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The central government is likely to keep the gross borrowing number on the higher side,considering the heavy redemption pressure in the next financial year. However,net borrowing couldbeatparwith thatinthisfinancialyear,say economists and bond dealers. In 2017-18,aboutRs.2.28 lakh crore of bonds are set to mature.The government borrowing programme will have to account for it.To avoid paying theentire amountat on ego,the government enters into arrangements with the Reserve Bank of India(RBI)or large institutions like insurance companiestoswapsomeofthe maturingbondswithdated papers,maturinginfiveto10 years.Thisiscalleda‘switch’. Theswitchdoesn’tdisturb themarket,asthegovernment buysthesefromthesecondary market and swaps it with longertenurebonds issuedtotheseinstitutions.Thistime,bond dealersexpectthegovernmenttoswitchat least~30,000-40,000 crore,tokeepredemption pressurelow. The gross borrowing number for the current financial year turned out tobe Rs.5.82lakh crore,afterthegovernm

Domestic hotel and tour aggregatorssuchasOYO Rooms, EaseMyTrip and MakeMyTripwereexpectingtax reliefintheBudgettobepresented on February 1. But the mood has turned sombre, with the finance ministry deciding to imposeservicetaxonwhatthey receivefromcustomersandnotjust thecommissionearnedfromhotels andothers. Inaquietmove,the Central Board of Excise and Customs has amended the service taxrules to clarify this because there was ambiguity on the point.The changed rules came into effect on January 22. The aggregators said their associations had taken up the matter with the ministry because this step would make the muncompetitive vis-à-vis international tour and travelplayerssuchasTravelocity, ExpediaandPriceline.com,which donotpayservicetaxinIndia. The rates of service tax depend on whether aggregat or soffer tour packages,hotelrooms,hotelrooms withfood,etc. The current practice is that most customers pay the entire amount to aggregators because the latter give discounts invarious

With the cash crunch situation easing,the Reserve Bank of India(RBI)may do away with the weekly with drawal limits from banks as well as ATMs by the end of next month, bankers said. The RBI had recently raised the ATM withdrawal limit to Rs.10,000 a day but maintained the weekly capat Rs.24,000 for saving account and Rs.1lakh for current accountholders. "I think there strictions on withdrawal by RBI should be completely lifted by February end or by first half of March as cash situation is easing gradually," Bank of Maharashtra ExecutiveDirectorRKGuptasaid. It is entirely RBIs decision and the central bank would decide after making holistic assessmentofthesituation,hesaid. According to SBIs research report Ecow rap, "By the end of February,78-88 percent of the currencycould be back in the system under the best cases cenariointerms of anoptimalcurrencydistribution(moresmalldenomination notes),"thereportsaid,addingthat"itseems withinthenexttwomonthsthingswouldbe

Budget may have incentives for leather & gems sectors, setting up of coastal employment zones The government is considering a comprehensive employment generation package for millions of youth that enter the workforce every year. This could lead to big-ticket announcements in the upcoming Union Budget on February 1, including incentives for employment generation in labour intensive sectors and a plan for setting up coastal employment zones that would directly link tax incentives to job creation, officials said. The proposals under consideration include incentives for creating jobs in sectors such as leather, electronics manufacturing, and gems and jewellery, on the lines of sops introduced for textiles last year. “The government is under pressure to speed up the process of job creation in the country because despite several efforts not many employment opportunities are opening up across sectors,“ said a senior government official, who did not wish to be identified. Several minis

Income from transfer of unlisted shares to be treated as capital gains & not as biz income even on transfer of control or mgmt Private equity (PE) and venture capital (VC) funds investing in startups have got a tax relief. Income from transfer of unlisted shares by them would now be treated as capital gains and not as business income even if there is transfer of control or a management change. A number of funds had received show cause notices from income-tax authorities on this issue, prompting a spate of representations from them as well as startups to the Central Board of Direct Taxes (CBDT). The relief is available to Sebi-registered Alternate Investment Fund (AIF), both category I and II. The board has now sent out a letter to the field saying this change in control or management should not be applied in case of such investments as AIFs typically invest in unlisted shares of ventures, many of which are startups, making some form of `control and management of underlying bu

Budget 2017-18 may turn out to be one of the most trend-setting Budgets to be presented by the National Democratic Alliance government. This is the first time that the Railway Budget has been merged with the Central Finance Budget and there is no distinction between Plan and nonPlan expenditure. This apart, the Budget would be presented on February 1, almost a month earlier than the usual date. Further, preceded by the historic move of demonetisation and expected to be followed by the path-breaking tax reform of goods and services tax (GST), this Budget carries high expectations for both consumers and business owners. With the conclusion of the GST Council’s last meeting, the tax reform’s journey towards realisation has progressed substantially. Resolution between the Centre and the states on the much-debated issue of sharing administrative control over taxpayers should also set the pace to reach the remaining milestones and for the government to roll out GST. The decision that

Fresh PoEM guidelines will affect pharma, energy, automobiles, manufacturing and software companies DILASHASETH New Delhi, 24 January The government on Tuesday issued guidelines to plug tax evasion by shell companies or foreign firms set by groups in India to retain income outside the country, dashing hopes of industry that implementation of these norms would be deferred to next year. The rules will affect companies in industries like pharmaceuticals, automobiles, energy, manufacturing and software. The guidelines have a few safeguards that were not present in draft norms issued in 2015 such as a collegium of officers to vet whether companies are to be taxed on the basis of their place of effective management (PoEM) and test of active business. However, experts warned even then there could be subjectivity in establishing PoEM. The rules outline companies incorporated overseas but with effective control of business and majority of board meeting in India will be considered a