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http://www.thesynergyonline.com/pre-budget memorandum

Thursday February 25 2016

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It does seem so pleasant to talk with an old acquaintance that knows what you know. I see so many of these new folks nowadays, that seem to have neither past nor future. Conversation's got to have some root in the past, or else you've got to explain every remark you make, an' it wears a person out." - Sarah Orne Jewett, The Country of the Pointed Firs
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  • Banks seek greater capital infusion to restore health of the banking sector
  • Revalidate tax structure to flat 5% for end user and 15% for developer
  • HR Fund focuses on measures to boost human capital and improve human resources to accelerate GDP growth
  • Focus on development via the jobs route : PeopleStrong
  • What a retired citizen of India expects from Union Budget 2016
  • Call to boost real estate sector
  • 'Widen the definition of startups , bring in additional effective measures for ease of doing business'
 

 

 

Knowing comes from learning, finding from seeking."
― Vaddey Ratner

Banks seek greater capital infusion
to restore health of the banking sector

Thesynergyonline Economics Bureau

NEW DELHI, FEBRUARY 24 : IBA Survey of bankers conducted during January-February 2016 reveals insights on some of the key operational areas of banks in India for the period July-December 2015.


 

Key findings of the survey, which saw participation by 17 banks
including public, private and foreign:

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Majority of participating banks have not reported any change in credit standards during the period July-December 2015 vis--vis the previous six months. However, about 35 per cent of respondents have tightened their credit standards for large enterprises due to rising NPAs and higher sector-specific risk. In case of SMEs, about 23 per cent of respondents have eased their credit standards citing thrust laid by the government as one of the key reasons.+ All participating banks have lowered their base rate following the policy rate reduction by RBI, but transmission has varied. While majority (41 per cent) of the respondent banks have reduced base rate by 20-30 bps, only 24 per cent have reduced base rate by more than 40 bps over the July-December 2015 period.+ All participating banks have also reduced interest rates on term deposits. In case of short duration term deposits of less than one year, 53 per cent of respondent banks have reduced rates by more than 50 bps, while in case of long duration term deposits of one year and above, 35 per cent of respondent banks have reported reduction of more than 50 bps. + A large majority (76%) of the respondent banks in the survey have reported a moderate rise in Current and Savings Account (CASA) deposits during the period July-December 2015, on the back of greater emphasis laid on low-interest / retail deposits.+ During the period July-December 2015, the participating banks have on an average utilised 68 per cent of their funds for loans and advances, while 32 per cent have been used for investments. + Continued thrust laid on infrastructure sector by the government is reflected in rising demand from the sector. A majority 65 per cent of respondents reported high demand for long-term credit from infrastructure sector during July-December 2015. In the previous round of survey too, majority (76 per cent) banks had reported high demand from this sector. Given the rising dem and for infra-financing, one of the key suggestion of Banks for the Union Budget is to allow banks to issue off-shore rupee bonds to finance infrastructure. + There has been a rise in NPAs and stressed assets during the period July to December 2015. The proportion of respondent banks reporting rise in the level of their NPAs is higher at 76 per cent in this round of survey as against 63% in the previous round. A majority 53% of the respondent banks have also indicated that there has been a rise in the number of cases requesting for restructuring of advances. As per the survey, the key sectors that have seen a surge in NPA levels in the second half of 2015 include infrastructure, metals, textiles, and chemicals, amongst others. + Given the severity of NPA problem, majority of the participating banks expect the Union Budget to introduce specific measures for its resolution. Some of the suggestions offered include: - Establishing a National Asset Management Company (NAMCO) or a Bad Bank which can take over stressed loans from the Banks and either sell them off or revive them. - Additional budgetary allocation for capitalisation of Public Sector Banks over and above the original commitments - Revamping Debt Recovery Tribunals (DRTs) - Setting of a fund to aid the revival of stalled Infrastructure projects, Power Discom projects + Other key budget expectations of Banking sector identified in this survey include: - Ceiling for TDS on interest on Deposits to be increased to Rs.50,000 from the current Rs 10,000 - Tax rebate limit u/s 80C to be increased to Rs 2.5 lakhs - Reintroduction of Tax exemptions for Infra Bonds over and above rebate u/s 80C - Rationalise the interest rate of small savings schemes + Surveyed banks were asked for their views on the new lending rates based on Marginal Cost of Funds that will be applicable from April 1, 2016. A large majority of participating banks indicated that the Marginal Cost of Lending Rate (MCLR) regime will lead to effective transmission of monetary policy into the lending rates. + Banks were also asked for their views on impact of competition with the entry of Payment and Small Banks +Majority of participating banks mentioned that it will intensify competition in the banking sector, especially for savings and current deposits.

 

Santosh Nema, Founder &CEO, BmatPro :

"e-commerce has helped in the growth of consumer durable sector in a big way despite economy not doing too well. Real estate sector is de-growing for last 2-3 years and one of the way to support it to encourage B2B e-commerce which will bring down overall construction cost. Free interstate movement of goods without any form ( till GST becomes a reality ) will immensely help. Anti dumping duty, whichever product it is imposed on, is only helping big companies make more money at the cost of end consumers. Customer focused policies will help this sector take off to a healthy growth."

Economy, policy issues, regulatory matters

• Mukesh Butani, Managing Partner, BMR Legal (location – Delhi). He specializes in international tax, policy, transfer pricing, tax litigation. He advices on FDI policy, entry strategy, business re-organisations, cross-border tax structuring, tax controversy and regulatory policy across a range of sectors. He is reachable @ +919811132000 or you can mail him at Mukesh.Butani@bmrlegal.in.

Financial Services sector

• Bobby Parikh, Chief Mentor & Partner, BMR & Associates LLP (location – Mumbai). He advises private equity investors, banking groups, investment banks, brokerage houses, fund managers and financial services intermediaries. He focuses on interpreting the implications of the deregulation as well as the changes to India's policy framework. He is reachable @ +919820298500 or you can mail him at Bobby.Parikh@bmradvisors.com.

• Shefali Goradia, Partner, BMR & Associates LLP (location – Mumbai). She specializes in cross-border taxation, advises multinational corporations in designing global holding and operating structures, inbound and outbound investments, cross border mergers, acquisitions and other corporate reorganizations; works extensively with leading investment and private equity fund houses. She is reachable @ +919821034082 or you can mail her at Shefali.Goradia@bmradvisors.com.

Oil & Gas Energy, Aviation, Chemicals and Mining sector – and all Direct Tax issues

• Gokul Chaudhri, Leader, Direct Tax, BMR & Associates LLP (location – Delhi). He focuses on Oil & Gas Energy, Aviation, Chemicals and Mining industry. He is reachable @ +919811324742 or you can mail him at Gokul.Chaudhri@bmradvisors.com.

Indirect tax issues including GST, foreign trade, customs, etc.

• Rajeev Dimri, Leader, Indirect Tax, BMR & Associates LLP (location – Delhi). He specializes in structuring domestic & cross-border transactions for goods and services covering a range of indirect tax issues. He is reachable @ +919811060585 or you can mail him at Rajeev.Dimri@bmradvisors.com.

• Himanshu Tewari, Partner, BMR & Associates LLP (location – Mumbai). With a specialization in customs and international trade, he has over 20 years of work experience, including at the customs department and advising multinational and Indian business houses on a range of customs and trade related issues. He is reachable @ +919820447448 or you can mail him at himanshu.tewari@bmradvisors.com.

• Mahesh Jaising, Partner, BMR & Associates LLP (location – Bangalore). Mahesh is a Partner with the BMR & Associates LLP's indirect tax practice in Bengaluru and leads the firm's technology industry practice. With a specialisation in VAT, sales tax, work contract tax and service tax issues, Mahesh has over 11 years of experience in advising clients, specifically with focus on the IT, real estate and education sectors. You can always reach out to him @ +919845208820 or mail him at Mahesh.Jaising@bmradvisors.com.

Auto sector

• Amit Jain, Partner, M&A, BMR & Associates LLP (location – Pune). Amit is based out of Pune and he specializes in M&A, Transaction Advisory, Due Diligence, Direct Tax, Regulatory, FIPB, FEMA, Corporate Law, Valuations and Transfer Pricing. He is reachable @ +919810812036 and you can mail him at amit.jain@bmradvisors.com.

Real estate and Infrastructure sector

• Kalpesh Maroo, Partner, BMR & Associates LLP (location – Bangalore). He specializes in corporate and transaction tax with specific expertise in SEZ's and the real estate sector. He is reachable at @ +9199866 00075 or you can mail him at Kalpesh.Maroo@bmradvisors.com.

IT, Real Estate and Education sector

• Mahesh Jaising, Partner, BMR & Associates LLP (location – Bangalore). Mahesh is a Partner with the BMR & Associates LLP's indirect tax practice in Bengaluru and leads the firm's technology industry practice. With a specialisation in VAT, sales tax, work contract tax and service tax issues, Mahesh has over 11 years of experience in advising clients, specifically with focus on the IT, real estate and education sectors. You can always reach out to him @ +919845208820 or mail him at Mahesh.Jaising@bmradvisors.com.

M&A perspective (Media and Entertainment, IT, Retail, e-Commerce and Consumer sector; also PE & FDI)

• Vivek Gupta, Partner, BMR Advisors (location – Delhi). He looks into Transaction tax and restructuring, Investment Banking, Private Equity and FDI. He closely tracks the media and entertainment, information technology, retail, e–commerce and consumer sector. He is reachable at @ +919810404411 or you can mail him at Vivek.Gupta@bmradvisors.com.

Risk & Advisory perspective (across sectors)

• Sanjay Mehta, Partner, BMR Advisors (location – Delhi). With over 30 years of experience in assurance, business process risk consulting and financial diligence, Sanjay has worked with multinationals, Indian business houses and private equity funds across a range of industries. He is reachable at @ +919810037000 or you can mail him at sanjay.mehta@bmradvisors.com.

'Revalidate tax structure to flat 5%
for end user and 15% for developer'


Currently customers are paying huge taxes when buying homes, if this is addressed there is going to be huge relief to the industry. In Maharashtra, as high as 35 per cent of the value of the home goes towards tax. The same requires to be carefully revalidated to reduce the burden to the customer when we are moving towards GST regime. Tax to end users should be flat 5% including stamp duty, VAT and Service Tax. And cap all premiums and taxes including VAT, Service Tax payable by the developer to 15 per cent.

Increase deductible on interest to Rs 3 lac and give 3% subvention on home loan to end user
Individual home buyer should be incentivized by increasing deductible on housing interest loan from Rs 2 lac to Rs 3 lakh. This will definitely boost affordable segment home buyers. Another big incentive that may touch all segments of real estate buyers is giving subvention of 3% interest for 3 years.

Tax Breaks for the Industry for Affordable Housing

Real Estate Industry contributes 6% to GDP and no tax breaks are available to industry. But now to gear up for “Housing for All”, there is a need for tax break for the sector in affordable housing segment. Reintroduce incentive schemes like 80IA and 80IB for developers for affordable housing segment clearly defined definition of affordable housing which definitely varies from rural to Tier 3 cities to city like Mumbai where by Rs 50 lakh should be affordable home.

Removal of Taxation on Annual Letting Value for Stock in Trade

In case of stock in trade, real estate developers are taxed as if those empty homes are let out. This Section 23 of Income Tax requires to be modified with effect to no tax on notional basis on stock in trade.

Denial of Tax Benefit to End User

Section 24 of the Income Tax Act requires to be modified and extend provision to 5 years from 3 years as on account of several delayed approvals most of the projects take more than 3 years to complete.
Status as Industry

Real Estate sector should be treated in par with Infrastructure as Real Estate players are key contributor to decongest the city center by adding more development in peripherals of the city .

'Widen definition of startups, bring in additional
effective measures for ease of doing business'


Thesynergyonline Economics Bureau


NEW DELHI, FEBRUARY 11:
Mynd Solutions Pvt. Ltd. a leading global service provider in business process and technology management, offering broad spectrum of services in finance and accounting (F&A), human resource outsourcing (HRO), IT Solutions and consulting has following expectations and recommendations from the government in the upcoming union budget 2016.


Sundeep Mohindru, Director,Mynd Solutions has highlighted the key aspects of establishing and running a business with focus on start-ups and micro, small and medium enterprises (MSME) in India.


Definition of startups  


India is going through the phase of changes and new outlook is being worked upon. The prime minister (PM) has laid the path for enhancement of entrepreneurship in the country. The PM’s initiative for making available finance for start-ups and related incentives is going to take concrete shape in the upcoming budget. The initiatives will be given to new businesses set up after 31st March 2016. At Mynd Solutions,  we are serving and supporting many customers to set up their business, all clients that have set up their businesses in the past two years are feeling strapped to miss this opportunity. Also existing entrepreneurs setting up new lines of business as start-ups in their current running companies are feeling that they will miss out on this opportunity by government of India. Therefore, the definition of start-ups has to be widened enough to support all the initiatives taken by entrepreneurs.


Ease of doing business

Company law changes made by Companies Act 2013 do not support the ease of doing business in India, especially for holding and subsidiary companies relationships for unlisted companies. These are small businesses that don’t have enough resources to manage the requirements of Companies act. A review by government has been discussed at many stages and many new notifications have been released to ease this space after 2013. However, a lot has to be done to support the ease of doing business in India.

Incentives for export of services

Incentives for export of services are limited and have been released only for corporates operating in special economic zones (SEZ) area. However, micro, small and medium enterprises(MSME) have limited access to SEZ set-ups and enjoy no export incentive for the export of services. India is growing tremendously in services arena and export benefit rules shall be made available for export of services. In the initial days, government released the scheme of software technology parks of India (STPI) for information technology (IT) and IT enabled services (ITES). This scheme was utilised by MSMEs and export units flourished in almost every city where such parks were established. Incentives of STPI scheme could be enjoyed by all companies operating from their respective place of business. Current rules released by government in 2015 limit these incentives to companies operating from SEZ area. These rules have to be relaxed to widen the coverage of operations.

Job creation

In 2014, the government of India had launched an ambitious programme “Make in India” which infused a fresh breath of air in increasing job opportunities for 10 million workforces that enters the market every year and also 10,000 Start-ups initiative, a mega-program that aims to catalyse 10,000 technology start-ups over the next decade. In the upcoming budget, we look forward to the enhanced implementation plan of these policy initiatives and introduction of similar policy initiatives to boost jobs especially in the under-developing areas such as infrastructure, aviation, and real-estate.
 Skill Development and compliance reforms

Enhancing Employability and access to a skilled talent pool is a critical enabler for India’s competitiveness. Secondly, enhancing the ease of managing compliances through E-governance / single-window concept policy reforms shall only strengthen the policy of ease of doing business for both domestic and international corporates. Recent initiative of “Digital India” is an extremely welcoming step towards covering both above points, however, it’ll be interesting to see the policy implementation framework especially government-Industry partnership model in the upcoming fiscal to achieve quantifiable results on the ground

Focus on measures to boost human
capital and improve human resources


Thesynergyonline Economics Bureau

NEW DELHI, FEBRUARY 10 :
The HR Fund, India’s first human resources (HR)-focused investment company with an objective and vision to transform HR entrepreneurship, has the following expectations and recommendations from the government in the upcoming union budget 2016.

Utkarsh Joshi, Principal at The HR Fund, highlights the key aspects of improvements required in the human resource (HR) of India to accelerate growth in the country’s gross domestic product (GDP). The union budget 2016 is being awaited with a lot of expectations both in India and internationally with major institutions calling India to be the next biggest growth engine. With the GDP growth projections on the rise and all eyes on India, it is very crucial that the government focuses on the key issues that will strengthen the Indian economy.

It is a widely accepted fact that India is on its way to become the largest and youngest working population in the world. India’s human capital is going to be the biggest boon for the economy if it is honed and utilized properly.

Skilling India:

Improving the overall efficiency of the Indian workforce and skilling the still untrained ones can potentially be the biggest boost that the country needs today. With only 2.3 per cent of the total workforce in India having undergone formal skill training as compared to 68 per cent in the United Kingdom (UK) and 52 per cent in the United States (US), the gap is very high.The National Skill Development Corporation’s (NSDC) efforts are yet to showsignificant results yet with just 40 percent placement record as registered in 2015.
               
“Skilling India” is probably the biggest step in that direction but it has a long way to go and needs more support. The problem with such initiatives remains with the implementation and unless that is taken to the last step, these initiatives fail to show the desired results. It is very important to understand how the skilling problem sits behind all the other initiatives that the government is planning like“Make in India”, “Digital India”, and “Start Up-India”, etc. It is the problem of the demand side andthe desired output cannot come with the right input.  The government expects private players to enter the skilling domain to not only support but also take over some of the important activities. The government needs to pave the way for private sector to do business more easily and new innovative start-ups in this area to burgeon without too many regulatory hassles.

Entrepreneurship in HR and Ease of doing business Index:

Promotion of entrepreneurship in India needed the much awaited and talked about boon that it received from the recently announced “Start Up – India” initiative.The central government clearly understands the importance of entrepreneurship and realizes the fact that thisis going to create jobs in the country.With all the job creation, new age companies, ever growing businesses and the growing economies of the company, it is quite obvious that innovation in HR is fast becoming a necessity and entrepreneurs in the field of HR are now looking up to the government to improve the ease of doing business in the country. Even today we see many entrepreneurs flocking to Singapore and other more friendly hubs to setup a company as they offer a much leaner and quicker mechanism. The measures announced towards achieving these goals in the “Start-Up India” event would need a lot of work from the government before we see that actualizing.

Thereare many issues with the policies surrounding ease of doing business and unnecessary obstructions with the regulatory affairs. Being in the field of investing into HR start-ups, we at The HR Fund are seeing an increasing number of start-ups that are flourishing in the area of HR solutions that need the support and right environment from the government in order to establish their businesses.Many issues have been addressed by the government (which would still need a lot of work), but many remain. Below are a few examples.

Tax deducted at source:
Start-ups currently have to claim tax deducted at source (TDS). Many start-ups are generally known to have been making losses in business but still sellers and banks deduct TDS, which affects their liquidity. There should be a mechanism where one gets a generic exemption from everyone.

Tax on investment received:
The current Income Tax (IT) Act obligates all start-ups to pay taxes on all and any investments that they receive including angel investors. Such clauses de-motivate a lot of angels and the government should look to encourage new businesses by giving both the start-ups and the angel investors the required tax breaks.
                               
Regulatory Scrutiny:
Start-ups face huge amount of scrutiny from all regulatory bodies, which needs to be mollified a little, such as the mandatory requirement for every company to file audited accounts every year and submit returns even when they do not have any revenues on their books.

Other aspects to improve business scenario:
The issues relating to payment of gratuity, provident fund (PF), and contract labor regulations also need to be looked at. Few important things to improve business scenario in the country would be rise in the income tax exemption limit,reduction in company tax, service tax and TDS to someextent to support businesses.

Labor Laws:

Labor laws are directly linked to improving the “ease of doing business” index of the country. The government is in the process of consulting with all stakeholders to derive the new amendments and has already initiated steps to streamline various laws and acts. The cabinet has given its nod on two new legislations pertaining to improving the existing labor code on wage and small factories act with lot more expected in near future. The government is trying to amalgamate the 44 existing laws to make things simpler for the businesses, which would require some serious efforts. Once implemented, the steps have the potential of not only improving the ease-of-doing-business index but also of generating more employment, which would be key to the growth of Indian economy. It would also benefit the working conditions and environment across various industry segments.

Focus on development via
jobs route : PeopleStrong

Thesynergyonline Economics Bureau

NEW DELHI, FEBRUARY 10 :
PeopleStrong HR Services, platform-based mpHRO (Multi-process HR Outsourcing), recruitment process outsourcing specialist, and HR technology company, has following expectations and recommendations from the government in the upcoming union budget 2016.

Pankaj Bansal, co-founder and CEO, PeopleStrong highlights the key aspects of improvements required in the human resource (HR) aspects including creation of jobs, skills development, career centers, labour laws and ease of doing business, among others for growth and development in India.

With various initiatives led by government like Make in India, Digital India, Skill India, Startup India, and Stand Up India which are designed to facilitate investment, foster innovation, enhance skill development, protect intellectual property and build best in class manufacturing infrastructure.
While global economy is still not showing signs of recovery, Indian economy is poised with positive growth momentum and optimism. A positive policy environment of attracting investment and job creation would go a long way in ensuring that the growth targets are met.

Admist the economy which is showing signs of recovery, listed below are the various aspects from human resource industry in the upcoming union budget 2016.

Incentivizing job creation

Addressing the nation on the occasion of the 69th Independence Day, prime minister, Narendra Modi, said there would now be an attempt at linking job creation with new investments. Such schemes are under preparation, according to which proposed schemes would now impose the obligation of creating fresh jobs for every clearance given to investments whether in the public or private sector. This has been important initiatives of thegovernment and gave hope in terms of jobs as well as development. Government should now back it up with increased reforms to translate the sentiments to numbers.

Ease of doing business

One of the major attempts of ‘Make in India’ campaign is to attract foreign investments in the country.
 While the government has struck the right notes in reaching out to Investors across nations, it is time to keep up the promises made.

 India ranks 142 amongst 189 economies, in World Bank’s Ease of Doing Business Index.
Some factors that rank India at this level are complex procedures, multiple regulatory approvals spanning several months, and stringent rules on environmental clearances, and exit schemes, etc.
The government needs to address the major issue of complex procedures and approvals by providing single-window clearances of projects and fixing due dates for closing each step of the different processes.
Another step that the government should take is reduce the complexities and vagueness in the tax framework as evident in the recent transfer pricing case. 

What every corporate player needs is simplicity and predictability in laws, so that every time they do not go to court of law to decide what is correct and what is wrong.

Skill Development and Career Centers

The government is now giving increased focus on career counselling as a key activity for our aspiring youth to pursue the right career choice so that they join the workforce with better skills for enhancing growth and development.

 Career Centers shall connect local youth and other job-seekers with all possible job opportunities in a transparent and effective manner through the use of technology as well as through counseling and training.
While the state-of-the-art technology driven National Career Service Portal willin a sustained manner, provide information about available job opportunities and resources for Career Centers to function effectively. The Career Centers would be the pivotal outreach and counseling interface of the National Career Service for teeming millions of aspiring youth from rural, semi urban areas as well as from disadvantaged sections of the society.

These Centre are great scheme and government should come up with booster funds for these centers to make them performance driven and effective.

Labour reforms:

 India has a complex labour law structure with approximately 44 central and 100 state laws that are expected to regulate the labour landscape.
Being archaic and having loop holes, many of these laws are biased towards the working population. In order to make “Make in India” a success, the government needs to look into it.
For example, the Industrial Dispute Act 1947 has very stringent guidelines on lay-offs, retrenchments and closure. This often stops the employers to grow their manufacturing operations in India beyond a certain limit.
The benefit regime established often locks almost half of the salary of a low wage worker, making self-employment more attractive for the workers.

 It would be worthwhile to revisit these guidelines and create a balance between industry and worker welfare in the labor laws.
 It would be great if the complex framework of central and state legislations is reduced to an integrated legal framework with lesser but effective laws with no redundancy, besides clearly defining the ownership of central and state governments.

As the Indian geography and labour market conditions are diverse across different states, their involvement in creating this framework is a must. We expect amendments to the Factories Act (exempting factories with less than 40 employees from 14 labour laws, including easier shutdown).
About PeopleStrong HR Services

"You can only perceive real beauty in a person
as they get older. -- Anouk Aimee

What a retired citizen of India
expects from Union Budget 2016

Thesynergyonline Economics Bureau

 

 Aging is not "lost " youth  

NEW DELHI, FEBRUARY 09 :
Social Security, a critically important, great program which does serve as the cornerstone of support for senior citizens, now faces challenges that threaten its long-term stability and well-being. The facts are there. The facts are crystal clear."- Bill Frist
 

Sanjay Lakhotia, Founder Director, Aamoksh One Eighty, highlights the need for certain issues for the union budget 2016. Besides higher tax exemptions, promotion of senior citizen-led business, support to geriatric services, and friendly reverse mortgage terms are highlighted.

The retired seniors of 2016 are very different from the retired seniors a few decades ago. There is a significant change in the demographic profile of people in India. Some of the key changes are:

- More people / couple are living alone, without a person of 60 + years of age living with them

- With rising pensions, affluent children, the disposable income has increased for a significant number of seniors

- Life expectancy has increased significantly

- Seniors are more willing to spend on experiences, travel, adventure etc.

Some things that the finance minister can do which can help the seniors a lot are as below :

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Special category to promote seniors led businesses under Start up India – Seniors have a lot to give to the society. Their experience, knowledge and attitude can help create a revolution around small start-ups which can generate a lot of employment. Start-up programs are typically targeted to youngsters. Motivating seniors to start-up and providing them incentives can help utilize their experience,knowledge base and also lead to creating more sustainable and thought through business models. Friendly reverse mortgage terms: A lot of seniors in India have their money locked in to properties with very little monthly income. This does not allow them to utilize the value of the money they have earned and saved over a period of time. The current reverse mortgage product has failed to attract seniors in un-locking the potential of their asset. Modifications to make it friendlier and a push by the government to make the scheme popular will help a lot in making the life of seniors comfortable. Higher exemptions on taxes: With rising cost of living, the current exemption of three lacs can be enhanced. Also seniors are running very high medical costs today with the healthcare costs having seen manifold increase, the exemption on medical can be enhanced for seniors to be three times of what it is for youngsters. Support geriatric services: India is going to be the home to largest number of seniors in the world very soon. Seniors till now have not been considered a specific market segment and companies have now started approaching the seniors as a separate market segment and creating customized products / services for this segment. Promoting some of these segments through income tax holidays, VAT and service tax exemptions can help in supporting organizations which are trying to make inroads into the geriatric segment, especially organizations which are in the business of setting up retirement homes, at home care, assisted living centers, and other geriatric products, etc.
 

Call to boost real estate sector

Thesynergyonline Real Estate Bureau

NEW DELHI, FEBRUARY 08 :
"The real estate fraternity is pinning its hopes on the upcoming Union Budget 2016 to give the 'stressed' sector the much needed boost. With three consecutive bad years for real estate that left developers and other stakeholders gasping for fresh air, the expectations are only building up by the minute. The last Budget had a focus on 'Housing for All', but did not have a gameplan attached to it.

"We hope that sops and exemptions for home buyers are announced this year. On the annual deduction for interest payments, I wish the government increases the limit to INR 300,000 from INR 200,000, and additionally making this deduction applicable only for property that is ready with an occupancy certificate," said Mr Shishir Baijal, Chairman and Managing Director, Knight Frank India


"Another important area for us would be REIT. For REIT to become a reality, it is important for DDT to be abolished. Despite, the regulatory approval being in place for quite some time, DDT has remained a sore point for stakeholders. Considering that REIT will be an annuity product, it is a must for the government to focus on removing DDT. GST should be also another highlight in this Budget. The implementation of the same will lead to more efficiency and competitiveness from the seamless movement of goods as well as the location of warehouses, an important component in the logistics sector. With infrastructure an important focus of the government already, I hope this will continue. The development of infrastructure has a direct bearing on the revival of real estate, which we all look forward to at this stage," Mr Baijal added.

Surendra Hiranandani:

The government has taken positive steps with the announcement of smart cities, increase in FDI and "Housing for All-2022" that have boosted the sentiments of both buyers and developers. We are optimistic that the upcoming budget will address key administrative, financial and tax reforms that will spur growth in the future.

I have listed below few key points that should be looked into by the government in the Budget.

1. Granting 'industry status' to the real estate sector.
Getting industry status has been a long pending demand of the real estate sector as developers can avail finances at cheaper rates from financial institutions that will spur economic growth. Currently most industry rules are applicable to the sector, but denial of industry status for funding will only worsen the slowdown in demand because of erosion of capital.

2. Provision for additional interest exemption/tax-saving on housing loans. The current tax deduction limit of Rs 2 lakhs is not sufficient considering the inflation rates prevailing today. The government should look at increasing the interest deduction limit to Rs 3 lakhs for new home buyers. Similarly, tax concessions on house insurance premiums can be introduced to encourage end users to insure their homes.

3. Simplification of taxes: Promote REITs (Real Estate Investment Trusts) and remove roadblocks such as DDT (Dividend Distribution Tax). There hasn't been a single REIT listing in India since its inception and we attribute this to the existence of DDT (currently 15%). Removal of DDT (tax levied on the dividend paid to investors) will result in a rush of investment in REITs and this could prove to be decisive for the sector. Additionally, REITs offer the benefits of diversification, safety and easy exit. Simplifying the tax system will provide a major lift to the industry.

4. Additional allocation of funds for infrastructure development will lead to affordable housing. With the government's 'House for All by 2022' initiative under way, it is imperative to allot new land on the outskirts of metropolitan areas in order to promote affordable housing. Incidentally, the government's target to provide 20 million houses over the next six years can be met if the government and the developers join in the hip in creating unique urban townships. Meanwhile, the government must allocate an amount exclusively for developing infrastructure and improving connectivity in the peripheral areas of cities, especially the metros.

'FM should announce woman-friendly
Budget; provide exemptions for crèche
allowance, higher education limit'

Thesynergyonline Economics Bureau

NEW DELHI, FEBRUARY 07 :
In order to help salaried income households and encourage more women to join the work force, the Finance Minister Mr Arun Jaitley should announce a 10-fold increase in children education allowance and tax exemption for crèche facility in the Budget, the ASSOCHAM has said.

In its pre-Budget recommendations to the Finance Ministry, the chamber has made out a strong case for the re-boot of the consumer demand that will bring in vibrancy in the economic cycle of demand leading the investment and employment.

"While we are confident about a positive multiplier effect of the leaving more money in the hands of the tax payers, a lot of women specific proposals be brought in the Budget so as to empower them economically," the chamber President Mr Sunil Kanoria said.

In its memorandum to the Finance Ministry, the chamber has made a specific recommendation for allowing exemption for crèche provisions either within the organisation or through specific tie-up through commercial crèche providers. An allowance of up to Rs 2,500 per child every month for up to two children may be provided for.

"To supplement household income, more women are entering the job market. With increased phenomenon of nuclear families, working women need support in terms of care of young children while they are at work. Hence to encourage increase in the women workforce, it is desirable that a specific provision be introduced for allowing exemption for crèche provisions," the ASSOCHAM memorandum on direct tax recommendations stated.

As has been repeatedly pointed out by the Reserve Bank of India, increasing cost of health and education are pinching the pockets of the households, particularly those in the salaried earning bracket. In this backdrop, children education allowance must be enhanced by the income tax laws along with being liberal with expenses on health insurance and medical reimbursements.

The chamber has recommended that let the children education allowance exemption limit go from the present Rs 100 to Rs 1,000 per month. Likewise, the hostel expenditure allowance which is presently exempt up to Rs 300 pm per child for maximum of two children be increased to Rs 3,000 pm.

"The limit for children education allowance is too low as compared to the prevailing school fee and was fixed in FY 1988-99. Also, the limit hostel expenditure allowance as also fixed in 1988-89," it said.

A similar situation exists with regard to medical expenses reimbursed by the employer. It is exempted to the extent of Rs 15,000 per annum. This limit was also fixed 17 years ago and needs to be revised significantly, at least to Rs 50,000 per annum. Besides the provision should also be made applicable to the retired employees.

"To swim against waves is always an impossible task "

Budget for 2016-17 likely to have
quite a pruned disinvestment target
 


Thesynergyonline Economics Bureau


NEW DELHI, JANUARY 29 :
"Each arrow you shoot off
carries its own target
into the decidedly
secret
tangle"
― Paul Celan, Glottal Stop


With complete dimming of prospects of disinvestment target being met in the current financial year and the markets expected to stay in subdued mood even in the next fiscal, the government is likely to drastically scale down targets for realization of resources from PSUs' stake sale in the Budget for 2016-17, ASSOCHAM said .

"It is given that with just about a month to go for the Budget presentation and the window of opportunity having been missed earlier in the year, there is no hope that the over-optimistic target of Rs Rs 69,500 for the current financial year could be reached. Hopefully, the Finance Ministry will desist from setting an un-realistic disinvestment yet again for the FY 2016-17," the ASSOCHAM Paper on Budget expectations pointed out.

It said the disinvestment targets, ironically, have always been off the mark with either the government doing a mere academic budget making exercise or getting it completely wrong. " It is nobody's case that we can always be on the top of the market moods and the projections can go wrong at times, but it is difficult to understand how year after year, these targets have gone completely haywire under successive governments" , the paper said.

ASSOCHAM Secretary General Mr D S Rawat said, "with the odds stacked against the equity market in 2016 and the world economic prospects looking even grimmer, there is less hope of a recovery in the financial markets. Thus, it is expected that next Budget would be much more realistic in getting the Revenue Budget right".

The paper noted that but for a windfall from a steep reduction in the crude oil prices, the Finance Ministry would have found a huge shortfall in the Revenue Budget in 2015-16. "Bulk of the windfall has been retained by the government. While it is debatable whether it has been the right or wrong strategy, the oil prices cut has certainly helped the Finance Ministry to come closer to the fiscal deficit target for the year".

The government has so far raised only Rs. 12700 crore through PSU disinvestments in the current fiscal and may raise another Rs 2000-3000 crore in the remaining months of this fiscal. The government has missed its disinvestment target for fourth consecutive financial years. In 2013-14, the government has raised Rs. 15819 crore against the target of Rs. 40000 crore. In 2014-15 it raised Rs. 24277 crore against the target of Rs. 36925 crore.

As per ASSOCHAM study, Government may face a shortfall of at least Rs. 55000 crore with regard to disinvestment target. The government would meet the shortfall through higher taxable and non taxable routes. In fact, the disinvestment target for FY 2015-16 had been increased by 88 percent over the last financial year to Rs. 69500 crore with the objective of generating non-debt resources to both boost public investment and contain fiscal deficit. Of this, Rs. 41000 crore was to come from minority stake sale in PSUs and another Rs. 28500 crore from strategic stake sale.

For the past six years running, receipts have lagged targets with such regularity that underperformance now appears to be routine and accepted.

With regards to the dividend, the government is taking steps to push profit making PSUs to either increase their capital expenditure or pay higher dividends and suggested them not sit on cash pile.

By way of dividend from the profit making public sector enterprise, the government had budgeted to collect Rs 36,174 crore which is higher than last year's realisation of Rs 28,423 crore. Through this initiative the Government has already received a dividend of Rs 65,896 crore from RBI, which is higher than this year's budget projection of Rs 64,477 crore.

 

For access to funds, real estate sector demands industry status to tackle slowdown

Thesynergyonline Real Estate Bureau

L-R : Mr R R Singh, DG, NAREDCO , Shakuntala Iyer, Director, Shander Properties , Mr Navin Raheja, Governing Council Member, NAREDCO , Mr. Parveen Jain, president, NAREDCO , Mr Gourav Jain, MD & CEO, Jindal Reality Mr Vijay Gupta, Orris Infrastructure.

NEW DELHI, JANUARY 20 : The National Real Estate Development Council (NAREDCO), apex body of real estate stakeholders, ON Wednesday asked the Government to grant industry status to the real estate sector to enable it to recover from severe slowdown. The industry status will attract large companies and most importantly inculcate "corporate culture" and "industry discipline" which will immensely benefit economy in general and consumers in particular, said NAREDCO president Parveen Jain in a pre-Budget Memorandum to the Government.

Mr. Parveen Jain said, "Most industry rules and regulations are applicable to real estate sector also and denial of industry status for funding purposes to the sector will further worsen the existing financial crunch and slowdown in demand because of erosion of capital and loss of confidence of investors and buyers."

NAREDCO has also demanded "infrastructure status" to the Housing sector, a long standing demand of the real estate developers, by adding a clause to the definition of "infrastructure facility" u/s 80IA of IT Act 1961 and the clause is:

"An integrated township and group housing development on area more than 10 acres involving provision of residential, educational, medical, community, commercial or institutional buildings and creation of required facilities including roads, water supply, water treatment, sanitation and sewerage systems and solid waste treatment and management systems".

Mr Jain demanded creation of Special Residential Zones (SRZs) for affordable housing on the lines of Special Economic Zones (SEZs) where special concessions and incentives are in built together with single window clearances. This will help increase supply of affordable housing on a large scale.

Central and State Governments, in the past, have attempted to address large number of issues detrimental to housing growth and provided fiscal concessions to builders and home buyers and tried to build strong public-private partnership to boost housing growth. In many ways it has paid dividends, but still there is lot to be done to provide shelter to all.

Mr. Jain said that the government land, wherever available, should be used as equity and government agencies encouraged to assemble additional land as much as possible. India is short of 18.78 million housing units and 96 per cent of it is in EWS and LIG categories. Government is targeting to build 2 crore housing units by 2022. All this will be possible if land and bank financing is made easy.

He said that Housing Finance Companies be allowed access to long-term funds such as Provident Fund, Insurance and Pension funds as all developing countries have access to such long term funds for housing and infrastructure development. USA and Singapore are classic examples where fund flows from these sectors have helped increase financial resource with long tenor and cheaper funds, he added.

NAREDCO has suggested that banks should be asked to increase their allocation for housing from the present 3 per cent to 5 per cent of their incremental deposit. The additional 2% incremental allocation may be earmarked exclusively for canalizing it through housing finance companies registered with National Housing Bank.

President NAREDCO, has requested government to give push to the real estate sector by increasing the deduction u/s 24(b) of IT Act 1961 to Rs 3 lakh from the current level of Rs 2 lakh of interest paid on home loan on a self-occupied house.

Also, three years period for acquisition or completion from the year of borrowing should be dispensed with, said NAREDCO President, Mr Parveen Jain, adding that this will provide much needed impetus to housing sector which is reeling under huge housing shortage in the country.

He said that priority sector lending need to be extended for home loans upto Rs 25 lakh for rural, small and medium cities, Rs 35 lakh for metropolitan cities and Rs 50 lakh for mega cities. Also, income from renting of properties should be taxed at a flat rate of 10%, he said, adding that high cost of houses and high property taxes lead to low rate of return (ROR) from rental housing, making renting out an un-remunerative proposition.

Mr. Jain said that the residential construction be taken out of 14.5% service tax net in the first place and this exemption should cover the builders and developers who are registered. Rise in excise duty on cement and steel would raise the unit cost by about 4 to 5 per cent.

To promote REMF (real estate mutual fund) and REIT (real estate investment fund), Mr Jain asked the government to make them income tax free at least for 10 years both for residents and non-residents. The world over, REIT have been very effective instrument and source for funding housing projects because of various fiscal concessions and incentives provided by various governments to REIT units and the shareholders.

Demanding external commercial borrowing in all spheres of housing and real estate development, including SEZ projects, Mr Jain said funding to real estate be allowed through FDI, particularly in under construction projects.

The size of Indian real estate market in 2013 was estimated to be approx. USD 78.5 billion which is likely to grow to US$ 140 billion by 2017. Between 2009-11, FDI investment grew at 8% but witnessed deceleration during 2012-13 to around 6.5% primarily due to sluggish growth of Indian economy, rising input cost and overall global economic sentiments. Now there is need to give push to this through fiscal incentives.

Mr. Jain emphasized that, given the impetus required, real estate sector has the potential to turn around the Indian economy and contribute to the growth of the country because of its backward and forward linkages with other sectors of economy and huge job potential.

FM: Inclusive growth is high on the
priorities of the present Government


Thesynergyonline Economics Bureau


NEW DELHI, JANUARY 12 :
The Union Finance Minister Mr Arun Jaitley said that the inclusive growth is high on the priorities of the present Government and the Government will take adequate measures to ensure social security for the children, women and senior citizens of the country. The Finance Minister was making the opening remarks during his Pre -Budget Consultative Meeting with the representatives of different social sector groups here on Tuesday.

Various suggestions were made by the representatives of the different Social Sector Groups during the aforesaid meeting. Some of the major suggestions made during the meeting include increase in old age pension from Rs. 200 to Rs. 500, increase in pension for widows, inclusion of grandparents as a separate entity under Rashtriya Swasthaya Bima Yojana (RSBY).

Other suggestions include higher allocation for Integrated Child Protection Schemes, need to recruit trained and qualified teachers to meet the requirements of Right to Education (RTE) Act2009, need to increase allocation for training of School Management Committee members and strengthen community mobilization.Other suggestions include increased budgetary allocation in secondary education and universalize education for children upto 18 years of age and improving financial transparency in Sarv Siksha Abhiyan (SSA) and thereby improving the implementation of RTE Act across the country.

Other suggestions included insurance to farmers as a major initiative to address the distress in agriculture sector and for achieving higher agriculture growth, adequate provisioning towards a comprehensive and universal crop insurance scheme, extending crop insurance to all farmers for all crops and considering lower units as a unit of insurance with 100 per cent insurance premium to be borne by the Government.

Other suggestions in this regard include provisioning of higher credit and other input subsidies to small and marginal farmers, tenant farmers and farmers with oral lease, increase budgetary allocation for National Mission for Sustainable Agriculture under Krishi Unnati Yojana and for strengthening the institutional mechanism for better utilization of available funds under Rashtriya Krishi Vikas Yojana.

Other suggestions included creation of National Social Security Board with sufficient budgetary allocation for providing social security to the workers of unorganized sector as well as provision of interest subvention for economically weaker sections and low income group sections for taking benefit under Pradhan Mantri Awas Yojana. Other suggestions included adequacy of budgetary resources for social sector, enhancing budget transparency at the district and sub-district level among others.

Suggestions were also made to address violence against women by making adequate budgetary outlays in the forthcoming Union Budget for implementation of Protection of Women from Domestic Violence Act, 2005, assistance for construction of shelter homes for single woman/destitutes and widows, utilization of 'Nirbhaya Fund' to institute substantive interventions for sector like health, urban development, public transport, education and other sectors that have a bearing on the safety of women. In order to meet the nutritional needs of women and girls, it was suggested to make higher allocations for Indira Gandhi Matritva Sahyog Yojana, review and scaling-up of Rajiv Gandhi Scheme for Empowerment of Adolescent Girls, higher allocation for ICDS Scheme and strengthening 'Gender Responsive Budgeting' among others.

Other suggestions included adequate allocation for the flagship schemes for children in the forthcoming Union Budget, timely disbursal, utilization and proper monitoring mechanism be placed in position to achieve desired outcomes. Children related legislation and commitments should be adequately resourced among others.

Some suggestions were made regarding special planned focus for welfare of child labourers, street children, child domestic workers, children in conflict with law, anti-human trafficking initiatives and to stop child abuse in institutional and non-institutional set ups. At present there is an allocation of 0.06% on child protection in the budget which needs to be raised in the forthcoming budget.

Some suggestions were made regarding special budget allocation for implementation of New Juvenile Justice Act as it will require setting-up separate children homes with skilled staff in all States/UTs for reformation of juveniles engaged in heinous crimes and higher budget allocation for protection of girl child. Other suggestions include higher allocation on health education and social protection of women at par with other developed countries, need for significant increase in spending for health from 1.3 per cent to 5 per cent of GDP as recommended by WHO, allocation of funds for Navjaat Shishu Suraksha Karyakram and ASHA Module 6 & 7 for all frontline health workers and higher allocation for Mid Day Meal Scheme among others.

Along with the Finance Minister Shri Arun Jaitley, the Pre Budget Consultative Meeting with the representatives of Social Sector Groups was also attended among others by Shri Jayant Sinha, Minister of State for Finance, Shaktikanta Das, Secretary, DEA, Dr. Hasmukh Adhia, Revenue Secretary, Ms. Anjuly Chib Duggal, Secretary, Financial Services, Shankar Aggarwal, Secretary, Labour and Employment, Dr. Arvind Subramanian, Chief Economic Adviser (CEA),

Among the representatives of the various Social Sector Groups included Shri Amitabh Behar, National Foundation of India, Sreedhar Ramamoorthy, Mines Minerals and People, Ms Deepa Sinha, Right to Food Campaign, Subrat Das, Centre for Budget and Governance Accountability, Shri Ashok Bharti, Natoinal Confederation of Dalit Organisation, Shri Ambarish Rai, Right to Education Forum, Ms Sonali Khan, Breakthrough, Ms Meenu Venkateswaram, Pravah, Ravi Duggal, Jan Swasthya Abhiyan, Thomas Chandy, Save the Children, Sandeep Chachra, Actionaid, Pradeep S Mehta, CUTS, Ms Avani Kapur, Centre for Policy Research, Ms Rukmini Banerjee, Pratham, Ms Mirai Chatterjee, Self Employed Women's Association, Ms Nandini Verma, Campaign for Tobacco Free Kids, Mathew Cherian, Helpage, Ms Bhavna Mukhopadhyay,Voluntary Health Association of India and Neereaj Jain, Wateraid among others.

Indian economy firmly on the path of revival : FM

Thesynergyonkli e Economics Bureau

NEW DELHI, JANUARY 08 :
The Union Finance Minister Mr Arun Jaitley said that Indian economy has emerged as one of the fastest growing economies in the world with its GDP growth accelerated at 7.3 percent in 2014-15 as compared to 6.9 per cent growth in 2013-14 and 5.1 per cent in 2012-13, indicating that the economy is firmly on the path of economic revival. He was making the opening remarks at his fourth Pre-Budget Consultative Meeting with the representatives of IT (Hardware & Software) Sector on Thursday in New Delhi.

Highlighting the contribution and importance of IT Sector, the Finance Minister said that the Government's 'Make in India" programme has included the electronic systems and IT & BPM (Business Process Management) sectors among the 25 key sectors.

He said that the Governments recognizes this Sector's potential and the Information Technology sector is a key pillar in various flagship initiatives like digital India, Make in India, Skill India as well as Start-up India among others.

The participants expressed their gratitude and congratulated the Government for the measures undertaken in the previous year which facilitated their market performance and enabled them to revive and improve their growth .They expressed full confidence in India being the next big player in the manufacturing field in the world. They further said that Manufacturing will be the major driving force of our economic growth and they will be able to achieve the committed target of creation of job opportunities.

Various suggestions were received during the aforesaid Consultative Meeting. Major recommendations were to continue with measures to facilitate the exports, facilitating ease of doing business, measures for simplifying and rationalizing tax procedures. Other suggestions included the provision of Place of Effective Management (POEM) to be deferred by couple of years as this short period can be a hurdle for industrial growth. There was also suggestion that the scope of POEM need to be rationalized and made applicable to overseas shell companies. It was suggested that GST be implemented at the earliest.

On the proposal of sunset clause in case of SEZ companies, the tax relief to the eligible development activities and the sales activities by a SEZ unit may be extended till March 2019, as it will be unfair to deny the tax benefits to such SEZ developers who have planned large investments in setting-up SEZ infrastructure. Other suggestions were reduction of corporate tax, specific time bound policy to revive the mobile industry, incentive to pollution free industries and vehicles, TRIPS Plus (Agreement on Trade-Related Aspects of Intellectual Property Rights ) commitment need to be relooked, directive to make all State and Inter-State duties and procedures online among others. There is also need to create duty differential benefits for Indian (IT hardware) manufacturers especially in case of mobile and tablets.

It was also suggested to reduce Minimum Alternate Tax (MAT) and utilization period under MAT be increased from 10 years to 15 years.

Along with the Finance Minister Mr Arun Jaitley, the Pre-Budget Consultative Meeting with the representatives of IT (Hardware & Software) Sector was also attended among others by Shri R.N. Watal, Finance Secretary, Mr Shaktikanta Das, Secretary, DEA, Dr. Hasmukh Adhia, Revenue Secretary, Ms Anjuli Chib Duggal, Secretary, Financial Services and Dr. Arvind Subramanian, Chief Economic Adviser (CEA).

The representatives of the IT (Hardware & Software) Sector present at the meeting included Mr Ramadas Kamath, Infosys, Mr P.V.Srinivasan, WIPRO, Mr Anil Chanana, CFO, HCL, Mr Pauroos D Karkaria,TCS,Mr R. Chandrashekhar, Chief Economist, NASSCOM, Ms Nisha Tompson, Founder, Datameet,Mr Vinod Sharma, Chairman, Electronics and Computer Software Export Promotion Council, Mr Nitin Kunkolienker, Vice President, Manufactures Association for Information Technology (IT), Mr Rajoo Goel, ELCINA Electronic Industries Association of India, Mr Hari Om Rai, Co-Chairman Task Force on Mobile Phone Manufacturing, Mr Suraj Saharan Ajit Pai, COO,Delhivery, Mr Sumandro, the Centre for Internet & Society and Mr Vikas Jain, Member, Task Force on Mobile Phone Manufacturing among others "

Budget 2016 poised to be a gamechanger
in economic growth


Thesynergyonline Economics Bureau

NEW DELHI, JANUARY 06 : "Real situations and real problems can be solved with real talk."

And so the Union Budget 2016 is poised to be a game changer in reviving investment, economic growth and job creation, enabled by the next generation reforms to fast-track India's economic resurgence.

The following are ASSOCHAM's recommendations in this regard:

The following are ASSOCHAM's recommendations in this regard:

Slide Down || Slide Up
Use the Infrastructure Finance Companies like IIFCL to rebuild the capacity of the private infrastructure sector by making it easier for them to raise funds. Since IFCs have the necessary expertise, they should also be used as ARCs for the infrastructure sector, helping revive stranded projects. NIIFIs a good first step but more needs to be done. Recommend that a taskforce on infrastructure finance under JS, Infra be setup to take this forward. Pension and insurance funds should be allowed to invest in any investment grade paper, not just AA.+Bank guarantees can be costly for companies and for bankers. These could be replaced by bid bonds or surety bonds, which are issued by insurance companies to contractors when they bid for government projects. Request IRDA to research and then create standards for these new type of bonds that companies can issue.+Service tax should be paid by contractors to government, only when the receive the payment from the government (this could be deducted from the government's payment). Today, contractors don't have the margin to deposit service tax every month yet receive their payments after many months. If there's a default receiving payment, then the service tax on that default should be credited back into the account of the payee.+ Eliminate all surcharges on corporation tax, service tax, etc. This does not promote ease of doing business, when everyone has to calculate taxes to two decimal places. Adjust tax rates where necessary.+NBFCs account for close to 15 percent of all advances the financial sector. Yet, they are treated differently than banks on the issue of TDS on interest. The act of deducting and depositing monthly TDS (and then sending out the TDS certificates) to thousands of borrowers increases the complexity of doing business. Banks don't have to do so. Therefore, NBFCs should also be treated on par with banks.+To promote mechanization in agriculture using advanced machinery like combine harvesters, suggest the creation of an Agricultural Equipment Bank, through PPP in each district. To promote entrepreneurship in smaller towns, especially that which is not around IT, suggest that the government gives tax breaks similar to IT Parks, for "Startup Hubs" in each city. These startup hubs are like incubators, but for all kinds of businesses, especially service and professional businesses.+Conduct a full cadastral and GIS survey of all the land parcels of the entire country, including boundaries. Match that survey with land records. And then put the final "land registry" online. This will dramatically ease litigation.

 

 

Exempt marketing and brand promotion of
agri products in rural areas from service tax

Thesynergyonline Economics Bureau


NEW DELHI, JANUARY 05 : Apex industry body ASSOCHAM has urged the Finance Ministry to keep all services provided for agricultural produce outside service tax ambit.

"Services like warehouse management, security, laboratory testing and others that are essential to secure storage of agri-produce should be included in the negative list or in the list of exempted services," recommended The Associated Chambers of Commerce and Industry of India (ASSOCHAM) in its pre-budget memorandum submitted to the FinMin.

Besides, ASSOCHAM has also suggested the government for exempting services like leasing of land and agricultural equipment, agri-extension services and others provided in rural areas or marketing agricultural products from service tax.

In order to prevent misuse of exemptions, appropriate rules can be framed for certification of services provided in rural areas by governmental bodies like the gram panchayats, village post-master and others, highlighted the ASSOCHAM pre-budget memorandum.

"Unscrupulous players are taking undue advantage of lower levels of consumer awareness of high-quality goods in rural India and flooding them with sub-standard and counterfeit products," said Mr D.S. Rawat, secretary general, ASSOCHAM.

"The government should partner with private sector for developing market infrastructure in rural areas by providing appropriate incentives and exemption from service tax in respect of input services that are used for strengthening infrastructure in rural markets," said Mr Rawat.

ASSOCHAM has also recommended the government to cover the processing of whole pulses into split pulses under the negative list of service tax. "Levy of service tax on such processing activities that are carried out in factories adds to the high prices of pulses, which is a staple diet for common man."

Prices of pulses have been showing an upward trend during the course of past few years owing to lower production and impact of adverse weather.

On a similar corollary, Finance Ministry has exempted levy of service tax on processing of paddy into rice.

Currently, negative list of services includes processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun-drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter the essential characteristics of agricultural produce but makes it only marketable for primary market.

 

 

 

 

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