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Govt likely to meet next year's 3% fiscal deficit goal: BofA-ML

The government has proposed a penal tax rate of 50% to incentivise black money hoarders to switch to formal economy

Press Trust of India  |  New Delhi 

Govt likely to meet next year's 3% fiscal deficit goal: BofA-ML

Government is expected to meet its target of 3% for the next financial year on account of additional revenue from penalty on and deposits under the income disclosure, says a report.

According to Bank of America Merrill Lynch (BofA-ML), the imposition of 50% penalty on deposits is likely to help the government meet its target of 3% for 2017-18 and the additional capital would also help to recapitalise banks.



"We expect the to raise additional Rs 1,000 billion or 0.7% of by imposing 50% penalty on deposits," said in a research note adding "along with the 0.2% raised under the income disclosure scheme, this should enable the FM to meet 3% of FY'18 target".

According to the report, the additional revenue should enable the to recapitalise banks without cutting public investments or delaying full payout of award.

"This supports our call that bank capitalisation risks are overdone, as Delhi has every incentive to capitalise to step up loan supply and growth," the report said.

The government has proposed a penal tax rate of 50% to 'incentivise' hoarders to switch to formal economy.

Moreover, 25% of turned deposits will also have to be parked in RBI notified non-interest bearing deposit account for four years to fund the Pradhan Mantri Garib Kalyan Yojana scheme.

The Ministry of Finance proposes to tax unearthed in the future at 75-85%, while, under reporting and mis-reporting will continue to attract 50% and 200% tax rate.

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Govt likely to meet next year's 3% fiscal deficit goal: BofA-ML

The government has proposed a penal tax rate of 50% to incentivise black money hoarders to switch to formal economy

The government has proposed a penal tax rate of 50% to incentivise black money hoarders to switch to formal economy Government is expected to meet its target of 3% for the next financial year on account of additional revenue from penalty on and deposits under the income disclosure, says a report.

According to Bank of America Merrill Lynch (BofA-ML), the imposition of 50% penalty on deposits is likely to help the government meet its target of 3% for 2017-18 and the additional capital would also help to recapitalise banks.

"We expect the to raise additional Rs 1,000 billion or 0.7% of by imposing 50% penalty on deposits," said in a research note adding "along with the 0.2% raised under the income disclosure scheme, this should enable the FM to meet 3% of FY'18 target".

According to the report, the additional revenue should enable the to recapitalise banks without cutting public investments or delaying full payout of award.

"This supports our call that bank capitalisation risks are overdone, as Delhi has every incentive to capitalise to step up loan supply and growth," the report said.

The government has proposed a penal tax rate of 50% to 'incentivise' hoarders to switch to formal economy.

Moreover, 25% of turned deposits will also have to be parked in RBI notified non-interest bearing deposit account for four years to fund the Pradhan Mantri Garib Kalyan Yojana scheme.

The Ministry of Finance proposes to tax unearthed in the future at 75-85%, while, under reporting and mis-reporting will continue to attract 50% and 200% tax rate.
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Business Standard
177 22

Govt likely to meet next year's 3% fiscal deficit goal: BofA-ML

The government has proposed a penal tax rate of 50% to incentivise black money hoarders to switch to formal economy

Government is expected to meet its target of 3% for the next financial year on account of additional revenue from penalty on and deposits under the income disclosure, says a report.

According to Bank of America Merrill Lynch (BofA-ML), the imposition of 50% penalty on deposits is likely to help the government meet its target of 3% for 2017-18 and the additional capital would also help to recapitalise banks.

"We expect the to raise additional Rs 1,000 billion or 0.7% of by imposing 50% penalty on deposits," said in a research note adding "along with the 0.2% raised under the income disclosure scheme, this should enable the FM to meet 3% of FY'18 target".

According to the report, the additional revenue should enable the to recapitalise banks without cutting public investments or delaying full payout of award.

"This supports our call that bank capitalisation risks are overdone, as Delhi has every incentive to capitalise to step up loan supply and growth," the report said.

The government has proposed a penal tax rate of 50% to 'incentivise' hoarders to switch to formal economy.

Moreover, 25% of turned deposits will also have to be parked in RBI notified non-interest bearing deposit account for four years to fund the Pradhan Mantri Garib Kalyan Yojana scheme.

The Ministry of Finance proposes to tax unearthed in the future at 75-85%, while, under reporting and mis-reporting will continue to attract 50% and 200% tax rate.

image
Business Standard
177 22