Startups enjoy 3 years tax holiday over a five year window

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If a startup claims benefit in first year & does not make profit in next two years, it can still enjoy tax exemption on profit in fourth and fifth year

The three-year tax holiday proposed for startups in India will be available over a five-year window, ensuring that innovators won’t lose the benefit even if they make a profit later, the government said.

Those seeking the income tax exemption, announced in the Startup Action Plan on Saturday, will need to get approval by March 2019, in line with the government’s policy to weed out exemptions and bring down the corporate tax rate to 25%. Startups approved until March 31, 2019, will enjoy the benefit for up to five years. The government has proposed that a high-level, inter-ministerial committee should vet startup proposals to validate the innovative nature of the business for granting tax-related benefits. The details of the tax benefits will be announced in the budget.

“The benefit will be available for three years over a five-year period, “a senior government official told ET. If a startup claims the benefit in the first year and does not have a profit in the next two years, it will not lose out on the exemption. If profits are made in the fourth and fifth year, they will still be eligible for the tax break.

“All startups incorporated in India not prior to five years as per the definition of startup and starting the operations before 2019 can get this benefit for three years,“ said Amitabh Kant, secretary in the Department of Industrial Policy and Promotion, which piloted the startup initiative.

With the deadline for seeking exemption set for March 2019, the scheme will effectively run till March 2024, a period of eight years from now.

“This fiscal exemption shall facilitate growth of business and meet the working capital requirements during the initial years of operations, “according to the action plan document.

The policy imposes only one condition on startups claiming the benefit, apart from seeking approval from the appropriate body and meeting eligibility criteria: it should not distribute dividend while getting the tax exemption.

Tax-friendly Regime Need of the Hour for Startup Investors

The devil is in the details. The tax incentive package for startups will be clear in the Budget. But open-ended tax breaks won’t be possible as the government has already signalled a phasing out of exemptions to lower the corporate tax rate. Investments in unicorns would typically be long-term. So, it makes eminent sense to spare investors from paying capital gains tax when they sell their unlisted shares in startups after holding them for over a year. A tax-friendly regime will encourage many of them to relocate to India from, say, Singapore. The government, as promised, should end its Inspector Raj to boost the startup ecosystem.

Source: http://epaperbeta.timesofindia.com/Article.aspx?eid=31816&articlexml=Startups-May-Get-5-Year-Window-to-Avail-18012016015013

 

Japan has 17th straight Current-Account Surplus in November

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A cargo ship is seen behind Japan's national flag at an industrial port in Tokyo March 8, 2012.Japan posted a current account surplus for the 17th consecutive month in November, providing support for Prime Minister Shinzo Abe’s efforts to boost the world’s third-largest economy.

The excess in the widest measure of the nation’s trade was 1.14 trillion yen ($9.7 billion) in November, up from 440.2 yen billion a year earlier, the Finance Ministry said Tuesday in Tokyo. The median estimate of 23 economists surveyed by Bloomberg was for a surplus of 895 billion yen.

The surplus was supported by a rise in income from investments abroad by Japanese companies as well as a gain in services, which came with an influx of tourists after the yen weakened. The boost helps an economy that has been hurt by a slowdown in exports including to China, Japan’s biggest trading partner.

“The wider current account surplus bodes well for Japan’s economy,” said Junko Nishioka, chief economist for Japan at Sumitomo Mitsui Banking Corp. in Tokyo. “Going forward, Japan will likely hold onto the surplus trend.”

Declining oil prices and recent gains in the yen, which may push down import prices and improve the trade balance, is expected to help Japan maintain the current-account surplus in coming months, Nishioka said.

The primary income surplus was 1.54 trillion yen in November, the largest on record for November, according to the report. The services balance had a surplus of 61.5 billion yen, helped by charges for the use of intellectual property rights and travel.

Source: http://www.bloomberg.com/news/articles/2016-01-12/japan-posts-17th-straight-current-account-surplus-in-november

FTA with EU: India to take up ‘stock-taking exercise’

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FTA with EU: India to take up ‘stock-taking exercise’ for a free trade agreement with the EU later this month, after a gap of three years, and pitch for greater market access in services..

India will undertake a “stock-taking exercise” for a free trade agreement with the EU later this month, after a gap of three years, and pitch for greater market access in services once the stage is set for further negotiations, a senior commerce ministry official said.

Before engaging in serious formal talks on the EU-India Bilateral Trade and Investment Agreement (BTIA), a “stock-taking exercise” will be undertaken, as some contours of the earlier negotiations have to be altered, keeping in view the changes that have taken place since the talks were stuck in 2013, Arvind Mehta, additional secretary in the commerce ministry, told FE.

For instance, India has further liberalised many sectors for foreign investments, including some of the areas where the EU had interests, over the past three years. For instance, the FDI cap in insurance has been raised to 49% from 26% and 100% FDI is allowed in telecoms. In private sector banking, full fungibility of foreign investment is now permitted and accordingly FIIs/FPIs/QFIs can now invest up to a sectoral limit of 74%, with certain conditions.

While India feels the flexibilities shown by it in further opening up to foreign investments should be considered positively by the EU, it also expects some reciprocal measures by the 28-member bloc to address its concerns, especially on data privacy and market access in the services sector. However, there will be no binding commitments until India’s core concerns are addressed suitably, Mehta said. The BTIA negotiations cover boosting goods and services trade as well as investment.

India seeks a data secure status because the high compliance cost with EU’s data protection laws will hit small and medium enterprises (SMEs) of India and make them un-competitive.

Mehta said India will be betting for a trade facilitation agreement (TFA) in services at the World Trade Organisation — similar to the TFA in goods — that would focus on liberalised visa regime, long term visas for business community and freer movement of professionals for the greater benefit of both India and the world. India will pursue it vigorously in negotiations for the BTIA as well as Regional Comprehensive Economic Partnership. RCEP is a proposed FTA between the Asean members and the six states with which it has forged FTAs, including India.

Gr3

India is keen on services, as they account for over a half of its GDP. The EU is India’s largest trade partner, accounting for close to 15% of trade in both goods and services. It is a major market for Indian textiles, garments, pharmaceuticals, gems and jewellery and IT. The EU is also the largest source of FDI inflows to India, accounting for over one-fourth of the total. However, India ranks only ninth among the EU’s top trade partners, making up for just about 2% of its total merchandise goods in 2014.

BTIA talks were to be revived last year, but the EU’s surprise ban on 700 products of GVK shocked India, which then called off the negotiations. Prior to that, the negotiations centred around India’s demand for.

The EU is interested in further liberalisation of FDI in multi-brand retail and insurance, and closed sectors like accountancy and legal services. The underutilised private banking space in India is another draw. India’s intellectual property regime (IPR), which is unlikely to allow ever-greening of patents, remains a concern for European pharma majors. Moreover, the EU has been seeking a cut in the high import duties on assembled vehicles and wines and spirits. In case of assembled vehicles, the import duties remain in the range of 60-75%.

Source: http://www.financialexpress.com/article/economy/fta-with-eu-india-to-take-up-stock-taking-exercise/191733/

Foreign investors find Indian realty sector attractive again after 5 years

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At least Rs 14,680 crore of funds have been raised in sector so far in current investment cycle.

Foreign investors’ interest in Indian real estate is on the rise after almost five years, India-specific fundraisings indicate.

The cycle started gaining momentum just before the 2014 general elections and at least $2.2 billion (Rs 14,680 crore) of funds have been raised so far in the current investment cycle, indicating an improvement in foreign investors’ confidence in Indian real estate, said consultancy firm JLL India. “During the pre-GFC (global financial crisis) phase, 82% of funds got raised in US dollar.

This reduced to 57% in post-GFC phase when micro-market understanding was required more than banking on the macro-economy,” said Shobit Agarwal, managing director of capital markets at JLL India. “Interestingly, the contribution, 2014-onwards, has increased considerably to 70% – hinting that the positivity is here to stay for some time.”

Recent easing of foreign direct investments rules is expected to bring in more capital into the property sector. PE funds are also looking to leverage on this rising interest among foreign investors.

“We believe this is an opportune time to invest in Indian real estate, with rigorous risk management and strong asset management.

Offshore funds are showing interest in Indian real estate and there is lot of interest from FDI funds back in Indian real estate,” said Rubi Arya, chief executive of Milestone Capital Advisors. “We are planning to leverage further on our structured debt and commercial platform to raise money from offshore funds.”

According to Arya, FDI funds are looking to invest in pre-leased commercial assets, create strategic-level partnerships with reputed developers mainly through equity deals and make structured debt investments in residential projects.

India-specific cumulative fundraising attained its peak in the pre-GFC period. During this period between 2005 and 2008, there were 50 such funds that raised $16 billion in total. However, post-GFC, only 29 funds got raised in five years, with cumulative fundraising of $3.9 billion, said the JLL India report.

Not only has the volume of investment increased, but there has also been an increase in the average investment size from $134 million to $184 million in the current cycle that started in 2014.

Source: http://economictimes.indiatimes.com/articleshow/50476154.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

Govt gets Rs 2,428 cr from black money disclosures

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The national exchequer received Rs 2,428.4 crore in payments from disclosures made during a three-month long compliance window under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act last year, bolstering tax revenue collections.

This is 97 per cent of the amount due from 644 declarations made from holders of black money stashed overseas by December 31, the last day of payment.

The amount included tax and penalty on the declarations made under the three-month compliance window that ended September 30 last year on total disclosures of Rs 4,147 crore.

This added to government’s gross tax revenue collection, which touched 66 per cent of Budget Estimates for the full financial year till December, a sharp uptick from 52.4 per cent till November.

Even as government targets a fiscal deficit of 3.9 per cent during 2015-16, it is expecting a shortfall of Rs 30,000-40,000 crore in direct taxes this financial year. Besides, lower than expected nominal GDP (gross domestic product) growth at close to eight per cent will exert further pressure on the fiscal deficit target.

“The amount collected under black money disclosure is Rs 2,428 crores (97 per cent of amount due) by December 31, which was the last date of payment. The total tax revenue collected up to December this year is Rs 9.5 lakh crore, 66 per cent of Budget Estimates,” said Revenue Secretary Hasmukh Adhia in a tweet.

Source: http://www.business-standard.com/article/economy-policy/govt-gets-rs-2-428-cr-from-black-money-disclosures-116010700025_1.html

E-Commerce Industry to Cross $38 Billion Mark in India

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India’s e-commerce market is likely to touch $38-billion-mark in 2016, a 67 per cent jump over the $23 billion revenue it clocked last year, according to the Associated Chambers of Commerce and Industry (Assocham).

“Increasing internet and mobile penetration, growing acceptability of online payments and favourable demographics has provided the e-commerce sector in India the unique opportunity to companies connect with their customers,” according to the Assocham’s latest report.

Buying trends during 2015 have witnessed a significant upward movement due to aggressive online discounts. India’s e-commerce market was worth about $3.8 billion in 2009, it went up to $17 billion in 2014 and to $23 billion in 2015 and is expected to touch $38-billion mark by 2016, said D.S. Rawat, Secretary General, Assocham.

Mobile commerce

Mobile commerce (m-commerce) is growing rapidly as a stable and secure supplement to the e-commerce industry. Shopping online through smart phones is proving to be a game changer and industry leaders believe that m-commerce could contribute up to 70 per cent of their total revenues, according to the report.

Mumbaikars had left behind all other cities in India shopping online in 2015. While Delhi residents rank second, Ahemdabad came third, Bangalore fourth and Kolkata fifth in their preference for online shopping in 2015.

“The customer is connected 24×7 through their smart phones, tablets and other mobile devices which is leading to a gradual evolution of e-commerce into mobile commerce and there is an issue of convenience which also leads to impulsive buying,” Mr Rawat said. The browsing trends, which have broadly shifted from the desktop to mobile devices in India, online shopping is also expected to follow suit, as one out of three customers currently makes transactions through mobiles in Tier-1 and Tier-2 cities. In 2015, 78 per cent of shopping queries were made through mobile devices, compared to 46 per cent in 2013, said Mr. Rawat.

The highest growth rate was seen in the apparel segment, almost 69.5 per cent over last year followed by electronic items by 62 per cent, baby care products at 53 per cent, beauty and personal care products at 52 per cent and home furnishings at 49 per cent. The most important contributing factor to the rapid growth of digital commerce in India is the increase in the use of smartphones. Mobiles and mobile accessories have taken up the maximum share of the digital commerce market in India, according to the paper.
Online shoppers

Almost 45 per cent of online shoppers reportedly preferred cash on delivery mode of payment over credit cards (16 per cent) and debit cards (21 per cent).

Only ten per cent opted for internet banking and a scanty seven per cent preferred cash cards, mobile wallets and other such modes of payment.

As per the findings, many small companies have also established online stores for group buying, which enable customers to obtain goods at a discount so long as a certain number of people make the purchases.

Shopping centres, whole sale markets and supermarkets should create their online stores to reduce costs and develop product-tracking systems, Mr Rawat said.

Among the age segments, the 18-25 years age group was the fastest growing age segment online with user growth being contributed by both male and female segments, it was said in the paper.

The survey highlights that three per cent of regular shoppers are in 18-25 age group, 52 per cent in 26-35, eight per cent in 36-45 and two per cent in the age group of 45-60.

Sixty-five per cent of online shoppers are male with females constituting 35 per cent. The products that were sold most in 2015 were mobile phones, iPad and accessories, MP3 players, digital cameras and jewellery, among others.

As per the study, there would be more than a five to seven-fold increase in revenue generated through e-commerce compared to last year with all branded apparel, accessories, jewellery, gifts, footwear available at a cheaper rates and being delivered at the doorstep. The most popular among the e-commerce websites — Snapdeal, Myntra, Flipkart, Amazon, Jabong and others — have been doling out massive price cuts or discounts on purchase of popular brands of apparels, footwear, electronic goods, coinciding with the year end.

According to the report, the one of the driving factors for the online shopping is the age profile of the consumers who are young, between 15-35 years. This segment is quite net savvy and enjoys doing new type of shopping experience, virtually from their desk top in office, lap tops at home or even Android-based phones.

Source: http://www.thehindu.com/business/ecommerce-industry-to-cross-38-billion-this-year-assocham/article8058892.ece

SEBI puts in place new form for ASBA

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With a checklist regime kicking in for initial public offerings (IPOs), capital markets regulator the Securities and Exchange Board of India (SEBI), has put in place a new form for ASBA (Application Supported by Blocked Amount) facility.

ASBA facility has become mandatory for all categories of investors applying for a public issue for making payment from Friday. The facility allows the bid amount to remain in the applicants account till the time the shares are finally allotted.

In a circular, SEBI said that the application form for ASBA would be printed in a booklet form of A4 size paper.

Besides, SEBI has prescribed white colour form for Resident Indian, NRIs applying on a non repatriation basis and blue colour form for NRIs, Foreign Venture Capital Investor, Foreign Institutional Investors, their Sub-Accounts (other than sub-accounts which are foreign corporates or foreign individuals bidding under the QIB Portion), on a repatriation basis.

It further said that top of the application form will have a coloured identifier strap incorporating the name of the issuer, ISIN (An International Securities Identification Number) and type of form (Repatriation, Non- Repatriation). Besides, the main application should have information about eight digit application number, PAN number, bidders depository account details, investor category, among others.

A confirmation by the applicant (on behalf of joint bidders) that he/she has read, understood and agrees to such confirmations is also required.

The regulator said that application should also highlight about different category of investors (retail, non-institutional and QIBs), number of equity shares (reservation if applicable), percentage of issue available for allotment, basis of allocation in case of over-subscription, mode of allotment and terms of payment.

The new circular will be applicable for all public issues opening on or after January 1, 2016, SEBI said.

The regulator, in August, had made ASBA facility mandatory for all categories of investors applying for a public issue.

In order to enhance the points for submission of applications, SEBI had also allowed Registrar and Share Transfer Agents (RTAs) and Depository Participants (DPs) to accept application forms (both physical as well as online) and make bids on the stock exchange platform.

This will be over and above the stock brokers and banks where such facilities are presently available. The number of bank branches with ASBA facility has now increased to about 95,500, from 9,800 when this facility was introduced.

Source: http://www.thehindu.com/business/Industry/new-form-for-asba-in-place/article8055065.ece