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Year Gone By-
Key Economic
Reforms

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