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Despite the volatility in the equity market, shares of brokerage firms that have diversified their business model have rallied handsomely in the past year. Shares of Motilal Oswal Financial Services, Edelweiss Financial Services and IIFL Holdings have all doubled in the past one year against the Sensex´s 23 per cent gain. These firms have benefited from the thematic rally in stocks of nonbanking financial companies (NBFCs) for most of last year. For these entities, broking activities are no longer the mainstay as they have diversified into lending, private wealth management, asset management and even insurance. For instance, the contribution of the capital markets business for IIFL in the overall profit pie (profit before tax or PBT) fell to 13 per cent in FY16 from 21 per cent in FY15, and further to eight per cent in the nine months ended December 2016. For Motilal Oswal Financial Services, revenues from the capital market business declined to 38 per cent in Q3 FY17 from 46...

Secondary adjustment provision in Budget FY18 could hit cash flow, dividend payout A new provision for secondary adjustment in transfer pricing, announced in the Union Budget for 201718, is likely to affect the cash flow of multinational corporations (MNCs) and the dividend distribution tax paid by their Indian subsidiaries. The provision has also sparked worry on Minimum Alternate Tax (MAT) and service tax payable by the subsidiaries, as well as retrospective implementation from 201314. Experts claim the provision is in line with the norms of the Organisation for Economic Cooperation and Development (OECD) —an international economic organisation with 35 member nations —but its wording is giving rise to apprehension. Transfer pricing is the setting of the price of goods or services sold byasubsidiary to the parent. Aprimary adjustment is made, byatax administration, toacompany´s taxable profits on transactions with an associated enterprise inasecondary jurisdiction. At presen...

With an aim to deepen the nascent commodity market, Sebi is likely to give mutual funds the go-ahead to trade in commodity markets in a month, while the regulator is also in talks with the RBI to allow institutional investors like banks and FPIs to trade in the segment. Mutual funds' participation in commodities derivatives would be the first one to happen among institutional investors," Securities and Exchange Board of India (Sebi) Chairman U K Sinha today said, and hinted that the move could be implemented in a month. Sinha, whose term as Sebi Chairman ends on March 1, was speaking to reporters on the sidelines of the regulator's international conference on commodity derivatives. On allowing participation of banks, alternative investment funds and foreign portfolio investors (FPIs) in commodities, he said Sebi is in active consultation with the Reserve Bank over the issue. "Our argument with RBI has been, in any case bank's have huge exposure to commodit...

The Employees´ Provident Fund Organisation has extended the deadline for its subscribers to submit Aadhaar number to March 31 from February 28. An order also said the deadline for submitting Aadhaarlinked digital life certificate has also been extended till March 31, 2017. PTI< President nod for wages via cheques or emode The central and state governments can now specify industrial units and other establishments which will have to pay wages either through cheques or by electronic transfors into workers´ bank accounts, according toanew law. President Pranab Mukherjee recently approved the Payment of Wages (Amendment) Act, 2017, an official order said. The Act enables employers to pay wages to workers through cheque or by transferring into their bank account without their written authorisation. Business Standard New Delhi,18th Februray 2017

The income tax department is "verifying" over Rs.4.5 lakh crore of suspicious deposits made by 1.8 million people after the note ban and will send ´nonstatutory´ letters to those who have not responded to its SMS and email queries seeking explanation. Business Standard New Delhi,18th February 2017

After thrashing out the contentious issue of administrative turf, Finance Minister Arun Jaitley is set to meet state finance ministers on Saturday for what could be the secondlast meeting of the Goods and Service Tax (GST) Council before the expected July 1 rollout of the new indirect tax system. On the agenda are the ratification of supporting pieces of the GST legislation andaproposed compensation law. Most of the contentious issues the council has been dealing with, including crossempowerment or dual control and rate slabs, have been dealt with in the previous meetings. The 10th meeting of the GST Council to be held at Udaipur would be crucial. The council´s consent to the draft integrated GST, central GST, and state GST Bills are required before the first two can be taken up in the Budget session. The Parliament session would reconvene on March 9. Each state´s legislature will also have to pass their own state GST laws. “The GST council meeting on Saturday could be the second...

Tax authorities are investigating Goods and Service Tax Network (GSTN) for possible service tax evasion. GSTN was floated to create the technology platform for combined indirect tax levy . CEO Prakash Kumar of GSTN, where banks and financial institutions are majority shareholders, was initially summoned by service tax superintendent with the books of accounts, details of funds received from the Centre as well as a copy of the agreement with Infosys, which is designing the system along with payments made to the IT major. An official, however, said that the “summon does not exist now“, indicating that the letter which had been issued last Saturday was withdrawn. “I have not received anything,“ GSTN CEO Prakash Kumar told TOI adding that the GST network operator had paid all taxes on time including service tax. Tax experts said GSTN was liable to pay service tax under the rules. “Though service provided by government is in negative list but service provided by a company to governm...

The Reserve Bank of India (RBI) has proposed that the merchant discount rate (MDR or charge) on debit card transactions be rationalised on the basis of turnover. Transactions up to Rs.2,000 do not attractacharge but this is to end on March 31. The central bank issued draft guidelines on its website that propose the MDR be “on the basis of merchant turnover, rather than present slabrate based on transaction value”. Besides, there should be differentiated MDR for the government and QRcode related transactions. Also, “there isaneed to differentiate MDR between acquiring infrastructure involving physical terminals, including mobile pointofsale, or mPOS, and digital acceptance infrastructure models such as QR code”. RBI proposes that whereamerchant is willing to pay upfront for the card acceptance infrastructure, the MDR has to be on the lower side. The draft proposes different categories of merchants, based on the categories proposed in the coming goods and services tax (GST). For example...

With an aim to boost digital payments, the government has said that all matters related to promotion of digital transactions will be handled by the ministry of electronics and information technology (Meity).According to an order issued by the Cabinet Secretariat, “Promotion of digital transactions including digital payments” has been delegated to the IT Ministry. On Thursday, President Pranab Mukherjee gave his approval to amend the ‘Government of India, Allocation of Business Rules, 1961’ to assign the new role of accelerating digital payments to the ministry. “Promotion of digital transactions including digital payments has been formally assigned under the purview of Meity. The digital payments mission is expected to be set up shortly by the ministry,” said an official from IT ministry, who did not wish to be named. The IT ministry is tasked with promotion of e-governance for empowering citizens, promoting inclusive and sustainable growth of the electronics and information technolo...

To make real estate and infrastructure investment trusts more attractive for investors, regulator Sebi has notified norms allowing mutual funds to invest their money in such entities. The move comes after Sebi in its board meeting in January permitted mutual funds to invest in real estate investment trusts (REITs) and infrastructure investment trusts (InvITs). A mutual fund is permitted to invest only up to 5% of its net asset value in units of a single issuer of alternative securities. The maximum allowed investment in alternative instruments by a single fund will be capped at 10%. The cap will not be applicable in the case of index fund or sector—or industry—specific scheme. “A mutual fund may invest in the units of REITs and InvITs... No mutual fund under all its schemes shall own more than 10% of units issued by a single issuer of REIT and InvIT,” Sebi said in a notification dated 15 February. The move is part of Sebi’s effort to get more number of investors into REITs and InvITs...

Capital markets regulator Securities and Exchange Board of India has allowed foreign investors to acquire shares through primary markets in depositories and clearing corporations. Prior to this, foreign investors could acquire shares of depositories and clearing corporations only through secondary market. The move comes at a time when Central Depository Services (India) Ltd is preparing to launch its initial public offering. Mint New Delhi,17th Febryary 2017