Oil Market 'Responding Positively' To Production Cut: OPEC

Doha: Qatar's energy minister, the current president of the Organization of the Petroleum Exporting Countries (OPEC ), said world oil markets were "responding positively" to output cuts implemented by OPEC and some non-OPEC producers.

"I think the market is responding positively and you can see the drop in supply," Mohammed Saleh al-Sada told reporters.

OPEC and non-OPEC producers led by Russia agreed in December to cut output by nearly 1.8 million barrels per day, initially for six months, starting from the beginning of this year.

Hindalco Surges On Strong Show From Novelis In December Quarter

Hindalco shares surged over 3 per cent to an intraday high of Rs. 192.25 on Wednesday after its US subsidiary Novelis reported strong earnings for the October to December quarter. Novelis contributes more than half of Hindalco's operating profit. Atlanta-based Novelis said its adjusted net profit for the December quarter more than doubled to $67 million dollar compared to $32 million in the year ago quarter.

Novelis' strong performance was supported by a 7 per cent jump in its adjusted EBITDA or operating income to a record high of $255 million and 18 per cent reduction in interest expenses as a result of refinancing of two senior note issuances during the second quarter of fiscal 2017, the company said in a press release.

"Following our successful bond refinancing during the second quarter, we refinanced our $1.8 billion term loan with Asian banks in January," said Devinder Ahuja, senior vice president and chief financial officer at Novelis.

"Together, these bond and term loan transactions will result in an extended debt maturity profile and annual cash interest savings of approximately $80 million," he added.
Meanwhile, investors are also optimistic about Hindalco's December quarter earnings, to be announced on February 13 (Monday) on the back of strong show from Novelis and a revival of international metal prices.

As of 10.25 am, Hindalco shares traded 1.32 per cent higher at Rs. 188.35, compared to 0.03 per cent gain in the broader Nifty.

Earning Over Rs. 50 Lakh? How Marginal Relief Brings Down Your Tax Burden

Finance Minister Arun Jaitley in Budget 2017 cut the income tax rate on the lowest slab (Rs. 2.5 lakh to Rs. 5 lakh) to 5 per cent from 10 per cent. To offset the revenue loss, he imposed a surcharge of 10 per cent on those with taxable income between Rs. 50 lakh and Rs. 1 crore, thus bringing more taxpayers into the purview of surcharge. And the 15 per cent surcharge on income above Rs. 1 crore will continue as before. The total amount of tax foregone on account of these changes in tax rates is estimated at Rs. 15,500 crore. The new income tax rates will be applicable from April 1, 2017 or assessment year 2018-19 (AY2018-19).
What is Surcharge?

Surcharge is applicable on income tax if the income exceeds a specified limit. It is applicable on the basic tax (without inclusion of cess). Let us consider a person below 60 with taxable income of Rs. 75 lakh. What will he pay after the surcharge proposed in the Budget? His basic tax would come to Rs. 20.62 lakh. The 10 per cent surcharge comes to Rs. 2.06 lakh. Thus his total tax liability would be Rs. 22.68 lakh and after education cess it comes to about Rs. 23.37 lakh.

The concept of marginal relief is designed to provide some relief in levy of surcharge to a taxpayer where the total taxable income marginally exceeds Rs. 50 lakh or Rs. 1 crore.
How marginal relief helps lower tax burden?

Let us consider two scenarios:
1) where the surcharge is 10 per cent (income between Rs. 50 lakh and Rs. 1 crore) and 2) where surcharge is 15 per cent (income above Rs. 1 crore). According to tax rules, the surcharge of 10 per cent is not applicable where marginal relief comes into play even if taxable income is above Rs. 50 lakh. According to the concept of marginal relief, if the amount payable as surcharge exceeds the income above Rs. 50 lakh or Rs. 1 crore, the surcharge will be applicable at a marginal rate, which is 70 per cent of the incremental income above Rs. 50 lakh or Rs. 1 crore. (Incremental income above Rs. 50 lakh or Rs. 1 crore - 30 per cent of incremental income).

Scenario - 1 (where income exceeds Rs. 50 lakh marginally)
Suppose an individual's taxable income amounts to Rs. 51 lakh. Technically, the person has to pay a 10 per cent surcharge as income exceeds Rs. 50 lakh. But in this case, marginal relief comes into play and the surcharge he has to pay is not 10 per cent. How?

The person's income above Rs. 50 lakh is Rs. 1 lakh (Rs. 51 lakh - Rs. 50 lakh). On Rs. 51 lakh, the person is supposed to pay tax of Rs. 13.42 lakh and surcharge of (@10%) Rs. 1.34 lakh for (AY 2018-19). Since the surcharge (Rs. 1.34 lakh) is more than the income differential between (Rs. 51 lakh and Rs. 50 lakh), the surcharge of 10 per cent will not be applicable. Thus, the person with taxable income of Rs. 51 lakh will pay tax of Rs. 13.42 lakh and surcharge of Rs. 70,000 which comes to Rs. 14.12 lakh. Including cess (3%), it will come to Rs. 14.54 lakh. If the marginal relief had not been applicable, the total tax liability would have been Rs. 15.20 lakh.

Scenario - 2 (where income exceeds Rs. 1 crore marginally)
Suppose an individual's taxable income amounts to Rs. 1.02 crore. Technically, the person has to pay a 15 per cent surcharge as income exceeds Rs. 1 crore. But in this case, marginal relief comes into play and the surcharge of 15 per cent is not applicable. How?

The person's income above Rs. 1 crore is Rs. 2 lakh (Rs. 1.02 crore - Rs. 1 crore). On Rs. 1.02 crore, the person is supposed to pay tax of Rs. 28.72 lakh and surcharge of (@15%) of Rs. 4.31 lakh for (AY 2018-19). Since the surcharge (Rs. 4.31 lakh) is more than the incremental income of Rs. 2 lakh (Rs. 1.02 crore - Rs. 1 crore), then the 15 per cent surcharge will not be applicable. Instead, a lower surcharge of Rs. 1.4 lakh (70 per cent of incremental income of Rs. 2 lakh) will be applicable as marginal relief comes into play.
Thus the tax liability of the person with taxable income of Rs. 1.02 crore comes to Rs. 30.12 lakh (Rs. 28.72 lakh Rs. 1.4 lakh). Including cess, it would come to Rs. 31.02 lakh crore. Had marginal tax not come into play the total tax liability would have been Rs. 33.03 lakh and with cess Rs. 34.02 lakh.

Budget 2017: Lower Tax Rates To Encourage Income Disclosures

India will change some personal tax rates to encourage people to disclose their incomes as well as put more cash in the hands of consumers after Prime Minister Narendra Modi withdrew old high-denomination banknotes in a crackdown on unaccounted wealth.

The personal tax rate will be halved to 5 percent on incomes between 250,001 rupees ($3,697) and 500,000 rupees, Finance Minister Arun Jaitley said Wednesday in New Delhi, while announcing the budget for the year starting April 1. A surcharge of 10 percent will be levied on the personal tax paid on incomes between 5 million rupees and 10 million rupees, he said.

"While the government is trying to bring within tax-net more people who are evading taxes, the present burden of taxation is mainly on honest tax payers and salaried employees who are showing their income correctly," said Jaitley. "Also an argument is made if a nominal rate of taxation is kept for the lowest slab many more people will prefer to come within the tax net."

The step is part of efforts of the government to widen the tax net in a country of more than 1.2 billion people where about 53.8 million filed details of their personal incomes. The move will also likely put more disposable cash in the hands of people as growth in Asia's third-biggest economy slows.

Gross domestic product is predicted to expand 6.8 percent in the year through March, from 7.9 percent a year earlier, according to the median forecast of analysts surveyed by Bloomberg.

Indians with annual income up to 250,000 rupees for the current fiscal year are exempt from paying any personal tax. A 10 percent tax is levied on income from 250,001 rupees to 500,000 rupees; 20 percent for 500,001 rupees to 1 million rupees; and 30 percent for more than 1 million rupees. In addition, a 3 percent education levy is also charged on personal incomes. Individuals with an annual income exceeding 10 million rupees have to pay a surcharge of 15 percent on the personal tax paid.

Union Budget 2017: Sensex Cautious Amid High Hopes From Budget, PSU Banks In Focus

It is a big day for markets. Both Sensex and Nifty turned flat after opening marginally higher with shares of public sector banks advancing. Finance Minister Arun Jaitley is set to present Union Budget 2017 later in the day.  Markets' expectations are riding high given that it is the first Budget after demonetisation. From income tax to corporate tax cuts to measures to support the economy to more funds for public sector banks, expectations galore from Budget 2017. Stocks markets have already rallied to pre-denomination levels in anticipation of big announcements from the finance minister.  Analysts say that any disappoint could trigger a big correction in stock markets. 

Sajiv Dhawan of JV Capital Services says that feel good factor post demonetisation is still not there and Finance Minister Arun Jaitley should take this opportunity reignite the investor sentiment.  "I think the feel good factor is still not there across the board after demonetisation and this is an opportunity for the finance minister to reignite the sentiment by giving us some infrastructural push," he said. "He has to come out with some big reforms on tax cuts." Any Budget announcement on higher cash infusion in public sector banks and a roadmap for divestment would be hugely positive for stocks of state-run banks, say analysts. Income tax and home loan sops would be positive for consumer durable and real estate stocks. 

The index of public sector banks was up over 1 per cent, with SBI and Bank of Baroda up around 1-2 per cent. If there is any announcement on corporate tax cuts, it will be a big positive trigger for markets as the bottomline of companies would get an immediate boost, say analysts. 

However, if there is a change in capital gains tax regime or taxes on gains from stock market investments, it could spook markets, caution analysts. The Rail Budget has been merged with the Union Budget from this year. So a big hike in capital outlay for rail infrastructure will be a positive for railway-infrastructure related stocks. 

AK Prabhakar, head of research at IDBI Capital Markets & Securities, says markets have very high hopes from the upcoming Budget and it will be difficult for Mr Jaitley to fulfill them.  If there is a slight disappointment, markets could see a big correction, he added. If Nifty corrects below 8,300, then the correction would get deeper, he added.

At 9:19 am, the Sensex was up 40 points at 27,692 while Nifty edged higher to 8,574, up 13 points.

Budget Won't Be Moved Over MP's Death, Arun Jaitley Is Ready: 10 Points

New Delhi:  Lok Sabha Speaker Sumitra Mahajan will decide whether the Union Budget will be presented today, after a member of the house E Ahamed died last night. Sources, however say, the budget will be presented as scheduled, according to news agency ANI. Parliament is usually adjourned for a day after a sitting member dies. A decision is expected after 10 am. But the government, sources said, would like to go ahead with the Budget today and Finance Minister Arun Jaitley left home on schedule and is now meeting the President. The government is also talking to the opposition, whose leaders have suggested that the Budget should be put off for a day.

Here are 10 things to know:

1. Stock markets opened higher on Wednesday anticipating big announcements from the Finance Minister to support the economy after November's notes ban. This is Mr Jaitley's fourth Budget and the first after demonetisation.
2. The Railway Budget has been merged with the Union Budget, which has been advanced by almost a month for the first time. Opposition parties have alleged that the government made the change to be able to offer sops before elections in five states.
3. To support higher government spending, economists expect Mr Jaitley to plan a fiscal deficit of 3.3-3.4 per cent of the gross domestic product (GDP) for 2017-18 which is higher than the earlier road map of 3 per cent. Rating agencies will frown at such a deviation.
4. All eyes are on the tax section of Mr Jaitley's Budget. The income tax exemption limit for persons below 60 could be hiked from the Rs. 2.5 lakh currently, say economists. Mr Jaitley had in the Modi government's first Budget in 2014, raised the tax exemption limit to Rs.2.5 lakh from Rs. 2 lakh.
5. With the overall savings rate declining, Mr Jaitley is expected to increase the deduction under Section 80C to Rs. 2 lakh from the current Rs.1.5 lakh. In last year's Budget, Mr Jaitley had allowed an additional deduction of Rs.50,000 under Section 80CCD (1) for investment in the National Pension Scheme or NPS.
6. Economists expect the government to increase the exemption limit for interest payments under housing loans to Rs. 2.5 lakhs for existing home loan buyers from the current Rs. 2 lakh. This will benefit the real estate sector, which has been hit hard by demonetisation.
7. Mr Jaitley is also expected to cut corporate tax rate by 1 percentage point to 29 per cent. The finance minister had in his second Budget speech in February 2015 announced reducing the corporate tax rate from 30 per cent to 25 per cent over a period of time. With the goods and services tax (GST) set to be rolled out from July, Mr Jaitley is not expected to tinker much with excise duties. However, he could raise the service tax rate from the current 15 per cent to align with the higher GST rate.
8. Though the currency in circulation has largely normalised, the impact from demonetisation is likely to linger over the next few months, says global financial powerhouse Morgan Stanley. This will make revenue and tax projections a tough task, say economists.
9. The Economic Survey has projected a growth rate of 6.75 per cent to 7.5 per cent for the next year (2017-18) but said that demonetisation is a risk for its growth projection. The Survey sees India's GDP growing between 6.5 per cent and 6.75 per cent in the current fiscal year.
10. With elections in five states this month and the impact of demonetisation, some analysts are    worried that the government may turn towards less productive forms of spending, like subsidies. However, Morgan Stanley expects the government to stick to a fiscal policy stance that will remain supportive of promoting productive spending. "The government policies over the last 2.5 years have shown policymakers' commitment to promoting productivity-enhancing reforms," it said.

India's GDP To Grow At 6.75-7.5% Next Year, Projects Economic Survey

India's economy is expected to grow by between 6.75 per cent and 7.5 per cent in the coming fiscal year (2017-18), according to the Economic Survey, which was tabled in Parliament today. Indian economy is expected to slow down significantly in this current fiscal (2016-17) in the wake of demonetisation. The International Monetary Fund (IMF) has already downgraded its growth projection for this fiscal year, down to 6.6 per cent from 7.6 per cent forecast earlier.

The Indian economy expanded at 7.6 per cent in 2015-16 and at 7.2 per cent in 2014-15.
Prior to that, India's GDP grew at 6.9 per cent in 2013-14 and 5.1 per cent in 2012-13. 
At the lower band of Economic Survey's projection, if the economy grows at 6.75 per cent in 2017-18, it would be the lowest growth in five years.

A flagship annual document of the Ministry of Finance, the Economic Survey reviews the developments in the Indian economy over the previous 12 months, summarises the performance on major development programmes, and highlights the policy initiatives of the government. The Economic Survey also highlights prospects of the economy in the short to medium term.
 
The IMF has also cut India's growth rate for fiscal year (2017-18) to 7.2 per cent as against its previous forecast of 7.6 per cent.