Tag: Union Budget 2020

Budget 2020: Has government provided enough fillip to infrastructure sector?

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

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Infrastructure is one of the largest sectors in the Indian economy and the fillip that is provided by the union budget 2020 was much expected, but was it too little compared to the hopes?

Budget 2020 fell short of expectations from the allocation itself. For the transport sector, the Modi government announced an allocation of Rs 1.7 lakh crore and that compares to Rs 1.56 lakh crore done last year, which is a growth of just 9 percent. The expectation was double-digit growth in terms of allocation.

Even for the power sector, the allocation has remained flat year-on-year (YoY) and for Indian Railways, the growth is just 3 percent. The government has proposed Rs 5,753 crore outlay for new and renewable energy ministry for 2020-21 as against Rs 3,891.74 crore revised estimate for 2019-20. The budget estimate was Rs 5,254.83 crore.

In the policy framework, there are no major reforms announced. For the power sector, there was no reform for the discoms and there was no development financial institution which has been a long ask from the sector.

However, on the positive side, the government did announce to provide 100 percent exemption when it comes to the investment of sovereign wealth fund into the infrastructure sector and that could bring in sizeable inflows to the infrastructure sector.

For the power sector as well, the government has announced a concessional rate of 15 percent which will be allowed to new power generating companies in order to attract investment.

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

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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

Govt says budget tax on NRIs will not hurt bonafide workers abroad, including in Gulf

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

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The Finance Bill, 2020 has proposed that an Indian citizen shall be deemed to be resident in India if he is not liable to be taxed in any country or jurisdiction.

This is an anti-abuse provision since it is noticed that some Indian citizens shift their stay in low or no tax jurisdiction to avoid payment of tax in India.

​The new provision is not intended to include in tax net those Indian citizens who are bonafide workers in other countries.

In some section of the media, the new provision is being interpreted to create an impression that those Indians who are bonafide workers in other countries, including in the Middle East, and who are not liable to tax in these countries will be taxed in India on the income that they have earned there. This interpretation is not correct.

​In order to avoid any misinterpretation, it is clarified that in case of an Indian citizen who becomes deemed resident of India under this proposed provision, income earned outside India by him shall not be taxed in India unless it is derived from an Indian business or profession. Necessary clarification, if required, shall be incorporated in the relevant provision of the law.

A source close to the development said to CNBC-TV18 that Finance Bill 2020 has introduced a sub-section (1A) in section 6 deeming an Indian citizen to be resident in India if he is not liable to tax anywhere else.

Casewise explanation in the case of UAE:

1) An Indian citizen has permanent home only in India and he starts staying in UAE to avoid payment of tax in India. In this case, he would be resident in India and would be liable to tax in India on global income.

2) An Indian citizen has a permanent home in India and personal and economic relation as well only in India and to avoid payment of taxes in India he starts staying in India. He also buys a house in UAE but personal and economic relation remains in India. In this case, he would be resident in India and would be liable to tax in India on global income.

3) On the other hand, if an Indian citizen has permanent home only in UAE he would be resident in UAE and would not be hit by this new provision.

4) Further, if he has a permanent home in both India and UAE but personal and economic interest only in UAE. For example, he is having employment or business establishment or source of income only in the UAE. In this case, he will be resident of UAE and would not be hit by this new provision.

5) In another situation, if Indian citizen has a permanent home as well as personal and economic interest both in India and UAE and if he stays in UAE regularly and occasionally visits India, his place of habitual abode would be in UAE and he would be resident of UAE and would not be hit by this provision. Thus an Indian citizen who is having a permanent home in UAE and have his employment or business in UAE and most of the time stay in UAE would not be hit by this provision and would remain resident of UAE.

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

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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

LIC-IDBI Bank disinvestment bad economics: RSS-affiliate BMS to government

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

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The Bharatiya Mazdoor Sangh (BMS), an RSS affiliate, has termed the budget proposal on disinvestment of the LIC and IDBI as “bad economics”.

“It indicates the government is helplessly continuing to depend on the sale of national wealth for revenue generation,” the BMS said.

Stating that a national discourse is required for finding an alternative revenue generation method, the BMS said otherwise all the public sector undertakings and other assets would be sold at throwaway prices.

Union finance minister Nirmala Sitharaman said on Saturday the government would reduce stake in the life insurer LIC through the initial public offering (IPO). “The government will list LIC on the stock exchanges,” she said in her budget speech.

To be listed in the FY21, starting April, it could be the country’s biggest IPO in recent times. However, the listing could be a complicated affair given LIC’s huge investments in real estate, art and equity market, said an official. The valuation process could be time-consuming, the official added.

In FY20, the disinvestment accrued only about Rs 18,000 crore to the government.

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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

How does Budget 2020 impact the personal finances of aspiring Indians?

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

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Finance Minister Nirmala Sitharaman spoke on multiple themes in this budget with a major theme being aspirational India.

Whilst multiple initiatives were announced with respect to this theme, most aspirations around a budget revolve around trying to understand how personal finances will be enhanced or impacted by this budget. After the budget announcements reactions will be mixed, more so because there is a new tax regime announced with lower tax rates on one side, but doing away with the exemptions and deductions available on the other side. So what can the aspirational Indian now look at?

– Each individual will need to look at his income level and accordingly look at which regime may be more efficient — the earlier regime with exemptions, or the new tax regime with a lower tax rate, but exemptions/deductions taken away. He would need to keep in mind that over a period of time, all exemptions /deductions may gradually be removed and the choice to move from one option to another may not be allowed each year, so the choice may need to be
evaluated carefully. The aspiring Indian will also need to keep in mind that money once spent due to the tax-saving, will not be available to support long term goals like retirement, and there could be a regret at some point in the future on it.

– In case one opts for the new tax structure, rather than spending on discretionary items, it may be a good idea to upskill oneself as there have been a host of announcements on degree level online programs.

– Besides that, investors could also look at the new debt ETFs announced which will invest in government securities offering both a new investing avenue and a new way to invest in fixed income via ETFs. However, the tenor of investing will be important to keep in mind as long term investing is ideally suited to equity investing and not to debt investing, and thus investors
will need to evaluate the long term returns on debt vis a vis equity before making this choice.

– The enhanced deposit insurance guarantee from Rs 1 lakh to Rs 5 lakhs should provide some reassurance to the bank fixed deposit investor who may have been a bit shaken from the experience of some others, when some banks in 2019 gave sleepless nights to investors as their money was not accessible to them. For investors who went through a similar situation with debt mutual funds, wherein segregated portfolios were created, there is now clarity on the tax treatment on sale of a segregated portfolio, with the original date of purchase being considered just like for the original investment.

– The divestments of PSUs and the announcement of the LIC IPO may also open avenues for investors to invest and participate in some new offerings in equities.

– Individuals who are part of a start-up may find some solace that tax on the ESOPs they may have received has been deferred by 5 years or when they sell their shares or when they leave the company, whichever is earlier (start-up as in Sec 80-IAC).

– If you are using mutual funds as an investment vehicle, there is a tax deduction at source on income received in excess of Rs 5,000.

– With the change in dividend distribution tax rules, dividends will now be taxed in the hands of the recipient depending on his tax slab. Thus, investors who depend on dividend income from mutual funds may need to evaluate if they should consider the use of systematic withdrawal plans more carefully, using a growth option.

– The fiscal deficit numbers at 3.5% for FY 2021 and the government borrowing program should enable bond markets to settle down fairly quickly, though equity markets may continue to be concerned about the lack of stimulus measures to boost growth. However, we need to remember that the biggest boost to equity markets took place through the corporate tax rate
cut, and therefore whilst the benefits of that may take time to accrue, the Budget need not address all factors, as reforms and stimulus measures can also take place outside the Budget.

Thus, aspiring Indians need to focus on their own family budget rather than the Indian government’s budget.

Vishal Dhawan is a certified financial planner and founder of Plan Ahead Wealth Advisors, a SEBI registered investment advisory firm.

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

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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

Coming soon: International bullion exchange at IFSC in GIFT City

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

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The government on Saturday proposed to set up an international bullion exchange at IFSC in GIFT City, which will lead to better price discovery of gold, create more jobs and enhance India’s position in such market.

“With the approval of the regulator, GIFT City would set up an International Bullion Exchange(s) in GIFT-IFSC as an additional option for trade by global market participants,” finance minister Nirmala Sitharaman said while presenting the Budget for 2020-21.

This will enable India to enhance its position worldwide, create jobs, and will lead to better price discovery of gold, she added.

The country’s only International Financial Services Centre (IFSC) is in GIFT City near Ahmedabad in Gujarat. IFSC has the potential to become a centre of international finance and high-end data processing, the minister added.

It has 19 insurance entities and 40 banking entities. IFSC has also provided for setting up of precious metals testing laboratories and refining facilities.

This announcement is in line with Prime Minister Narendra Modi’s vision that GIFT City would become a price setter in some of the world’s largest traded instruments in the next 10 years.

“We welcome the announcement in today’s Union Budget on setting up of an International Bullion Exchange at GIFT IFSC,” said Tapan Ray, MD and Group CEO at GIFT City.

“Finance minister has re-emphasised the importance of GIFT IFSC as an emerging global financial services hub. The policy pronouncement regarding GIFT IFSC gives a tremendous boost to investor confidence both in India and abroad,” he added.

V Balasubramaniam, MD and CEO of India International Exchange said they are keen to set up the international bullion exchange at GIFT IFSC.

The finance minister said in recent years there has been a surge in trading volumes of the Indian rupee in the offshore financial centres. The government and the Reserve Bank have taken various measures to permit Rupee derivatives to be traded at IFSC.

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: CAA has not hurt business sentiment, affected foreign flows, says FM

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

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Union finance minister Nirmala Sitharaman said the controversial citizenship law has neither hurt business sentiment nor affected capital inflows in the country.

“The data in the last two-three months show that the (foreign fund) flow is continuing,” she said in an interview with Network 18 after presenting her second budget on Saturday.

“In fact, many of the sovereign funds have been enquiring with us as to where they can put their money. I have announced some concessions for them.”

The government said the Citizen Amendment Act is required to help members of persecuted religious minorities who fled to India before 2015 from Muslim-majority Afghanistan, Bangladesh and Pakistan.

But critics of the law who have been protesting across India say the law, and a proposed national register for citizens discriminates against Muslims and violates India secular constitution.

The law has received plenty of bad press in the international media.

Sitharaman said the CAA does a lot to give citizenship and not remove citizenship. “The CAA is something which suited all political parties when they were in power, they gave assurances but they didn’t fulfil it.”

The finance minister said the government has not taken up the law without taking the mandate of the people on it. “We have put it in our manifesto, many other parties have also put in their manifesto. We have gone to the public seeking vote inclusive of this point and we have got the mandate.”

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