Finance Bill 2012

Discussion in 'Economy & Infrastructure' started by nrj, May 8, 2012.

  1. nrj

    nrj Stars and Ambassadors Stars and Ambassadors

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  3. nrj

    nrj Stars and Ambassadors Stars and Ambassadors

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    BJP, Govt defeat Left motion on General Anti-Avoidance Rule in Lok Sabha

    Finance Minister Pranab Mukherjee today firmly defended deferring the implementation of the General Anti-Avoidance Rules (GAAR), which are aimed at preventing tax evasion and have led to fears that they would target foreign institutional investors. In his reply to the debate on the Finance Bill in the Lok Sabha, he said the deferral of the tax proposals to 2013, announced in Parliament yesterday, was not a result of fear or apprehension.

    The Left moved for division on an amendment brought by the government to give effect to the deferral of GAAR, but was defeated 342 to 22, with the BJP backing the government. The Left, accusing the UPA of surrendering to market forces and the US, insisted that GAAR be part of this year's Finance Bill. The Lok Sabha passed the Finance Bill.

    In his speech, Mr Mukherjee said, "GAAR I have agreed to defer, but not because of fear or apprehension. I am not afraid of any consequences.” He also defended a retrospective tax on overseas deals involving assets in India, such as the one involving Vodafone’s 2007 acquisition of Hutchison Essar.

    Mr Mukherjee said such deals must be guided by double taxation avoidance agreements or the companies must pay tax in India. “(You) Cannot make money on assets made in India by not paying tax in India or somewhere else, some tax haven through a series of subsidiaries and make huge capital gains on assets based in India,” he told the House.

    The Income Tax department had claimed that Vodafone was liable to pay $2.2 billion in capital gains because the underlying assets for the deal were based in India, but that argument was rejected by the Supreme Court. Mr Mukherjee countered criticism that he was challenging the ruling of the Supreme Court on the retrospective taxation issue by saying that it was solely the right of the legislature to frame laws. "I am aware of the power of legislature, it is the power of legislature to make law. Supreme Court can interpret, but legislature can make amendment to correct the flaw,” Mr. Mukherjee said.

    “Law has to be framed by us. If there is conflict between intent and interpretation of judiciary, then we respectfully say that it is our right,” he added.

    Here are the highlights of Pranab Mukherjee's reply to the debate on the finance Bill:

    * We need to work with the Opposition.

    * Need to revive economic reforms.

    * When the real crisis comes, we have the capacity to be united.

    * Even reforms could not have been possible without support of Opposition parties.

    * We have made and unmade governments; political uncertainty hurts growth.

    * Today, nobody can insulate themselves from the rest of the world.

    * GDP has come down, growth has moderated.

    * Our oil consumption is about 100 million tonnes.

    * Today we are talking about high prices; tomorrow we may be worrying about availability.

    * Once demand in developing economies grows, oil prices will go up.

    * Some price has to be borne by consumer, some by state governments, and some by the Union government.

    * Centre not in a position to compensate.

    * State taxes are a tax on the tax, they are ad valorem.

    * Oil subsidy must be fixed at 2 per cent of GDP.

    * I am receiving criticism but the beneficiaries are actually someone else.

    * Economic distortions cannot be put in place—have to mobilize resources.

    * I have seen a high tax regime, where for every Rs 100, one had to pay taxes of Rs 105, this led to massive tax evasion.

    * Can the economy bear the burden of fiscal deficit of 5.9 per cent?

    * If we can get 3 major economic reforms passed, 2 major tax reforms passed, the economic environment will change, but I can't do it with the numbers we have.

    * Import cover is for 7.3 months, half of that under Chidambaram.

    * We should be extremely careful about short-term borrowing.

    * Presence of external market should remain intact.

    * Why did the markets fall? Because for years, FIIs had been bridging gap in current account. This had to happen. Confidence can be brought back.

    * UPA not a Congress government, there are others also, some are traditional opponents of Congress.

    * There will be a sea change in Indian tax system that will be transparent and will provide tax buoyancy.

    * GAAR I have agreed to defer but not because of fear or apprehension. I am not afraid of any consequences.

    * From 10 mn tonnes of crude, we increased to 29 mn tonnes. I am concerned that today there are dificulties but we will sort it out.

    * On balance of payments, there is difficulty but not insurmountable.

    * Non-residents can bring 1 kg of gold. Had to reduce amount for jewellers from 10 kg to 1 kg.

    * Sovereign credit rating, for them outlook is negative but rating is not negative. That's why when Standard & Poor's report came, I said it wsa a signal, I will take note and corrective measures must be taken.

    * Corrective measures means controlling fiscal deficit, creating environment for investment, flow of funds, flow of technology must be there, but at the same time keeping our eye on domestic demand driven factors.

    * Exemptions in customs for wood pulp, solar power project goods and parts for solar lights.

    * My argument against Vodafone was on one thing -- either be guided by DTAA or be taxed. Cannot make money on assets made in India by not paying tax in India or somewhere else, some tax haven through a series of subsidiaries. And make huge capital gains on assets based in India.

    * Tax liability, if assessment which has been closed, there is no question of re-opening.

    * UK did this 21 years ago India is not inferior.

    * We cannot be equated with Cayman Islands. We have our rule of law. Many have said 'How can you go against the Supreme Court'? I am aware of power of legislature, it is power of legislature to make law. Supreme Court can interpret, but legislature can make amendment to correct the flaw.

    * Government has always fought the courts, Golaknath case, Keshavanand Bharti case, Privy Purse Abolition.

    * Law has to be framed by us. If there is conflict between intent and interpretation of judiciary, then we respectfully say that it is our right.

    * We will bring white paper on black money. We can reveal names only after prosecution starts.

    BJP, govt defeat Left motion on General Anti-Avoidance Rule in Lok Sabha
     
  4. nrj

    nrj Stars and Ambassadors Stars and Ambassadors

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    FM's master plan: Sort GST & oil subsidies, tame inflation - CNBC-TV18 -
     
  5. nrj

    nrj Stars and Ambassadors Stars and Ambassadors

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    Finance Bill: Markets like Pranab Mukherjee's diluting GAAR, but other changes are a mixed bag

    Finance Bill: Markets like Pranab Mukherjee's diluting GAAR, but other changes are a mixed bag - The Economic Times
     
  6. nrj

    nrj Stars and Ambassadors Stars and Ambassadors

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    Chambers heave a sigh of relief

    Chambers heave a sigh of relief
     
  7. nrj

    nrj Stars and Ambassadors Stars and Ambassadors

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  8. nrj

    nrj Stars and Ambassadors Stars and Ambassadors

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    Startups breathe easy as FM exempts angel investments from tax hit

    The startup ecosystem and angel investors are a relieved lot after Pranab Mukherjee's speech in Parliament on 7 May.

    The finance minister has proposed to exempt angel investments from the purview of the proposed share premium tax on closely held companies which was part of Budget 2012.

    Said Mukherjee in his speech on the Finance Bill: "It has been proposed in the Finance Bill that any consideration received by a closely held company in excess of the fair market value of its shares would be taxable. Considering the concerns raised by 'angel' investors who invest in start-up companies, I propose to provide an enabling provision in the Income Tax Act for exemption to a notified class of investors."

    Organisations like The Indus Entrepreneurs (TiE) and several other angel networks across the country were shell-shocked when, as part of proposals to unearth unaccounted money, the finance minister had proposed a tax on share premiums charged by closely held companies. This effectively meant startups, who are typically closely held and receive funding from angel investors, would also have to pay the tax, which would effectively cause a huge hit on small companies and the entire entrepreneurial ecosystem in the country.

    The FM's statement has come as a major boost to the entrepreneurial space.

    Firstpost had also reported on the major damage this proposed tax would cause to the spirit of enterprise across the country, particularly for startups.
    TiE had also suggested other options to the ministry to get around this problem, particularly by creating exemptions for categories of investors, so that the angel investor ecosystem, which powers entrepreneurship in a major way, is not killed by what was being called the 'startup' tax. The FM's statement has come as a major boost to the entrepreneurial space.

    Sources in TiE said it was a huge boost to see that the FM had understood the legitimate concerns of the startups and angel investors and had proposed an exemption to a notified category of investors.

    "While we will have to verify the exact wordings in the Act after the proposed Bill gets enacted, we are hopeful this would help sort out the issue," a TiE functionary told Firstpost after the FM's speech on 7 May.

    The idea behind the proposed tax is to ensure that unaccounted monies do not find their way into closely held firms under the garb of share premiums. The proposal also envisages convincing the tax assessing officers of the fair value of shares, and the amount charged as premium over the fair value would be subject to the tax. While most agree that unaccounted money may be finding its way into companies through this route, the concern was that startups would be hit and that angel investors, who invest not only money but also time and knowledge through mentoring, would also be penalized along with the actual wrongdoers. Angel investors had likened the tax proposal to bombing a city just to find a criminal.

    Startups breathe easy as FM exempts angel investments from tax hit
     
  9. nrj

    nrj Stars and Ambassadors Stars and Ambassadors

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    India to incentivise foreign banks to set up subsidiaries

    India to incentivise foreign banks to set up subsidiaries - Reuters -
     
  10. sob

    sob Moderator Moderator

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    The markets do not seem to be in sync with Pranab Da. Parliament was satisfied with the GMs statement on GAAR, but lack of clarity on the ground leads to sharp fall in the market, yesterday. BSE falls 2.2%

    Markets fall 2.2%; GAAR worries revived - Money Matters - livemint.com

     

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