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Mumbai, Feb 7 () Life Insurance Corporation is keen to unlock value in IDBI Bank in the run up to the insurance behemoth's IPO, which is likely to happen in FY21, its Chairman M R Kumar said on Friday. Presenting the Budget, Finance Minister Nirmala Sithraman had said the government would sell a part of its 100 percent holding in LIC through an IPO in the next fiscal year. Later, Finance Secretary Rajiv Kumar said the government could divest up to 10 per cent in LIC, which has an enterprise value of Rs 36 lakh crore. The government aims to garner Rs 90,000 crore from the listing of LIC and stake dilution in IDBI Bank in the next fiscal out of the total disinvestment target of Rs 2.10 lakh crore. In January 2019, LIC picked up 51 per cent stake in IDBI Bank, making it the majority shareholder of the lender. The Irdai regulations bar an insurance company from holding more than 15 per cent in any listed entity. However, Irdai has given some exemption to LIC in regard to its holding in IDBI Bank. LIC Chairman Kumar said though Irdai has not fixed any timeline for LIC to reduce its stake in IDBI Bank, the Reserve Bank has given a 12-year timeframe. "We would not want to wait that long, especially when we are also going to be listed, but we have to find some ways to unlock value in IDBI Bank," Kumar told reporters here on Friday. He said once the bank comes out of the lending restrictions imposed by the RBI under the Prompt Corrective Action (PCA) framework and becomes profitable, the bank would be able to attract investors. "Once they come out of the PCA and start lending again, I believe that their profitability will go up substantially and also attract investors," he said. IDBI Bank, which is under PCA framework since May 2017, had met RBI in January to seek lifting of the operational restrictions, had earlier reported. The lender had made a presentation to the RBI on its improved financial position. The government holds 47.11 per cent stake in IDBI Bank, while 51 percent is with LIC. This leaves practically nothing for investors, as its floating shares are only 3 per cent of the paid-up equity. Sitharaman had said the government would want to tap the retail investor segment to sell its stake completely. Kumar said the stake sale by the government in IDBI Bank will help bring in more retail investors. "Once the stake sale happens, people will show more interest in the scrip, because as of now with 51 per cent with us and over 47 (per cent) with the government, there is hardly any free float to give value to shareholders," Kumar said. When asked about the IPO's timing, Kumar refused to give any timeline. "Yes, the finance secretary was on record saying listing will happen in the H2 of FY21. We have to work it out. I don't know how long it takes for the very simple reason that we are doing for the first time," he said. Finance Secretary Rajiv Kumar had on Sunday said the LIC IPO may be done in the second half of FY21. The LIC chairman said the listing would need some legislative changes in the LIC Act. "Basic amendment to the LIC Act would be required," he said. Explaining further, the corporation's appointed actuary Dinesh Pant said, "LIC (Act) has got a Section 24 where the entire fund of the corporation is a controlled fund which is under one fund. So how will be now be bifurcated. There is Section 28 about dividend distribution and so all those things have to be taken care of." He also said it needs to be seen how Section 37,which talks about the sovereign guarantee, is amended. Spelling out the priorities in the run up to listing, he said the focus would be on creating right perception in the market and to work on the process of valuation. He also said the policyholders and employees will not have any impact due to the listing. Earlier this week, nearly 1 lakh employees of the corporation staged an hour-long walkout against the IPO plans. HV BEN ABMABM

Looking to unlock value in IDBI Bank: LIC chief

New Delhi, Feb 15 () Association of stock brokers ANMI on Saturday said it will mobilise one crore investors for the initial public offering of insurance behemoth LIC in order to unlock the true potential of the country's crown jewel, akin to the Saudi Aramco.Finance Minister Nirmala Sitharaman in her budget speech announced that the government proposes to sell a part of its holding in LIC through IPO.The proposed listing will help the government in achieving its disinvestment target of Rs 2.1 lakh crore for 2020-21."It would be our endeavour to mobilise one crore investors for LIC's IPO and unlock the true potential of India's crown jewel, akin the Saudi Aramco in the Middle East and Apple's listing in the US," Association of National Exchanges Members of India (ANMI) President Vijay Bhushan said.LIC's initial share-sale will be the IPO of the decade and ANMI will support the government in its effort to mobilise investments, including the landamark initial offer of the insurance behemoth, he added.Currently, the government owns the entire 100 per cent stake in LIC and according to market experts, the company can be valued at around Rs 8-10 lakh crore.Saudi Aramco, which is currently valued at USD 117.82 billion, was listed on Saudi Stock Exchange in December last year.ANMI is an association comprising around 900 stock brokers from across the country who are members of the National Stock Exchange, BSE, Multi Commodity Exchange and other exchanges having national presence. SPBAL

ANMI to mobilise one crore investors for LIC's IPO

New Delhi, Mar 3 () The government on Tuesday said it will continue to retain the management control of LIC and safeguard the interest of policyholders even after listing of the insurance behemoth through initial public offering (IPO) on stock exchanges. In the Budget Speech 2020-21, Finance Minister Nirmala Sitharaman announced that Life Insurance Corporation of India (LIC), a fully-owned government undertaking, will be listed. In a written reply to a query in the Rajya Sabha, the minister said that listing of companies on stock exchanges disciplines a company and provides access to financial markets and unlocks its value. "It also gives opportunity for retail investors to participate in the wealth so created," Sitharaman added. The IPO, she said, would be brought out after necessary legislative changes and regulatory approvals. "The government will remain the majority shareholder and will continue to retain management control safeguarding the interest of policyholders," she said. The finance minister further said LIC is not losing its market share. At the end of March 2019, LIC had a market share of 74.71 per cent in number of policies and 66.24 per cent in first year premium income. According to data published by the Life Insurance Council, LIC has a market share of 77.61 per cent in number of policies and 70.02 per cent in first year premium income as on January 31, 2020. Meanwhile, Minister of State for Finance Anurag Thakur in another reply said the government has given in-principle approval for strategic disinvestment of 34 central public sector enterprises, including subsidiaries, units and joint ventures. Strategic disinvestment implies sale of substantial portion of the government shareholding of a CPSE along with transfer of management control. NKD CS HRS

Govt to retain management control in LIC after listing: Sitharaman

New Delhi, Feb 2 () Listing of insurance behemoth Life Insurance Corporation (LIC) may be done in the second half of the next financial year, Finance Secretary Rajiv Kumar said on Sunday.
 Finance Minister Nirmala Sitharaman while presenting the Budget 2020-21 on Saturday announced stake sale in LIC through an initial public offer in the next fiscal.
 There are a number of processes which have to be followed for the listing and some legislative changes would also be required for the listing of LIC, Kumar said.
"We will follow the extant procedure for listing and for other things including the legislative changes it requires in consultation with the Ministry of Law and that process we already started ... listing in the second half of FY21 seems logical," he said.
Listing of LIC will bring in greater transparency, public participation and also deepen the equity market, he told in an interaction.
 Asked about the quantum of dilution, Kumar said, it could be 10 per cent but no decision has been taken so far.
 The government aims to garner Rs 90,000 crore from the listing of LIC and stake dilution in IDBI Bank in the next fiscal out of total disinvestment target of Rs 2.10 lakh crore.
 The government currently owns 100 per cent in LIC, while it holds around a 46.5 per cent stake in IDBI Bank.
"Listing of companies on stock exchanges discipline a company and provides access to financial markets and unlocks its value. It also gives opportunity for retail investors to participate in the wealth so created. The government now proposes to sell a part of its holding in LIC by way of Initial Public Offer (IPO)," the Finance Minister had said in her Budget speech. 
 Market participants are quite bullish about LIC and said it could be "IPO of the decade" akin to the Saudi Aramco listing.
The 60-year-old state-owned firm, LIC, is the country's largest insurer, controlling more than 70 per cent of the market share. The insurer has a market share of 76.28 per cent in number of policies and 71 per cent in first-year premiums.
 LIC has many subsidiaries including IDBI Bank. It acquired controlling stake in IDBI Bank last year. DP MR
MR

LIC IPO may come in 2nd half of FY21, says Finance Secretary

New Delhi, Feb 1 () The government on Saturday pegged disinvestment target for 2020-21 at Rs 1.20 lakh crore, nearly double of Rs 65,000 crore it expects to raise in the current financial year.
 The government has missed the budgeted disinvestment target of Rs 1.05 lakh crore set for the current financial year by a huge margin.
 In the current financial year so far, the government has mopped up about Rs 18,000 crore by way of disinvestment. The Revised Estimate pegs disinvestment proceeds at Rs 65,000 crore for this fiscal ending March 2020.
 For the next financial year, beginning April 1, the government expects a substantial Rs 90,000 crore revenue from disinvestment of government stake in public sector banks and financial institutions. This would help the government achieve the Rs 1.20 lakh crore total disinvestment proceeds for 2020-21.
 Finance Minister Nirmala Sitharaman in her 2020-21 Budget announced selling of part government stake in insurance behemoth Life Insurance Corporation (LIC), beside selling the balance holding of the government in IDBI Bank to private, retail and institutional investors.
 "In the last few years, the government has taken concrete steps to bring our banking system to be robust. However, there is a need for greater private capital. Accordingly, it is proposed to sell the balance holding of Government of India in IDBI Bank to private, retail and institutional investors through the stock exchange," she said in her Budget Speech.
 The government currently holds 47.11 per cent, while LIC is the majority shareholder holding 51 per cent stake in IDBI Bank.
 In August last year, the Cabinet approved selling the government's controlling stake in IDBI Bank to LIC, which is currently 100 per cent government-owned.
 Sitharaman in her Budget Speech also proposed listing of LIC on the stock exchanges through an initial public offer.
 "Listing of companies on stock exchanges discipline a company and provides access to financial markets and unlocks its value. It also gives opportunity for retail investors to participate in the wealth so created. The government now proposes to sell a part of its holding in LIC by way of initial public offer (IPO)," she said.
 In the financial year 2016-17, the government had missed the budgeted disinvestment target. While the Budget had pegged target at Rs 56,500 crore, the government was able to mop up Rs 46,247 crore.
 In 2019-20, after a gap of 2 years, the government has missed the disinvestment target set in Budget.
 In 2017-18, it bettered the target of Rs 1 lakh crore and raised a record Rs 1,00,056 crore. In 2018-19, the disinvestment mop-up stood at Rs 84,972 crore as against the Budget target of Rs 80,000 crore. JD HRS

Govt pegs Rs 1.20 lakh cr disinvestment mop-up in 2020-21, Rs 65,000 cr in current fiscal

<ul><li>Both Sensex and <keyword id="6354813" type="UNKNOWN" weightage="20" keywordseo="Nifty">Nifty</keyword> declined nearly a percent and half as Finance Minister Nirmala Sitharaman read her budget speech.</li><li>Markets were hoping for a big stimulus from the government to revive the economic growth which has hit a six and a half year low. </li><li>Changes to income tax slabs, passing of the tax on corporate dividends, liberalisation of education sector, the IPO of LIC, extended tax holiday for affordable housing were among the big proposals.</li></ul>India's <keyword id="35199" type="PERSON" weightage="20" keywordseo="stock-markets">stock markets</keyword> were unusually open on a Saturday, in anticipation of an 'economic stimulus', but as Finance Minister Nirmala Sitharaman went through with her speech, both Sensex , down nearly 700 points, and Nifty that was down about 220 points at 2:30 pm. Changes to income tax slabs, passing of the tax on corporate dividends, liberalisation of education sector, extended tax holiday for affordable housing, and the initial public offering of Life Insurance Corporation (LIC) were among the big proposals. However, the stock market did not seem very excited with the minister's proposals. "Investors stayed away from taking fresh positions ahead of the big event. Focus will turn to the Union Budget as all eyes will be on how Centre is going to bring growth as any increase in spending would result in widening of fiscal deficit. Global economy is also on the edge with slow growth fears significantly high after the outbreak of the virus," Vinod Nair, head of research at Geojit Financial Services told IANS earlier in the day. Insurance stocks like HDFC Life, ICICI Prudential, and SBI Life took a heavy beating, down anywhere between 5% and 8%, after the budget proposed the listing of LIC ⁠— the country's largest insurance giant with a corpus of ₹31 lakh crore⁠— that is likely to corner a lot of interest from investors. Technology stocks were propped up as the early part of Sitharaman's speech gave a lot of thrust to leveraging technology in a whole host of sectors from health and education to quantum computing and gene mapping. Even stocks like HUL, Asian Paints, and Bajaj Finance, which started the day on buoyant note hoping for sharp cuts in income tax and a boost for consumption including housing, gave up the early gains as the tax cuts proposed by the budget can be availed only if the taxpayer gives up on exemptions. <table style="border-width: initial; border-style: none; width: 468pt; table-layout: fixed;"></colgroup></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Income </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Previous Tax Rate </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">New Tax Rate </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Up to ₹2.5 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Nil </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Nil </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹2.5 lakh to ₹5 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">5% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Nil </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹5 lakh to ₹7.5 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">20% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">10% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹7.5 lakh to ₹10 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">20% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">15% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹10 lakh to ₹12.5 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">30% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">20% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹12.5 lakh to ₹15 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">30% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">25% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Abover ₹15 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">30% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">30% </td></tr></tbody></table> While Sitharaman said that a person earning up to ₹15 lakh a year can save up to ₹78,000 a year in taxes, if they give up on exemptions. These are some of the big highlights that are relevant to the share market: Cost to the exchequer ₹40,000 crore; Removed 70 tax exemptions and deductions. These new rates are available to those who forego exemptions, deductions, and rebates. Dividend distribution tax will be abolished, it will be taxable in the hands of the recipient. Cost to exchequer: ₹25,000 crore. ""The decision to remove dividend distribution tax was much-needed as it was resulting in triple taxation of corporate earnings. The shift to a simplified scheme of personal income tax is another welcome move as it removes distortionary influences in the individual’s savings choices even though the actual tax savings may not be significant for those who were availing deductions and exemptions," VP Nandakumar, MD &amp; CEO of Manappuram Finance Limited said. However, the stock of the company fell over 3.2% in trade. Shares of IDBI Bank surged as much as 17% after the Finance Minister said that the government will sell its remaining 47% stake (as of December 2019) in the bank. LIC owns 51% stake in IDBI Bank, the unlocking of value will make the insurance giant's IPO even more valuable. Zeal Aqua (up 14.4%), Waterbase (up 5.58%), Apex Frozen (up 4.55%), Avanti Feeds (up 2.93%) and Coastal Corporation (up 2.66%) gained due to a dedicated push for the fishing industry. Sitharaman said that the fish production will be increased 200 lakh tonnes a year and set a target of ₹1 lakh crore in fish exports. The education sector has been allowed to borrow money from abroad as well as to invite foreign students via a new entrance examination called the INDSAT. Shares of Navneet Education (up 2.33%), Zee Learn (up 2.19%), Career Point (up 1.98%) and MT Educare (up 1.97%), gained in trade. The speech discouraged the use of chemical fertilisers, and promote organic farming, dragging down stocks like Rashtriya Chemical Fertilisers. The ₹2.83 lakh crore allocation for agriculture, irrigation, and rural development did little to stokes of a revival in rural demand. Dividend distribution tax will be taxable in the hands of the recipient and not the company. This will cost 25,000 crore to the exchequer. Dividend and capital gains made by foreign funds on investment in infrastructure space will tax free. The budget also proposed to set up a 100 new airports in the next five years but stocks of airport construction majors like GMR Infra and GVK were down nearly 5% in afternoon trade. SEE ALSO: <a href="https://www.businessinsider.in/personal-finance/news/new-income-tax-slab-tax-savings-for-salaried-people/articleshow/73835816.cms">You'll save ₹78,000 more under new income tax slabs if you earn less than ₹15 lakh</a> <a href="https://www.businessinsider.in/budget/news/indian-government-infuses-22000-crore-in-power-and-renewable-proposes-freedom-to-choose-supplier/articleshow/73835587.cms">Indian government infuses ₹22000 crore in power and renewable, proposes freedom to choose supplier</a> <a href="https://www.businessinsider.in/budget/income-tax/news/check-out-new-income-tax-slab-of-2021/articleshow/73830824.cms">New income tax slabs 2020</a> <a href="https://www.businessinsider.in/budget/news/there-will-be-no-manual-cleaning-of-sewers-anymore-announces-nirmala-sitharaman/articleshow/73835265.cms">“There will be no manual cleaning of sewers anymore,” announces Nirmala Sitharaman</a> <a href="https://www.businessinsider.in/budget/news/union-budget-2020-live-updates-news-and-highlights/liveblog/73824572.cms">Union Budget 2020 Live Updates</a>

Indian markets aren’t excited because budget does not have the ‘stimulus’ they had hoped for

New Delhi, Feb 14 () The government expects to complete sale of national carrier Air India in the first half of the next fiscal, Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said on Friday. During an interaction with financial sector experts to discuss the Union Budget, Pandey also said disinvestment strategy has shifted from minority stake sale in public sector units to strategic sale, and a lot of privatisation would happen in the next fiscal. In November, he said the government decided on big ticket disinvestments while referring to sale of stakes in BPCL, CONCOR, and Shipping Corporation of India. "I think our movement has been very swift. Even the Expression of Interest (EoI) for Air India is in the public domain... We intend to complete these transactions in the first half of financial year 2020-21," he said. The next financial year starts from April 1. Last month, the government issued a preliminary information memorandum for 100 per cent stake sale in Air India. The airline's 100 per cent shareholding in profit-making budget carrier Air India Express as well as 50 per cent shareholding in equal joint venture Air India SATS Airport Services (AISATS) would also be sold. The deadline for submitting the EoI is March 17. This is at least the third time that the government is attempting disinvestment of Air India, which has been in the red since merger with Air India Express in 2007. The first attempt for stake sale, when Air India and Indian Airlines were separate entities, was done in 2001-2002 period when the NDA government was in power. In 2018, the government proposed to offload 76 per cent stake as well as transfer the management control but there were no bidders. Air India has more than Rs 60,000 crore debt. About proposed stake sale in LIC, Pandey said it was a "big thing" and lot of value would be unlocked. According to him, disinvesment in the public sector insurance company would be done, keeping in mind the interest of all stakeholders. Department of Economic Affairs (DEA) Secretary Atanu Chakraborty, who was also present at the session chaired by Finance Minister Nirmala Sitharaman, sought suggestions from the industry on direct listing of Indian companies on foreign bourses. He said the government was working on a scheme towards it as many companies want to get listed both in India and abroad at the same time. The discussions are at an advanced stage, he added. Currently, Indian companies can list their shares through depository receipts abroad, while foreign companies need to go through the Indian Depository Receipt route for listing of equities. A high-level panel has already recommended to markets regulator Sebi to allow direct listing of Indian companies on overseas bourses and of foreign firms on Indian exchanges. NKD CS RAM

Air India sale expected in first half of next fiscal: DIPAM Sec Pandey

In spite of major concessions announced by way of an ordinance in October 2019, the Indian economy continued to dwindle in the backdrop of the global economic meltdown. The current economic situation necessitated bold steps from our Hon’ble Finance Minister (‘FM’) to present a simplified budget that would result in a quick economic turnaround. However, whether such a ‘Simplified’ budget really unlocked potential for an economic turnaround, remains a question. Some key amendments coupled with their challenges are listed below: Some key amendments: Personal Tax Regime (‘PTR’): In line with the Concessional Tax Regime (‘CTR’) introduced by the Hon’ble FM in October 2019 which focused solely on corporates, a PTR has been introduced which focuses on providing alternative lower tax rates to individuals/HUF. The aforesaid concessional tax rate is applicable subject to the following conditions: <ol><li>The Individuals and HUFs having various incomes would not be allowed to claim any deductions/incentives, them being - <ul><li>Certain business <keyword id="891931" type="PERSON" weightage="20" keywordseo="deductions">deductions</keyword> and deductions from other incomes</li><li>House property deduction</li><li>Salary deductions including standard deduction and professional tax</li><li>Major deductions under Chapter VI-A (i.e. deductions under section 80C, 80D, etc) and</li><li>Set-off/carry forward of losses in relation to the above </li></ul></li></ol><ol><li>Further, <keyword id="1064766" type="ORGANIZATION" weightage="20" keywordseo="alternative-minimum-tax">Alternative Minimum Tax</keyword> (‘AMT’) shall not be applicable to an individual/HUF opting for PTR. Consequently, carry forward and set off of AMT credit shall not be allowed.</li></ol>In view of the above amendments, an individual having salary income as a major source of income and making investments in various schemes/instruments (For example, LIC premiums, PPF, ELSS, etc.) may not consider opting for PTR. It needs to be seen whether such a scheme is welcomed by the taxpayers at large or not. Dividend Distribution Tax (‘DDT’) Abolition: The Finance Bill proposes to abolish DDT in the hands of domestic companies and tax the same in the hands of the recipient. Accordingly, domestic companies declaring dividends shall be required to deduct TDS @ 10% on dividends exceeding INR 5,000 per shareholder. Further, it has been proposed to provide a deduction of interest expense of upto 20% of dividend income received in the hands of the shareholders under income from other sources. Lastly, in order to remove the cascading effect of taxes, dividend distributed by companies for a particular year (subject to conditions) shall be allowed as a deduction from dividend income. The benefit of deduction has also been extended to companies opting for CTR. However, the amendment leaves certain areas which need to be addressed: <ul><li>No scientific mechanism exists to allow deduction of expenses to the shareholders and only an ad-hoc deduction of interest expense capped at 20% of dividend income is allowed</li><li>In view of the above, the Company vs LLP structure needs to be re-evaluated</li><li>In case of banks and NBFCs where dividend income is a major source of business income, no separate provisions have been carved out</li></ul>Though the above is in line with the longstanding demand of the corporate world, only time will be able to tell whether the objective of earning higher taxes is achieved by these amendments. The above amendments also open-up the question of selection of an offshore jurisdiction for investing in Indian companies. Other Key Amendments A. Start-ups – Rationalising tax provisions and ESOP Taxation With a view to rationalise the tax deduction provisions for start-ups, the following amendments are proposed: <ul><li>100% profit deduction for an eligible start-up for any 3 consecutive years out of 10 years; and </li><li>Threshold of turnover for an entity, to be eligible as a start-up, has been increased to INR 100 Crores </li></ul> Further, in order to ease the burden of tax payment for employees of eligible start-ups, it is proposed to defer the timing of taxation of ESOPs perquisites. The amendment proposes to tax ESOP at the earliest of the following event: <ul><li>Expiry of 5 tears from the end of the relevant financial year; or</li><li>Date of sale by individual taxpayer; or</li><li>Date of cessation of employment</li></ul>These are welcome steps that would go a long way in providing ease of doing business for start-ups. Existing companies in the technology space must evaluate the possibility of obtaining necessary approval to claim exemption. B. Tax withholding on e-commerce transactions TDS @ 1% shall be made applicable on payments by e-commerce operators (who own/operate a digital e-commerce platform) to e-commerce participants (who sell goods/providing services/both). Further, exception is provided for payments to such a participant who is an individual/HUF if the transaction value during a particular AY is less than INR 500,000 This amendment will not only add compliance obligation on the e-commerce platforms but would also bring larger population of service providers and goods suppliers under the tax net. C. Increasing Tax Audit Turnover Threshold The FM proposes to increase the turnover threshold for tax audit applicability to INR 5 Crores, provided that the aggregate cash receipts/cash payments by such taxpayer do not exceed 5% of the total receipts/payments respectively during the financial year. This move is again intended with a view to move towards a cashless economy. D. Stay by the Hon’ble Income-tax Appellate Tribunal (‘ITAT’) ITAT may grant a stay of demand for upto a maximum of 365 days on a condition that the taxpayer deposits not less than 20% of the amount of tax, interest, fee, penalty, etc. Though the law seems to have been proposed, it would need to be seen whether condition can be applied to the judicial power of adjudicating authority. Since taxpayers at various levels are now being provided alternative tax regimes, the same may lead to complication of the tax regime with minimal benefits. TDS levied on dividend payments to shareholders/payments by e-commerce operators shall only increase the TDS compliance burden of large companies and e-commerce MNCs respectively. The impact of such complications and compliances on ease of doing business need to be evaluated. 
 <div type="image" title="Pranay Bhatia" msid="73984955" hostid="261"></div> Disclaimer: This article is written by Pranay Bhatia, a Partner and Leader of Tax &amp; <keyword id="344310" type="COMPANY" weightage="20" keywordseo="Regulatory-Services">Regulatory Services</keyword> at BDO India. The opinions expressed are entirely that of the author.

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