Sitharaman's Budget missed deficit target for the third year in a row, pushing shortfall to 3.8 per cent of GDP in the current fiscal as compared to 3.3 per cent previously planned.
The reduced growth is largely because of consumption slowdown and tax rate cuts.
The mandatory use of the Indian flag on SCI's ships has been a bone of contention with prospective buyers, on account of the costs it will entail in terms of taxation and vessel registration.
Investors need to evaluate how they stack up against other high credit quality fixed-income options before putting money in them.
While the tax treatment does legitimise past crypto transactions, there is a possibility that any, or all, private cryptocurrencies will be banned in future.
A survey, with over 3,700 respondents across digital platforms, found that transparent taxation has been one of the most significant initiatives of the government followed by the production-linked incentives (PLI) scheme, equalisation levy and new labour codes.
The GoM is likely to submit an interim report to the Council on pruning the list of items that at present do not attract the levy.
Engineering Export Promotion Council (EEPC) of India has urged the Centre to extend lower corporate tax benefit to Limited Liability Partnerships (LLPs) and proprietary firms as it would make funds available with MSMEs and boost private investment cycle. A body of direct tax professionals also sought for reduction of tax burden on individuals and requested the government to raise the income tax exemption limit at Rs 2.5 lakh to Rs 4 lakh per annum in the upcoming budget for 2022-23 fiscal. EEPC India chairman Mahesh Desai claimed around 84 per cent of small businesses are being denied the benefit of lower corporate tax which was aimed at providing industrial units with more investible surplus.
Companies wanting to consider treaty benefits and deducting tax at a lower rate will have to examine the qualitative factors. They will have to consider whether FPIs are liable to tax and whether they are the beneficial owner of dividend income.
The government has set a direct tax collection target of Rs 13.35 trillion, which includes Rs 7.66 trillion from corporation tax and Rs 5.69 trillion from personal income tax.
Rishi Sunak on Monday is all set to make history on Diwali as Britain's first Indian-origin prime minister after being elected unopposed as the new leader of the governing Conservative Party, following Penny Mordaunt's withdrawal from the race.
The Goods and Services Tax (GST) Council, chaired by Union Finance Minister Nirmala Sitharaman, will likely consider on Saturday a GST rate cut for Covid-19 relief essentials and drugs for treating the black fungus disease and might leave the vaccines untouched. The meeting is being held following a report submitted by a Group of Ministers (GoM) to the GST Council on Monday. The GoM, set up by the Council on May 28, was mandated to look at tax exemption and concessions on various Covid items including vaccines, drugs, and equipment.
Ahead of the first meeting of the top decision-making body in nearly eight months, finance ministers of eight states ruled by non-Bharatiya Janata Party and like-minded parties -- Rajasthan, Punjab, Chhattisgarh, Tamil Nadu, Maharashtra, Jharkhand, Kerala and West Bengal -- have devised a joint strategy to press for a zero tax rate on Covid essentials, sources said.
Measures that quickly boost demand and increase employment are needed to push up growth. Moreover, without announcing new planss, the government should strengthen schemes such as PM KISAN, MNREGA and programmes to build rural roads.
Mihir Tanna, Associate Director, S K Patodia & Associates, answers your tax queries.
While the surcharge on super-rich would help garner additional income of around Rs 12,000 crore this fiscal on the direct tax side.
While she primed up spending on infrastructure to create jobs and boost economic activity, Sitharaman did not tinker with income tax slabs or tax rates. Her Budget for the fiscal year beginning April 2022 proposed a massive 35 per cent jump in capital expenditure to Rs 7.5 lakh crore, coupled with rationalisation of customs duty, an extension of time for setting up new manufacturing companies and plans for starting a digital currency and tax crypto assets.
Bihar Deputy Chief Minister Sushil Kumar Modi said, a hike in GST rates would have hampered consumption amid the economic slowdown. The revenue augmentation panel in the Council meeting recently recommended revisiting and restructuring the GST rate slabs, besides correcting the inverted duty structure. The panel listed 24 items, including mobile phones, footwear, fabrics, LED light, medical equipment, utensils, agri machinery, pharma, and renewable components, which have an inverted duty structure, resulting in refunds of close to Rs 20,000 crore annually.
Most taxpayers will benefit from being in the old tax regime, assuming they optimise their salary for tax benefits and claim the deductions available to them.
Before 2019, an estimated 22 million individual income-tax returns did not have to pay any taxes. But after the change in the exemption level, another 13 million individual tax returns did not require to pay taxes. Thus, of about 58 million returns, as much as 63 per cent or 35 million went out of the direct tax net, A K Bhattacharya points out.
The tax rate rises to 10 per cent, 15, per cent, 20 per cent and 25 per cent for every Rs 2.5 lakh addition. A 30 per cent tax is charged for income over Rs 15 lakh.
Companies in China, South Korea and Indonesia pay 25 per cent tax, while those in Malaysia pay 24 per cent. Only Japan has a higher tax than India at 30.6 per cent. Hong Kong has the lowest corporate tax rate of 16.5 per cent while Singapore has 17 per cent rate and Thailand and Vietnam levy 20 per cent tax on companies.
The GST Council had given the option to real estate companies to either opt for old rates of 12% (for residential) and 8 per cent (affordable housing) with ITC benefits or the new tax rates of 5% for residential units and 1% for affordable housing without the benefit of adjusting the credit on inputs used during construction.
The income tax department has also launched a faceless e-assessment scheme to eliminate interface between an assessing officer and a taxpayer.
The Budget has relaxed a few safe harbour rules that aim to make it easier for fund managers overseeing offshore India-focused funds to relocate to the country.
There have been complaints from consumers that the firm has increased the base price of products and then charged the lower GST rate, thereby keeping the MRP of products the same in pre and post tax rate cut.
Certain clarifications by the GST Council, such as tax rates on ice cream parlours and royalty paid to state governments over mineral rights, may turn out to be contentious and lead to litigation, feel some experts. The council, at its meeting in Lucknow on Friday, had clarified that ice cream parlours will attract goods and services tax (GST). The clarification said these parlours sell already manufactured ice cream and such supply would draw 18 per cent tax.
India's growth outlook has weakened sharply this year, with a crunch that started with the non-banking finance institutions spreading to retail businesses, car-makers, home sales and heavy industries.
The Xi Jinping regime might try to quell internal distress by directing nationalism and militarism against India, warn Ajay Shah and Gautam Bambawale.
Pranay Bhatia offers insights on some key issues from Nirmala Sitharaman's maiden Budget.
Levying buyback tax at a flat rate of 20 per cent (plus applicable surcharge and cess), irrespective of the period for which shares are held will be a dampener for equity shareholders who take inherent risks while investing, says Hitesh D Gajaria, partner and head of tax, KPMG in India.
The GST Council might on Friday consider taxing petrol, diesel and other petroleum products under the single national GST regime, a move that may require huge compromises by both central and state governments on the revenues they collect from taxing these products. The Council, which comprises central and state finance ministers, in its meeting scheduled in Lucknow on Friday, is also likely to consider extending the time for duty relief on COVID-19 essentials, according to sources in the know of the development. GST is being thought to be a solution for the problem of near-record high petrol and diesel rates in the country, as it would end the cascading effect of tax on tax (state VAT being levied not just on the cost of production but also on the excise duty charged by the Centre on such output).
'Tax cuts will have only marginal effects in the short run and significant positive effects in the medium term,' says Shankar Acharya, former chief economic adviser to the Government of India.
Cars and two-wheelers attract 28% GST and a cess in the range of 3-22%, taking the effective tax rate to up to 50%.
The Modi government is notoriously honest about one fact: It does not listen to economists, observes Shekhar Gupta.
Every option before the finance minister comes with a price tag, observes T N Ninan.
Even though option to invest as a company is available, many FPIs have chosen trust route to enjoy less tax or zero tax through tax havens such as the Cayman Islands and Luxembourg.
Finance Minister Nirmala Sitharaman is likely to strike a fine balance between being fiscally prudent and growth supportive when she presents her fourth straight budget on Tuesday, which is expected to have plans to boost spending to revive investment and create jobs. The Budget for the fiscal year starting April 1, 2022 is likely to raise spending on infrastructure to set the economy on a firmer footing. The stage for the Budget presentation was set by the Economic Survey stating that the government has the fiscal space to do more to support the economy that is forecast to grow at a healthy 8-8.5 per cent growth in the 2022-23 fiscal.
When you are in your 20s and early 30s, you have the biggest asset to your credit -- time. By starting to invest during the early stages of your career, you get a lot of time to research, learn, and achieve, advises Ayan Nagpal.
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