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Overseas investors buying rupee bonds issued by Indian entities will not need to pay tax on their interest income, the government said on Monday, as it attempts to encourage capital inflows and support the rupee.  The Central Board of Direct Taxes (CBDT), the apex direct tax body, said in a statement that interest payable to a nonresident or a foreign company regarding offshore rupee bonds issued from Monday till 31 March 2019 will be exempt from tax, and hence, no tax will be deducted on interest payment at source.  The CBDT statement said legislative changes will be proposed in due course. NTPC Ltd and Housing Development Finance Corp Ltd have sold rupee bonds to raise funds from abroad.  It helps the borrower avoid currency risks which are borne by the investor.  The ongoing rupee depreciation has hurt industries using high quantities of imported raw materials.  The domestic price of auto fuel, which is linked to international dollar price of the commodit...

Company directors who have not authenticated themselves have written to the secretary to the Ministry of Corporate Affairs (MCA), seeking more time to complete the process.  They said the MCA 21 site was not working and because of that they could not complete their know your customer (KYC) norms.  The MCA is deactivating the registrations of 2 million directors because they did not update their KYCs.  In 60 days, 1.2 million directors have completed their KYCs. The remaining will be disqualified unless they update their KYC and pay a penalty to the ministry. There were 3.2 million active director identification numbers (DINs) with the Registrar of Companies. The ministry is planning to track down each director who has not completed his or her KYC. Stating that the ministry will not extend the time to update KYC, sources said it was the directors’ fault and not the ministry’s.  “If they have not done it, they deserve to pay a fine,” an official said, adding the sy...

Economists feel the government measure to address the current account deficit and rupee depreciation may improve sentiment and were just the limited response that was needed, but some felt they suggest panic on the part of the government.  The government on Friday announced a slew of measures to bring additional capital inflows of $8-10 billion to arrest rupee depreciation and address the underlying problem of high current account deficit.  “We view the government’s guarded response as appropriate because India’s macro fundamentals are in a much better shape today than in 2013 – higher growth, stable inflation and fiscal commitment - and do not necessitate a knee-jerk reaction,” Sonal Varma of Nomura said in a research note. Upasna Bhardwaj, senior economist at Kotak Mahindra Bank, was not sure how much capital flow will come from these measures but agreed that no panic reaction was needed.  “Though we need to be vigilant of rupee depreciation, there is no need to pre...

The rupee may retrace up to 3% of its lost ground by the end of the calendar year, helped by the five-pronged strategy that the government announced to prop up the free-falling local currency, market participants expect.  A majority of the respondents in an ET snap poll predicted the local unit to see some signs of gains this week following the announcement. But that could be short-lived, as they expect the rupee to swing both sides in a wide range through the year amid continuing global uncertainties, and even hit a new low.  A meltdown in the Turkish lira and Argentine peso is clouding the prospects of emerging market investment, with investors seeking safe-haven assets. Foreign investors pulled out more than ?49,000 crore since January from India’s equity and bond markets, even as the rupee lost about 11% to the dollar to be one of the worst performing emerging market currencies this year.  Overseas Investors Wait for Details,  The local currency hit a record ...

The government has started the process of de-activating the identification numbers of nearly 2.1 million directors of companies as they failed to comply with KYC norms, according to a senior official.  The Director Identification Numbers (DINs) -- a unique number allotted to individuals who are eligible to have directorship on the boards of registered companies -- are being de-activated. They will be re-activated after a fee payment of Rs 5,000 along with the requisite form and the individuals concerned might also face action. The latest move by the Corporate Affairs Ministry also comes at a time when the government has intensified the crack down on shell companies, which are suspected to be conduits for illicit fund flows.  In June, the ministry decided to carry out KYC (Know Your Customer) process for all directors, including those who have been disqualified. The last date for complying with the new norms by way of submitting form 'DIR-3 KYC' without fee ended on Septemb...

Securities and Exchange Board of India (Sebi) has directed the NSE to keep four senior officials, served show-cause notices (SCN) in the co-location case, out of action. Sources said these four key managerial personnel (KMP) will have to remain out of the bourse’s “sensitive” and “confidential” matters until the probe is complete. The move is to ensure a fair trial in the colo case, which is nearing conclusion.  “These KMP have also been directed to recuse themselves from key decisions of the NSE. Further, they have been told not to participate in any of the core activities,” said a regulatory official. Meanwhile, the NSE has filed another consent application with Sebi based on fresh SCNs served on July 4. Notices have also been served to about 20 individuals. These include Ravi Varanasi, the exchange’s chief of business development, and Suprabhat Lala, senior vice-president (regulatory and investor services cell).  Sebi had, in March, returned the NSE’s previous consent...

India’s antiprofiteering officials will look into complaints alleging that many consumer goods companies have not fully passed on a recent reduction in the goods and services tax on their products to consumers.  According to the complaints, some makers of refrigerators, televisions, washing machines and water heaters haven’t reduced the prices of their products to reflect the cut in GST to 18% from 28%. However, white goods companies said the entire benefit has been passed on. “We have received many complaints... These will be looked into as per the process,” said a senior official with the National Anti-Profiteering Authority, the government entity that ensures traders don’t realise unfair gains by charging high prices from consumers in the name of GST.  The GST Council, which administers the tax, cut the rate for a host of white goods to 18% from 28% on July 21. Companies were directed to affix stickers with the new prices on old stock to ensure that the tax cuts are pas...

Amidst Centre may be gradually adding gold equivalent to the sale of sovereign gold bonds, says an analyst  Rajesh Bhayani. The Reserve Bank of India (RBI) is becoming consistent in adding gold to its foreign currency reserves.  In July the central bank added 6.8 tonnes, the highest monthly accretion after 2009. This came at a time when the central bank spent more than $25 billion defending the falling rupee. After buying 200 tonnes from the International Monetary Fund in 2009, the RBI made its first token purchase in December last year with 300 kg and then added more than 2.2 tonnes in March this year.  In 2018-19, in four months, it added 12.7 tonnes, of which 11.2 tonnes was purchased in June and July, according to the data released by the World Gold Council.  Analysts tracking the international gold reserves say the RBI’s action shows it is buying gold and adding it to its reserves without disturbing markets. The need was felt because Russia, Turkey and even ...

A seemingly missing provision from the fine print in the amendments to the central GST law approved by Parliament in the monsoon session has led to a furore in the industry,  A seemingly missing provision from the fine print in the amendments to the central goods and services tax (GST) law approved by parliament in the monsoon session has led to a furore in the industry.  Tax practitioners say the latest changes deny carryforward of credit for cesses, as intended, but credit for service tax has also been done away with. A government official, however, played down the concerns saying the interpretation being drawn is erroneous. He told ET that the government will issue a clarification if it is so needed as the intent of the law is very clear.  The issue, experts say, stems from the retrospective amendment to Section 140 (1) of the CGST Act 2017 that empowers assessees to transition the closing balance of cenvat (central value added tax) credit in the erstwhile indirect...

DIVERSIFYING ITS ASSETS Investing in gold is a prudent treasury move by the central bank at a time of rising yields.  The Reserve Bank of India (RBI) has bought gold for the first time in nearly a decade, signalling that the metal could be in demand as a store of value when returns and capital values of fixed-income bonds are declining in a rising rate environment. The RBI added 8.46 metric tonnes of gold to its stock of holdings during the financial year 2017-18 that ended June 30, taking the level of gold reserves to 566.23 metric tonnes, according to its latest annual report.  It last bought 200 metric tonnes from the IMF to boost its reserves in November 2009.  Over the past nine years, the gold stock in RBI reserves was stable at 17.9 million troy ounce. But RBI has started adding to its stock since December 2017, data submitted to the IMF indicate. Stock of gold, as of June 30, amounted to 18.20 million troy ounce or equivalent to 566.23 metric tonnes, up from...

Officials said the tax department refunds Rs 750 bn in the first four months of the current financial year, half of what was refunded in the entire FY18. The government might be talking about the surge in filing of Income Tax returns till the August 31 deadline, but direct tax collection data available so far are unlikely to bring a loud cheer.  The numbers released by the Controller General of Accounts (CGA) on Friday revealed that direct tax collections grew by a meagre 6.6 per cent during April-July of the current financial year against the Budget target of 14.4 per cent for 2018-19. The growth was in comparison with the corresponding period of the last three years. Corporation taxes, in particular, disappointed the exchequer. These collections grew at just 0.57 per cent, the lowest in the first four months in at least seven years. Corporation taxes are budgeted to yield 10.15 per cent more revenues to the coffers at Rs 6,210 billion in FY2019 against Rs 5,637.45 billion in ...