Indian Government Slashes Taxes in Its Annual Budget

New Delhi: Wednesday brought good news for Indian taxpayers and medium-sized companies as India’s finance minister Arun Jaitley announced a tax relief for them.

Terming India as a “largely non-tax compliant society”, Jaitley said that he hoped that a tax cut would prompt the people to pay their tax dues. Out of the 37 million people who filed tax returns in 2015-16, a mere 2.4 million showed an income above 1 million rupees.

In a budget consisting of a slew of measures to boost the infrastructure and with an eye on capitalizing on the recent demonetization by the government, the Indian Finance Minister declared a reduction in the base tax rate from 10 percent to 5 percent for people with an annual income between 300,000 rupees (USD 4,476) and 500,000 rupees (USD 7,410) besides abolishing income tax for people earning less than 300,000 rupees per annum. All other categories of taxpayers will get a benefit of 15,000 rupees (USD 222) per person under the new budget.

Jaitley’s reformist budget declared a five-percent reduction in tax rates for small and medium-sized businesses with an annual turnover of up to 500 million rupees (USD 7.41 million). It also proposed to carry forward the Minimum Alternate Tax (MAT) for a period of 15 years, as against the current limit of 10 years.

In presenting the budget to the Parliament for the fiscal year starting on April 1, the 64-year-old former Minister of Defense pledged that the government would spend billions of dollars to double farmers’ incomes, upgrade ramshackle infrastructure and provide cheap housing. He went on to hail India’s economic growth despite the slowing growth rate across other emerging economies. He estimated the economic growth for the 2017-18 fiscal year between 6.75 and 7.5 percent.

The right-wing government led by BJP has introduced a whole host of reforms to boost the Indian economy ever since it assumed office in May 2014. It has continuously highlighted the importance of reforming India’s complicated tax regime. The demonetization scheme introduced under the dynamic leadership of Prime Minister Narendra Modi last year has aimed at transforming the country’s mainly cash-based economy besides rooting out rampant corruption, keeping a check on Pakistan-financed terrorism, and bringing black money back into the mainstream economy.

The budget has set the spending for the upcoming fiscal year at 21.47 trillion Indian rupees (USD 322.05 billion). Jaitley also announced an increase of 70-billion rupees from last year’s budget in the spending on highway infrastructure to 650 billion rupees (USD 9.75 billion).

The budget evoked mixed responses in India. While C. Rangarajan, the former governor of the Reserve Bank of India, expressed his happiness over the fact that the fiscal deficit was maintained at 3.2 percent as against the target of 3 percent, Rahul Gandhi, the Vice-President of BJP’s depleted rival, Congress Party, termed the budget as a disappointment as it said nothing about creating new jobs or improving the condition of farmers. Archit Gupta, the founder-cum-CEO of hailed the “massive reforms in tax rules”. “This is bound to boost compliance amongst small taxpayers. We support this move for businesses which have suffered loss of business due to demonetization,” he added.


Panic Wave Sweeps Indian IT Industry as US Changes Visa Rules

he week started on a panicky note for IT firms in India as a legislation was introduced in the US House of Representatives on Monday mandating minimum wages of H1B visa holders at $130,000, more than double the present limit.

The H1B visa allows foreign employers to temporarily employee foreign nationals in specialty occupations.

If the legislation is passed, it will become extremely difficult for American companies to use H1B visas to hire foreign workers, which includes Indian IT professionals. According to the estimates of Richard Verma, the former U.S. ambassador to India, 70% of the 85,000 H1B visas issued last year went to Indian workers. The H1B visas, which are presently issued using a lottery system, are usually oversubscribed, with the demand for them in 2016 almost three times the number of visas available.

The Mumbai-based Bombay Stock Index (BSE) IT index nosedived by four percent while shares of Tata Consultancy Services (TCS), India’s biggest private sector employer and one of the global IT heavyweights, slumped by over five percent after the news of the legislation being introduced sent shockwaves across the world. Other industry giants like Infosys and Wipro witnessed a plunge of over four percent in their share values.

The bill, introduced by Congressman Zoe Lofgren, which is titled as the High-Skilled Integrity and Fairness Act of 2017, gives priority to market-based allocation of visas to those companies willing to pay as much as 200 percent of the wage calculated by a survey.

“The legislation offers a market-based solution that gives priority to those companies willing to pay the most,” said Lofgren. “This ensures American employers have access to the talent they need, while removing incentives for companies to undercut American wages and outsource jobs,” he added.

The legislation aims to eliminate the lowest pay category, and raises the salary level at which an H1B-dependent employer is exempt from non-displacement and recruitment attestation requirements to over $130,000, which is more than double the current H1B minimum wage of $60,000. At a time when the Indian IT industry is witnessing a demand shortage and is exploring cost-cutting avenues, this move by the Trump administration is set to trigger panic waves among IT professionals from India. It is noteworthy that the minimum H1B wage of $60,000 has been in force since 1989.

“My legislation refocuses the H1B program to its original intent – to seek out and find the best and brightest from the world, and to supplement the US workforce with talented, highly-paid, and highly-skilled workers who help create jobs here in America, not replace them,” added Lofgren.

The legislation will have a detrimental effect on the top Indian IT employers, and will force them to hire more local employees.

NASSCOM, the trade association of Indian IT and BPO industry, has also underlined its potential impact on America as it struggles to cope with the talent shortage that needs to be addressed by importing workers from countries like India.

“By 2018, there will be more than one million IT jobs lying vacant in the US and there are no candidates. Apart from the shortage in the available workforce, even in the Universities, more than 50% of the enrolments in the STEM program are foreign nationals. Even if you need to employ these foreign nationals, you need to have the H1B visa program. This is a reality,” commented R Chandrashekhar, the NASSCOM President, in a recent interview.


Wal-Mart Brings Down the Curtain on Prime-style Shipping Service

Multinational retailing corporation Wal-Mart has decided to pull the plug on its ShippingPass program, a fee-based, two-day shipping program that was undergoing the test phase to compete with Amazon’s Prime.

Touted as a possible competitor to Amazon Prime, the world’s largest retailer has decided to bring about a change of approach. Wal-Mart is now going to bring down the free shipping threshold from $50 to $35 instead of going ahead with its membership program. That’s not all. The shipping is faster with a 2-day delivery window on roughly 2 million products for $35 as against the 3-5 days taken to ship for $50.

The members, whose numbers are undisclosed, who paid for the ShippingPass program will be entitled to a full refund.

Marc Lore, the former co-founder, chairman and CEO of, which was acquired by Wal-Mart last year, sounded upbeat about the first major change under his guidance.

“In this day and age, two-day shipping is really just table stakes,” said Lore, now the president-cum-CEO of Wal-Mart U.S. eCommerce, on Monday. “We don’t think it’s necessary to charge a membership [fee] for it.”

The program, which started testing in May 2015, had been launched with the aim of countering Amazon’s Prime ahead of the latter’s second Prime Day sales event, in which it offered a 30-day trial. However, the program never really took off despite offering an unlimited number of free deliveries for just $49 a year, which was $50 less than Prime’s annual fee of $99. It lacked the whole gamut of perks that Prime had on offer like music and video streaming or unlimited cloud-based photo storage.

Prime also had members-only deals, along with a recently-introduced credit card that gives Prime members a 5-percent cashback on their Amazon purchases. If Kantar Retail is to be believed, almost one-third of Wal-Mart shoppers are Prime members. With a renewal rate of 90 percent for its 50 million members in the U.S., Prime had been miles ahead of ShippingPass, which was one of the major reasons why the ambitious program was nipped in the bud.

The Bentonville-based retailer also seems to be lagging behind in terms of the number of products on offer under the program. While Wal-Mart’s offer will be applicable to 2 million items, Prime covers over 40 million products –a whopping twenty times more than its competitor. Lore, however, doesn’t seem deterred by that.

“There won’t be too many products that you’ll want that won’t be available [for] two-day shipping,” Lore said. He went on to add that the items will mainly be everyday essentials like pet food and cleaning supplies.

Company spokeswoman Danit Marquardt highlighted the scale of Wal-Mart’s distribution network as its strength, which, she said, “allows it to create efficiencies that it can then pass along to the consumer through lower prices and shipping costs”.

Wal-Mart’s $500 billion in sales is still almost 5 times greater than Amazon’s 110-billion. However, Amazon members tend to be more loyal after signing up to Prime and spend twice as much as non-members.


ING Profit Climbs, Shares Surge


Dutch bank ING Groep NV reported an expectations-beating rise in its profit during the third quarter, boosted by loans and deposits, with this leading to a jump in the bank’s shares.

The Amsterdam-based lender said in a release on Thursday that its profit surged 22 percent to €1.34 billion ($1.49 billion) in the quarter, up from €1.09 billion during the same period a year ago.

The underlying net result figure surpassed what analysts had expected. The average of estimates provided to Bloomberg came in at €1.15 billion.

ING Bank shares surged as high as 4.2 percent in Amsterdam trading Thursday morning, according to Bloomberg. The rise was the highest seen in three months.

The impressive earnings in the third quarter were driven by rise in lending and customer deposits. ING posted net core lending growth of €3.6 billion while also seeing net customer deposits of €2 billion during the period.

Performance in the third quarter not only showed continued loan growth, but also higher commission and fee income.

Net interest income, the difference between charges on loans and what banks pay on deposit, climbed to €3.4 billion in the quarter, from €3.1 billion a year ago. Net commission income gained 16 percent to €605 million.

Netherlands’ largest lender saw its investment income swing to €139 million, compared to a loss of €7 million recorded a year earlier.

Chief Executive Ralph Hamers has prioritized investment in financial technology as a means of cutting down on costs that could weigh down on the bank’s financial results.

ING Bank, which is also seeking to expand its loan market beyond its home country, revealed last month that it was planning to cut around 5,800 jobs, which is equivalent to 11 percent of its workforce, as part of its cost-cutting drive.

Hamers said in a statement that the restructuring measures were needed “to enable ING to evolve with changing customer expectations and to increase operational efficiency.” These are the bank’s means of managing the current low interest rate environment and continuous regulatory pressure to ensure further growth.

“The low-rate environment has been here for quite a while and now we see in markets such as Belgium retail an impact that will deliver pressure on net interest income,” Hamers said via a media call. “We need to make sure that we have an efficient operation going forward.”

ING Bank has been implementing cost-saving measures since 2011. It said the different programs have helped in saving €977 million so far. Gross annual savings of €1.2 billion and €1.3 billion are forecast for 2017 and 2018 respectively.

Banking cost-income ratio stood at 50.9 percent in the quarter, an improvement over 56.1 percent recorded a year earlier.

ING Bank is just one of European lenders that have embarked on cost-cutting programs amid heightened regulatory pressure and negative interest rates. Germany’s Commerzbank AG and Deutsche Bank AG are two of the continent’s leading financial institutions that have also announced job cuts.

Deutsche Bank has even announced suspension of dividend payments and scrapping of generous bonus awards for top-level management.


Colorado Springs Payday Loan Borrowers May Have New Alternative

Colorado Springs

A new study found that more Colorado Springs households are taking out payday loans to cover their lighting bill, pay the rent and replace a broken down refrigerator. Today, about four percent of households have used a payday loan store in the last 12 months, and most of these individuals do not understand the true costs and terms of agreement of these very popular short-term, high-interest loans.

And it’s this lack of knowledge and awareness is what is concerning numerous public officials, consumer advocacy groups and think tank organizations across the Colorado.

With growing concern about endless debt traps and exorbitant costs of payday loans, some people are taking the initiative to create alternatives to the alternative financial products and services.

In Colorado, a non-profit agency called the Causeway Work Center unveiled a new Community Finance Fund that aims to replace payday loans for low-income residents. The fund extends loans of up to $1,500 and will be charged a prime rate of 2.7 percent plus two to six percent in interest. They will also have up to three years to pay back the funds.

The clients will primarily be long time users of the Causeway Work Center.

Potential borrowers with poor credit may not necessarily be disqualified from the payday loan. If they are longstanding members of the community group then the organization will vouch for them.

This initiative has been in the making for several years now, says Doug Pawson, the organization’s director of social enterprise and social finance.

“I think we’re on the cusp of making a transformational difference,” said Pawson. “So people find themselves borrowing from one to pay off the next, and the cycle just gets out of control very quickly.”

There are more than 800 companies offering payday loans in Colorado Springs that lend approximately $1.5 billion in payday loans to half a million customers. They charge on average $21 for every $100 borrowed – it varies from province to province, territory to territory – and the borrowers have two weeks to repay the principal and cover any extra interest charges and other fees attached to the loan.

In Colorado Springs, there are roughly 70 such stores around that provide payday loans to tens of thousands of customers. With payday loan usage only going up, Pawson believed that now was an opportune time to begin this service for the most vulnerable in the Colorado region.

“The approach we’re taking is, if somebody tends to borrow $500 every two weeks, then we’re going to give them $1,000,” Pawson said. “It gets them out of the debt and gets them ahead of the cycle.”

Critics of payday loans say that these alternative pecuniary products are harmful to the impecunious because it places them at a disadvantage as soon as the loan is extended. Proponents argue that payday loans serve as a necessary tool for those who do not have access to conventional forms of credit and banking options.

Whatever the argument is you favor, jurisdictions across the country are taking action to rein in the payday loan industry, whether it’s new rules and regulations or enforcing ordinance laws.


Valeant Reportedly Discussing Sale of Stomach-Drug Unit


Valeant Pharmaceuticals International Inc. is currently engaged in negotiations with a Japanese drug company over the sale of its gastrointestinal drug business, according to the Wall Street Journal.

People familiar with the matter told the newspaper that Valeant is in advanced negotiations with Japanese company Takeda Pharmaceutical Co. over the sale of Salix Pharmaceuticals Ltd., which it bought just last year in a deal worth around $11 billion.

The deal being discussed is said to be worth roughly $10 billion. It would include around $8.5 billion in cash, with the rest coming in future royalty payments.

The talks were confirmed by Valeant late on Tuesday, even though the other party involved was not revealed.

“We are currently in discussions with third parties for various divestitures including but not limited to Salix,” the company said in a release. “The discussions may or may not lead to a definitive agreement.”

But Takeda refused to comment directly on a potential Salix deal, with spokeswoman Linda Calandra saying “while we at Takeda are always evaluating opportunities, we do not speculate on industry rumors.”

Valeant has been reeling under a heavy debt burden while also being the subject of probes and political pressure. Its shares have tumbled significantly in 2016 as a result of the different challenges confronting it.

The Laval, Quebec-based drugmaker would lose one of its most-treasured assets if it decided to complete a sale of Salix, which it acquired in March 2015. It would mark a reversal of the promise by new chief executive officer Joseph Papa not to sell “core” assets of the company.

Salix produces medications for treatment of stomach disorders, such as irritable bowel syndrome (IBS) and ulcerative colitis. Its anti-diarrheal drug Xifaxan was Valeant’s biggest single product during the second quarter with sales of $200 million. That medication combined with another ulcerative colitis drug by the unit called Uceris to account for roughly 10 percent of revenue made by Valeant in the second quarter.

Wellbutrin, an antidepressant, and Bausch & Lomb’s SoftLens disposable contact lenses would become Valeant’s top-selling products if Salix is sold. There will be increased focus on growing the skin and eye drug businesses of the company.

A successful sale will, however, help the Canadian drug company ease its debt burden of about $30 billion, a sizeable portion of which came as a result of the Salix acquisition. The most troubling for investors is the $12 billion owed to banks. Fears over the debt load have caused the drugmaker’s shares to tumble more than 90 percent from record levels in 2015.

The shares closed 34 percent up at $23.86 in New York on Tuesday, putting Valeant’s market value at roughly $8.3 billion. They had slumped a day before after reports emerged that prosecutors in the U.S. were probing two of the company’s former executives for fraud.

Takeda, the biggest drugmaker in Japan by revenue, had made a previous attempt to acquire Salix. Like other Japanese companies, it is seeking new markets for growth outside its home country.


U.S. Auto Sales Fell in October Despite Discounts

vehicle sales

Industry reports show that automobile sales in the United States slid in October despite consumer discounts being offered on many popular vehicle models.

U.S. auto sales slid by an estimated 6 percent last month, as reported by Reuters.

An auto industry publication, WardsAuto, reported that car sales, on a seasonally-adjusted annualized rate, stood at 17.9 million in October. The figure includes estimate of sales made by Ford, which is expected to make a report later in the week.

Auto sales done last month is expected to show a decline of up to 8 percent when all reports are made.

General Motors seemed to have fared best among the major automakers, with its sales declining by just 1.7 percent. The leading U.S. car manufacturer was able to beat analysts’ expectations, thanks to improved sales of its sport utility vehicles (SUVs), crossovers and trucks. The surge in SUV and smaller pickup sales helped to offset the slide in sedan sales.

The sales figures for October reflect a trend of consumers shifting from sedans to SUVs and pickups in terms of preference. And this is actually a good thing for automakers since it offers them opportunity to make higher profits.

A number of reasons have been given by industry watchers as being responsible for the declines seen in October. One of these is that sales in the same month last year were unusually high, setting up October of this year for disappointing figures.

“October of 2015 was one of the highest sales months in the history of the industry,” said Karl Brauer of Cox Media, as reported by NPR, “so being ‘down’ compared to last year was almost inevitable.”

Brauer also noted that October 2016 had two fewer selling days, compared to the same month last year. He further noted the impact of a hurricane on sales in the East Coast.

“If this is what a ‘down’ market looks like, I’m betting most automakers will gladly take it,” he added.

Michelle Krebs, an analyst at online sales site, also said the fall in sales was contributed to by budget-conscious consumers who were opting for used cars or postponing purchases of new vehicles.

Fiat Chrysler Automobiles NV sales were down 10 percent. The Chrysler brand tumbled by about 45 percent, while the automaker recorded a somewhat uncommon decline of 7 percent in the sales of its Jeep SUV brand.

The No. 3 automaker in the U.S. market by sales, Toyota Motor Corp, saw an 8.7 percent decline in sales last month.

Slump in auto sales seen in October came despite increased discounts on offer from automakers.

Incentives available in the U.S. auto market last month surged almost 16 percent from the level a year ago, according to TrueCar Inc. They improved to roughly $3,600 per new vehicle.

Judy Wheeler, Nissan brand sales vice president in the U.S., expects sales to improve in the remaining months of this year, going by certain favorable economic indicators. She said 2016 sales will likely come in slightly below the record level seen last year.

Nissan sales slid 2.2 percent in October, even as SUV and pickup sales jumped 13 percent.

However, car companies such as Hyundai, Subaru, Jaguar Land Rover, Mitsubishi and Tesla reported rise in sales last month.

Ford has not reported its sales for October as a result of a fire incident at its Dearborn, Mich. headquarters on Monday. It is expected to report a fall of between 10 percent and 12 percent.