QBiz: Budget to Focus on Direct Taxes; GST E-Way Bill to Go Live

Here is a roundup of the top business stories of the day.

Finance Minister Arun Jaitley will present the Budget for the financial year 2018-19 on 1 February in the Parliament.

(Photo: The Quint)

1. Budget Expected to Focus on Direct Taxes

While there are unlikely to be any major changes in indirect tax as most of them are now under the purview of the Goods and Services Tax Council, Budget 2018 could have several positive changes on the direct tax side, according to analysts.

However, the key consideration while reducing direct taxes, either for individuals or corporates, would be to ensure that the changes don’t reduce government revenue too much, as there is already the possibility of overshooting the fiscal deficit target.

“One of the things I have been reading is that the Budget could introduce a standard deduction for salary payers,” Parizad Sirwalla, Partner and Head, Global Mobility Services – Tax, at KPMG told The Hindu.

“The other thing that could change is the medical reimbursement limit of Rs 15,000, which is an archaic limit. So that could go up. The last thing is that the income tax slabs could be tweaked.”

Sirwalla also said there is a chance the government may introduce a long term capital gains tax on equity shares, or may remove the dividend distribution tax. There could be some changes on the corporate tax front as well, according to analysts, but they added that the government will be careful with these in order to minimise the impact on the exchequer.

(Source: The Hindu)

2. GST E-Way Bill to Go Live on Budget Day, Industry Fears Disruption

The e-way bill, key to preventing tax evasion under the goods and services tax (GST), will be rolled out nationwide from Thursday, the day Finance Minister Arun Jaitley will present the Union Budget 2018, amid persistent concerns in some quarters that its enforcement could trigger fresh economic disruption.

The GST e-way bill, an electronic documentation tracking the movement of goods, is mandatory for all inter-state movement of goods from 1 February. It is designed to prevent underreporting and evasion of taxes.

The e-way bill is a key part of the GST architecture. It was put on hold until after GST, which was implemented from 1 July, stabilised. Over 2.84 million GST e-way bills have been generated in the trial phase so far.

“We rolled out the e-way bill system for all states from 17 January. Given the experience so far of the last two weeks, we are optimistic that the rollout will be smooth,” said Prakash Kumar, chief executive officer of the Goods and Services Tax Network (GSTN).

(Source: Livemint)

3. BSE Sensex, Nifty Post Best One-Month Pre-Budget Rally in 13 Years

Indian stock markets have posted their best one-month pre-Budget gain in 13 years. Benchmark indices have gained 5.6% in the month to Thursday’s Union Budget 2018, riding the coat-tails of a worldwide equities rally.

Abundant liquidity and expectations that the budget will boost the rural economy and revive private investment, without compromising on fiscal prudence, have aided the run-up.

The one-month gain has come despite a pullback in the last two sessions following a sell-off in US and Asian markets over valuation concerns. On Wednesday, the Sensex fell 68.71 points, or 0.19 percent, to close at 35,965.02. Since 2000, the index has gained only eight times in the month leading up to the Budget presentation, and rose as much as 11.7 percent in the run-up in 2002.

Analysts said investors have high hopes of the government reviving investment and growth in the last full Budget before next year’s general election.

(Source: Livemint)

4. Facebook Shares Slip Despite Jump in Earnings

Facebook today reported earnings that handily beat expectations, but shares slumped as it outlined changes expected to curb the amount of time people spend on the world's biggest social network.

Facebook said that profit in the three months of last year climbed 20 percent to USD 4.26 billion as ad revenue and ranks of members grew.

Revenue in the quarter leapt 47 percent to nearly USD 13 billion, but expenses also rose as its ranks of employees growing by the same percentage to finish the year at 25,105 workers.

Facebook said the number of monthly active users hit 2.13 billion in the past quarter, up 14 percent from a year ago.

Facebook shares fell more than four percent to USD 177.92 in after-market trades that followed release of the earnings figures.

(Source: PTI)

5. FPIs Infuse More Than $1 Billion in Indian Debt in 2 Weeks

Foreign portfolio investors (FPIs), including large sovereign wealth funds, have bought heavily into Indian bonds over the last two weeks, ignoring the sharp decline in bond prices.

The second half of January witnessed considerable volatility in the bond market, driven by multiple newsflow, be it the Reserve Bank of India (RBI) deputy governor Viral Acharya’s comments on interest rate risk of banks or chief economic advisor Arvind Subramanian’s take on the monetary policy when speaking on the Economic Survey.

However, this was the time when FPIs played contrarian, buying over a billion dollars (on a net basis) of Indian bonds – a period when the benchmark yield rose 21 basis points to 7.43 percent.

In 2018, so far, foreign investors have infused $1.35 billion whereas in the same period last year FPIs were net sellers of Indian debt, having sold $409.47 million.

(Source: Financial Express)

6. Domestic Loan Growth Will Continue to Be Above 15%, Says Chanda Kochhar

ICICI Bank on Wednesday reported a 32 percent year-on-year (y-o-y) rise in provisions in Q3 FY18. In an interaction with reporters, the bank’s MD and CEO Chanda Kochhar said provisions will remain at an elevated level because the bank still has to make provisions for the next round of NCLT cases and for ageing as well.

The annual risk-based supervision of the bank by the Reserve Bank of India (RBI) for FY17 concluded during the quarter. The observations regarding the asset classification and provision do not require additional disclosure in terms of the RBI circular. They were below the threshold by the central bank, which is 15 percent.

(Source: Financial Express)

7. Microsoft Reports Loss Due to Tax Charge

Microsoft on Thursday reported a hefty loss in the past quarter, as it set aside billions of dollars for taxes on profits it expects to bring back to the United States following passage of a major tax overhaul.

The technology giant said its loss for the quarter to 31 December was USD 6.3 billion – as it took a charge of USD 13.8 billion to pay its taxes.

Revenue for Microsoft's fiscal second quarter rose 12 percent to USD 28.9 billion as it saw gains in business services and cloud computing.

"This quarter's results speak to the differentiated value we are delivering to customers across our productivity solutions and as the hybrid cloud provider of choice," said Microsoft CEO Satya Nadella.

"Our investments in IoT, data, and AI services position us to further accelerate growth." Microsoft shares rose 2.45 percent in after-hours trade to USD 95.01 as investors welcomed the results.

(Source: PTI)

8. Budget 2018: E-commerce Industry Eyes Significant Changes in Rules & Taxes

With the effects of Demonetisation settling down and implementation of GST well on its way, Budget 2018 is expected to positively drive the different sectors of economy.

With Finance Minister Arun Jaitley already having boosted startups with a strong business environment in areas like commercial real estate, logistics and e-commerce should be the key focus in startup segment in the upcoming Budget. Startups will also have huge expectation from the retail sector for higher returns.

In the backdrop of Startup India initiative, the startup ecosystem is reiterating its demand for investment. Investment in startups will directly affect the acceleration of the economic growth and increase job opportunities in the medium term.

This Budget is expected to bring some significant changes in the rules and taxes in the ecommerce industry.

(Source: Economic Times)

9. Budget 2018: Capital Spending Pegged at Rs 1.5 Lakh Crore for Railways

The Railways may chart a course to spend the highest ever plan size in Budget 2018-19 with sources pegging a figure close to Rs 1.5 lakh crore of capital expenditure.

While the Railways has been scaling up capital expenditure every year for the last three years, what makes the coming one different is that it is mostly based on institutional financing and monetisation of assets, not so much on Gross Budgetary Support (GBS) from the government, sources said.

The Budget may give around Rs 55,000 crore to Railways as budgetary support — same as last year. The rest the national transporter will source through a loan from the LIC and other avenues. Sources suggested that around Rs 49,000 crore the Railways plans to draw from the LIC money.

Unlike the last Budget, the Railways will allocate resources on broad categories while detailed projects will be fitted into them later, sources said.

(Source: The Indian Express)