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The Securities and Exchange Board of India (Sebi) has told the government that recent budget proposals could undermine its role as regulator, particularly with respect to the recommendation that the minimum public shareholding be raised to 35 per cent from 25 per cent. Already, government-owned companies are laggards in raising this level to the current 25 per cent norm, said a senior Sebi official.   “Going forward, this has to go up from 25 per cent to 35 per cent and ensuring compliance would be greatly impacted particularly from PSUs as Sebi has to depend on government for funding,” the official said. FM Nirmala Sitharaman’s July 5 budget proposals require the regulator to transfer its surplus funds to the Consolidated Fund of India (CFI). It will also need prior government approval for its annual capital expenditure plans, she has proposed.   That could lead to a conflict of interest with respect to the regulator having to enforce the shareholding cap and PSUs being unable to me

An increase in the effective tax rate will affect only high net-worth individuals, and according to government policy they should contribute more to nation building, the finance minister said  The controversial super-rich tax on foreign portfolio investors (FPIs) that are organised as trusts will stay undiluted as Parliament passed the Finance Bill, 2019, on Thursday.  Replying to a debate on the Bill in the house, Finance Minister Nirmala Sitharaman dismissed the argument of the Opposition that the tax would lead to a flight of FPIs.  “It will have an impact on FPIs registered as trusts. There is an option for FPIs to register as companies. If they are registered as companies, they don't have a problem with this new tax,” Sitharaman said.  She said a trust was treated as an individual entity and came under the tax.  She recalled finance ministry officials had been saying that FPIs registered as trusts might consider the option of dressing up as companies. An increase in the effe

Govt looks to plug a loophole in buybacks as these are not taxed like dividend payouts.  Cash-rich Indian IT services companies may now offer more dividends to return cash to shareholders, against the recent norm of share buybacks that have become less attractive with the budget proposing to introduce a new tax.   “Buyback is the most efficient way to return capital in India because it was not taxed earlier. It also helps companies improve the value when they think the market is not fairly pricing the stock,” said V Balakrishnan, a former finance chief of InfosysNSE 0.27 %. “Suddenly you tax buyback, companies will shift to dividend because buyback comes with its own hassles.” Share buybacks by listed companies aren’t taxed currently, but there is a 15% tax on dividend payment. To discourage companies from using this loophole, the budget has proposed a 20% tax on the money spent on share buybacks. Technology services companies have been rewarding shareholders by buying back share

CBDT chief says after the Budget proposals only biometric ID is enough for tax purposes The assessing officer of the department will use his powers to allot PAN to an entity New Delhi: The taxman will 'suo motu' allot a fresh PAN to a person who files tax returns with only Aadhaar as part of a new arrangement to link the two databases, the CBDT chief said after the Budget proposed that only the biometric ID is enough for tax purposes. The PAN (permanent account number) is "certainly not dead" and the recent Budget announcement of interchangeability of the two databases is an "additional facility" to ensure their linkage, which is now mandatory under the law, Central Board of Direct Taxes (CBDT), chairman, Pramod Chandra Mody, said. "In cases where Aadhaar is being quoted and PAN is not there, we could possibly think on the terms of allotting a PAN to the person (who is filing income tax return)," he told PTI in an interview. Mody was aske

Next Growth Level Industry associations CII and Ficci call for a single central registration process against the current procedure at both the Centre and state levels. Indian industry bodies have pitched for a GST 2.0 with fewer slabs and more sectors including oil and gas, electricity and real estate with simpler registration and filing processes on the two-year anniversary of the introduction of the goods and services tax."GST 2.0 will take the Indian economy to the next growth level,” said Confederation of Indian Industry (CII) President Vikram Kirloskar. The industry also pressed to bring in all sectors under GST. “The most critical action would be to ensure ‘one nation, one tax’ by including all sectors under the ambit of GST,” said the Federation of Indian Chambers of Commerce and Industry (FICCI) . The CII also echoed this calling for the inclusion of electricity, oil and gas, real estate and alcohol under GST “at the earliest” to allow for seamless availability of

Central bank's move may make lending to NBFCs relatively streamlined Large exposure norms for banks were on Monday amended by the Reserve Bank of India (RBI). The move will make lending to non-banking financial companies (NBFC) more streamlined and invite scrutiny on the structure of these entities.  The new framework, however, also makes it possible for government entities to borrow more, as they will not be considered part of a group of connected entities.  The central bank introduced economic interdependence criteria in the definition of connected counterparties and said banks must check how the different parties in a group were invested in each other's assets. The RBI also excluded entities connected with the sovereign from the definition of group of connected parties. This means that government-backed entities can expect to get higher loans from banks, without inviting objections of the RBI. All banks, however, have board-approved policies on lending to various entit

The ministry said proactive measures undertaken by the government in past few months have led to increase in detection and reporting of bank frauds The finance ministry on Tuesday said there has been no rise in bank frauds in recent years, and an RBI reply to an RTI query on the issue pertained to the year in which the frauds were reported and not the year when they occurred.  The Reserve Bank of India (RBI) in an RTI reply had disclosed that over 6,800 cases of bank fraud involving an unprecedented Rs 71,500 crore were reported in 2018-19 as against a total of 5,916 such cases in 2017-18 involving Rs 41,167.03 crore.  "The fact is that this data is by the year of reporting and not the year of occurrence of the fraud or sanction of loan, letter of undertaking etc, which in many cases is of an earlier period," the finance ministry said in a statement. The RBI data on frauds reported to it by banks has been cited in sections of the media to paint a picture of rising fraud