need2know: Retro tax haunts in Make in India season

Income-tax sleuths are best in playing unwanted guests in your party. Just when the government was busy wooing foreign investors through its Make in India week in Mumbai, the I-T department has ruffled a lot of foreign investors’ feathers by issuing tax notices to Vodafone and Cairn India. They went into damage control mode quickly, but the damage had already been done.

This and more such stories as we look at what is buzzing on the macro front, many of which have the potential of impacting the market

Government mulls hiking FDI cap in public sector banks to 49%
The government may hike the foreign investment limit in public sector banks to 49 per cent from 20 per cent with a view to attract overseas inflows. The Finance Ministry is looking into the proposal. If agreed upon, the policy may be announced in the coming Budget 2016-17. Currently, 20 per cent foreign investment is permitted in the PSBs under government approval route.

Vodafone gets Income Tax reminder to pay up Rs 14,200 crore tax dues
Just days after Prime Minister Narendra Modi said retrospective taxation was a closed chapter and promised a “transparent, stable and predictable” tax regime, the income tax department has done just the opposite. In a notice to Vodafone, the tax department said it might seize the British firm’s assets in the country if it failed to pay Rs 14,200 crore in disputed tax. “In a week when PM Modi is promoting a tax-friendly environment for foreign investors, this seems a complete disconnect between government and tax department,” Vodafone said.

Supreme Court cracks the whip on bank NPAs, air routes
The Supreme Court has inserted itself into two key debates — over banks’ bad loans and unviable air routes — suggesting that the Reserve Bank of India and the civil aviation ministry needed to shake things up a bit. This has significant implications for those who don’t repay loans on time and airline companies. The chief justice even threatened to cancel licences if airlines didn’t fulfil their obligations to fly uneconomic routes. The top court told RBI to submit details of all defaulters with loans of Rs 500 crore and more in the past five years.

CBDT resolves Rs 5,000-crore tax disputes under MAP The tax liability of Indian arms of some foreign information technology (IT) and consultancy firms for the past years could come down significantly from the levels estimated earlier as the Central Board of Direct Taxes (CBDT) has settled 180 such disputes bilaterally with its counterparts in foreign nations under the framework for Mutual Agreement Procedure (MAP). The government’s success in using MAP to resolve tax disputes would obviate pending litigation in this area in a number of cases.

Venture debt firms see pick up in demand as equity deals slow The slowdown in the availability of equity funding and a downward pressure on valuations in the venture capital ecosystem in the country has emerged as a business opportunity for firms which lend to technology start-ups. Venture debt providers are hopeful that the current momentum in business will continue in 2016, given the current scenario in venture equity funding

Hiring jumps in IT, telecom, healthcare in Jan Demand for professionals in sectors such as IT, telecom, healthcare and hospitality has gone up in the country, with increased hiring activity in January, says a report. Among top recruiting industries, healthcare posted a two per cent rise and IT, telecom saw a one per cent rise in talent demand. Hiring in travel and hospitality also grew three per cent, according to the latest TimesJobs RecruiteX data.

Crisil puts Budget focus on agriculture The government needs to restore the health of the rural economy without increasing unproductive subsidy spend for the agriculture sector in the upcoming Budget, according to the latest study by Crisil Research. Steps including widening irrigation and crop insurance coverage, direct subsidy transfer and reorienting farm subsidies to boost investment in the sector are needed.

Cos that bucked the trend on stock market

need2know: Retro tax haunts in Make in India season

FPIs sell $367 million of Indian debt over last five sessions
Foreign investors have sold $674 million of Indian equities over the last 10 consecutive sessions. However, foreign investors still remain net buyers of debt this calendar year at $90.40 million. Market participants attribute the flight of capital to the general risk aversion prevailing in global markets.