed by the investors.

The Nikkei Purchasing Managers’ Index for the manufacturing sector is scheduled to be released on Monday and that for the services sector would be out the day after. Along with the domestic factors, global cues too are likely to play their role in the market.

Deepak Jasani of HDFC Securities said that both the Caixin China Manufacturing PMI and the Markit US Manufacturing PMI for January will be announced on Monday, February 3. On the technical front, Jasani said: “With the Nifty breaking the trend reversal levels of 11,832, the intermediate trend is now down.”

The Nifty could head towards the next major supports of 11,490 if the immediate supports of 11,633 are broken. Any pullback rallies could find resistance at 11,845, he added.

On Saturday, the Nifty50 on the National Stock Exchange (NSE), closed at 11,661.85, lower by 300.25 points, or 2.51 percent, on its previous close. The Sensex settled at 39,735.53, lower by 987.96 points, or 2.43 percent on its previous close of 40,723.49.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Crisil says Nirmala Sitharaman’s budget 2020 unlikely to boost economy

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The measures announced to trigger growth in the Union Budget 2020-21, including the widening of the fiscal deficit target, would not result in major impact for the slowing economy in the short-term, a report by Crisil said on Sunday.

The budget on Saturday set the fiscal deficit target for the financial year 2020-21 at 3.5 percent, at higher than the previous target of 3.0 percent.

The report noted that the additional fiscal space is to be funded by aggressive disinvestment, asset monetisation and telecom revenue targets, optimistic tax-buoyancy assumptions and some tightening in overall expenditure, adding that the space created is being used to fund capital expenditure (capex) and rural sector spending to support consumption.

“The government has aimed at some measured moves in the budget to bolster growth. Most of these, however, are not expected to provide a short-term boost,” it said.

According to Crisil, the relaxation in target to spur growth was inevitable and more realistic. With this budget, fiscal policy appears to be doing its bit, it said, adding, however, that fiscal pressures have also intensified in the past two years, leaving the government with limited ability to stimulate growth.

“There is some support to growth, but nothing substantial in the short term. However, the government is still eyeing the long-term and has, therefore, pushed capex. The multiplier impact of this will be positive but lagged,” Crisil said.

The report observed that in the absence of growth-triggering factors, growth pick-up in fiscal 2021 is expected to be largely led by the base effect and supported by somewhat better farm incomes led by a good rabi crop and the delayed impact of monetary easing. A normal monsoon in 2020 and benign global crude oil prices would be critical to achieve the predicted growth, it added.

According to the report, despite tight fiscal conditions, the budget makes room for higher capex and overall capex is budgeted to increase 18 percent in the fiscal year 2020-21.

“A large part of this is because of spending on infrastructure creation. Overall infrastructure spending, however, is budgeted to decline 7 percent in fiscal 2021. This is because of lower reliance on extra-budgetary spending through central public sector enterprises (CPSEs) despite higher budgetary support. Lower spending is especially seen in roads and highways, urban infrastructure, and power,” it said.

It further said that the budget has tightened revenue expenditure, but makes way for higher social-sector spending. Growth in revenue expenditure is expected to slow down in fiscal 2021, led by the lower burden of food, fuel and fertiliser subsidies.

The budget, however, makes way for higher allocations on some of the flagship programmes, such as Pradhan Mantri Gram Sadak Yojna (PMGSY), Pradhan Mantri Krishi Sinchai Yojna (PMKSY), Pradhan Mantri Awas Yojna (PMAY) and Pradhan Mantri Kisan Samman Nidhi (PM Kisan), spending on which is revenue in nature, it added.

The report also said that allocation for most of these schemes faced the axe in fiscal 2020, and higher spending next fiscal can support rural employment, income and consumption.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow