Friday, 2 February 2018


 1. Rationalization of Long Term Capital Gains (LTCG)
Currently, long term capital gains arising from transfer of listed equity shares, units of equity oriented fund and unit of a business trust are exempt from tax. The total amount of exempted capital gains from listed shares and units is around `3,67,000 crores as per returns filed for A.Y.17-18. Major part of this gain has accrued to corporates and LLPs. This has also created a bias against manufacturing, leading to more business surpluses being invested in financial assets. The return on investment in equity is already quite attractive even without tax exemption. There is therefore a strong case for bringing long term capital gains from listed equities in the tax net. This budget proposes to tax such long term capital gains exceeding `1 lakh at the rate of 10% without allowing the benefit of any indexation. However, all gains up to 31st January, 2018 will be grandfathered.

2. Tax incentive for IFSC 153.
The Government had endeavored to develop a world class IFS center in India. In recent years, various measures including tax incentives have been provided in order to fulfil this objective. To further this objective, it is proposed to provide two more concessions for IFSC. In order to promote trade in stock exchanges located in IFSC, propose to exempt transfer of derivatives and certain securities by non-residents from capital gains tax. Further, non-corporate taxpayers operating in IFSC shall be charged Alternate Minimum Tax (AMT) at concessional rate of 9% at par with Minimum Alternate Tax (MAT) applicable for corporates.

3.Venture Capital Funds and the angel investors need an innovative and special developmental and regulatory regime for their growth. Budget 2018 has taken a number of policy measures including launching ‘‘Start-Up India’’ program, building very robust alternative investment regime in the country and rolling out a taxation regime designed for the special nature of the VCFs and the angel investors, and additional measures to be taken to strengthen the environment .

4.The Government and market regulators have taken necessary measures for development of monetizing vehicles like Infrastructure Investment Trust (InvIT) and Real Investment Trust (ReITs) in India. The Government would initiate monetizing select CPSE assets using InvITs from next year.

5.RBI has issued guidelines to nudge Corporates access bond market. SEBI will also consider mandating, beginning with large Corporates, to meet about one-fourth of their financing needs from the bond market.

6.Corporate bonds rated ‘BBB’ or equivalent are investment grade. The government and concerned regulators will take necessary action

7.International Financial Service Centre (IFSC) at Gift City, which has become operational, Government will establish a unified authority for regulating all financial services in IFSCs in India to have a coherent and integrated regulatory framework to fully develop and to compete with other offshore financial centers.

8.Capital of the Food Corporation of India will be restructured to enhance equity and to raise long-term debt for meeting its standing working capital requirement.
Budgeting of Government of India’s contribution in equity and debt of the metro ventures floated by the State Governments will be streamlined.

9.Department of Commerce will be developing a National Logistics Portal as a single window online market place to link all stakeholders.

10.The Government has approved listing of 14 CPSEs, including two insurance companies, on the stock exchanges. The Government has also initiated the process of strategic disinvestment in 24 CPSEs. This includes strategic privatization of Air India.

11.Three public sector general insurance companies National Insurance Company Ltd, United India Assurance Company Limited and Oriental India Insurance Company Limited will be merged into a single insurance entity and will be subsequently listed.  

12.The Government introduced Exchange Traded Fund Bharat-22 to raise `14,500 crore, which was over-subscribed in all segments. DIPAM will come up with more ETF offers including debt ETF

13.The budget sets the target for the disinvestment to `80,000 crore for 2018-19 (Target of Rs.72,500 Crs in 2017-2018 which has already crossed to Rs.1,00,000 Crs)

14.Bank recapitalization program has been launched with bonds of `80,000 crore being issued this year. The program has been integrated with an ambitious reform agenda, under the rubric of an Enhanced Access and Service Excellence (EASE) program.

15.This recapitalization will pave the way for the public sector banks to lend additional credit of `5 lakh crore. 128. It is proposed to allow strong Regional Rural Banks to raise capital from the market to enable them increase their credit to rural economy.

16.National Housing Bank Act is being amended to transfer its equity from the RBI to the Government. Indian Post Offices Act, Provident Fund Act and National Saving Certificate Act are being amalgamated and certain additional people friendly measures are being introduced. To provide the Reserve Bank of India an instrument to manage excess liquidity, Reserve Bank of India Act is being amended to institutionalize an Uncollateralized Deposit Facility. Securities and Exchange Board of India, Act 1992, Securities Contracts (Regulation) Act 1956, and Depositories Act 1996, are being amended to streamline adjudication procedures and to provide for penalties for certain infractions. These proposals are in the Finance Bill.

17.The Government will formulate a comprehensive Gold Policy to develop gold as an asset class. The Government will also establish a system of consumer friendly and trade efficient system of regulated gold exchanges in the country. Gold Monetization Scheme will be revamped to enable people to open a hassle-free Gold Deposit Account.

18.The Government will review existing guidelines and processes and bring out a coherent and integrated Outward Direct Investment (ODI) policy.

19.The Government will evolve a separate policy for the hybrid instruments.

20.Reform measures taken with respect to stamp duty regime on financial securities transactions in consultation with the States and make necessary amendments the Indian Stamp Act.

21.Process of acquisition of Hindustan Petroleum Corporation by the ONGC has been successfully completed.

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1 comment:

  1. Thanks for sharing this with us. I found it informative and interesting. Looking forward for more updates.
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