Time series of IT released by CBDT

Time series data of Direct Tax Collections by GOI is being released by IT Dept/CBDT now and then.There is no regularity in release of data and also in data details.Previous Time series data was released upto the year FY18-19 in May/ of 2020.Now this update has been released after 3 years gap.(Time series data)

The time series data contain whole host of details and a student interested in analysing our country's Direct Tax collection , can Data mine large amount of useful information.

The most important datapoint is Direct Tax GDP ratio (Chapter 1.4) which has increased to 2.52% in FY21-22. Next to that is Chapter 1.5 which gives Pre-Assessment and Post-Assessment Collections.

 Two observations based on the latest Time Series Chapter 1.5 details .1)it strengthens the argument that more than 89% of Direct Tax collections are thro Advance tax,TDS and Self assessment Tax.This percentage is even without considering,Equalization levy, Central TDS, Dividend Tax etc.which are also pre assessment collections.This leads to the obvious question as to what is the necessity for the Assessment proceedings?

IMHO, atleast Salary earners,who are assessees,  if they have a Form16 issued by the employer to back up should not be subject to separate Assessment proceedings.Even for others, Assessment can be dropped on a case by case basis if they show atleast 15% YOY increase in their Taxable income and Tax payments.

CBDT can call this scheme as "File & Forget " Assessment to encourage this.Data intelligence of IT dept should be deployed to prevent misuse of this scheme.Trusting the Assessees will instill confidence in them and will lead to better compliance over the long term.

 2)chapters on Number of IT return filed,No.of persons filing IT return, No.of Tax payers , have been left out.These details were available in the earlier Time series data Why they have been left out now?Nobody knows.

Old Pension System(OPS) vs New Pension System(NPS)

All opposition political parties worth their salt have released their election manifestos condemning NPS and promising OPS, if they get elected.

Already Congress has reverted back to OPS in Rajasthan, calculating that they will be able to save on Pension in the initial years upto middle of next decade and then the Pension bill will balloon."In the longterm everybody is dead" is what Lord Maynard Keynes said. So Long term is far off politically.

OPS is inherently beneficial to Govt employees as they dont contribute to their Pension from their Salary but is wholly unsustainable fiscally and it also benefits Govt employees at the cost of Common man by shifting the burden of their Pension to the tax payers .It is like robbing Peter to pay Paul.If the fiscal deficit exceeds the target fixed by RBI and Govt, then it means the present State Govt is kicking the can down the road for future generations to service the bloated borrowings due to higher fiscal deficit today.

But NPS is the right solution for the long term and if some tweeking can be done to make it attractive that should solve the problem of government retirees.

In the current  NPS, many retired Government servants are saying their pension income is not 50% of last drawn salary, On top of it , the pension also fluctuates and there is no revision considering the cost of inflation ,based on Dearness Allowance computation. These are available for Pensioners under the OPS.

If these are addressed thro proper restructuring of NPS,that should be acceptable to retirees who are currently under NPS.

GOI has appointed with Finance Secretary as the Head of a Committee that would look into the Pension issues of the Government employees. This Committee would study and provide the path forward for streamlining the NPS to bring it in line with more attractive OPS. 

பிராமணர்களின் பூர்வீகம் -ஆரியன் வந்தேறியா ?

 பிராமணர்கள் பூர்விகம் இந்த பாரத மண்தான் 

1)இந்தியாவை கர்மபூமி-இப்புவியில் உன்னதமான இடம்-என்று வேதங்கள் சொல்கின்றன. பிராமணர்கள் கடைமையாக  தங்கள் சங்கல்ப மந்திரங்களில் இந்திய/பாரத புண்ணிய பூமியில் சடங்குகளை செய்வதாகத்தான் சொல்லித் தொடங்குவார்கள் 

2)இந்தியாவில் தான் பிராமணர்களின், இந்துக்களின் அனைத்து வழிபாட்டுதலங்களும் உள்ளன.காசியும், இராமேஸ்வரமும் இவைகளில் மிக முக்கியமானவை.வேற்று நாட்டிலிருந்து வந்தவரானால் இந்தியாவில் வழிபாட்டுத்தலங்களுக்கு முன்னுரிமை கொடுத்திருக்க மாட்டார்கள். இந்நாட்டில் தோன்றிய இராமனையும், சிவனையும், கண்ணனையும் கடவுளர் ஆக்கியிருப்பார்களா.

3)நம் தாய்மொழி தமிழ்,சிவபெருமானின் அருளால் அகத்திய முனிவரால் தொடங்கப்பெற்றது என்று அறிவோம். அவர் பிராமணர்.தமிழின் மிகத்தொன்மையான தொல்காப்பியம் எழுதிய தொல்காப்பியரும் பிராமணர். ஏனெனில் அவர் வடமொழி ஐந்திரம் என்னும் இலக்கண நூல் நன்கு பயின்றவர்.

இவையெல்லாம் நம்கண்முன்னே உள்ளங்கை நெல்லிக்கனியைப்போல் தெரியும் சான்றுகள்.

ஆரியன் படையெடுப்பு என்பது ஆங்கிலேய ஏகாதிபத்தியத்தின் வலிந்து திணிக்கபட்ட கோட்பாடு .இது நம் இந்திய சமுதாயத்தை பிரித்தாளும் சூழ்ச்சியில்,பிரிட்டிஷார் வேண்டுமென்றே  விதைத்தது  . ஏனெனில் ஆரியன் தன் மதத்தை வெளியில் இருந்து கொண்டு வந்திருந்தால் ,கௌதம புத்தர் தன்னுடைய கோட்பாட்டை "ஆரிய மார்க்கம்/வழி  " என்றும் ,தன் கொள்கைகளை "ஆரிய சத்தியம் " என்றும் சொல்லியிருப்பாரா ?ஆரியம் என்ற வட மொழி சொல்லுக்கு "உயர்ந்த/உன்னதமான " என்பதுதான் உண்மையான பொருள்.

ஆரியன் வந்தேறிகள் என்று சொல்லுமுன் இவற்றை சற்றே யோசித்து பார்க்க வேண்டும் என்பது என்னுடைய தாழ்மையான அபிப்ராயம் .

Q3 GDP growth

 Q3 FY23 GDP growth estimates released on 28th Feb 2023 mentions 4.4% growth as against 5.4% GDP growth estimated during Q3 of FY 22.With estimate of about 4 to 4.5% growth in Q4, the full year FY 23 GDP growth will be around RBI's GDP growth estimate of 6.8%.The nominal GDP growth for the full year FY23 will be around 15.9%

Q2 FY 22 GDP growth is now estimated at 6.3%.

The most important datapoint in these estimates is the revision of GDP growth of Pandemic years.

The cumulative average real GDP growth during FY19-20 to FY 22-23 is now estimated better at 3.2% as against the potential real GDP growth of 7% of Indian economy.

Since the GDP estimates of the previous years have been revised upwards, the base effect has impacted the current year GDP growth estimates.

The most worrying aspect of Q3 of FY 23 is the contraction of manufacturing output at -1.1%.

Private consumption which contributes about 60% of Indian GDP has also languished at 2.1% in Q3 FY23.

Again Statistics reg. IIP and Consumption Spending Survey are not reliable and they are constantly under revision upwards now.MOSPI has an important task on hand for strengthening data collection for estimating IIP and Consumer Spending and making them robust.

With unabated inflation estimated at around 6% for the FY 23 ,which is the upper tolerance level of RBI, the monetary policy will have to continue with elevated borrowing costs. Such high borrowing costs dampen Private Consumption further feeding into a vicious cycle of lower GDP growth.

Government will have to be mindful of its high fiscal deficit which is also fuelling inflation to some extent.But Government is banking on Capex expenditure to crowd in Private Investment which will counter balance the inflation through higher production efficiencies.Govt should also look at fiscal incentives apart from PLI, to bring in Private Capex through Investment allowance and accelerated Depreciation schemes for the short term covering the next couple of years.

With dark clouds of high interest rates and liquidity tightening looming all over the globe ,GOI has extremely difficult task cut out for itself  inorder to maintain high GDP growth of 6%+ in FY 24.

Union Budget musings!

 Only unbridled Govt borrowings can crowd out Private investment.FS Somanathan clearly articulated in the post budget press conference that Nominal GDP growth will b 10.5% and incremental Govt Borrowings will grow only 8% or less & therefore, not a problem. As rightly said, Govt Capex will have multiplier effects and will crowd in Private investments.

Capex is 3.2% of GDP which  means about 55% of Fiscal Deficit of 5.9% will be used for Capex.That will have huge impact on job creation and other multiplier ripples across the Economy. Capital expenditure is estimated to be Rs 10,00,961 crore (37.4% increase over FY22-23).  The increase in capital expenditure is due to an increase in capital outlay on transport (including railways, roads and bridges, and inland water transport) by Rs 1,28,863 crore (36.1% increase)

Revenue deficit in 2023-24 is targeted at 2.9% of GDP, which is lower than the revised estimate of 4.1% in 2022-23(original BE for FY 22-23 was 3.8%).  Fiscal deficit in 2023-24 is targeted at 5.9% of GDP, lower than the revised estimate of 6.4% of GDP in 2022-23.  While the revised estimate as a percentage of GDP is the same as the budget estimate, in nominal terms, fiscal deficit would be higher by Rs 94,123 crore (increase of 5.7%) in 2022-23.  Interest expenditure at Rs 10,79,971 crore is estimated to be 41% of revenue receipts.The target for primary deficit (which is fiscal deficit excluding interest payments) in BE 2023-24 is 2.3% of GDP as against 3% in RE for FY 22-23(BE was 2.8%).

All the trajectories of deficits are on a downward trend since the end of pandemic and rightly so in tandem with Monetary tightening happening under Monetary Policy of RBI.But the downside is growth may get hampered may be after a long of 4to 6 months when Global headwinds are also expected to hit the demand in the Indian Economy.

Therefore front loading of Capex by GOI is the right strategy to keep up the demand momentum in the domestic economy. By the time Global slowdown or recession starts gnawing at our economy, RBI may have to tweek its Monetary Policy accordingly to shore up the sentiments.

In all probability, this situation has to be watched out for during second half of FY 23-24 as things stand and if El Nino plays out leading to deficient monsoon little earlier also.

Govt should keep an eye on Pvt Sector Capex growth minus the PLI scheme and also focus on MSME Investment growth. If possible, MSME and Pvt sector outside PLI scheme should be supported by increasing Depreciation rates for the next couple of years as an adhoc measure.

This will be mostly revenue neutral since any loss through higher depcn rates will be offset through tax revenue from higher economic activity.

Adani saga and my personal views.

IMHO,before adversely or favorably commenting on any business group on SocialMedia, all shd make disclaimers that they have not profited from their exposure directly or indirectly thro MFs etc w.r.t that Group of Cos.!!!

How do you say crony capitalism in India, when the biggest loss making Public Sector enterprise Air India was sold to Tatas?or becoz Marxist Communist party ruling Kerala wants Adani to complete the port project in Kerala?or becoz Mamata has givena project to Adani in west Bengal?

Even though I agree that alleged stock manipulation &violations accusations  are against Adani and not on India, but why #Hindenberg report says India's capital markets r in broken state and that journalists r murdered or imprisoned for writing against country's businessmen. Is it not attack on India? See below

H report saying this with a judgmental tone and spreading fake info as if India has slid on civilized capitalist culture has not gone down well with many neutral observers H report also screams this alleged Adani scam is  "Biggest con in history". Had Hindenberg brought out a report after 2 months of research against FTX crypto Sam Bankman Fried before his ponzi scheme collapsed I would have appreciated the title "biggest con in history" as appropriate since this real scam happened right under Hindenburg's nose in USA ! Yet, Nobody is questioning why Hindenburg wants to short sell Adani shares and why their motive to profiteer thro this report is not questioned?

I have a strong suspicion that the profits from this short selling could round trip back to India for funding General elections expenses of Opposition in India.

Sebi in its wisdom can bring in Additional Surveillance Measures probably when PE ratios of particular co.shares,exceed threshold limits ,similar to the one it brings in when share prices crash leading to excess volatility

This is only good news as this confirms he has repaid US$1.1 billion loan- whether due to Margin call or not.Nobody has denied his repayment of loan.Only if had evaded and had taken flight to UK,you can accuse him.Don't ridicule if someone repays or prepays his loan.

 Adani's financial problems are only pertaining to Overleveraging where Debt to EBITDA ratio is more than 3 and his Debt Service Coverage Ratio is less than 3. As per Rating Agencies and Banks there are no Short Term Cash problems as Major Loans are maturing only in late 2024 or in 2025.

Road for reviving Capex investment in Pvt sector

 Indian think-tank at the top in GOI has brought out the PLI Production Linked Incentive Schemes to

attract investments into India which can push up our Exports and also provide jobs to the locals.This twin objectives of Value add and Job add have remained Work-in-Progress and the full benefits would start flowing into the economy in about 3-5 years time.

Nevertheless the Capex appetitie beyond this ambitious scheme has remained largely muted mainly because of reasons like lack of demand momentum going forward.higher interest rates and large Govt borrowings programme as this is penultimate year before General elections.

In this scenario, one of the important avenues open to the Govt is looking at Investment allowance and Depreciation rates.Earlier it has been demonstrated that whenever the IA and Depreciation rates are increased for a limited period, there has been a pickup in Capex investments inorder to save on Corporate Taxes. But now the Tax rates have already been lowered and so it is a moot point whether any increase in IA and Depreciation rates will work.

However the past experiences are a guide for us to peep into future. Despite lower Tax rates if our India Inc. sees some avenue to save today's tax which can also partially offset raise in cost of funds then there will be appetite to take the bait.

Depreciation and IA rates may be doubled with a sunset clause at the end of two financial years can help many corporates to front load their Capex investments. Govt need not have to forego by way of tax since what Govt may give up by way of higher taxes may in part come back from Capex manufacturing companies. With the overall buoyancy in the economy on an even keel, the tax revenues will get a legup in both Direct and Indirect Tax-GST..