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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 the

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

Budget 2018 needn’t be populist The finance minister will have more opportunities later in the year to woo voters by doling out freebies A view, currently shared by a large number of people, is that the Union government’s Budget for 2018-19 will be populist. The argument is that this will be the last full Budget of the Modi government in its current tenure. Hence, it will make sense for Finance Minister Arun Jaitley to dole out free bies and concessions in his final Budget in an attempt to woo voters Such assumptions are flawed, based as they are on an incomplete and outdated understanding of the factors that influence the making of the Budget. In fact, the dates of general elections in 2019 and the presentation of the final Budget of the Modi government are so far removed from each other that Jaitley should not be under any pressure to present a populist Budget next month. Instead, he could well unveil an array of schemes and proposals that he believes are necessary for the ec