China, Japan growth to slow sharply in 2016, warns

 IMF Government stimulus measures, lower commodity prices and low unemployment will help drive regional expansion, the International Monetary Fund said, and called on leaders to push on with reforms. China and Japan's economies are expected to slow sharply over the next two years but Asian growth will remain strong as domestic demand takes up the slack from weak global trade, the IMF said today. Government stimulus measures, lower commodity prices and low unemployment will help drive regional expansion, the International Monetary Fund said, and called on leaders to push on with reforms. However, in its Regional Economic Outlook for Asia and the Pacific, the Fund also warned of several external challenges, from weakness in advanced economies, weak global trade and increasingly volatile global financial markets. Since its previous outlook on the region in October, global markets have seen wild volatility, with worries over China's economy and plunging oil prices hammering shares in January and February, wiping trillions off valuations. While there has been a slight recovery since March, investors remain on edge.

FII  Neelkanth Mishra of Credit Suisse says

 India is the fifth-best performing market in 2017 (so far) globally. In the first five weeks of 2017, Indian equities have outperformed global equities by 10 percent, nearly reversing the under performance in November-December 2016. This has mostly been driven by relative P/E jumping from a near 10-year low of negative 1 percent to positive 5 percent now, he feels. Mishra remains constructive on narrower indices, given their significant global exposure and past positive correlation with commodity prices. He will look through distortions induced by strong flows in a market with disoriented expectations, and continue to prefer businesses with non-India exposure. 9:31 am Stake sale: ITC shares gained 5 percent after government confirmed that it sold 2 percent shareholding in the company via block deals. It is a part of FY17 divestment target of Rs 45,500 crore that has been revised recently from Rs 56,500 crore earlier

No minimum import price extension for 19 products: 

Steel secy Minimum import prices are short-term emergency measures while anti-dumping duty is a long-term measure, she said, adding that she expects to see steel prices stabilising from the current levels. There will be no minimum import price extension for 19 steel products, India's steel secretary Aruna Sharma told television channel ET .She said the government is gradually moving from minimum import price to the WTO-compliant anti-dumping duty. Minimum import prices are short-term emergency measures while anti-dumping duty is a long-term measure, she said, adding that she expects to see steel prices stabilising from the current levels

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Nifty reclaims 8800, Sensex gains 200 pts; Midcap at new high Tata Motors,

 Hero Motocorp, ICICI Bank, Lupin, SBI, Grasim and Tata Motors DVR were early gainers while M&M and ACC were losers.  Benchmark indices extended rally in morning, with the Nifty reclaiming 8800 level led by banks ahead of RBI policy meeting later in the week. The 30-share BSE Sensex was up 209.78 points at 28450.30 and the 50-share NSE Nifty rose 61.05 points to 8802. The market breadth was strong too. About 1468 shares advanced against  412 declining shares Credit Suisse maintained underperform rating on the stock, with unchanged target at Rs 2,750 and slashed FY18 EPS estimate by 3 percent. It says Q3 was good with 17 percent EBITDA beat driven by better margin & lower SG&A (selling, general and administration). According to the research firm, margin beat may not sustain but SG&A savings should continue. Court verdict on Aloxi can give maximum 18 months upside, it feels.  Mixo Das of Nomura says he has downgraded tactical stance on Asia ex-Japan equities from 'neutral' to 'cautious'.

Sensex, Nifty, Midcap continue to gain; ICICI leads, DRL drags 

ICICI Bank was biggest gainer among Sensex stocks, up 2.5 percent followed by ITC, HDFC, HDFC Bank, SBI, L&T, Axis Bank and Reliance Industries. Equity benchmarks as well as broader markets maintained early gains, with the Sensex rising over 150 points supported by banking & financials ahead of RBI monetary policy later in the week. The 30-share BSE Sensex was up 180.44 points or 0.64 percent at 28420.96 and the 50-share NSE Nifty rose 52.60 points or 0.60 percent to 8793.55. Dipen Shah of Kotak Securities says going ahead, the remaining quarterly results will be important to determine the impact of demonetisation. Focus will now shift to the RBI meeting this week wherein expectations of interest rate cuts have increased, after the Finance Minister set the fiscal deficit target at 3.2%, he feels.

Reuters Gold up on weaker dollar after US jobs data 

US job growth surged more than expected in January as construction firms and retailers ramped up hiring, but wages barely rose, handing the administration under President Donald Trump both a head start and a challenge as it seeks to boost the economy. Gd prices crawled higher on Monday on a weaker dollar after mixed US jobs data late last week lowered expectations for near-term interest rate hikes. FUNDAMENTALS * Spot gold had gained 0.2 percent to USD 1,222.30 per ounce by 0053 GMT. * US gold futures rose 0.2 percent to USD 1,223.20 per ounce. * The dollar Index was down 0.2 percent at 99.723. * US job growth surged more than expected in January as construction firms and retailers ramped up hiring, but wages barely rose, handing the administration under President Donald Trump both a head start and a challenge as it seeks to boost the economy. * Wall Street's top banks expect just two rate hikes from the Federal Reserve this year and see only modest risk to the US central bank being pressed into a more aggressive pace of monetary policy tightening, a Reuters polls showed on Friday. * Asian shares edged ahead on as Wall Street gathered momentum into a busy week of earnings with more than 100 major companies due to report, while the dollar was again hobbled by a lack of progress on US fiscal stimulus.

Withholding tax – Boon or nightmare? 

Taxpayers and business houses are willing to take on the responsibilities of collecting and depositing tax and undertake necessary compliances. However, generation of artificial demand and treating honest and innocent taxpayers at par is certainly something that needs to be addressed by the government. Rajeshree Sabnavis / Alpesh Gandhi The government’s focus on “Ease of doing business” and its tax agenda of having non-adverersial tax regime with specific emphasis on certainty and clarity in tax laws and reduce tax litigation is well known now. The government has taken numerous positive steps towards this agenda, which has been welcome by the business houses. Though withholding tax provisions has been an effective mode of recovery of tax, the complexity of the withholding tax laws and the compliance burden, which the business houses are facing, there is an immediate need for rationalisation and simplification of the withholding tax provisions in the Income-tax Act, 1961 (‘ITA’). Tax Deductor’s agony As the great Shri Nani Palkhivala rightly remarked “What is wrong with India is the pathological obsession displayed by the law makers who frame laws only with the tax evader in mind, regardless of the enormous inconvenience and harassment to the far larger section of honest taxpayers

A departmental store which is wholly preoccupied with prevention of shoplifting is a sure candidate for stagnation” The taxpayers and business houses are willing to take on the responsibilities of collecting and depositing tax and undertake necessary compliances. However, generation of artificial demand and treating honest and innocent taxpayers at par and in the same category as that of tax evaders, merely if certain procedural or administerial related nuances are missed, is certainly something that needs to be addressed by the government. Not only does the deductor step into the shoes of the payee and is required to make good the amount of tax which otherwise the payee is liable to pay, they are also required to compensate the government for the time delay by paying interest at exorbitant rates. Additionally, the deductors are not only partially denied of the claim of deduction of their otherwise eligible business expenditure, they are also fastened with various rigorous penalties and even prosecutions in few cases. 

 The withholding provisions, which are embodied in Chapter XVII-B of the ITA, itself are complex to apply. The deductors are often struggling with the interpretation of the tax laws as to whether a particular payment is subject to withholding or not or which provision should apply for a particular payment, especially considering the fact that the definitions in the withholding tax laws are widely defined, there have been amendments to the withholding tax laws on a frequent basis, especially to the definitions itself, some with retrospective effect, compelling the deductors to dance on a tight rope. This complexities increases manifold when the question of applicability of withholding on overseas payment gets involved, wherein apart from the interpreting complex sets of domestic tax rules, due cognizance of the international tax treaty provisions and their interplay with the domestic tax rules, also needs to be taken into account. In addition to above, the prevalent withholding provisions not only covers corporate taxpayers and business transactions but also personal transactions as well like payments made to non-residents for personal purposes, purchase of immovable property exceeding a certain threshold etc, which creates unnecessary stress and financial burdens on individuals and small taxpayers. Procedural bottlenecks

The government should ensure that tax deductors, as an agent, should not be burdened with such onerous penalties and administrative inconveniences. As regards withholding positions on various payments, the government should come out with comprehensive circular clarifying various withholding tax positions especially those which are litigative in nature, so that there is clarity on the withholding position that needs to be taken. Simplification of TDS rules like uniform moderate tax rates, rationalization of interest, penalty/ fee, TDS procedures like easy filing and correction of TDS statements would certainly help. Any procedural bottlenecks faced should be removed in 48 hours of the taxpayers informing the same on TRACES website. Such measures by the Government would go a long way in achieving its tax agenda of creating non-adversarial tax regime, certainty and clarity in tax laws and substantial reduction in tax litigation, apart from supplementing its “Ease of doing business” agenda

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