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As buyback gets taxing, IT companies may switch to dividends

Govt looks to plug a loophole in buybacks as these are not taxed like dividend payouts. 
Cash-rich Indian IT services companies may now offer more dividends to return cash to shareholders, against the recent norm of share buybacks that have become less attractive with the budget proposing to introduce a new tax.  “Buyback is the most efficient way to return capital in India because it was not taxed earlier. It also helps companies improve the value when they think the market is not fairly pricing the stock,” said V Balakrishnan, a former finance chief of InfosysNSE 0.27 %. “Suddenly you tax buyback, companies will shift to dividend because buyback comes with its own hassles.”Share buybacks by listed companies aren’t taxed currently, but there is a 15% tax on dividend payment. To discourage companies from using this loophole, the budget has proposed a 20% tax on the money spent on share buybacks. Technology services companies have been rewarding shareholders by buying back shares and is…
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I-T to allot PAN to those filing returns with only Aadhaar

CBDT chief says after the Budget proposals only biometric ID is enough for tax purposes
The assessing officer of the department will use his powers to allot PAN to an entity
New Delhi: The taxman will 'suo motu' allot a fresh PAN to a person who files tax returns with only Aadhaar as part of a new arrangement to link the two databases, the CBDT chief said after the Budget proposed that only the biometric ID is enough for tax purposes. The PAN (permanent account number) is "certainly not dead" and the recent Budget announcement of interchangeability of the two databases is an "additional facility" to ensure their linkage, which is now mandatory under the law, Central Board of Direct Taxes (CBDT), chairman, Pramod Chandra Mody, said. "In cases where Aadhaar is being quoted and PAN is not there, we could possibly think on the terms of allotting a PAN to the person (who is filing income tax return)," he told PTI in an interview. Mody was asked if the In…

Birthday Wishes: Industry Wants It Simpler and All-Encompassing

Next Growth Level Industry associations CII and Ficci call for a single central registration process against the current procedure at both the Centre and state levels. Indian industry bodies have pitched for a GST 2.0 with fewer slabs and more sectors including oil and gas, electricity and real estate with simpler registration and filing processes on the two-year anniversary of the introduction of the goods and services tax."GST 2.0 will take the Indian economy to the next growth level,” said Confederation of Indian Industry (CII) President Vikram Kirloskar. The industry also pressed to bring in all sectors under GST. “The most critical action would be to ensure ‘one nation, one tax’ by including all sectors under the ambit of GST,” said the Federation of Indian Chambers of Commerce and Industry (FICCI) .
The CII also echoed this calling for the inclusion of electricity, oil and gas, real estate and alcohol under GST “at the earliest” to allow for seamless availability of input tax…

RBI tweaks large exposure framework for banks; NBFCs to come under scrutiny

Central bank's move may make lending to NBFCs relatively streamlined Large exposure norms for banks were on Monday amended by the Reserve Bank of India (RBI). The move will make lending to non-banking financial companies (NBFC) more streamlined and invite scrutiny on the structure of these entities. The new framework, however, also makes it possible for government entities to borrow more, as they will not be considered part of a group of connected entities. The central bank introduced economic interdependence criteria in the definition of connected counterparties and said banks must check how the different parties in a group were invested in each other's assets. The RBI also excluded entities connected with the sovereign from the definition of group of connected parties. This means that government-backed entities can expect to get higher loans from banks, without inviting objections of the RBI. All banks, however, have board-approved policies on lending to various entities and d…

RBI data on bank frauds based on reporting year, not occurrence date: Govt

The ministry said proactive measures undertaken by the government in past few months have led to increase in detection and reporting of bank frauds The finance ministry on Tuesday said there has been no rise in bank frauds in recent years, and an RBI reply to an RTI query on the issue pertained to the year in which the frauds were reported and not the year when they occurred. The Reserve Bank of India (RBI) in an RTI reply had disclosed that over 6,800 cases of bank fraud involving an unprecedented Rs 71,500 crore were reported in 2018-19 as against a total of 5,916 such cases in 2017-18 involving Rs 41,167.03 crore. "The fact is that this data is by the year of reporting and not the year of occurrence of the fraud or sanction of loan, letter of undertaking etc, which in many cases is of an earlier period," the finance ministry said in a statement. The RBI data on frauds reported to it by banks has been cited in sections of the media to paint a picture of rising frauds in bank…

From 13,000-word monetary policy statements, RBI has become a lot clearer

That's more than the average length of a Masters thesis in economics and was before the adoption of inflation targeting in 2016 The Reserve Bank of India has come a long way from the days when monetary policy statements would average 13,000 words. That’s more than the average length of a Masters thesis in economics and was before the adoption of inflation targeting in 2016. Since then, the central bank has become briefer and less complex in its policy communication, according to a recent paper published by the Indira Gandhi Institute of Development Research in Mumbai. RBI statements have averaged 3,084 words in the post-inflation targeting regime, still pretty high if compared to the Federal Reserve’s average of 500 words, the paper’s authors, Aakriti Mathur and Rajeswari Sengupta, say. The readability of the RBI’s statements —based on the number of one syllable words in the text — has also improved. The researchers matched the policy communication against financial market performan…

Paper use, acceptance infrastructure need attention, says RBI report

The report said that the relatively high level of cash in circulation offers scope for a higher level of digitisation of payments The Reserve Bank of India (RBI) on Tuesday released a report on Benchmarking India’s Payments Systems, which provides a comparative position of the payments ecosystem in India relative to comparable payments systems and usage trends in other major economies. The study found that India has a strong regulatory system and robust large value and retail payments structure, which have contributed to the rapid growth in the volume of transactions. There has been substantial growth in e-payments by the Centre and in digital infrastructure, in terms of mobile networks. The report, however, notes that India is required to take further efforts to bring down the volume of paper clearing and increase acceptance infrastructure to enhance digital payments. This echoes the targets of the RBI’s Payments Vision Report 2021 and recommendations of the Nandan Nilekani deepening p…