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Showing posts from March 22, 2017

Sebi wants MFs to adopt tougher benchmarks

The Securities and Exchange Board of India (Sebi) is evaluating the category of benchmarks being currently used to compare the returns of mutual fund (MF) schemes. The net asset value (NAV) of MF schemes takes into account dividends for computing returns. The schemes are, however, benchmarked against “price return" indices that do not take into consideration the dividend component. On an average, the dividend yield for Indian equities works out to 1.25-2 per cent for a year. In other words, dividend yields can add anywhere between 1.25 per cent and two per cent to the returns of MF schemes
“The NAV of schemes takes into consideration the valuation of the security as well as the dividend. So the NAV that comes out is a ‘total return’ NAV. The benchmark indices that are available are all ‘price’ indices. We need to move in a direction where there is a like-to-like comparison," said a Sebi official.
Total return benchmark indices assume that any cash distribution, such as dividend,…

Govt Considers 100% FDI in Insurance Broking

The government is considering allowing 100% foreign direct investment in insurance broking with a view to giving a boost to the sector and attracting more funds.The FDI policy, at present, allows 49% foreign investment in the insurance sector that encompasses insurance broking, insurance companies, third party administrators, surveyors and loss assessors as defined by DIPP. An official said representations have been made to the government that insurance brokers should be treated at par with other financial services intermediaries, where 100% FDI is permitted. The Economic Times New Delhi,22th March 2017

GST casts shadow on state Budgets

With the goods and services tax (GST) set to be rolled out from July 1, states have not made many changes in the indirect tax structure in their Budgets for 201718, assuming that adequate compensation would be provided to them for any shortfall in revenue receipts on this count,arecent study suggests.

The Union Cabinet on Monday gave its nod to four of the five Bills approved by the GST Council.

The Central GST, Union Territory GST, Integrated GST and Compensation Bills will now be tabled as money Bills in Parliament this week, which will do away with the need to get the nod of the Rajya Sabha where the ruling National Democratic Alliance does not haveamajority.

The Council has approved four rates —five per cent, 12 per cent, 18 per cent and 28 per cent.

Over the peak rate of 28 per cent,acess will be imposed on sin and luxury goods, as well as on coal. Money collected from the cess would go to states as compensation.

The Centre has agreed to give full compensation to states for the first …

Aadhaar to be must for IT returns

The NDA government has proposed to make Aadhaar mandatory for individuals to apply for a PAN (Permanent Account Number) card and file income tax returns from July 1 this year. Finance, Defence and Corporate Affairs Minister Arun Jaitley moved an amendment, to this effect, in the draft Finance Bill 2017 that was taken up by the Lok Sabha on Tuesday. Earlier this week, the Centre made it mandatory for beneficiaries to quote their Aadhaar number to avail themselves of benefits under the Pradhan Mantri Kaushal Vikas Yojana for skill development, and the Self Employment Scheme for Rehabilitation of Manual Scavengers. The Centre had identified 31 schemes in which the Aadhaar could be made mandatory. Notifications have been issued in recent months by departments to make Aadhaar compulsory for getting subsidised foodgrains under the National Food Security Act, jobs under the MGNREGA and pension benefits under the Employees’ Pension Scheme. The Hindu Business Standard New Delhi,22th March 2017

Start ups, NBFCs seek exemption from debt norms

As the Finance Bill came up for debate in the Lok Sabha on Tuesday, startups and some nonbanking financial companies (NBFCs) demanded an exemption fromaprovision of the draft legislation. According to the provision, income tax deduction is denied to those companies whose interest payment on overseas debt to associated enterprises exceeded 30 per cent of their earnings before interest, taxes, depreciation and amortisation (Ebitda).

Banks and insurance companies have already been exempted from the Budget proposal, technically calledaprovision on thin capital incorporated in the Bill following an action plan by the Organisation for Economic Cooperation and Development (OECD) on Base Erosion and Profit Shifting (BEPS).

Eric Mehta, partnertransfer pricing, Price Waterhouse, said startups should be given exemption from this proposal as they have very low Ebitda in the initial years.

Also, NBFCs should be out of this, in line with banking and insurance companies, he said.

Sanjay Agarwal, managing…

Cash transaction limit lowered to Rs.2 lakh

The Rs.3lakh limit proposed for cash payments in the Budget for 201718 would be brought down to Rs.2 lakh as part of an unprecedented 40 amendments to the Finance Bill. Finance Minister Arun Jaitley moved the amendments in the lower House on Tuesday. This is aimed at tightening the noose on those dealing in cash.

Most other amendments —making Aadhaar mandatory for filing tax returns, applying for permanent account numbers (PAN) and allowing payments by only noncash modes such as cheques, bank drafts or electronic transfers for electoral trusts —are also aimed at curbing black money.

Afew are aimed at rationalising tribunals by merging these to reduce the number to 12 from 40.

The amendment related to reducing the cap on cash transactions comes amidst reports that digital transactions had declined afteraspurt after demonetisation.

“In the amendment to the Finance Bill, the government has proposed the limit of Rs.3 lakh for cash transactions be reduced to  Rs.2 lakh,” Revenue Secretary Hasmuk…