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Cash deal limit may be reduced under PMLA Present limit of Rs 1 million to be lowered substantially to curb money laundering The Centre is planning to tighten the anti-money laundering rules pertaining to the “reporting and maintenance of record” by mandating reporting entities to furnish information of entities dealing in cash above a certain amount, a move to curb money laundering. Under the current Prevention of Money Laundering Act (PMLA) rules, such reporting is required for all cash transactions of value exceeding Rs 1 million, all cross-border wire transfers of more than Rs 500,000, and all purchase and sale of immovable property of Rs 5 million or more. Sources say the cash transaction limit could be reduced to as low as Rs 200,000.The reporting provisions under PMLA impose obligations on reporting entities like banks, financial institutions, and intermediaries such as stockbrokers to verify the identity of clients, maintain records, and furnish information to the finan...

Higher direct tax mop up gives govt fiscal relief A mid fiscal worries, the government has got some relief on the direct taxes front, primarily due to lower refunds.Direct tax collection rose 18.2 per cent till December last year.The target of direct tax collection growth was 15.7 per cent for this financial year, according to Budget Estimates. The collection (after refunds) rose to Rs 6.56 trillion till December.This represented 67 per cent of the Budget Estimates of Rs 9.8 trillion.The refunds stood at Rs 1.12 trillion, 23 per cent lower than last year´s Rs 1.38 trillion. The increase would give some leeway to the government, which faces the challenge of reining in its fiscal deficit at 3.2 per cent of gross domestic product (GDP) due to subdued goods and services tax (GST) collection, transfer of surplus by the Reserve Bank of India and telecom spectrum receipts.The government is looking atashortfall of about Rs 500 billion from these heads. The 23 per cent drop in refunds...

Benefits of AADHAAR  unclear: RBI researchers January 9 The benefits of Aadhaar, India´s biometrics based unique national identity system —the world´s largest —are unclear and the impact of direct benefit transfers it will be used to deliver to the poor is not studied enough,a  new study published by an arm of the Reserve Bank of India (RBI) has concluded. The paper, ´Biometric and Its Impact in India´, was part of Staff Papers series published in its October 2017 edition.It is written by SAnanth, an adjunct faculty at the Institute for Development and Research in Banking Technology (IDRBT), which was established by the RBI as an autonomous institute. Aadhaar is becoming central to India´s public policy with increasing number of programmes being linked to it.And its scope is constantly increasing.In the seven years following its introduction, 1.12 billion Indians or 88.2 per cent of the population have enrolled for Aadhaar, India Spend reported in March, 2017. Establ...

Direct tax collections rise 18.2% in April-December in breather for govt Direct tax collections soars 18.2% in the first nine months of FY18 to Rs 6.56 trillion, in a breather for the government struggling to meet the fiscal deficit target Direct tax collections grew by more than 18% in the first nine months of the fiscal year to two-thirds of the full-year target, providing a breather to the government as it struggles to contain the fiscal deficit. Government revenues have been under pressure due to a shortfall in revenue from the goods and services tax (GST), prompting it to announce additional borrowing of Rs 50,000 crore last month to fund spending in key sectors of the economy. Net direct tax collections in April-December rose 18.2% to Rs6.56 trillion, or 67% of the budgeted direct tax collection of Rs9.8 trillion for the full fiscal year ending March, the tax department said in a statement on Tuesday. This means the remaining one-third has to come in the last quarter of...

Middle class likely to get tax relief in upcoming Budget Middle class can hope for a big relief in 2018-19 Budget, which will also be the last regular Budget of the NDA government, as the finance ministry is contemplating to hike personal tax exemption limit and tweak the tax slabs, according to sources The proposals before the ministry is to hike the tax exemption limit from the existing  2,50,000 per annum to at least Rs 3,00,000 if not Rs 5,00,000, they said. Besides, the tinkering of tax slab is also being actively considered by the ministry to give substantial relief to middle income group, especially the salaried class, to help them tide over the impact of retail inflation, which has started inching up. In the last Budget, Finance Minister Arun Jaitley left the slabs unchanged but gave marginal relief to small tax payer by reducing the rate from 10 per cent to 5 per cent for individuals having annual income between Rs 2,50,000 and Rs 5,00,000. In the next Budget t...

Hedge fund tax rule sought by SEBI would boost demand Sebi is seeking “unit-based” taxation for products broadly classified as hedge funds as part of its proposals for the union budget , according to people in the know India’s market regulator has recommended new tax rules for alternative investment funds, people familiar with the matter said, a move that would boost the country’s fledgling hedge fund industry The Securities and Exchange Board of India (Sebi) is seeking “unit-based” taxation for products broadly classified as hedge funds as part of its proposals for the union budget due on 1 February, said the people, who asked not to be identified because the matter is confidential If approved, the designation would reduce fund managers’ administrative burdens and make the country’s equity hedge-fund investors eligible for capital-gains tax exemptions after one year, moving the rules more in line with those for mutual funds. Unfavourable tax treatment has been a key barrier to...

Govt notifies amendments to Companies Act The government on Monday notified amendments to the Companies Act 2013, aimed at making the insolvency process more effective The government on Monday notified amendments to the Companies Act 2013, aimed at making the insolvency process more effective. The Companies (Amendments) Act 2017, which received Parliament’s nod in the just-concluded winter session, have put restrictions on managerial remuneration when a company has defaulted in its dues. Companies, which have defaulted on their dues to financial institutions, will now require the prior approval of these creditors, besides approval in a general meeting in case the payment of managerial remuneration exceeds 11% of the net profits. Earlier, only the company’s prior approval in a general meeting was required.The amendments have also allowed issuance of shares at a discount to the creditors in cases where debt is converted into shares in pursuance of a resolution plan under the In...

Simplifying invoice matching process on GST Council agenda GST Council, comprising the Union finance minister and state finance ministers will meet on 18 January in New Delhi. Simplifying the invoice matching process to check tax evasion and the revenue leakages under the composition scheme will dominate discussions of the goods and services tax (GST) Council in its next meeting. The representative federal body comprising the Union finance minister and state finance ministers will meet on 18 January in New Delhi.The law committee of the council, which held meetings last week, has come up with suggestions to make the invoice matching process simpler, said a person familiar with the development. These could translate into doing away with the multiple return forms under GST by combining some forms, the person added.“The council will discuss how to resolve the issue of invoice matching and make it more simpler,” the person said. Invoice matching is key as the law is framed in a...

Budget may tweak tax norms for  listed stocks Short-term capital gains tax on equities may be extended to three years The finance ministry is considering extending the holding period for shortterm capital gains (STCG) tax on listed securities from one year to three years, bringing equities onapar with some other asset classes in tax treatment. This is among a number of measures for the capital markets that may be announced in the Union Budget for 201819.The STCG tax on stocks and mutual funds is 15 per cent at present.Listed securities held above a year do not attract any tax. The longterm capital gains (LTCG) tax on this asset class was removed in 2005, making India one of the most liberal stock market regimes. The STCG tax on other asset classes such as bonds, gold, and real estate is applied when the holding period is less than three years.There have been demands from a section of stakeholders that the LTCG tax on equities be reimposed. Budgetmakers, however, are of ...

Insolvency professionals divided over ban on resolution outsourcing The insolvency regulator’s move to ban outsourcing of resolution work is primarily targeted at insolvency professional entities (IPEs), some experts said. However, others said this step by the Insolvency and Bankruptcy Board of India (IBBI) would affect individual resolution professionals (RPs) as well. It is aimed at ensuring that only RPs chair the committee of creditors meeting. Otherwise, the worry was that someone from resolution entities and not an RP would conduct these. In its circular, IBBI had said resolution services cannot be outsourced by insolvency professionals. Sources say it had found that heads of IPEs were chairing the committee of creditors meetings. Insolvency professionals who had taken up the project of reviving the company concerned are supposed to do so. umant Batra, managing partner at Kesar Dass B and Associates, says, “The outsourcing part of the circular might be targeted at those i...

Shrinking footprints of foreign banks in India Foreign banks are increasingly shrinking their presence in India and are also becoming more conservative than private and public sector counterparts. While many of them have sold some of their businesses in India as part of their global strategy, some are trying to keep their core expertise intact. Others are branching out to newer areas to continue business momentum.For example, HSBC and Barclays Bank in India have got out of the retail business, whereas corporate-focused Standard Chartered Bank is now trying to increase its focus on retail “Building a retail franchise is a huge exercise and takes a long time. You cannot afford to lose it,” said Shashank Joshi, Bank of Tokyo-Mitsubishi UFJ’s India head.According to the Reserve Bank of India (RBI) data, foreign banks’ combined loan book shrunk nearly 10 per cent from Rs 3.78 trillion in fiscal 2015-16 to Rs 3.42 trillion last financial year. The banking industry, which includes for...