– Prasun Banerjee, Editor TJEF
The banking system functions on the very foundation of trust between the lender and the creditor. Businessmen borrow money to build assets which supposedly churn more money when put to use. These businesses should have the competitive advantage to repay not only the principle but also the timely interests attached with the borrowed sum from the banks. Yet, history has numerous examples, when people tried to dupe the system and exploit loopholes to embezzle.
One such facility (/loophole) being employed on Indian banks have recently heated up the socio-political environment. The dent that has been caused on the coffer of Punjab National Bank (PNB) is in the tune of one-third of the re-capitalization amount that the bank is allocated. The LOUs which have led to such a massive loss, is being explained in a pictorial format.
By TJEF Editor Junitha Johnson
The Telecom Sector is deeply disappointed that Budget 2018 has not addressed any of the key issues of the financially stressed telecom industry that is already plagued by brutal price wars and high debt, upwards of Rs 7 lakh-crore. Quoting Rajan Matthews, director general of Cellular Operators Association of India (COAI) –
“The telecom industry is disappointed that none of its key asks have found mention in finance minister Arun Jaitley’s budget. We had sought a reduction in the high levies and taxes, and an urgent intervention for resuscitating the sector, which is currently experiencing its worst financial health and hyper competition,”
In the past few years, the Telecom Sector has seen considerable reduction in the profitability primarily due to reduced tariffs, increased competition and increase in costs due to spectrum purchases. Further, unprecedented increase in adoption of digital services such as payments, e-governance and entertainment has made further investments in the telecom infrastructure sector a necessity.
In the above backdrop, this sector has been pushed into a wave of consolidation as also increased investments in networks, to keep pace with changes. This has increased the pressure on the already debt laden companies in the sector.
The Telecom Industry’s expectation from the Budget 2018 were high, following are the certain expectations –
- Clarity on tax treatment of spectrum payment
- Characterization of telecom services as royalty
- Amendment to the definition of ‘industrial undertaking’ to include telecom infrastructure service providers
- Benefit of Investment Allowance should be provided to telecom infrastructure service providers
The salient points of the Budget 2018 with regards to the Telecom industry are as follows: –
- Custom duty on mobile phones up from 15% to 20%
- Corporate tax rate cut to 25% for companies with up to Rs 250 crore turnover
- 1 lakh Gram Panchayats are connected to optic fibre; 5 lakh Wi-Fi spots to be created in rural areas
- Rs 10,000 crore announced for creation and augmentation of telecom infrastructure
- Broadband access to over 20 crore rural Indians in 2.5 lakh villages
In our opinion the Budget has not been in line with expectations of the industry. The Government, as per Mathews said the finance minister “had completely ignored” the sector’s four key demands, including the immediate reduction of high and unsustainable levies & taxes, cut in basic customs duty on 4G network gear, clarity on right of way (RoW) related taxation at the state level and the industry’s call for a lower tax rate to 1% on discounts extended to small dealers.
– Prasun Banerjee, Editor TJEF
This Budget Season, we witnessed huge drama on the stock market, with Finance Minister announcing the revival of the LTCG-tax of 10%, the market nose-dived and continued to do so until the magical word of “grandfathering” announced by Mr. Arun Jaitley. Here we try to pictorially depict what LTCG-tax means in Indian context and its implications. Feel free to comment, how you feel about it.