MARKETS, P9 COMPANIES, P4 HOST OF PROBLEMS Foreign portfolio investors run into glitches in filing ITR BACK PAGE, P24 REGULATORY FILING BIG ACQUISITION IN THE NEWS No need to pay off parent's liabilities on Day 1 of merger, says HDFC Bank Adani to buy Macquarie's Andhra, Gujarat toll road portfolio for `3,110 cr In line to be next CJI, UU Lalit a judge who walks the talk on fairness NEW DELHI, FRIDAY, AUGUST 5, 2022 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL XLVIII NO. 134, 32 PAGES, `10.00 (PATNA & RAIPUR `10.00) 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: 58,298.8 ▼ 51.73 NIFTY: 17,382 ▼ 6.15 NIKKEI 225: 27,932.2 ▲ 190.3 HANG SENG: 20,174.04 ▲ 406.95 `/$: 79.4713 ▼ 0.31 `/€: 80.9679 ▼ 0.35 BRENT: $95.25 ▼ $1.53 GOLD: `51,834 ▲ `505 NOD FROM REVENUE DEPARTMENT SOON TDS on large loan waivers likely to go IN THE NEWS India needs to roll back stimulus gradually: IMF THE IMF on Thursday suggested that India withdraw fiscal and monetary policy stimulus gradually, develop export infrastructure and scale up exports by getting into free trade agreements with key trading partners, reports fe Bureau in New Delhi. P2 Import duty on wheat likely to be scrapped TO CONTAIN soaring domestic wheat prices that may accentuate inflationary pressures, the Centre is likely to scrap the 40% import duty on wheat soon, report Prasanta Sahu & Sandip Das in New Delhi. P2 Sebi amends mutual fund rules SEBI HAS amended mutual fund rules to remove the applicability of definition of "associate" to sponsors that invest in firms on behalf of beneficiaries of insurance policies. FE SPECIALS Weaving a strong brand story Garden Vareli’s comeback plan is testament to the potential the branded saree segment holds ■ BrandWagon, P7 ? Who clears a dead man’s loans? The legal heir’s liability to repay any loan depends on the kind of loan and whether there was insurance covering it ■ Personal Finance, P7 Tax liability RESOLUTION IN SIGHT discourages lenders ■ Under sec. 194R of I-TAct, any person who from addressing provides a resident any default through benefit arising from one-time settlement business by such resi- Banks fear the dent, will deduct tax at 10% of such benefits BANIKINKAR PATTANAYAK New Delhi, August 4 SOON, BANKS ARE likely to get relief from a new tax rule that effectively mandates them to deduct a 10% tax at source on the amount of debt waived by them through onetime-settlement(OTS)orsome other schemes, especially involving large accounts. “The departments of revenue and financial services are in talks and a positive resolution of this issue is expected soon,” a senior finance ministry official told FE. The Indian Banks’Association has represented to both thedepartmentsofthefinance ministrythat the loan amount waived by banks via OTS doesn’t amount to earnings by or business benefits granted to the borrowers,the official said. Instead, it’s a settlement with the borrowers, as they no longerhave the abilityto repay new rules will force them to deduct a 10% TDS on the amount of loan waived, to be payable by borrowers 2.36 2.34 Write-offs 1.61 ■ They say the amount of loan waived isn’t a business ‘benefit’ granted to borrowers, so this rule shouldn’t apply ■ Since borrowers are unable to repay in full, effectively bankswill end up paying the tax if the rule isn’t relaxed 2.03 by banks (` trillion) FY18 FY19 the entire loan amount. According to the section 194R of the Income Tax Act, introduced in the Budget for FY23, any person providing to a resident any benefit or perquisite (whether convertible into money or not) arising from business or the exercise of a profession, by such resident, will ensure that tax has been deducted in respect of such benefit or perquisite at the rate of 10% of the value of FY20 FY21 DATA PROTECTION Four key clauses may go in new Bill RISHI RAJ New Delhi, August 4 THEGOVERNMENTHASidentified four key clauses in the now-withdrawn Personal Data Protection Bill that are likely to beeitherdroppedorfine-tuned in the new one to facilitate ease of doing business and achieve regulatorysimplicity.Theindustry,which includes Big Tech as wellasstartups,hadvoicedconcerns about these clauses. Regulationofhardwareand devices, localisation of data with retrospective effect, the need to seek regulatory nod everytime cross-borderflowof dataisrequired,andpenaltyon global turnover for any viola- Needing a relook The need to seek regulatory nod every time crossborder data flow is required Clause on regulation of hardware & devices On localisation of data with retrospective effect tion, are the four areas which figure on the list, sources told FE.Itislikelythatconsultations willbe heldonceagainwiththe industryon these issues. For instance, regulation of hardwaredeviceswasnotinthe draft originally submitted by Penalty on global turnover for any violation the Justice BN Srikrishna committeebutwaslaterinsertedby the Joint Committee of Parliament (JCP). The industry had flaggeditasoneoftheirbiggest concerns,andinallprobability, this may not figure in the new Bill, which the government 1.57 FY22 such benefit or perquisite.The rules,tied to some riders,came into force from July 1. No tax, however, will be deductediftheaggregatevalue of perquisite/benefit to a residentdoesn’t cross`20,000ina fiscal. Moreover, the provision won'tapplytoabusinesswhose total annual turnover doesn’t exceed`1crore;thelimitis`50 lakh in case of a professional. Continued on Page 18 Sebi initiates forensic audit of 2 Future firms E-way bills in July second highest FE BUREAU Mumbai, August 4 PRASANTA SAHU New Delhi, August 4 THE SECURITIES AND Exchange Board of India (Sebi) has initiated a forensic audit into thefinancial statements of beleagueredFutureRetail(FRL) and Future Supply Chain Solutions (FSC) over concerns of improperdisclosureoffinancial information.Themarketsregulator has appointed Chokshi & Chokshi LLP, a chartered accountantfirm,astheforensic auditor,twoFutureGroupfirms informedthestockexchangesin separate statements. “The Sebi has reasonable grounds to believe that the disclosureoffinancialinformation andthebusinesstransactionsin the matter of FRL have been dealt with in a manner which maybedetrimentaltotheinterest of the investors or the securities markets…” Future Enterprises, one of the group firms, said in a regulatoryupdate. “…an intermediary or a person associated with the securities market may have violated the provisions of the Sebi Act,” the regulatory filing said,quotingaletteritreceivedfromSebi. The letter, an email, was addressed to FRL’s resolution professional (RP), it said. The audit is with respect to consolidated financial statements and account books of FRLand some other entities for the financial yearsendedMarch2020,March 2021 and March 2022,it said. E-WAY BILLS GENERATED by businessesforinter-statecommerce in July were up 18% on year and 1.5% on month,suggesting that the goods and services tax (GST) collections in August could be upwards of `1.5 trillion, which is becoming the new monthly normal. At `1.49 trillion, GST collections in July (June transactions)wereup28%onyearand the second-highest ever, thanks to resurgent economic activities, improved compliance, high inflation and a broadening of the tax base. The number of e-way bills stood at 75.58 million in July, the second-highest since the systemwas rolled out in 2018. It was 78.16 million in March 2022, resulting in a record `1.68-trillion gross GST receipts in April 2022. With a monthly average of `1.5trilliontillJuly,FY23gross GST receipts may exceed the target by `3 trillion, allowing the Centre to appropriate an additional`80,000crore,after devolution to the states. Continued on Page 18 Continued on Page 18 ■ Forensic audit initiated over concerns of improper disclosure of financial information Sebi appoints CA firm Chokshi & Chokshi as forensic auditor ■ Regulator has grounds to believe disclosures in FRL matter have been dealt with in a manner detrimental to interest of investors or securities markets IT revenue growth may lose pace AYUSHMAN BARUAH Bengaluru, August 4 THE REVENUE GROWTH momentum of IT companies is likely to soften in the second half of the fiscal as the pandemic-induced demand for digital transformation slows down and clients cut down on IT budgets in select pockets. The general consensus among the management of ITcompanies is that the demand environment continues to be strong in the near term and client conversations do not indicate pullback in tech spending. However,a few cracks have begun to emerge, analysts at Kotak Institutional Equities said. According to research firm CareEdge, cloud computing, artificial intelligence (AI), cybersecurity, SLOWING DOWN ■ After Covid- induced surge in revenues, IT firms likely to see a slowdown, say analysts ■Slowdown in US & EU, global macroeconomic uncertainties, currency volatility to play spoilsport ■ Costs related to backfilling attrition, hiring and discretionary spends to also hit growth data analytics, and internet of things (IoT) are expected to be the key focus areas going forward. “However,a slowdown in the key markets of the US and the EU,uncertainties arising from the global macro-economic slowdown, and currency volatility can potentially playa spoilsport with respect to corporations spending on technology and maylead to postponing some of these spends,” it said. The deal total contract value (TCV) for key companies has flattened out or declined. The deal TCV on an annual basis was flat for Tata ConsultancyServices (TCS) andTech Mahindra, while it fell for Infosys. On the other hand,Wipro delivered strong year-on-year growth in TCV, but on a low base.HCLTechnologies reported healthy y-o-y growth, driven by large deals. Continued on Page 18 New Delhi plans to introduce in Monsoon session of Parliament. Continued on Page 18 ■ Tech industry eyes a more conducive bill, Page 4 ■ Data laws & trade talks, Opinion, Page 6
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