New ITR form: Taxman seeks details of deposits made during demonetisation

The government has done away with two forms ITR 2A (used by individuals & HUFs not having income from business or profession and capital gains and who do not hold foreign assets).

The tax department has, however, introduced a new column for obtaining details of all deposits made by an individual or entity during the demonetisation period between November 8 and December 30 last year. This new column has also been introduced in the ITR-1 or ‘Sahaj’, the simplest form for individuals with salary income.

ITR, Income tax, returns, I-T, IT Click here to see the new ITR form
The I-T department has given a number of opportunities to taxpayers to explain any unaccounted deposits made during the note ban period, such as the ‘Operation Clean Money’ and the Pradhan Mantri Garib Kalyan Yojna (PMGKY). Now, the move to introduce this new column in the ITR form is meant to ascertain all deposits made by a person or entity irrespective of the threshold.

“This is just an effort to ascertain what deposits were made during the demonetisation period. The department has not issued notices in cases where the deposit amounts were small,” a senior officer told PTI.

Only 6 crore out of 29 crore persons holding permanent account number (PAN) file income tax returns at present.

The e-filing facility for ITR-1 is enabled from April 1 and ITRs can be filed till the stipulated deadline of July 31.

At the time of filing the form, the taxpayer has to fill in PAN, Aadhaar number, personal information and information on taxes paid. TDS will be auto-filled in the form.

Post July 1, as per amendments to the Finance Bill 2017 as passed by the Lok Sabha, it would become mandatory for an assessee to provide the Aadhaar number or the number showing that he has applied for Aadhaar in the ITR.

Also ITR 4 (filed by Individuals & HUFs having income from a proprietary business or profession) will now be known as ‘Sugam’ and ITR-4S will be substituted.

The form ITR-4S was used for filing ITR by individuals/ HUF or Partnership Firm having income from presumptive business.

New ITR form: Taxman seeks details of deposits made during demonetisation

BPCL, ONGC pip Reliance in overseas fundraising

Thanks to aggressive acquisition of oil assets abroad, government-owned BPCL and ONGC are set to overtake Reliance Industries in overseas fundraising in 2016-17. Reliance was the topper among corporate India in raising funds during the past five years.
The change in the league tables comes against a backdrop of a slowdown in fundraising by Indian corporates during the year. Overseas fundraising by Indian companies slowed to $19.02 billion in 2016-17 from $21.06 billion in 2015-16.
BPCL and ONGC raised $4.9 billion in 2016-17 against $1.65 billion raised by Reliance. ONGC raised $2 billion and State Bank of India raised $1.7 billion.
Analysts said Reliance was slowing new investments and its requirements of funds had declined substantially. The state-owned oil companies, on the other hand, are raising funds for acquisitions abroad, which led to their need for dollar-denominated loans.
Reliance has the biggest appetite for funds, having raised $14.85 billion over the past five years to fund its telecom services and expand its petrochemicals capacity.
“Most of the fundraising by Reliance now is to refinance old loans and it refinanced loans worth $1.75 billion just this week,” said a banker.
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ONGC and BPCL raised $9.1 billion and $6.5 billion, respectively, in the past five years, according to statistics with the Reserve Bank of India.
Last year, a consortium of state-owned oil companies led by ONGC, BPCL and Oil India had invested $3.2 billion to acquire stakes in two Russian oil fields. The funds were raised abroad because interest rates were lower overseas, said a banker.
Bankers said fundraising by Indian companies would climb in 2017-18 on a revival in economic activity. “There will be an increase in the capital needed by Indian companies. As Indian banks will not be able to meet this demand, top corporates will borrow abroad, where the rates are better,” said Prabal Banerji, head of international finance at the Bajaj group.
BPCL, ONGC pip Reliance in overseas fundraising

Beginning Brexit: Bracing for impact

The world did not end. No recession unfolded. Nine months after Britain voted to leave the European Union (EU), disregarding warnings of grim economic consequences, a nation famous for calmly carrying on has seemingly gone about its business.

As Prime Minister Theresa May on Wednesday officially initiated Britain’s exit from Europe — Brexit, in everyday talk — the lack of disaster was touted by those steering the departure as a sign of little trouble ahead.

“There were predictions about what would happen to the economy if the United Kingdom voted to leave,” May told Parliament on Wednesday. “Those predictions have not proved to be correct. We see a strong economy.”

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But the reassuring talk did not reckon with one significant detail: Nothing has actually happened yet.

May has only set in motion the complex, politically fraught divorce proceedings through which Britain must settle its affairs with the 27 jilted members of the EU. The outcome will almost certainly be costly: Britain has placed in jeopardy its trading relationship with Europe, its largest customer for exports, while imperiling London’s status as banker to the planet.

The markets essentially shrugged. The move was as expected as the next Super Bowl. The pound dipped a tad. So did shares on London’s stock market.

The immediate impact of May’s action was to start negotiations on future dealings across the English Channel. Those talks have a two-year deadline. If no deal is struck before then, Britain and Europe would plunge into a state of chaotic uncertainty.

Trade would revert to the rules of the World Trade Organization, making Britain’s exports to Europe vulnerable to tariffs and other barriers to commerce, including health and safety rules.

London’s bankers would be effectively severed from Europe, with many transactions for clients based on the Continent rendered illegal.

Until now, such issues were wrapped in layers of hypotheticals, with the details left for some indeterminate day when Britain’s government would make it real. That day has come.

Though the financial industry has been preparing to move jobs to other financial capitals in anticipation of a messy Brexit, other industries have waited for clarity. Now, they will feel pressure to act — shifting some lines of business to European capitals, perhaps shelving British expansions.

Global banking giants like Citigroup, HSBC and JPMorgan Chase may soon carry out plans to shift thousands of jobs to financial centers in the European Union. Goldman Sachs recently confirmed that it is moving hundreds of jobs out of London while expanding offices in Frankfurt and Paris.

Vodafone, the telecommunications giant, said after the referendum that it might shift its headquarters from London.

“The fact of setting this clock ticking is significant, because two years for many businesses is enough time for them to adapt, but short enough that they have to start making decisions really quickly,” said Nicolas Véron, an economist and senior fellow at Bruegel, a research institution in Brussels. “You will start to see very observable, concrete consequences of Brexit very soon.”

Britain has exploited its inclusion in Europe’s vast single market to make itself a dominant hub for multinational companies as various as aviation, pharmaceuticals and finance. They have set up factories, marketing teams and trading floors in Britain while selling to clients from Ireland to Greece, as if this swath of geography — home to some 500 million people — were one country.

So much for all that.

European leaders have consistently reaffirmed that remaining in the single market requires that Britain accept the free movement of people. That collides with a primary aim of many Brexit supporters — restricting immigration.

After months of pretending that a finesse could be found, May in January declared her government’s choice: enter immigration limits, goodbye single market.

Long before this political reckoning with reality, executives at global banks were already mulling which jobs to move from London to other cities in the European Union — Dublin, Frankfurt, Paris, Amsterdam, Luxembourg.

“People will have to move,” said William Wright, founder and managing director of New Financial, a research institution in London. “There’s no other option.”

Predicting how many jobs will move has become a thriving cottage industry. Oliver Wyman, the global consultancy, concluded that if, as now seems likely, transactions in London for European clients are sharply curtailed, as many as 35,000 British jobs could disappear with as much as 20 billion pounds ($24.8 billion) in revenue.

After the Brexit vote, May met with Nissan’s chief executive to offer assurances that her government would do what was necessary to keep auto manufacturing competitive. Nissan said it would continue to make sport utility vehicles in Sunderland, a city in northern England.

Brexit supporters called the outcome a template for how a pragmatic British government would prevent businesses from abandoning its shores — with tax cuts, friendly regulation and deal making. But if Britain promised anything meaningful to Nissan, it probably violated World Trade Organization rules. Nissan has since said it continues to assess the uncertain economics of Britain. Ford and BMW are reassessing their British factories, too.

For now, Britain has managed to avoid the most frightening economic forecasts.

Before the referendum last June, the British Treasury predicted that a vote to exit could shrink the economy by as much 6 per cent annually for the first two years.

The economy expanded by 1.8 per cent last year. British consumers continued to spend. British factories continued to churn out cars, medical devices and aircraft parts, many of them destined for Europe.

This month, Toyota announced plans to sink an additional £240 million (about $297 million) into a factory in Derbyshire, though it qualified that it required reliable access to Europe. Snap, the parent company of social media darling Snapchat that raised $3.4 billion in an initial public offering, recently picked London as its international headquarters.

But consumer spending has been increasingly paid for by debt. The British pound has surrendered 17 per cent of its value against the dollar since the referendum, raising the cost of imported goods. Investment is flagging.

A weaker pound helps exports, making British goods cheaper on world markets. But exports have also been aided by the very thing Britain is trying to ditch — inclusion in Europe.

Proponents of Brexit tend to dismiss Europe as a land leading only in the numbers of unemployed men who are moving in with their parents. Britain’s next era is supposed to be centered on trade with faster growing, innovative nations like the United States.

Britain and Europe must negotiate a trade deal that will prevent a rupture to commerce. During the campaign, Brexit supporters argued that Europe would ultimately make it happen because its most powerful member, Germany, now sends a parade of BMWs, Audis and Volkswagens to Britain.

But trade negotiations are vulnerable to the manipulations of politically protected industries. This one seems particularly prone to acrimony. European leaders confront existential threats to their union, with political parties across the Continent hostile to its powers. Many are intent on using Britain to illustrate what they contend happens when a member leaves — nothing good.

“It’s common sense,” said Véron, an economist. “You don’t allow someone who leaves the club to have better terms than someone who’s in the club, or otherwise the club doesn’t mean anything.”

Even if European leaders seek middle ground, any one of the member nations could hijack the proceedings with their demands while the clock ticks away. Last year, a single province of Belgium nearly scuppered a trade deal negotiated between all of Europe and Canada in seeking favour for its dairy farmers.

In a bid to stake out a stronger negotiating position, May has threatened to walk away if Europe does not extend good terms. “No deal for Britain is better than a bad deal,” she said in January.

Whatever the comparative rankings of unfortunate events, Britain’s leaving Europe sans deal would be bad, as economists and people running businesses have said.

It is often said that businesses fear uncertainty more than anything. May just eliminated some of that. But she replaced it with an apparent certainty that presents its own troubles: Britain really is departing the largest consumer market on earth.

Beginning Brexit: Bracing for impact

EC asks print and electronic media to refrain from running exit polls

Taking note of violation by some media houses of its directive not to run exit polls till a specified time during the latest assembly elections in five states, the Election Commission on Thursday advised the media to refrain from such activity in future.
In a letter to the Secretary General of News Broadcasters Association and the Secretary of Press Council of India, the poll panel told the media, both print and electronic, to refrain from running exit polls or predictions about seats in future.
“Despite the provisions of Section 126A and notification by the Commission on March 4, specifying the period during which conducting or running any exit poll results was prohibited… it has been observed that some TV channels telecast certain programmes projecting the number of seats likely to be won by political parties,” it said.
“The Commission is of the view that prediction of results of elections in any form or manner by way of predictions by astrologers, tarot readers, political analysts or by any person during prohibited period is violation of the spirit of Section 126A of R.P. Act.”
It said that without the support of the media through “objective reporting and compliance to laid down code of conduct, rules”, the Election Commission would not have “earned the kind of recognition it got in election management the world over”.

 

EC asks print and electronic media to refrain from running exit polls

Insurance IPOs: Theme for 2017

Stock market investors are eagerly awaiting a new sector category of insurance as more insurance firms get listed in 2017-18. ICICI Prudential Life Insurance, the largest private sector insurer, came out with its public issue in September 2016, while HDFC Life and Max Life announced a merger in August, which is yet to receive regulatory approval. In this year’s Union Budget, Finance Minister Arun Jaitley announced the listing of state-owned general insurance companies, now preparing for their initial public offerings (IPOs).
After the IPO of public sector banks in the past few decades, the listing of insurance players will be the next big change in the country’s financial services sector.
While the insurance sector is as old as banking in the country, it is only in the past 10-15 years that the sector has undergone a sea change in terms of standards of expansion and disclosures. The Insurance Regulatory and Development Authority of India (Irdai), set up in 2000, opened insurance to the private sector and allowed foreign firms to partner with Indian players.
The listing of insurers is a step towards improving the quality of disclosures and its periodicity, and will make companies answerable to investors and society in general. Till a decade ago, there was little transparency in terms of policy details, claims and surrender rates, which Irdai has changed by bringing in more disclosures.
Joydeep Roy, partner – advisory practices, PwC India, who leads the insurance vertical, says that ever since the insurance sector was opened up, disclosures and transparency have undoubtedly increased. “This was done with an intention of tapping the capital market,” he says. He explains that insurance companies were among the first to rope in independent directors in the board. “Even the smaller companies in the sector follow far superior practices than in other industries,” he emphasises.
Sandeep Batra, executive director, ICICI Prudential Life, too adds that tapping the capital market will accelerate the levels of compliance and disclosures. “Anyone wanting to go public needs to start preparing for the IPO well in advance. This was the game-changer for the sector, because until 2014, the year when tapping capital market was made possible, not many companies really bothered about disclosures, though the general level of compliance with Irdai norms was always maintained,” Batra says.
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But, the process to successful listing might not be easy for all. The insurance business, especially life, has a unique way of publishing its financials. The format followed by insurers is far different than that of banks and non-banking financial companies, and has several layers of incomes and expenses that one needs to be mindful of. Abizer Diwanji, partner and national leader – financial services, EY India says, insurance company financial statements generally have many assumptions around the actuarially computed provisions, though the disclosure requirements of these assumptions can be benchmarked.
For an investor looking at insurance players, general insurance is an easier business to understand over life insurance as the financials are more straightforward. “Emergence of profit or loss is more immediate in general insurance and so value discovery should be easier,” says Diwanji.
In his opinion, the disclosure levels for general insurers is very detailed and contrary to popular belief, this holds true even for the public sector general insurers. “Accounting was branch oriented for public sector general insurers. So, calculating data was tough and long drawn, which is changing thanks to the efficient drive of Insurance Information Bureau,” he says. So, when these insurers get listed, data is expected to be real time, which will be help investors analyse companies better.
This year is expected to be a turning point for insurance companies and investors can expect at least two major issuances—New India Assurance and General Insurance Corporation in the public-sector general insurance space. SBI Life is also a possible candidate. The current buoyancy in the stock markets should also help these public issues.
Insurance IPOs: Theme for 2017

5 airlines win bids to fly 128 routes; link 70 airports

The government on Thursday said it was close to resolving a dispute with major Indian carriers over levying regional connectivity charges. It also unveiled a list of successful bidders and routes under the scheme, called Udan.
Five operators will operate on 128 routes and connect 70 airports, most of which are not well connected by airlines now. “This is a unique scheme, which is completely market-driven,” Jayant Sinha, minister of state for civil aviation, said. “Through a corpus of only Rs 205 crore, we will create around 1.3 million seats, which will kick-start the underdeveloped regional aviation market.”
Agra, Shimla, Nanded, Kanpur and Jamshedpur are among the many airports that would see connectivity under Udan. Experts have said the scheme has good business propositions.
Major established players such as Alliance Air (subsidiary of state-owned Air India) and Ajay Singh-owned SpiceJet emerged as successful bidders, along with lesser known players such as Air Odisha and Truejet. G R Gopinath’s (known as Captain Gopinath) Air Deccan, which pioneered low-cost travel in India, made a comeback through the scheme to connect 15 airports.
Civil Aviation Secretary Rajiv Nayan Choubey said Udan would leapfrog India’s aviation sector. “From a rate of one airport annually, we have leapfrogged to connecting 33 airports in a single year,” Choubey said, adding the routes have a uniform spread across the country.
The process saw intensive bidding for prime routes. For instance, SpiceJet outbid Alliance Air for the Delhi-Kanpur route, which Air India was operating till today. “It’s a great day for Indian aviation,” said Amber Dubey, India head of aerospace & defence at global consultancy KPMG. “This will give a huge fillip to investments, tourism and job creation in the interiors of India.  Good to see that the regional connectivity scheme routes are spread out across all corners of the country. Operators should try and synchronise their schedules and enter into code-share agreements with larger carriers.”
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The Udan scheme offers 50 per cent subsidy to airlines on these routes, route monopoly for three years and a host of other concessions at landing airports. It expects the airlines to cap fares at Rs 2,500 a seat an hour rate on regional flights.
On the tussle with airlines over levying regional connectivity charges, the minister said: “We are very close to a solution over this matter. We had multiple rounds of discussion with the airlines and the issue will be resolved soon.”
The Federation of Indian Airlines — which consists of IndiGo, SpiceJet, Jet Airways and GoAir, and has around 80 per cent market share — had moved court contesting that the government had no authority to impose a levy in the nature of tax on air services. Major airlines opposing the government’s move had put a question on the viability of the scheme and the government found it difficult to mop up fund to set up a corpus for Udan.
Successful bidders
Alliance Air
SpiceJet
Air Deccan
Air Odisha
TruJet (Turbo Megha)
On the flightpath
No. of routes: 128
Total airports: 70
Prime routes: Delhi-Kanpur; Delhi-Shimla; Delhi-Agra; Mumbai-Porbander; Kolkata-Jamshedpur
5 airlines win bids to fly 128 routes; link 70 airports

BS-III ban: Two-wheeler majors offer cash benefits of up to Rs 22,000

It’s time for year-end sales of two-wheelers by leading brands because of the Supreme Court’s Wednesday order, which banned sales of vehicles complying with Bharat Stage-III (BS-III) emission norms from April 1.
Saddled with a few hundred thousand BS-III two-wheelers, industry players, including Hero MotoCorp, Honda Motorcycle and Scooter India (HMSI) and Bajaj Auto, are offering discounts of up to Rs 22,000 on BS-III two-wheelers to clear the inventory.
The two-wheeler industry had about 670,000 BS-III units as on March 20. A significant number has remained unsold despite the push from companies since March 21. Companies will look at options to export the unsold stocks after March 31. These discounts will have some impact on the fourth quarter (Q4) profitability of companies, which will also take a hit during this quarter, owing to a decline in volumes after demonetisation.
The steepest discount comes from Japanese auto major HMSI. HMSI, which also took out dvertisements in leading national dailies on discounts, said on its Facebook page that it was offering a cashback of up to Rs 22,000 on any Honda BS-III motorcycles and automatic scooters purchased by March 31. The second-biggest player in the domestic two-wheeler market did not respond to queries on discounts. Hero MotoCorp, the country’s biggest two-wheeler maker, is giving cash discounts of up to Rs 12,500 and free insurance on most BS-III motorcycles and scooters.
Being the biggest player, its inventory of BS-III two-wheelers is the largest.
These are significant discounts, considering the price of an average two-wheeler, which is in a range of Rs 40,000-50,000. But what is triggering these discounts?
A company executive said there was an option to upgrade these two-wheelers in order to make them conform to BS-IV emission norms. But that process is elaborate. The manufacturer will have to take back the product from the company’s dealers even though billing and payment have been made by the dealer on such products. The next step would be dismantling the two-wheelers and then retrofitting them with a BS-IV engine and other components. “The process could cost almost Rs 15,000 for one such two-wheeler. And then it needs to be transported back to the dealer. There would be thin or no margin left to be shared between the manufacturer and the dealer after this process,” said an executive of a two-wheeler maker.
Pune-headquartered Bajaj Auto, which had approached the Supreme Court to stop automobile makers from selling BS-III vehicles after March 31, is also affected. It is offering discount and free insurance across models. The discount at its entry level motorcycle CT100 is Rs 3,000. The Avenger and Pulsar RS200 will come at a discount of Rs 7,000 and Rs 12,000, respectively. The company, like others, will reimburse the discount that dealers are offering.
Graph Companies have conveyed to dealers that they will offer support if any of the latter is left with unsold BS-III stocks on April 1. Bajaj Auto, in a letter to its dealers, said the manner of ‘such support would be communicated’.
A TVS Motor dealer said the company was offering a Rs 3,000-5,000 discount for all products. TVS said the offer went up to Rs 20,150 for select models.
A Yamaha two-wheeler dealer said it was giving a discount of around Rs 10,000 for some of its models.
While passing its order, the court had said any BS-III vehicle sold by March 31 would be permitted for registration even in April on giving proof of the purchase date. However, only BS-IV vehicles can be sold from April.
An Ashok Leyland spokesperson said, “Our products are in good demand. We will not be offering any price discount. To date, we have sold about 50,000 BS-IV vehicles to customers, who have access to BS-IV fuel.”
John K Paul, president of the Federation of Automobile Dealers Association (FADA), said the stocks with dealers could not be sold even with discounts within the limited period. The dealers may face a challenge if the manufacturers do not take back the stocks after April 1.
“We will sit with Siam (Society of Indian Automobile Manufacturers) and discuss the issues,” he said. The FADA has around 4,000 members, which own around 11,000 dealer units in the country.
Commercial vehicle makers, which are also hit by Wednesday’s order, are silent on discounts. “The sales and marketing teams are out in the market to close deals. Whatever is the need of the hour will be done,” said Vinod Agarwwal, managing director and chief executive officer at Volvo Eicher Commercial Vehicles.
A transporter said heavy commercial vehicle majors had been offering discounts in the range of Rs 3-4 lakh for the past few weeks and these were to continue. Mahindra & Mahindra (M&M) dealers said they were open till 1 am on March 31, and were witnessing reasonable traction for the light commercial vehicle segment. Discounts in the range of Rs 20,000 and above are being worked out. There’s no company level discount from M&M. The discounts are varying from market to market.
BS-III ban: Two-wheeler majors offer cash benefits of up to Rs 22,000