How 1996 World Cup is back to haunt foreign portfolio investors

The Budget earlier this year announced a 20% withholding tax on dividends paid to FPIs.

A recent Supreme Court ruling on the 1996 Cricket World Cup could have implications for foreign portfolio investors.

The ruling held that provisions for deducting tax at source will apply even to those covered by tax avoidance treaties. The Budget earlier this year announced a 20 per cent withholding tax on dividends paid to FPIs. Taken together, it may mean FPIs cannot seek treaty protection against the new withholding tax that companies are required to deduct at source, according to experts. The apex court order pertains to when the cricketing bodies of Pakistan, India, and Sri Lanka formed a joint committee to conduct the 1996 Cricket World Cup. The panel had made certain payments overseas as part of the tournament.

“India, Pakistan, and Sri Lanka were selected, on the basis of competitive bids, to have the privilege of jointly hosting the 1996 World Cup. These three host countries were required to pay varying amounts… in connection with conducting the preliminary phases of the tournament and also for promoting the game in their respective countries,” noted the order.

The tax department later said it should have deducted taxes for the same. The final Supreme Court order on the matter came on April 29, where it ruled in favour of the tax authorities while also noting that a Double Taxation Avoidance Agreement (DTAA) cannot shield investors from a withholding tax.

“The obligation to deduct tax at source under Section 194E (of the Income-tax Act) is not affected by the DTAA and in case the exigibility to tax is disputed by the assessee on whose account the deduction is made, the benefit of the DTAA can be pleaded and if the case is made out, the amount in question will always be refunded with interest. But, that by itself, cannot absolve the liability under Section 194E,” it said.

Classes in Cloud: Online teaching becomes order of the day amid lockdown

With the lockdown in force, live online teaching has become the order of the day, report Peerzada Abrar and Sai Ishwar

For the past few weeks, Father Muller Medical College in Mangaluru, Karnataka, is conducting virtual surgery classes for its students. In New Delhi, a pre-school is teaching kids rhymes and conducting online classes daily for each toddler. Education group PES has replicated online the entire physical campus experience for its schools, engineering and medical colleges across Karnataka, with over 1,000 classes being held daily.

At a time when India is under a nationwide lockdown to fight the coronavirus pandemic, much of the country’s $180 billion education sector is going online to adapt to the new reality. Many educational institutions are creating virtual learning infrastructure and radically transforming the way education has been offered for millennia. And to help them realise that goal, they are reaching out to technology companies such as Impartus Innovations, Amazon Web Services (AWS), Coursera and Tata Consultancy Services (TCS).

ALSO READ: India to stay in lockdown till May 3 with stricter curbs, some relaxations

Last week, the government of India also launched a week-long “Bharat Padhe Online” campaign to crowdsource ideas for improving the online education ecosystem in the country. Within three days of launching the campaign, the Union human resource development ministry received more than 3,700 suggestions.

“The coronavirus situation is forcing everyone to adopt online learning,” says Raghav Gupta, managing director, India and APAC, at Coursera, one of the world’s largest online learning platforms. Gupta says India has over 37 million students enrolled in higher education across thousands of universities and colleges.

In view of the lockdown, Coursera is giving universities and colleges free access to its catalogue through its “Coursera for Campus” platform. The platform enables almost any university in the world to deliver high quality, job-relevant, on-demand learning to students, alumni, faculty and staff.

Market rally loses steam over fears of extended lockdown

The weak opening of the European markets and a sharp deprecation in the rupee against the dollar weighed on stock prices.

The Indian markets posted strong gains in early Wednesday trade, with the benchmark indices adding 4 per cent to previous day’s 9-per cent gain, but the rally lost steam over fears of an extended lockdown amid rising Covid-19 cases in the country.

Also, the weak opening of the European markets and a sharp deprecation in the rupee against the dollar weighed on stock prices.

The Sensex after climbing past 31,200, settled at 29,894 — down 173.25 points, or 0.58 per cent, over the previous day’s close. The Nifty closed at 8,749, down 44 points, or 0.5 per cent, after touching an intra-day high of 9,132.

Index heavyweights, such as Hindustan Unilever, HDFC Bank, and ICICI Bank, came off sharply from their day’s highs. Overseas investors were net-buyers for the second day in a row. On Wednesday, they bought shares worth nearly Rs 1,943 crore, while domestic investors took money off the table, dumping equities worth Rs 1,758 crore. Despite foreign inflows, the rupee ended at a record low of 76.38 against a dollar, down nearly 1 per cent over Tuesday’s close of 75.63.

A day earlier, the Indian markets had logged their biggest daily jump in 11 years on optimism that the spread of the virus was deaccelerating in Europe, which had emerged as the Covid-19 hotspot after Wuhan.

The market breadth was strong for the second day in a row, with nearly two advancing stock for every one declining. The mid- and small-cap indices ended with nearly 2 per cent gain.

“Momentum indicators indicate the possibility of further upside towards 9,300-9,400. Support zone for the index is at seen at 8,500-8,700. The current upmove is broad-based and hence, expect positivity to continue for few more trading sessions,” said Sahaj Agrawal, head of research- derivatives, Kotak Securities.

Coronavirus: India Inc steps up act to contain crisis as tally reaches 29

Across the country, companies have stepped up their act to contain the crisis. IT and other new economy firms seem to have taken a lead.

Mindspace IT Park, Hyderabad’s largest office hub spread over several acres, was a centre of panic on Wednesday as a techie tested positive for coronavirus. The complex, housing many marquee brands, caught on to the news in no time, prompting employers to send their staff home.

An employee of Dutch company DSM Shared Services, the software professional had recently returned from an assignment in Italy. Hers was the second confirmed case of the virus in Telangana. “Our thoughts are with our colleague, who is doing relatively well and is being treated in quarantine,” the company said in an internal e-mail.

More than 1,000 km away, in Gurugram, next to New Delhi, another person tested positive, this time in the Paytm office, taking India’s tally to 29. He too had returned from a vacation in Italy. The company has asked its staff to work from home for a couple of days while the office gets sanitised.

Across the country, India Inc has stepped up its act to contain the crisis. IT and new-economy companies seem to have taken a lead.

At the Manyata Tech Park in Bengaluru, a US-headquartered software product company advised its employees to work from home till Friday, after an associate who had travelled from an affected country showed flu-like symptoms. Even though the person was declared asymptomatic by medical experts, the company began disinfecting the campus as a precautionary measure.

While online major Amazon confirmed its first case of coronavirus in its Seattle office, the company’s India unit felt the ripple effect. Amazon India has imposed travel restrictions, advising employees to prioritise health over efficiency. According to the advisory, all domestic travels by the employees can be undertaken only after consulting the manager while approval from vice-president is required for international travels.

Walmart–owned e-commerce firm Flipkart too has imposed a complete ban on all business travels, both domestic and international. In case the travel is unavoidable, CEO Kalyan Krishnamurthy must give an approval.