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APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOLUME XLIII NO. 268, 28 PAGES, `5.00 (PATNA `6.00, RAIPUR `7.00) P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 34,443.19 ▲ 90.40 NIFTY: 10,637.00 ▲ 13.40 NIKKEI 225: 23,849.99 ▲ 135.46 HANG SENG: 31,011.41 ▲ 111.88 `/$: 63.72 ▼ 0.22 `/€: 75.99 ▲ 0.15 BRENT: $68.09 ▲ $0.31 GOLD: `29,499.00 ▼ `7.00 DROPPING BELOW TARGET Govt’s revenue from telecom to take a hit IN THE NEWS National anthem in cinema halls optional: SC THE SUPREME Court on Tuesday made the playing of the national anthem in cinema halls before screening of movies optional, modifying its earlier order, reports PTI. The apex court modified its November 30, 2016, order by which it had made the playing of the anthem mandatory in cinema halls before the screening of a film. A bench headed by Chief Justice Dipak Misra said a 12member interministerial panel would take the final call. NTT case: Mistry says Tatas gave Siva ‘largesse’ LAWYERS ARGUING on behalf of former Tata Sons chairman Cyrus Mistry told the NCLT on Tuesday that the largesse given by the Tata Group to serial entrepreneur C Sivasankaran in the NTT DoCoMo case totalled over `1,000 crore of benefits and ranged from management contracts for procurement services that were not in conformity with industry standards, reports fe Bureau in Mumbai. No spectrum auction, lower licence fee and SUC collection to see inflow come in at `29,524 crore RISHI RANJAN KALA & PRASANTA SAHU New Delhi, January 9 THE ABSENCE OF an auction for spectrum and lower collection of licence fee and spectrum usage charge (SUC) from operators in the wake of lower revenue due to competitive pressure from Reliance Jio will see the government’s revenue forFY18fromtelecomservices fall 33% from the budgeted level to `29,524 crore. The Budget estimate was fixed at `44,342crore,whichitselfwas lowerby55% from the Budget target of `98,995 crore for FY17.Thegovernment’sactual collection in FY17 was finally lower at `78,715 crore. Sourcesinthedepartmentof telecommunications(DoT)said 44,342 (` crore) Major shortfall in licence fee and spectrum usage charge 29,524 Budget estimate (FY18) Final revenue expected 12,000* 3,200 31,942 Fixed accrual Other income Estimate 14,311 Final expected *from deferred payment instalment thattheyhavealreadyintimated finance ministryofficials about the fall in the targeted collections. Officials said that the lower target of `44,342 crore was fixed in the Budget in FY18 as there was no spectrum auction planned this fiscal. However, even this target needs downward revision because there’samajorshortfallexpected during theyearin licence fee andSUCwhichformthebulkof revenue from telecom services. Indices end at record high for third day US says no change in H-1B visa extension policy USCIS clarification a boost to Indian IT as US accounts for around 60% of annual revenues PRESS TRUST OF INDIA Mumbai, January 9 UP IN THE AIR Revenue shortfall RELIEF TO TECHIES ● TAKING STOCK THE BENCHMARK BSE Sensex built on gains to close at record high for a third straight session on Tuesday amid positive leads from global markets. Extending the record run for third day, the 30-share index closed at fresh life high of 34,443.19 points, up 90.40 points,or 0.26%. The Nifty on the NSE also settledatrecordhighof10,637, up13.40points,or0.13%,even as 19 of its constituents advanced and 31 dropped. For instance, in FY17 the actual collection from licence fee and SUC stood at `22,491 crore and the Budget target for FY18 was fixed at `31,942 crore. However, the commercial launch of Reliance Jio forced incumbent operators to drastically lower their voice and data charges, which has takenatollontheirpaymentof licence fee and SUC. 34,500 34,443.19 34,431.61 34,450 34,400 34,350 34,300 Open Prev. close: 34,352.79 Close Continued on Page 2 H-1B visas annually ■ Indians account for over 70% of H-1B visas given out every year for 3 years extendable by another 3 years INABIG relief to Indian ITprofessionals working in the United States, the US CitizenshipandImmigrationServices (USCIS) has clarified that there is no proposal to deny extension to H-1B visa holders and that the earlier policy remains in force. This clarification brings relief to an estimated over400,000 Indian ITprofessionals who continue to live in the US with such visas beyond thestipulatedsixyears,astheir green card status is pending. Earlier, there were reports thattheTrumpadministration was planning to change the rules, which would have resulted in self-deportation of H-1Bvisa holderswhose green card status was pending after the six-year extension. S&P BSE SENSEX Intra-day, January 9 ■ US gives out 65,000 ■ H-1B visas are granted FE BUREAU Bengaluru, January 9 Details on Page 11 GIVEN A PASS ■ H-1B holders can stay beyond 6 years if green card is pending ■ Over 4 lakh Indians, largely techies, fall under this green card category ■ There has been a 37% drop in new H-1B petitions by top 6 Indian IT companies between FY2015 and FY2016 According to the USCIS, it was not considering“a regulatory change that would force H-1B visa holders to leave the United States by changing interpretation of certain language in Section 104C of the American Competitiveness in the 21st Century Act (AC21) the current cap of 25% on the recommendation of the regulator,reports fe Bureau in New Delhi. The move will promote optimum spectrum efficiencyand utilisation aswell as encourage consolidation in the sector. CIL price hike to hurt gencos, discoms In the intra-band cap where the regulation prohibits any operator to have more than 50% in a given band,Traihadsaidinsteadthe government should now ensure that an operator does nothavemorethan50%ofall the sub-1GHz band. ■ P2 FE BUREAU New Delhi, January 9 MERGER, STAKE SALE Special Feature Outpatient insurance cover will be a big bet in 2018 The health insurance industry is contemplating the introduction of a Health Savings Account in India with a focus on financial security in the wake of medical emergencies ■ Personal Finance, P15 QuickPicks India mulls 70% safegaurd duty on solar equipment imports INDIA HAS proposed to levy a 70% safeguard duty on import of solar power equipment from countries like China for 200 days to protect the domestic industry from “serious injury”, reports PTI. The Directorate General of Safeguards in a January 5 recommendation to the finance ministry said solar cells are “being imported into India in such increased quantities and under such conditions so as to cause or threaten to cause serious injury to the domestic industry manufacturing like or directly competitive products”. PAGE 24 Rupee dives 20 paise to 1-week low as dollar catches steam THE RUPEE drifted sharply by 20 paise to end at a fresh one-week low of 63.71 against the greenback following steady uptick in dollar demand from importers and banks amid surging crude prices, reports PTI. A record-breaking rally in domestic stocks and sustained capital inflows failed to arrest the rupee’s fall as forex sentiment remained depressed due to a surge in global crude. Oil prices have been making some headlines recently, triggering near-term worries that expensive oil may lead to a fiscal slippage and stoke inflation. PAGE 10 Infosys to reverse $225-m tax provisions on pact with US IRS INFOSYS WILL witness a reversal in tax provisions to the tune of $225 million following the conclusion of advance pricing agreement (APA) with the US Internal Revenue Service (IRS), reports fe Bureau in Bengaluru. This is expected to bring down the company’s effective tax rate by around 100 basis points. However, Infosys expects to pay out approximately $233 million due to the difference between the taxes payable for prior periods as per the APA and the actual taxes paid for such periods. PAGE 6 ONGC-HPCL deal is a step closer With NMDC offer for sale, could take divestment kitty past `1 lakh crore PRASANTA SAHU & SAURABH KUMAR New Delhi, January 9 THE CORE GROUP of Secretaries on Disinvestment (CGD) headed by the Cabinet secretary has approved the broad contours of Oil and Natural Gas Corporation’s proposed acquisition of the government’s 51.11% stake in Hindustan Petroleum Corporation, paving the way for the transaction later this month, sources said. The deal would boost non-tax revenues of the Centre considerably as proceeds from disinvestment alone would be about `1 lakh ON TRACK TO BEAT TARGET ~`45,000 cr ONGC-HPCL deal likely to fetch the government ~`1,500 cr Likely proceeds from ongoing NMDC OFS ~`54,000 cr Desert storm A man looks at at a snow-covered slope in the Sahara Desert at the northern Algerian town of Ain Sefra with temperatures touching 1°C. Tax drive SUMIT JHA Direct results The Centre’s direct tax collections, after a fall in growth since July, has picked up smartly in December — advance taxes were lately robust. A drive by the tax man to boost collections has helped, indeed in PIT. With Apr-Dec revenue growth @18.2%, collections at fiscal-end could possibly be a few thousand crores higher than BE. ■ P2 ` lakh crore Already raised so far in FY18 by the Centre via stake sales in a clutch of firms Y-o-Y growth (%, rhs) (April-December 2017) Overall direct tax collections 7.0 18.2 6.5 (Disinvestment target for this year is `72,500 crore) 12 6.0 Continued on Page 2 5.0 6.56 FY17 20 15 10 5.53 5.5 crore as against the Budget target of `72,500 crore this year. Continued on Page 2 ● POWER PLAY TC for higher spectrum holding limit THE TELECOM COMMISSION on Tuesday approved Trai’s recommendation of removingtheintra-bandcap of 50% spectrum holding by operators in a circle. It also allowed operators to hold 35% of the total spectrum assigned in a circle against statute that states that USCIS may grant the extensions”. The statement added, “Even if it were, such a change would not likelyresult in these H-1B visa holders having to leavetheUnitedStatesbecause employers could request extensions in one-year incrementsundersection106(a)-(b) of AC21 instead.” The clarification provided by the USCIS would also give a boost to the Indian ITindustry as the US is its largest market, accounting foraround 60% of annual revenues. Indian IT companies are heavily dependent on H-1B visas to execute their projects in the US. According to Statista, Indians accountedfor82%oftheH-1B visas granted in 2016. The presence of large Indian IT companies like Tata Consultancy Services, Infosys and Wipro is significant in the US, though they have recently announced they would increase their local hiring. For example, Infosys has around 20,000 people working in the US with over 14,000 of them on H-1B visas. Advance tax 3.25 3.10 3.18 14.4 2.95 2.80 5 FY18 15.2 14.4 2.50 65.3 67 12.8 12.6 12.0 2.65 0 13.6 2.82 April-Deecember collections as % of budget estimate for full year FY17 FY18 11.2 FY17 FY18 FY18 direct tax target is `9.8 lakh crore, up 15.7% annually; FY 17 target of `8.47 lakh crore was just met COAL INDIA (CIL) has raised the prices of non-coking coal of various grades, inflating electricity cost by 2-4%, a development that might reflect in power tariffs soon. The price of coal with gross calorific value (GCV) between 3,100 kcal/kg and 4,300 kcal/kg, which the power sector uses the most, has been increased by 15-18%. The move is expected to impact operational coal-based power generation capacity of 193 gigawatts (GW), nearly 60% of the installed power plants in the country. “Duetothisrevision,CILwill earn an incremental revenue of `1,956 crore for the balance period of FY18. Projected annual incremental revenue wouldbe`6,421crore,”CILsaid. While research firm Icra saidthatthemovewillincrease the cost of generation forcoalbased power plants by about `0.13-0.15 per unit, Kameswara Rao, partner at PwC, estimated the impact at `0.06-0.10 per unit. Ashok Khurana, director general, Association of Power Producers, said that generation cost would increase by `0.30-0.35 per unit. Continued on Page 2 DIGITAL DRIVE Karnataka VAT receipts rose 26% in FY11 from 7% in previous 2 years SUMIT JHA New Delhi, January 9 IF THE GOODS and Services Tax (GST) Council insists on electronic way (e-way) bill for moving goods above certain worth along certain distance despite a section of the industrycallingit disruptive of trade and economic activity,it is not for nothing. The ability of the system to boost tax collections is huge.Among the two states that had the e-way bill system running in the pre-GST regime,Karnataka has seen its VAT revenue growth almost quadruple after embracing it in 2010-11 as cross-matching of tax returns with the invoice values of merchandise transported became easier for the tax man (see chart). Though not as much as in Karnataka’s case, Bihar too achieved incremental growth in VAT receipts after ushering in a similar mechanism in June 2012. “Implementation of esugam (Karnataka’s version of e-way bill) not only curbed tax evasion but also forced many dealers and transporters,espe- VAT revenue growth (%) 26.3 Karnataka 7.03 7.09 FY09 FY10 23 FY11* FY12 *E-way bill implemented cially those involved in carrying iron ore and marble,to registeron theVATportal,thereby expandingthetaxbase,”astate government official told FE. To ease the compliance burden of taxpayers at a time when the GSTNetwork system andtaxauthoritiesthemselves aregrapplingwiththeteething troubles of the switch-over to GST, the government had deferred e-waybill system and alsoallowedquarterly—rather than monthly — filing of sales invoices, but it has recently advanced the implementation of e-way bill on interstate transport of goods to February 1.Government managers have also expressed the hope that the system could boost GST revenue by some 20%. Once the e-way bill is implemented, it would be mandatory for businesses to generate an online receipt on the GSTN portal — the ITbackbone of GST — for movement of goods worth more than `50,000 for distance over 10 km. This would ensure that neither the supplier nor the purchaserwould find it easyto under-report transactions as theinformationonmovement of goods would be available with the government, which can be tallied with tax returns filed by the firms concerned. Continued on Page 2
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