TheJaggi

The Union budget presented by Nirmala Sitharaman on 1 February indirectly acknowledges a simple fact: that the government goofed in giving citizens a free ride on sovereign gold bonds (SBGs). SGBs currently have a tenure of eight years, but they are completely free from long capital gains tax (LTCG) if held to maturity. The interest, of 2.5 percent, is taxable. But Sitharaman now wants to ensure that these bonds pay LTCG unless they were bought at the time of original issue and held till maturity. It means that those who bought SGBs from the market have to pay capital gains tax. LTCG is charged at the rate of 12.5 percent. Sitharaman said in her budget speech: “It is proposed to provide that the exemption from capital gains tax in respect of sovereign gold bonds shall be available only where such bonds are subscribed to by an individual at the time of original issue and are held continuously until redemption on maturity. It is also proposed to provide that this exemption applies unifor...

Three major things have happened over the last 10 days that have brought forth renewed economic excitement. First, we had the India-European Union “mother-of-all-trade-deals”, followed by a forward-looking and non-populist Union budget which strikes all the right notes, and, last of all, the Indo-US trade “deal” whose contours are not fully clear yet. There could be some worms in the fineprint, but overall it can’t be negative to India’s growth story. But here’s the problem: outlays do not automatically lead to outcomes, and trade deals do not automatically deliver on their promises of mutual benefit. So how does one ensure that there is no slip between the cup and the lip? How do deals move forward from pious intention to effective implementation? There is a lot one can learn from the corruption economy - which works on the simple principle that wheels must be greased to ensure the right outcome for the party paying for a specific outcome (Eg: getting a driver’s licence). The middlema...