It has been a privilege to have been invited thrice to take the pre lunch inaugural sessions at the three Financial Markets Seminars conducted by the Direct Taxes Regional Training Institute in Mumbai…the First one was in September 2007,followed by one in February 2008 and the latest began yesterday…While the Coordinators keep on changing,the DTRTI continues to be headed by a very graceful and full of poise, Lady Commissioner…. The Invitation and the Thank You Letter that inevitably follows the conclusion of the Seminar comes from her desk
I go back tomorrow to the Seminar for an Open House Q & A Session…already have fielded some searching ones…..like when discussing the Ratio, Market Capitalisation to GDP,a very attentive Commissioner queried that while Market Cap may be the Wealth perceived by the Markets,GDP is Not the Wealth of the Nation…in a sense it’s only the Annual National Income as measured by Gross Domestic Product…Wealth of India is much more…we got into interaction on Money and what three things you can do with it…consume or save or invest…it also threw up India’s High Savings to GDP rate of 35% and the relatively higher Equity Exposure rate of over 7% of Total Savings…With Market Capitulation,expect this Exposure to water down quick
I have ofcourse forewarned them that those who had sought scrips to buy into, in earlier seminars, are no longer on this planet !
I spoke for over Three and a Half Hours on Indian Equity : Dimensions and Dynamics…..covering Global and Indian Market Dynamics,Fate of the US Dollar, FII exposures and trends and short sales (see a day or two old blog on this) ,Insider Trading,Sensex performance in the short and long term and likely Sensex by 2010
I faced some sombre,unlike earlier seminars,and quite smart,alike earlier seminars, Income Tax Commissoners….. perhaps reflecting both the Market Moods and how tough and challenging Direct Tax Collections are likely to be in the near future with the economy slowing down
Our FM has set a Direct Taxes collection target of Rs 1000 crores a day aggregating Rs 356000 crs in FY 09
The Collections in the First Half look good…but it was revealed to me that last year many assesses filed returns and paid taxes in October 2007 …this time around thay have paid taxes under self assessment in September itself…if you remove these then there is no significant rise in tax collections in the first half year on year
With Corporate Earnings Slowing and with the Markets in the Condition they are it is unlikely the target of Rs 365000 crs will be achieved,unless there is a vigorous exercise to widen the tax base and also effect better tax compliance
Have a look at the Collections in April 2008 to September 2008 Period in FY 09
|2008/9Rs Crs||2007/8Rs Crs||% Surge||Target for Full YearRs Crs|
|Personal Income Tax(Incl FBT,STT,BCTT)||51701+ 213||40729+ 86||26.94||115000|
|365000Rs 1000 crs/day
We know that Broking Income,has simply fallen off the Cliff with the Sensex plummeting from 21200 levels to go below 10000 in 2008…..yet we see that the Securities Transactions Tax (STT) collections being just marginally above last year levels
Are we Indians, gambling addicts, who need to roll the Derivatives Roulette every single day ! ? STT should have shown a fall. We seem to just love losing Monies !…and a smart cartel seems to simply enjoy seducing us !