Govt may allow 100% FDI in contract manufacturing for investments: Report

The government is working on a proposal to allow 100 per cent FDI in contract manufacturing with a view to attract overseas investments, sources said.

According to the existing foreign investment policy, 100 per cent foreign direct investment (FDI) is permitted in the manufacturing sector under the automatic route. A manufacturer is also allowed to sell products manufactured in India through wholesale and retail channels, including through e-commerce, without government's approval.

"The current policy does not talk about contract manufacturing and it is not clearly defined in the policy. Big technology companies across the world are going for this, so there is a need for a clarification on the matter which government is considering positively," they said.

The commerce and industry ministry is working on a proposal that would be finalised soon and sent for Union Cabinet's approval.

Finance Minister Nirmala Sitharaman in her Budget speech in July had proposed relaxation in the FDI norms for certain sectors such as aviation, AVGC (animation, visual effects, gaming and comics), insurance, and single brand retail with a view to attract more overseas investment.

FDI in India dipped 1 per cent to USD 44.36 billion in 2018-19.

Last year, the government had relaxed FDI rules for several sectors, including single brand retail, non- banking financial companies and construction.

Foreign investments are considered crucial for India, which needs billions of dollars for overhauling its infrastructure sector such as ports, airports and highways to boost growth.

FDI helps in improving the country's balance of payments situation and strengthen the rupee value against other global currencies, especially the US dollar.

This Budget has been made with a 10-year vision in mind: FM Sitharaman

In an interaction with the media after the Budget presentation, Finance Minister Nirmala Sitharaman said all the targets set by the government were achievable, the RBI would be a regulator for housing finance companies, and it was time to switch to electric vehicles. Edited excerpts:
On the message from the Budget
This Budget has been made with a 10-year vision in mind, and also what is attainable as a target within five years. In a concise form, we say we aim for a $5-trillion economy, but that is only to indicate that in the next five years we will take steps to achieve that kind of vision. That is why the presentation format also was firstly on the 10-year vision, a 5-year target, and five-six areas on which we will focus, and schemes related to those — whether it is rural India, urban India, youth, women, ease of living, or India’s soft power. All the targets given in the Budget, be it disinvestment or tax revenues, are reasonable and achievable. We have not exaggerated any of the tasks we face.
On NBFCs
There has been a lot of discussion on this in the past few months as non-banking financial companies (NBFCs) are a critical component of our financial system. Our announcements regarding NBFCs are a comprehensive, well thought-out approach to deal with the crisis. The Reserve Bank of India will be a regulator for NBFCs as well as housing finance companies. There is also a window being opened for NBFC financing, with a government backstop of 10 per cent.
On start-ups
Our start-ups have brought about a big social transformation. They have been given many tax incentives in this Budget. Hence, this is a step to further their ease of doing business.
ALSO READ: Budget 2019: Tax reforms pitch for simpler filing to ease compliance
On social sector
The budgetary outlays for the poor, scheduled castes, scheduled tribes have increased. We have provided enough funds for various rural and social sector-related schemes. There is no shortage. The big idea we have carried is, pool all the research, scholarship and fellowship money that have previously been spread across multiple ministries, so that there is one agency which takes care of that.
On excise duty increase for petrol/diesel
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The global situation being what it is, India’s public funding situation being what it is, there is always an effort to provide that money without hurting the individual taxpayer. But let’s also be clear that petrol and diesel are not under GST. We want to make sure that we don’t expand individual income tax so much, but where there is public transport coming in, and with biofuel coming in, this is an issue we wanted to address.
On electric vehicles
For our environment commitment, we have to gradually move out of fossil fuels and move towards renewable energy. So we have to give substantial incentives for renewable energy, particularly when it comes to mobility. We wanted to make sure that if we have made a commitment for improving the air pollution condition, we have to support EVs.
On disinvestment
We have set a realistic goal for disinvestment, which is Rs 1.05 trillion. It is necessary to push through reforms as we don’t want the economy to stagnate. Yet, if there are 2-3 agencies holding over and above 51 per cent, it should be opened up. The government still retains ownership as you are also giving opportunity to small retail purchasers of stock.

FM Nirmala Sitharaman's first budget speech on July 5

Finance Minister Nirmala Sitharaman will present the full-year budget on July 5, the government said on Friday a day after being sworn in for a second term.
Sitharaman face major challenges, as government data released on Friday showed that India's economy grew at a much-lower-than-expected 5.8% in the January-March period. That is its slowest pace in 17 quarters, and increases pressure for economic stimulus from the government and the central bank through tax cuts and lower interest rates.

Parliament's budget session will be held from June 17 to July 26 during which a new speaker for the Lok Sabha will be elected.

Feb 1 cut-off date for eligibility consideration under PM-Kisan scheme

Finance Minister Piyush Goyal had announced the scheme while presenting the interim Budget on Friday. Goyal said farmers who owned less than 2 hectares of land would receive income support worth Rs 6,000 a year — Rs 2,000 in three instalments. Crucially, the scheme was introduced with retrospective effect, and the government plans to transfer the first instalment to beneficiaries in the current fiscal year.
ALSO READ: Behind the speech
In a letter to the chief secretaries of all states and union territories (UTs), Union Agriculture Secretary Sanjay Agarwal said the cut-off date for determining the ownership of land under the scheme was February 1, 2019, and any changes to land records after that would not be considered for eligibility of the benefit for the next five years. “However, the scheme benefit will be allowed on transfer of ownership of cultivable land on account of succession,” it said.
In North-Eastern states, where land ownership rights are community based, the Centre will develop an alternative mechanism by a committee of Union ministers and the Ministry of Development of North Eastern Region to implement this scheme.
The Centre also said that if a landholder farmer family had land parcels spread across different villages or revenue records, then land would be pooled for determining the benefit. “Accordingly, it is of utmost importance that the land records are clear and updated and the state governments are requested to complete updating of land records for the purpose expeditiously,” the Centre said.
The government also said that for the transfer of benefit, district-wise beneficiaries’ lists shall be certified and uploaded by states/UTs on the PM-Kisan portal of the government of India and the funds would be electronically transferred to the beneficiaries’ bank accounts on the pattern of the MNREGS. These lists will also have to be displayed or verified at gram panchayats to ensure greater transparency and accuracy of the list.
The funds shall be released periodically based on the receipt of fund transfer order from the states concerned with the eligible beneficiaries’ details. It also asked states to notify district-level grievance redressal committees and designate a nodal department for implementation of the scheme.
ALSO READ: Modi assures more sops and benefits in full budget after the elections

The government has already earmarked Rs 20,000 crore for disbursement in the current fiscal year to an estimated 12 crore farmers.
Meanwhile, in an interview to PTI, NITI Aayog Vice Chairman Rajiv Kumar expressed confidence that there would not be any major difficulty in implementing this farm package, except in North-Eastern states where it might take a little more time.
“The Ministry of Agriculture has been working on this (proposal) and therefore they will pursue it on a mission mode. This is one scheme where implementation has to be ensured. We should be able to do it,” he said.
Kumar said the process of digitisation of land holdings had already started and in most states, including Uttar Pradesh, land records had already been digitised.

Key Statistics
Rs 20,000 crore earmarked for disbursement in the current fiscal year
120 million farmers to benefit
Rs 6,000/year to be given by the central government to the farm households that own less than 2 hectares

Interim Budget 2019: Goyal puts extra cash in pockets of middle class

Finance Minister Piyush Goel has chosen to put extra money in the pockets of the middle class in an election year. In addition, he has tried to make life more convenient for deposit holders.
Tax benefit extended
Goyal has made changes to Section 87A of the Income Tax Act, which deals with rebates. The interim Budget proposes to increase the limit of rebate from a taxable income of Rs 3.5 lakh to Rs 5 lakh. This means that people earning up to Rs 6.5 lakh (tax benefits of Rs 1.5 lakh under Section 80C) or more, depending on the exemptions such as medical insurance and others, will benefit from this move.
Chart In short, this is how the tax benefit will work. The basic exemption limit of Rs 2.5 lakh applies to everyone. Earlier, if your taxable income was up to Rs 3.5 lakh, you got a tax rebate of Rs 2,500. Now, this threshold has been hiked further to Rs 5 lakh.
The tax liability for someone earning Rs 5 lakh is Rs 12,500: Rs 5 lakh less the basic exemption of Rs 2.5 lakh means a taxable income of Rs 2.5 lakh. When this amount is taxed at 5 per cent, the tax liability is Rs 12,500. “Now, if your total taxable income is Rs 5 lakh or less, you do not have to pay any tax,” says Archit Gupta, founder and CEO, ClearTax.
The point to note here is that since this is a rebate up to a taxable income of Rs 5 lakh, if anyone earns even little more (say, even Rs 100 more) than this amount, he would have to pay all the taxes, according to the existing slabs. “Only individual taxpayers with taxable income not exceeding Rs 5 lakh no longer need to pay any tax. Others will still need to pay tax on the 5 per cent tax slab, as the benefit has been proposed by raising Section 87A rebate limit to Rs 12,500,” said Kuldip Kumar, partner and leader personal tax, PwC India.
Standard deduction limit raised
Chart The FM has also raised the standard deduction from Rs 40,000 to Rs 50,000. Standard deduction was introduced in the 2018 Budget. The government did away with travel and medical reimbursement and instead introduced a standard deduction of Rs 40,000.
“Both people who have salaried income and those who have pension income are entitled to standard deduction,” says Gupta.
With this change, those in the 30 per cent tax bracket will get a benefit of Rs 3,000, those in the 20 per cent tax bracket will get an additional benefit of Rs 2000, and so on.
TDS limit on interest income hiked
Chart The tax deductible at source (TDS) threshold on interest income from bank, co-operative society and post office deposits (other than interest on securities) has been raised.
This will not mean any tax benefit, but it will result in greater convenience.
Earlier, banks would start deducting TDS if your interest income in a year exceeded Rs 10,000. Now, they will do so only if it exceeds Rs 40,000.
“This change will benefit people who do not have any taxable income but have interest income in excess of Rs 10,000, say, a housewife,” says Deepesh Raghaw, founder, PersonalFinancePlan.in, a Securities and Exchange Board of India-registered investment advisor.
Earlier, people had to fill form 15H (for senior citizens) and Form 15G (for others) declaring that they did not have any taxable income and, hence, the bank should not deduct TDS.
When TDS has been deducted, the depositor has to file income tax return, and it takes a few months for the tax department to return the money. This change will mean fewer hassles for a lot of people.
Chart

Nirmala Sitharaman to become I-T dept lawyer, P Chidambaram hits back

Former Union Finance Minister P Chidambaram hit back at Defence Minister Nirmala Sitharaman today with a tongue-in-cheek tweet, saying that there was a buzz she would be removed from the cabinet and appointed a lawyer of the Income Tax department.
Chidambaram's dig on Twitter came soon after the Defence Minister wondered if the filing of charge sheets by the I-T department against his family members was the Congress party's "Nawaz Sharif moment".

ALSO READ: Chidambaram's foreign assets case Cong's 'Nawaz Sharif moment': Sitharaman
The Defence Minister was referring to the Pakistan Supreme Court's decision disqualifying its former prime minister from holding office because of non-disclosure of assets and income earned abroad.
The buzz in Delhi is that Ms Nirmala Sitaraman will be removed as Defence Minister and appointed as lawyer of the Income-tax department. Welcome to the bar, Ms Sitaraman.
— P. Chidambaram (@PChidambaram_IN) May 13, 2018
The Congress leader reminded the ruling BJP of its failure to bring back black money from abroad and deposit Rs 1.5 million (15 lakh) in every Indian's bank account, as promised by it before the 2014 Lok Sabha election.
The buzz in Delhi is that Ms Nirmala Sitharaman will be removed as Defence Minister and appointed as lawyer of the Income-tax department. Welcome to the bar, Ms Sitharaman,he tweeted.
The president of the richest political party in India is dreaming of billions of dollars! Bring the money back and put Rs 15 lakhs in the account of every Indian as you promised.
— P. Chidambaram (@PChidambaram_IN) May 13, 2018
The president of the richest political party in India is dreaming of billions of dollars! Bring the money back and put Rs 1.5 million (15 lakh) in the account of every Indian as you promised," he tweeted, without naming BJP president Amit Shah.
The Income Tax department on May 11 filed charge sheets against Chidambaram's wife Nalini, son Karti, daughter-in-law Srinidhi and a firm under the Black Money Act for allegedly not disclosing their foreign assets.
Sitharaman also asked if Congress president Rahul Gandhi would investigate the issue involving his party's senior leader.

To devote time for Budget 2018, FM Arun Jaitley to skip WEF at Davos

Finance Minister Arun Jaitley was scheduled to be one of the key speakers at the India-specific sessions at the World Economic Forum (WEF) in Davos, but he will now not be travelling to the Swiss town. Finance Ministry source said the change in plan was because the FM was needed in New Delhi to devote time to the Budget.
Apart from Prime Minister Narendra Modi, Jaitley was to be one of the six Union ministers scheduled to attend the WEF. The FM was earlier scheduled to be in Davos on January 24 to take part in the key “country strategy dialogue on India”. Commerce and Industry Minister Suresh Prabhu and Petroleum and Natural Gas Minister Dharmendra Pradhan were to join Jaitley in this session.
Sources confirmed the change in the FM’s itinerary barely 24-hours after the Ministry of External Affairs (MEA) had held a press conference on Friday to announce that Jaitley would be travelling to Davos.
PM Narendra Modi will be in Davos from January 22 to 23. He is slated to address the inaugural plenary session and is also scheduled to meet 60 of the world’s topmost business leaders and chief executive officers at a dinner on January 22.
Modi is the first Indian PM since H D Deve Gowda in 1997 to attend the WEF.
To devote time for Budget 2018, FM Arun Jaitley to skip WEF at Davos
Jaitley will present the Union Budget, the fifth and final one of the current the government, on February 1.
Announcing the itinerary of the PM and other ministers at Davos, Secretary (Economic Relations) in the External Affairs Ministry, Vijay Gokhale and Department of Industrial Policy and Promotion (DIPP) Secretary Ramesh Abhishek had said of Friday that six union ministers, including Jaitley, are scheduled to attend several of the sessions.
Abhishek said Prabhu will attend nine sessions across three days, while Pradhan will attend five sessions. Railway Minister Piyush Goyal will attend 10 sessions, Minister of State in the PMO Jitendra Singh three sessions and Minister of State for External Affairs MJ Akbar will be part of two sessions. Abhishek said a large number of sessions being addressed by ministers reflected the importance that WEF has given to India this year.
The Indian delegation will organise roundtable discussion on financial inclusion, promoting digital payments, clean energy, modernisation of Indian Railways and skill development, which will be attended by union ministers.