By Abhishek Vishnoi and Nupur Acharya India’s reduction in the corporate tax rate to among Asia’s lowest was welcomed by investors as a boon that may help spur economic growth and company profits. The effective corporate tax rate for all domestic companies will be 25.2%, lowered from 30%, the government announced Friday. That reduces it to the same level as Singapore. “This move means concerns on India are quite well covered for the time being,” said Felix Lam, Hong Kong-based senior Asia Pacific equities fund manager at BNP Paribas SA. “We have to now see what companies do in terms of investments and what consumers do in terms of spending.” The benchmark Sensex Index headed for its biggest gain in a decade, climbing as much as 6.3% after the unexpected reduction. The gains wiped out a year-to-date loss that had triggered a so-called correction Thursday as the gauge registered a 10% drop from a record high touched in June. Foreign investors had … [Read more...] about FPIs turn bullish on India, say tax cut eases worries over economy
Tax cuts definition
Some mutual fund investors love to recycle their investments in Equity Linked Saving Scheme or ELSS to claim tax benefit under Section 80C of the Income Tax Act. The strategy is very simple: you recycle your old investment and claim tax deduction on it again after three years. However, the re-introduction of Long Term Capital Gains (LTCG) tax may queer the pitch for these investors, say some mutual fund advisors. “Fundamentally, this process is unhealthy for your investments but now after the introduction of LTCG, you will be at loss since you will pay tax on the redemption,” says Vishal Dhawan, Founder, Plan Ahead Wealth Advisors. The finance minister has proposed to tax long term capital gains above Rs 1 lakh on equity mutual funds at a flat 10 per cent without the indexation benefit. For late comers, investments in ELSS qualify for tax deductions of up to Rs 1.5 lakh under Section 80C. However, instead of making fresh investments, some investors pull out their old … [Read more...] about Does it make sense to recycle your ELSS investments after return of LTCG tax?
NEW DELHI: The automobile sector, which is already undergoing one of its worst phases, may further take a hit amid reports that several states including West Bengal, Bihar, Punjab and Kerala are against the GST rate cut. An ET Now report said that these states believe high taxation is not a reason behind the crisis in the auto sector. “States claimed that GST is not behind the slump,” ETNow said. These states are afraid of the loss of revenue in case GST rates are slashed. “Reducing the 28 per cent tax category will cut compensation cess kitty,” the report added. The report further said that states may take up weak revenue position in the upcoming GST meet. The council may also take up the issue of GST revenue leakages. The report comes days before the GST Council is scheduled to convene on September 20 when, among other things, it is expected to take a call on the industry’s demand for a cut in goods and service tax on automobiles. The Centre may be … [Read more...] about Select states not in favour of GST rate cut for auto, fear revenue loss
NEW DELHI: Aditya Birla Group Chairman Kumar Mangalam Birla on Friday said the government needs to do more than corporate tax cut and provide a strong fiscal stimulus for the economy. He said fiscal prudence should be shown in business but a fiscal policy is also required in the year of slowdown to counter its impact. "I am not an economist to begin with but I think we are nearing the bottom...I don't see credit growth to large corporates to pick up anytime soon. Most are still getting large debts in their balance sheets which I think they need to lop off. I also think there is a case for the government to give greater fiscal stimulus to the economy. Anyway FRBM Act (Fiscal Responsibility and Budget Management) provides half a per cent deviation," Birla said at a media event here. The Reserve Bank of India (RBI) on Thursday cut the economic growth projection for the current financial year to 5 per cent from 6.1 per cent earlier, on the back of weak domestic and external demand. … [Read more...] about Govt should provide strong stimulus package for economy: Kumar Mangalam Birla
BENGALURU: Infosys, Tata Consultancy Services (TCS) and HCL Technologies were among the rare set of stocks on the benchmark Nifty that lost on a day Indian equities logged their biggest gains, with investors buying into homefocused companies instead of exports-driven technology bellwethers after New Delhi announced cuts in corporate levies. Benefits of the tax cuts, stretching to 10 percentage points, would be greater for companies that largely generate their revenue at home and don’t enjoy many operational exemptions. By contrast, many exports-driven companies have lower tax incidence due to exemptions, and stand to benefit less from the tax incentives announced on Friday. TCS, Infosys and Tech Mahindra declined Friday, with investors trading three times more shares than they do on an average on anticipation the sector might not see an immediate impact of the corporate tax cuts. Wipro, which would benefit from the government’s move to not impose a buyback tax for … [Read more...] about TCS, Infy & HCL Tech buck the greatest bull run