QBiz: Budget 2017 May Provide Tax Gain; SBI to Cut Lending Rates

The Quint brings to you the top news from the world of business.

Finance Minister Arun Jaitley. (Photo: PTI)

1. Budget 2017 May Provide Tax Gain for Common People

The Narendra Modi government's fourth budget is likely to make a sweeping recast of direct taxes focusing on both corporate tax and personal income tax to give a boost to the economy that’s struggling in the wake of demonetisation.

Finance Minister Arun Jaitley will announce the budget on 1 February, a month earlier than usual.

The recast is likely to speed up progress to a corporate tax rate of 25 percent, already a stated objective of the government, and offer substantial reliefs for small taxpayers who have backed demonetisation. The dividend taxation framework is likely to see more changes to make it more onerous for those receiving the bulk of their income in this form to make the regime more equitable.

(Source: The Economic Times)

2. ICICI Bank Registers the First Case Under the Bankruptcy Code

ICICI Bank Ltd has filed an application in the National Company Law Tribunal (NCLT) against Innoventive Industries Ltd to initiate a corporate insolvency process under the new bankruptcy law.

This is the first case in India filed under the Insolvency and Bankruptcy Code, 2016, and it will provide a primer on how the new law will help tackle the banking system’s nearly Rs 6.7 trillion of bad loans.

The Pune-based steel products maker, which had debt of Rs 955 crore at the end of September, has contested the petition.

(Source: Livemint)

3. ATM Withdrawal Limits Should Be Lifted Soon, Says SBI Chief

In a week from now, the government’s 50-day timeline for the exchange of Rs 500 and Rs 1,000 notes at bank counters will end. The passing of that deadline, however, will bring little relief for citizens, who will continue to face restrictions on accessing their money in cash.

In an interview with BloombergQuint, Arundhati Bhattacharya, Chairman at State Bank of India, said that it may take another two months before there is enough cash in the system to allow citizens to withdraw their money without any restrictions.

At last count, the Reserve Bank of India had pumped in Rs 5.9 lakh crore in new notes into the banking sector to meet cash needs. This, however, is only about a third of the Rs 15.4 lakh crore taken out of the system as part of the government’s decision to withdraw Rs 500 and Rs 1,000 notes from circulation.

(Source: BloombergQuint)

4. Focus on Cash Flows, Banks Need More Time to Tackle Other Issues

With a majority of bad asset recognition having materialised, 2016 was expected to mark a peak of the banking industry’s woes. While banks were putting their act together to face hurdles pertaining to higher provisions and slow loan demand, the demonetisation focus may delay the time they need to overcome these obstacles.

The withdrawal of old Rs 500 and Rs 1,000 notes, which is set to extract nearly 86% of the currency in circulation, has resulted in a surge in deposits and a subsequent fall in bond yields, which may help banks to earn higher treasury income.

However, the whole demonetisation exercise has put bank employees and practices followed by the banks to the test.

(Source: The Economic Times)

5. Taxis to Overtake Private Car Sales Soon: Maruti Suzuki's RC Bhargava

In a move that is indicative of Indian auto companies’ belated and grudging acceptance that their industry has been disrupted, perhaps forever, by new models of ownership, the country’s largest car maker, Maruti Suzuki India Ltd, expects the bulk of future vehicle purchases to be in the taxi space.

Fewer cars will be bought for personal use as shared mobility spreads its wings, according to Maruti Suzuki.

“The ownership spectrum will change. Bulk of the cars will not be privately owned. A lot of cars will be owned (commercially used) by the aggregators,” Maruti Suzuki Chairman RC Bhargava said at a press conference on Friday.

(Source: Livemint)

6. Compensation To States Remains Unfinished Business For The GST Council

The seventh GST Council meet saw the Centre and the states agree on the compensation law detailing that the Centre will absorb any spillover of revenue losses accruing on account of the adoption of the new indirect tax regime.

But hurdles in the implementation of the Goods and Services Tax are far from over. Inter-state trade, dual control and the quantum of compensation remain unresolved issues, according to West Bengal Finance Minister Amit Mitra.

(Source: BloombergQuint)

7. SBI, Other Banks May Cut Lending Rates in New Year

State Bank of India, the country’s largest lender, and a few other banks are expected to announce a cut in lending rates effective early January, said people with knowledge of the matter.

That could give consumption a much-needed boost, having slumped in the wake of demonetisation as people are unwilling to spend on non-essential items amid a currency shortage. People considering home and car purchases can look forward to cheaper rates due to the liquidity that’s flooded the banking system with the deposit of old notes, especially since corporate loan demand remains weak. SBI couldn’t be reached for comment.

(Source: The Economic Times)

8. Amazon India Sees FY16 Loss Soar to Rs 3,572 Crore

Online marketplace Amazon India’s revenue more than doubled in the 2015-16 fiscal year, but so did its loss, as the Indian unit of the Seattle-based Internet giant went all out to topple local arch-rival Flipkart from its No. 1 position.

After splurging heavily on marketing, discounts and investments in technology and infrastructure, Amazon India reported revenue of Rs 2,275 crore for the year ended March 2016, compared with Rs 1,022 crore in the previous year.

The firm’s loss soared to Rs 3,572 crore from Rs1,724 crore in the previous year, according to regulatory documents sourced from data platform Tofler.

(Source: Livemint)

9. Reinsurance Sector: Over Dozen Foreign Firms Vying to Get India Entry

The Indian reinsurance market, which was thrown open to the foreign companies last year, is set to witness intense competition with over a dozen players, including a Warren Buffet company, readying to enter the field currently dominated by a sole player – General Insurance Corporation of India (GIC Re).

After giving final licences to five global players, the Insurance Regulatory and Development Authority of India (Irdai) has cleared preliminary approvals to four more players, including Lloyd’s of London, Gen Re of Warren Buffett and Axa Re last week.

While Lloyd’s has received R2, the second round of regulatory approvals, Axa Re and Gen Re have received R1. XL Catlin has also received the preliminary licence.

(Source: The Indian Express)