Start Your SIP Now For A Better Future-The Total Investment & Insurance Solutions

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28^Th January 2017

BSL SIP (The Total Investment & Insurance Solutions)

GAAR(General Anti-Avoidance Rule )to become applicable from 2017-18: CBDT-The Total Investment & Insurance Solutions

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27 January 2017

In a bid to bring clarity in tax rules for foreign entities in India and their transactions, the government on Friday said the General Anti-Avoidance Rule (GAAR) to plug taxation loopholes, but yet recognise genuine players, will be applicable from 2017-18. The Total Investment & Insurance Solutions

"Stakeholders and industry associations had requested for clarification on implementation of GAAR provisions and a working group was constituted by Central Board of Direct Taxes (CBDT) to examine the issues raised," an official statement said.

"Accordingly, CBDT has issued the clarifications on implementation of GAAR provisions today." The Total Investment & Insurance Solutions

Among the provisions, if the jurisdiction of a foreign portfolio investor is finalised based on non-tax commercial considerations and the main purpose of the arrangement is not to obtain tax benefit, these rules will not apply. The Total Investment & Insurance Solutions

They will also not interplay with the right of the taxpayer to select the method of implementing a transaction. Further, grandfathering (or the application of old rules on certain transactions) will be available in investments made prior to April 1 this year. The Total Investment & Insurance Solutions

These include compulsorily convertible instruments, bonus issuess or stock splits, consolidation of holdings in respect of investments made prior in the hands of the of the same investor. 

"It has also been clarified that the adoption of anti-abuse rules in tax treaties may not be sufficient to address all tax avoidance strategies and the same are required to be tackled through domestic anti-avoidance rules," the statement said. The Total Investment & Insurance Solutions

GAAR was first proposed in 2010, targeting transactions made specifically to avoid taxes by companies such as Vodafone and Hutchison Essar. It applies to a company in case of abuse of treaty for gaining undue tax benefit. The Total Investment & Insurance Solutions

The rules are aimed at improving transparency in tax matters and help curb tax evasion.The Total Investment & Insurance Solutions

Witch hunt, says Mallya after Sebi ban on trading -The Total Investment & Insurance Solutions

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27 January 2017

After India's market regulator Sebi barred Vijay Mallya from trading in the securities market for allegedly diverting funds from the United Spirits Ltd (USL) in his capacity as its Chairman, the beleaguered businessman said on Thursday he is "getting used to these witch hunts". The Total Investment & Insurance Solutions

"I am kind of getting used to these witch hunts coming from all directions with no legal basis whatsoever. Shows what government machinery can do," Mallya tweeted. The Total Investment & Insurance Solutions

He said that the allegations of fund diversion out of the USL are "baseless".

"USL accounts were approved by top auditors, an eminent Board of Directors and shareholders...CBI alleges diversion of funds OUT of Kingfisher Air. Sebi alleges diversion of funds from USL into Kingfisher Air. What joke is this?" Mallya wrote.

"For 30 years I built the world's largest spirits company and India's largest brewing company. Also launched the finest airline. This is what I get?" he said.

He added that Kingfisher was a "great public utility service connecting India like never before".

"It was not my private toy," he said. The Total Investment & Insurance Solutions

India's market regulator, the Securities and Exchange Board of India (Sebi), on Wednesday barred Mallya and six officials of the USL from trading in the securities market with immediate effect.

They were "restrained from accessing the securities market and prohibited from buying, selling or otherwise dealing in securities in any manner whatsoever, either directly or indirectly" by Sebi.The Total Investment & Insurance Solutions

49% want taxes reduced to minimise demonetisation impact: Survey -The Total Investment & Insurance Solutions

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27 January 2017

Demonetisation (The Total Investment & Insurance Solutions)

Forty-nine percent of the more than 100,000 respondents in a survey ahead of the Union budget for 2017-18 said the government should reduce taxes to minimise the impact of demonetisation. The Total Investment & Insurance Solutions

Thiry-three per cent of the respondents in the survey, conducted by citizen engagement platform LocalCircles, said taxes on digital transactions should be dropped. The Total Investment & Insurance Solutions

On the question on what should be the top priority on relief in income tax for citizens, 55 per cent said that the minimum income to be taxed should be increased whereas 37 per cent said that income tax rates for individuals should be decreased. The Total Investment & Insurance Solutions

The poll was conducted across 200 districts of India and covered areas like income tax, government spending and allocation, Sawchh Bharat cess, startups, railways, pollution, healthcare and education.

The survey also said that 89 per cent of the citizens want the government expenditure on healthcare should increase to bring it at par with international standards, with 40 per cent saying that the investment should be used for improving infrastructure at existing government hospitals.

In another poll, 58 per cent said that government's top priority in education expenditure should be to improve governance and number of government schools whereas 32 per cent surveyed said that it should be used to improve infrastructure in existing government schools.

When asked about controlling the menace of pollution, 36 per cent of those surveyed said that they wanted the government to aggressively fund the public transportation system to reduce pollution. 

In an interesting response, 37 per cent of those surveyed said that the Rs 6,900 crore ($1 billion) collected through Swachh Bharat cess should be used to engage citizens and municipality in maintaining cleanliness, while 30 per cent said it should be used to build toilets and ensure their maintenance. 

According to 18 per cent of respondents said the money should be invested in municipal infrastructure, while 15 per cent voted in the favour of civic reforms and upgrades.

On the railways, 47 per cent of respondents wanted safety to be the top priority in 2017 and 24 per cent said wanted improved services and amenities. The Total Investment & Insurance Solutions

For 15 per cent, the priority was cleanliness and 14 per cent said the priority should be improving the on-time performance of trains.The Total Investment & Insurance Solutions

Demonetisation affected repayment of auto loans: Fitch Ratings-The Total Investment & Insurance Solutions

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27 January 2017

 

Fitch (The Total Investment & Insurance Solutions)

Global credit rating agency Fitch Ratings on Friday said repayment of Indian auto loans got affected by demonetisation and it would take a couple of months for collections to come back to normal levels. The Total Investment & Insurance Solutions

In a statement, Fitch said: "Demonetisation appears to have had a negative impact on Indian auto loan repayments, based on collection reports from Fitch-rated securitisation transactions."

"It is possible that collections will fall further in early 2017, and we believe it could take at least another two to three months for collections to return to normal," Fitch added.

According to Fitch, small auto loan borrowers have been affected the most but that would not impact credit ratings as there are sufficient external credit enhancement to cover the likely short-term impact on the lenders rated by it. The Total Investment & Insurance Solutions

Fitch said the cash shortage has affected used vehicle operators more than the new vehicle borrowers. The Total Investment & Insurance Solutions

Pools backed predominantly by used vehicle loans saw an average drop in collections of 130 basis points (bp) in November 2016. Those with a higher concentration of light and small commercial vehicles, which again have relatively weaker borrower credit profiles compared with medium and heavy vehicle owners, also dropped significantly by almost 200bp, Fitch said.

The collection of pools securitised in 2016 fell by an average 120bp compared with 80bp for pools securitised before 2016. The Total Investment & Insurance Solutions

More seasoned pools are on an average likely to have more experienced borrowers, with a stronger ability to meet their repayments. The Total Investment & Insurance Solutions

Furthermore, borrowers in seasoned pools will on an average have serviced their loans for longer and have higher equity than those in less seasoned pools, leading to a greater willingness to pay.

All Fitch-rated transactions are currently able to withstand a 30 per cent drop in collections for a minimum of eight months and an average of 22 months, the rating agency said.The Total Investment & Insurance Solutions

Bulls Take Charge? - Weekly Closing Report-The Total Investment & Insurance Solutions

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27 January 2017

I had mentioned in last week’s closing report that Nifty, Sensex were still in a bullish mode. Expectations from the upcoming Union Budget, along with global cues and domestic quarterly earnings results, lifted the Indian equity markets last week. For the week, the major indices have closed on a positive note with high gains. The trends of the major indices in the course of the week’s trading are given in the table below: The Total Investment & Insurance Solutions

Weekly Indices (The Total Investment & Insurance Solutions)

Indian equities markets traded on a flat-to-positive note during the mid-afternoon trade session on Monday, as rupee appreciation, coupled with hopes of positive incentives in the upcoming Union Budget and broadly positive Asian indices, kept investors' sentiments buoyed. Asian markets barring Nikkei traded flat-to-positive, but the domestic market witnessed profit booking as investors are in a wait and watch mode for the Union Budget, according to market analysts. The key indices traded marginally in the green, even as gains were capped by profit booking. Buying was witnessed in metal, oil and gas, and FMCG stocks. The Total Investment & Insurance Solutions

Rupee appreciation, coupled with positive Asian markets, lifted investors' sentiments on Tuesday. Buying was witnessed in the automobile, capital goods and oil and gas stocks and the trend lifted the key indices to trade with substantial gains. The BSE market breadth was tilted in favour of the bulls -- with 1,474 advances and 1,052 declines. The CNX Nifty maintained its morning gains and most of the sectors, barring FMCG, traded in the positive territory. The Indian rupee continued to hold on to its gain against the US dollar, whereas the US dollar index fell near its seven-week low as (President Donald) Trump formally withdrew the United States from the now 11-nation Pacific Rim Trans-Pacific Partnership (TPP), distancing America from its Asian allies. Looking at the market volume and rollover data, it seems there might not be heavy volatility tomorrow (on Wednesday) during F&O (futures and options) expiry, pointed out market analysts. The major indices of the Indian stock markets rallied on Tuesday and closed around 1% higher than Monday’s close. The Total Investment & Insurance Solutions

Indian equities were lifted during the mid-afternoon trade session on Wednesday as short-covering on the back of futures and options (F&O) expiry, coupled with positive Asian markets and hopes of incentives in the upcoming Union budget, cheered investors' sentiments. Besides, a marginally strong rupee and healthy quarterly results in finance and bank sectors added to the upward trajectory. Buying was witnessed in banking, capital goods and consumer durables stocks which boosted the key indices to trade with substantial gains of more than 0.50% each. The major indices of the Indian stock markets surged on a clear rally and closed with gains of 1.21%-1.5% over Tuesday’s close. NSE trading volumes were also on the higher side. The Total Investment & Insurance Solutions

The Indian markets remained closed Thursday on the occasion of Republic Day.

On Friday, the market sentiment was boosted by data showing that foreign funds made substantial purchases of Indian stocks on Wednesday, 25 January 2017. Sensex closed at 27,882.46 it’s highest since 30, October 2016. The key benchmarks extended the pre-Budget rally of the week’s three previous trading days. As per provisional data released by the stock exchange, the trading activity showed that the foreign portfolio investors (FPIs) bought shares worth a net Rs1,378.81 crore on Wednesday, 25 January 2017. On BSE, there were 1390 advances, 1394 declines and 79 unchanged. On the NSE, there were 779 advances, 790 declines and 52 unchanged at Friday’s close of trading hours. With Budget 2017 four days away, Nifty rallied 3.5% for the week, its highest weekly gain since May 27. The index has gained 6% in the year so far. The Total Investment & Insurance Solutions

Bring uniformity, transparency in budget numbers: SBI EcoFlash -The Total Investment & Insurance Solutions

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25 January 2017

Given the divergent figures on fiscal deficit being furnished by various agencies, notably the official audit office and the government, a think tank of India's largest lender has called for uniformity and transparency in budgetary reporting. The Total Investment & Insurance Solutions

"According to the financial audit report of the Comptroller and Auditor General (CAG), the fiscal deficit for 2015-16 was Rs 50,407 crore more than what the government has given in its revised estimates in the Union Budget for 2016-17," the SBI EcoFlash report said.

"Hence, fiscal deficit as a percentage of GDP in 2015-16 is 4.31 percent according to CAG, compared to 3.9 per cent estimated by the government in budget," said the report, compiled by State Bank of India's (SBI) research team, led by Group Chief Economic Advisor Soumya Kanti Ghosh.

It said audit figures remained within budgeted figures before 2005-06, and started reversing and became more pressing after that. It corrected itself in 2013-14 and the year after, but again slipped in 2015-16, with a significant departure. The Total Investment & Insurance Solutions

"Some of the possible reasons for this divergence is the lack of transparency in disclosure of receipts and expenditures. For example, during any year expenditures that need to fall under major heads are classified under the minor head," it said. The Total Investment & Insurance Solutions

"Another aspect of opaqueness is high degree of aggregation. This aspect has been brought forth by the 12th Finance Commission which has specified eight set of separate statements along with the budget."

The think tank said the governments continues the practice of using cash-flow based accounting, which makes the process difficult because its financial position at any given point and the changes that take place over time are not provided in the cash based system. The Total Investment & Insurance Solutions

"Government's liabilities such as accrued liabilities on interest payments due as also dues on account of pensions and superannuation benefits are not reflected. Current assets as well as non-financial assets are not tracked," it said. The Total Investment & Insurance Solutions

"Cash-based accounting leads to ambiguity, as tax revenues can be collected in excess during a period followed by high incidence of refunds. Payments can easily be deferred and passed on to future, and revenues due in the future could be compromised by providing for one-time receipts," it said.

"There may be thus enough reasons behind the two different numbers but Government should correct this to have a single figure across the agencies quoting this number."The Total Investment & Insurance Solutions

Tax cash transactions above Rs 50,000: CMs tell Modi-The Total Investment & Insurance Solutions

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25 January 2017

The government must tax cash transactions above Rs 50,000, abolish banks' interest on credit card transactions, give tax refund to consumers on digital payments and extend Rs 1,000 subsidy on smart phones to promote a less-cash, digital economy, a panel of Chief Ministers has said in a report. The Total Investment & Insurance Solutions

"To curb use of cash for large transactions consider a levy of banking cash transaction tax on transactions of Rs 50,000 and above. Consider a cap on maximum allowable limit of cash in all types of large size transactions," said the panel led by Andhra Pradesh Chief Minister N. Chandrababu Naidu. The Total Investment & Insurance Solutions

The interim report on promoting "Digital Payments" was submitted to Prime Minister Narendra Modi on Wednesday by Naidu and Chief Ministers of Madhya Pradesh Shivraj Singh Chouhan, Maharashtra Devendra Fadnavis and Sikkim Pawan Kumar Chamling.

Naidu later held a press conference to highlight the main points.

The report laid emphasis on the use of Aadhaar and said this unique identity number must be made the primary identity point for the "know your customer" (KYC) norms. It said the existing Aadhaar law can be applied towards this. The Total Investment & Insurance Solutions

The report sought to point out how low in rankings India stood in terms of pay points for digital transactions (like swipe machines with merchants) -- it is 1,080 per million people in India, 16,602 in China, 7,189 in Mexico, 25,241 in Brazil and 31,096 in Singapore.

Among its various recommendations, the panel said infrastructure must be provided for the 1,54,000 post offices by way of interoperable Aadhaar enabled micro-ATMs and subsidy of up to Rs 1,000 be extended on smart phones for non-income tax assesses or small merchants.

"All government sections like insurance, educational institutes, fertilisers, public distribution system and petroleum must switch to digital payments," it said. "Rural and urban cooperative banks should be on-boarded to digital transactions mode immediately."

In terms of Unique Identity Number, the panel said all payment banks and correspondents, besides post offices, must be interlinked to the Aadhaar-enabled payments system.

The panel said for the success of a digital economy, all stakeholders must be on board -- large financial institutions and telecom entities including regulators, with awareness creation entrusted with microfinance institutions, NGOs, cooperatives, state-run units and panchayati raj bodies.

As per the report, some of the constraints listed by the panel in the adoption of a digital economy includes attitudinal issues, hardware including payments acceptance infrastructure, data connectivity and cyber security. It said cash transactions were also cheaper than digital ones.

The high-powered panel was asked to suggest measures to enable all sections of the population to migrate to digital payments, and recommend measures to leapfrog to the advanced digital payment systems of global standards. The Total Investment & Insurance Solutions

It was constituted on November 30, last year after the government demonetised Rs 500 and Rs 1,000 notes.The Total Investment & Insurance Solutions

Home sales, prices will fall in 2017 on weak demand: Fitch-The Total Investment & Insurance Solutions

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25 January 2017

Homesale (The Total Investment & Insurance Solutions)

Property sales in India are expected to fall by at least 20%-30% in 2017, owing to disruption caused by demonetisation and general caution on the part of buyers. Homebuilders already have high levels of unsold inventory and are likely to cut selling prices as demand weakens, says Fitch Ratings. The Total Investment & Insurance Solutions

Talking about the fall in prices, Fitch says, "We expect home prices to decline this year because demand for residential property has weakened significantly in the fourth quarter of 2016, following the demonetisation of large denomination notes in November last year. Demonetisation has made it harder for home buyers to use undeclared wealth for property payments." The Total Investment & Insurance Solutions

Fitch says it expects the largest fall in sale prices in the National Capital Region (NCR), followed by Mumbai, where unsold inventory is the highest for 16 and 10 quarters, respectively, based on market estimates. The Total Investment & Insurance Solutions

"The NCR is also known to have the largest cash-based economy in the country, and therefore demand is likely to suffer more from the currency demonetisation than other regions. We expect demand for homes in Chennai and Pune to be less affected by the downturn, as unsold inventory is the lowest in these cities, at around six-seven quarters of sales," the report added.

According to the ratings agency, the worst of the downturn in home sales is likely to occur in the first half of 2017; demand is likely to recover moderately in the second half as the festive season approaches, and also because banks have cut interest rates on home loans by 50 basis points (bp) to 60bp, over the last 12 months, to multi-year lows. The Total Investment & Insurance Solutions

As per data compiled by Knight Frank Research, the number of residential property units sold in the fourth quarter of 2016 fell by 44%, dragging down overall units sold in 2016 by 9%. The volume of new units launched fell by 61%, the data shows.

The ratings agency says in a report, "We expect risks to homebuilders to rise further this year, with leverage likely to increase and liquidity to tighten. Homebuilders with access to diversified funding channels are likely to be more insulated from the downturn."

Top-tier homebuilders, such as Indiabulls Real Estate Ltd and Lodha Developers Pvt Ltd, whose sales benefit from their brand strength, have yet to start cutting home prices substantially. However, Fitch says it understands that smaller and second-tier homebuilders across the country have started offering discounts of around 25%-30% to attract buyers. 

Fitch continues to expect homebuilders that have a large pipeline of pre-sold projects, such as Indiabulls and Lodha, to be better off than those that do not. "However, even these homebuilders' credit profiles may weaken if demand does not recover for an extended period. Although property construction was hampered for a few weeks after the demonetisation announcement, we understand that most homebuilders have been able to work around practical issues related to making payments to suppliers and contractors, and that construction has since resumed," it concluded.The Total Investment & Insurance Solutions