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Year Gone By-
Key Economic

Indian equity markets went through a roller-                                        including defence, pharmaceuticals,
coaster ride in the year 2016. Big events on                                        aviation and single-brand retailing.
global front like Brexit, Donald Trump’s                                            This is barely seven months after
triumph in US elections and US Fed’s decision                                       it had eased norms for foreign
to hike interest rates were the major causes                                        investments in 15 sectors, fuelling
for volatile sessions on the bourses. However,                                      growth in the economy in the long
the bold and unprecedented move of Modi                                             run.
government of demonetisation remained
the single biggest factor that vibrated equity
markets in 2016 erasing earlier gains and
taking the nation by surprise.

February: Income                          capital gains tax will be imposed at      June: Rexit
Disclosure Scheme                         50% of the prevailing domestic rate.
                                          Full rate will apply from April 1, 2019.  Raghuram Rajan
In February 2016,                         Capital gains on derivatives and fixed    announced his decision
Government announced                      income securities will continue to be     to step down as RBI
the launch of “Income                     exempt.                                   governor and return to academia
Disclosure Scheme”,                                                                 after his three year term ended in
a four month window from Jun 1 to         June: 7th                                 September 2016.
Sep 30, 2016 to unearth black money       Seventh Pay
and bring it back into the system         Commission                                June: Brexit Vote
to provide an opportunity for tax
dodgers to disclose their hidden          The Union                                 Britain voted to
assets. Thousands of people availed       Cabinet approved the Seventh Pay          leave the European
`Income Disclosure Scheme (IDS)’ and      Commission recommendations,               Union on June 23rd
disclosed assets worth over Rs 65,250     paving the way for 20-25% pay hike        referendum after
crore as on October 2016.                 for the government employees,             the 'leave' campaign secured around
                                          benefitting 10 million people. The        51.8% of the votes ending 23 years of
May: India-                               Seventh Pay Commission, which had         EU membership. While England voted
Mauritius Tax                             submitted its report, recommended         overwhelmingly for Brexit, Scotland
Treaty                                    an overall 23.6% increase in salaries     and Northern Ireland backed 'remain'.
                                          and pensions of central government        Britain's exit from EU will push capital
On 10 May, 2016,                          employees, effective Jan 1, 2016.         outflows from the eurozone and direct
India and Mauritius                       Around Rs 70,000 crore allocated          it towards safe markets including US,
signed the protocol amending the          in the Union Budget 2016-17 for           resulting in strengthening of US dollar.
agreement for avoidance of double         the implementation of the Seventh
taxation with Mauritius which is          Pay Commission for government             August: Goods
the biggest source of foreign direct      employees.                                and Service Tax
investment and portfolio investment                                                 (GST)
into India. The protocol gives India the  June: Foreign
right to tax capital gains on transfer    Direct Investment                         In the biggest tax
of Indian shares acquired on or after     (FDI)                                     reform, the national
April 1, 2017. Existing investments                                                 sales tax or GST Bill was on passed 3rd
will be grandfathered. Under the          The government                            August approved by the Rajya Sabha
amended treaty with Mauritius, for        relaxed the FDI norms in seven sectors    to replace a draft of different state and
two years beginning April 1, 2017,
                                                                                              3 ARIHANT CAPITAL ¡ JANUARY 2017
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