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FM Seeks to bring digital firms under the tax net The government has sought to bring the digital economy into the tax net with a proposal to this effect in Thursday’s Union Budget.The proposal seeks to tax profits made by digital firms in India using the concept of significant economic presence. Analysts point out that this could apply to all online advertisements, online searches, cloud services and other digital products and ensure that profits of these firms attributable to Indian users is taxed in India. This could bring firms like Google, Facebook and Netflix with huge consumer bases in India into the tax net. Messages sent to Facebook, Google and Netflix remained unanswered till press time.To be sure, firms based in countries having double taxation avoidance agreements with India will be protected. Also, the provision will kick in only at a threshold that will be notified later. Significant economic presence has been defined in the finance bill as “any transaction in re...

Arun Jaitley raises rates to boost Make in India In his Budget speech, Finance Minister Arun Jaitley said there was potential for domestic value addition in certain sectors The government is hoping to garner Rs 60 billion by raising import duties on about 50 items — ranging from phones and TV parts to juices and edible oil — in the Budget for 2018-19. The customs duty hike in the range of 5 to 10 percentage points is aimed to encourage local manufacturing under the government’s flagship Make in India programme launched in 2014. This is the second hike in two months by the government, as it aims to achieve twin objective of boosting domestic manufacturing and garnering additional revenue amid floundering goods and services tax (GST) collections. There is a Rs 500 billion shortfall in GST revenue for Centre in the current fiscal. The customs duty on mobile phones was increased from 15 to 20 per cent, while that on parts of LCD and LED panels of televisions has been doubled to 1...

FM  Shuns Ambitious  Targets For FY 19 Having set an ambitious target in 201718, the government seems to have turned realistic on garnering non-tax revenues for 201819. On the revenue side,a slippage in projected non-tax revenues collections was the major factor for the government exceeding by 0.3 percentage points the fiscal deficit target set under the fiscal consolidation road map for 201819. The 13.5 per cent shortfall in nontax revenue collections (over the Budget Estimates) has occurred in FY18 despite the fact that the Reserve Bank of India (RBI) transferred an additional Rs100 billion to the government.In all, RBI has transferred surpluses of RS  406.59 billion (Rs 306.59 had been transferred earlier), which was, however, lower than the Rs 600 billion projected in the Budget Estimates (BE). As a result, the government projected a modest rise ofa3.8 per cent (Rs 2.45 trillion) in non tax revenues for 2018-19 even on the lower base of RE of 201718. If t...

GOVERNMENT SET TO REAP Rs  1 TRN THIS YEAR The Centre is set to garner its highest ever proceeds of Rs  1 trillion through divestment of state owned entities in 201718, compared to a budgeted estimate of RS 725 billion. And, for 2018-19, Finance Minister Arun Jaitley has setatarget of RS 800 billion for the Department of Investment and Public Asset Management (DIPAM).The revised estimates of Rs 1 trillion is around RS 110 billion more than the disinvestment proceeds of the previous two fiscal years put together. The centrepieces are, of course, the acquisition of HPCL´s 51 per cent stake by ONGC for Rs 369 billion and the launch of the Bharat 22 exchange traded fund (ETF) for Rs 145 billion.The finance minister also said that DIPAM will launch a debt focused ETF in the coming fiscal “The government has approved[the] listing of 14 CPSEs (central public sector enterprises), including two insurance companies, on the stock exchanges.The government has also initiated the ...

Budget will strengthen ´ new India´ vision: Modi Terming the Union Budget for 201819 “development friendly”, Prime Minister Narendra Modi said on Thursday it had focused on the needs of rural areas and would strengthen the vision ofa ´new India´ Modi said the Budget had devoted attention to all sectors, ranging from agriculture to infrastructure, and was “farmer friendly, common citizen friendly, business environment friendly, and development friendly”.On MSME sector The Prime Minister said the government would soon announce concrete steps to address the non-performing asset and stress account issues for the micro, small &medium enterprises (MSME) sector. “For a long time, MSMEs faced a lot of burden on the tax front.In this Budget, we have also reduced the corporate taxes that MSMEs owe. Now, they have to pay only 25 per cent tax instead of 30 per cent,” he said. On ´Ayushman Bharat´ scheme Modi said the Ayushman Bharat scheme would allow the poor to receive up to RS 500,0...

Defence budget increases 8 percent, unlikely to cover rise in cost The 2018-19 Budget has raised defence allocations from the current year´s revised estimate of Rs 3.74 trillion to Rs 4.04 trillion, an increase of Rs 303.61 billion, or 8.1 per cent, which, analysts say, is insufficient to even cover year on year inflation in manpower and equipment costs. These figures include all government expenditure on defence, such as allocations to the ministry, defence pension, revenue and capital expenditure, research and development (R&D), and production.The defence ministry, for reasons unclear, excludes pension from the Budget figures. While military planners would be dissatisfied with the small overall increase, the silver lining is the expenditure of the entire capital budget this year without surrendering billions of rupees, as the military did the previous two years. However, the increase in capital allocations, which have risen from Rs 0.91 trillion in the current year to R...

GST hurdle: E way bill put on hold The government on Thursday deferred the electronic way (eway) bill indefinitely on the first day of countrywide rollout as consignments faced delays.Businesses faced disruptions after the portal stopped functioning from around noon, causing wide spread confusion. Companies were seen approaching the National Informatics Centre (NIC), which is developing the e-way portal, with a flood of complaints over the past couple of days. “In view of difficulties faced by the trade in generating eway bill due to initial tech glitches, it has been decided to extend the trial phase for generation of e-waybill, both for inter and intrastate movement of goods,´´ GST@GoI, the official government handle, posted on Thursday evening. The new rollout date will be announced later.The NIC has sought 15 days to fix the problems. E-way bill will help the central and state tax authorities track interstate and intrastate movements of goods that are part of consignments o...