Budget 2024 Updates

One more Vivad Se Vishwas Scheme; Date to be notifiedNo deduction u/s 37 for settlement amount if paid for violation of any lawFM proposes to lessen tedium of TDS; reduces rates in many casesFM overhauls capital gains regime; to come into play from todayFM hikes exemption limit for long-term capital gain to Rs 1.25 lakh + hikes tax rate to 12.5% on specified financial assetsTourism: Temple corridors to be developed in BiharCGST - Finance Bill proposes to amend Sec 9 to take ENA out of purview of GST + inserts Sec 11A to regularise non-levy of tax on general practice in tradeCGST - Sub-sections to be inserted in Act to relax time-limit to avail ITC u/s 16(4) + New Sec 74A proposed to provide for common time limit for demand notices in fraud cases3.4% of GDP allocated as Capital expenditure to support infra sectorCGST - Proviso to be inserted in Sec 30(2) to provide for enabling conditions for revocation of registration + Amendment in Sec 39 to mandate return filing by TDS deductors even if there is no deduction in a particular monthIGST - Amendment proposed to prohibit refund of unutilised ITC on zero-rated supplyIncome tax - Finance bill revamps re-assessment regime againCustoms - Finance Bill proposes to amend Sec 28DA for acceptance of different types of proof of origin under FTAsFM hikes standard deduction to Rs 75K for new ITR regime + revises tax rates for all income slabs + Rs 7000 Cr revenue foregoneIncome tax - Search & Seizure cases - Block assessment is backBudget withdraws 2% equalisation levyFM reduces corporate tax rate for foreign companies to 35%FM proposes vivad se vishwas scheme + hikes monetary limits for filing appealsFM proposes 20% capital gains tax on short-term assets + listed financial assets held for more than one year to be classified as long-termGovt scraps TDS on Mutual Funds + decriminalises delay in depositing TDS + rationalisation of compounding of offences + revamps reassessment periodBudget proposes comprehensive review of I-T Act, 1961 + simplifies provisions for charities and TDSFM reduces customs duty on gold and silver to 6% + Nil BCD on nickel cathodeBudget proposes to reduce BCD on mobile phone and chargers to 15% + exempts 25 minerals from customs dutyFM exempts cancer medicines from Customs duty + amends BCD for various machinesFM proposes Rs 48 lakh expenditure outlay; 4.9% fiscal deficitFM announces Rs 1 lakh crore fund for developing space economyPromotion of Tourism - Vishnupad temple and Bodh Gaya temple corridors to be supportedFM announces over Rs 11 lakh crore capital expenditure in current fiscalGovt to invest in small Nuclear energy plants in partnership with private playersCentre to ask States to lower stamp duty for women purchasers of housesIBC - More Benches of NCLT to be set up to speed up recoveryFM spikes limit of Mudra loan to Rs 20 lakhsBudget offers financial aid to labour-intensive MSMEs in manufacturing sectorGovt announces 3 crore additional houses under PM SchemeGovt to secure Rs 15K loan for AP from multilateral agenciesGovt to frame new policy for all-round development of Bihar, Jharkhand and OdishaGovt to give one-month salary to all new recruits in formal sector through EPFOGovt to promote vegetable clusters closer to urban settlementsGovt to focus on productivity of agriculture with climate-resilient seedsFM allocates Rs 2 lakh outlay for PM's five schemes for job creation and farmersFM Nirmala Sitharaman presents 7th Union Budget in ParliamentBudget 2024: FM arrives at Parliament; Speech to begin at 11AMEconomic Survey 2023-24 - from GST PerspectiveUkrainian FM goes on tour to ChinaI-T- Additions framed u/s 69A are untenable where affidavits submitted by assessee's parents to explain source of cash deposits, were discarded by AO without consideration : ITATSurvey acknowledges productivity loss due to mental health disordersI-T- Short term capital gains returned by the assessee in terms of provisions of section 50 of the Act on assets held for a period of more than 36 months be treated as long term capital gains: ITATExpenditure on social services up from 6.7% to 7.8% of GDP: SurveyI-T-Additions framed u/s 68 are upheld where assessee is unable to prove genuineness of transaction involving purchase and sale of penny stock: ITATTrade deficit contracts to USD 78 bn from USD 126 bn in 2023I-T-Re-assessment is invalidated when there is no failure on part of assessee to make full and true disclosure of facts necessary for assessment: ITATCorporate profitability has peaked to 15-yr-old high between 2020-2023: SurveyI-T- When cash generated out of sales has been credited in the books of accounts, the provisions of Sec.69A could not be invoked: ITATBudget 2024: More relief for senior citizens & individual taxpayers on card; tweaking of capital gains tax likely; steady capital expenditure to stayI-T- If any amount invested is purely a strategic investment & for purpose of commercial expediency, then AO cannot hold such investments to be for non-business purpose: ITATGoogle backpedals on plan to scrap cookies from ChromeCus - For a HNWI individual, an expensive watch of 'Rolex' make would be his personal effect but same may not be the case if the person is of mere means - Pendant studded with diamonds not liable for confiscation: HCGovt amends Recruitment Rules for Debts Recovery TribunalGST - Even if no date, time or place of hearing is indicated in the notice issued, it was the duty of assessee to file his reply to SCN, which was admittedly received - Plea regarding violation of principles of natural justice cannot be countenanced: HCAbhinav Bindra conferred with Olympic OrderGST - Mismatch between value of e-way bills generated on portal and returns filed in Form GSTR-3B - Petitioner did not provide a comprehensive explanation - To remit sum of Rs.3.50 crores within six weeks - Matter remanded: HCHackers mercilessly hack Bangladesh PM’s website along with police portalsGST - Rule 30 of Rules, 2017 - Assessing officer ought to have issued summons and obtained clarification rather than estimating the outward supply value at 110% of purchase value - Order set aside and matter remanded subject to remit of 10% disputed tax demand: HCUS law-makers call for resignation of Secret Service chief in Trump assassination caseGST - Net ITC shown incorrectly - An inadvertent error was committed and such error was rectified, albeit irregularly, however, sum recovered from petitioner's bank account - Order set aside and matter remanded: HCKarnataka IT Industries piling pressure on govt to extend working hoursGST - Since notification is declared unconstitutional, Amount of IGST paid pursuant to Entry No. 10 of Notification No. 10 of 2017 is to be refunded along with statutory interest: HCStudy says earth’s water depleting fastFDI inflows slide to USD 26.5 bn in 2024 from USD 42 bn in 2023: Economic Survey
Great Wealth Migration: China continues to be perennial loser!

TIOL - COB( WEB) - 927
JULY 04, 2024

By Shailendra Kumar, Founder Editor

IT is commonly said that rats are the first to sense a sinking ship and they simply jump out, and humans find it a good idea to follow! The same analogy applies to the wealthy swathe of the global population such as millionaires and billionaires! Sensing losing steam of the economy or tepid growth prospects, growing geopolitical tensions, diminishing returns on investments, elevating safety and security concerns, lifestyle issues such as climate change, worsening healthcare standards and schooling for children, all millionaires or centi-millionaires annually embark on an odyssey for greener pastures! Thus is born the 'Great Wealth Migration' of the world. As our world is caught in the cross-hairs of frequent geopolitical storms, rising economic uncertainty, fractured global trade and social turmoil in many parts, millionaires of the world appear to be voting with their feet, looking for safer islands for their wealth and family interests. The on-going Ukraine and Gaza wars and military powers taking conflicting postures, our planet has turned tinder-dry! These conflicts may escalate into broader regional and even global infernos. In addition, fragmenting social cohesion has given rise to a sense of unease and anxiety across the world, particularly to the wealthy!

Against the rising silhouette of darkening clouds of global worries, a record 1.28 lakh millionaires of the world are projected to relocate in 2024 - 8000 more than last year, as per Henley & Partners, a reputed private wealth management firm. Prior to COVID-19, it was 1.1 lakh in 2019 - a growth of 16%. The trend represents a canary in the coal mine, indicating a subtle shift in the tectonic plates of wealth. The great wealth migration, it goes without saying, would have savoury repercussions for the countries they are migrating to and serious fall-outs for the nations they may leave behind. Interestingly, these millionaires do not only ferry their wealth to their new homes but also their entrepreneurial dynamism and networks. How does such an investment migration help the welcoming country? It helps in many ways - debt-free funds for governments, which may bankroll key infrastructure projects without resorting to borrowings or use of their own tax revenue. The recipient economies would have options to channelise them into green energy or industrial sectors. Predictably, the spillover benefits are also reaped such as job creation and transfer of technical knowledge. In brief, the 'magnet' countries earn oodles of foreign currency akin to the ones earned by doing exports!

Though such wealth migration is an annual feature for the global economy but China stands out as a perennial loser for the past few years. As China confronts severe economic headwinds such as deepening property crisis and growing state control over major parts of the economy a la limited space for the private sector, it continues to witness the highest net outflow of millionaires - 15200 from the mainland in 2024 (500 from Hong Kong). This trend has solidified particularly after the pandemic when Beijing had imposed asphyxiating 'Zero COVID' lockdowns and its economic wheels had come to a screeching halt. Secondly, when the 'Zero COVID' clampdown was dismantled, the Chinese economy had lost its latent energy which sparked collapse of the property sector where most savings of common Chinese citizens and even millionaires were locked. Soon realising that the gilded age of growth was on the slide, a large number of Chinese millionaires began relocating their wealth through licit and illicit methods as China permits outflow of only up to USD 50,000 through the official route. A large number of millionaires managed to palanquin their wealth through 'other' routes and set up family offices in Singapore. As per one study, owing to the reinforced migration of such wealthy crowd from China, the number of family offices spiralled from 400 in late 2020 to 1100 in 2022. However, after a recent money-laundering controversy, Singapore has stepped up scrutiny and two Chinese millionaires were denied permit to set up family offices. Therefore, a good number of Chinese millionaires have been trying to relocate to Japan, USA and Australia. A few dozens have moved to Hong Kong.

Interestingly, despite a popular Chinese proverb - 'Wealth is but dung, useful only when spread about', Mao Zedong was known for his strong dislike for the rich and he used to persecute them. The leaders who assumed power after him, allowed people to get richer before a state policy could be framed to deal with them. So, when China became richer, Mr Xi Jinping grabbed the 'gospel' of his predecessors and came up with a nebulous doctrine of 'common prosperity'. Though this doctrine is perhaps about minimising inequality but it also means crackdown on pompous display of wealth by the rich. The smacking of Jack Ma, the most popular Chinese billionaire, was a loud message to other plutocrats in China who began exiting their homeland. Scaling up the drive, China has, of late, begun threatening online influencers for showboating their luxury and expensive life-style. In the latest episode of persecution, when a popular influencer Wang Hongquanxing, monikered as 'China's Kim Kardashian', allegedly stated that he never leaves his home without clothes and jewellery worth less than USD 1.4 million, the Beijing authorities have banned him from top social media platforms. In fact, digital existence of dozens of influencers like him has simply been erased! Internet regulator has suspended accounts of hundreds of such influencers in the recent past! All these punitive measures of the Beijing establishment has been driving millionaires out of China. Though China tops the projected tally with 15200 but it still remains a small fraction of overall millionaire population in the country. As per various reports, China ranks second on the world's top 15 wealthiest nations with 8.62 lakh millionaires, including 2300 centi-millionaires and 305 billionaires. However, given Mr Jinping's confrontational and belligerent approach in diplomatic relations with the US, the EU and even his neighbours and also the slowdown of its behemoth economy, China would be poorer by thousands of millionaires in the coming years!

Predictably, America retains the first slot with 55 lakh millionaires - 9900 centi-millionaires and 800 billionaires! After China, the second spot goes to the UK whose number is going to be reduced by 9500 millionaires in 2024. This is more than double the number of 4200 in 2023. It was 1600 in 2022. Seemingly, this trend consolidated post-Brexit between 2017 to 2023. During this period, the UK has lost 16500 millionaires. One of the key drivers is construed to be the announcement of the Labour Party to scrap the 225-year-old non-dom tax regime from 2025 (no tax on overseas wealth) and the levy of VAT on school fee. Attributable to the messy state of the British economy, the number of millionaires has already been on a slide - 8% fall in the past decade as against 14% growth in France; 35% in Australia and 62% in the US. After Britain, the third spot goes to India which is projected to lose 4300 millionaires in 2024. India is ranked 10th in the list of wealthiest 15 with 3.26 lakh millionaires, including 1100 centi-millionaires and 120 billionaires. India is credited to have seen 85% growth in its wealth in the past decade. Apart from these top three, other countries in the list of top 10 are - South Korea, Russia, Brazil, South Africa, Taiwan, Vietnam and Nigeria.

Now, the larger question is - Where are these millionaires heading to? It may sound astonishing but UAE has emerged as the most powerful wealth magnet for the migrating millionaires for the third year on trot. A record 6700 plutocrats are going to make UAE their new abode. UAE remains the lodestone for the millionaires from India, Nigeria and Russia. UAE has been able to woo millionaires with its robust regulatory architecture which protects and multiplies their wealth. With its zero income tax, golden visa scheme and strategic geographical coordinates, UAE has beaten traditional magnets like Singapore in Asia. The second spot goes to the US with 3800 millionaires; followed by Singapore 3500; Canada 3200; Australia 2500; Italy 2200 and Switzerland 1500.The US, Canada and Australia remain top rankers for a thicket of economic and regulatory reasons. Many countries like Saudi Arabia, Mauritius, France, Monaco, Spain and New Zealand also remain in the race to attract millionaires of the future. The only risk, I clearly see for the future, is the rapid geopolitical fracture of the world which would dampen the global economic growth and, ergo, many autocratic regimes like China may rat on global treaties and also come up with more stringent framework to curb outflows of wealth. Secondly, such measures generally ripple out widely and too quickly! If that happens, that would be a grievous blow to the raging phenomenon of great wealth migration, which is natural and unstoppable! Also a new idea-pollinating event! Amen!



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