SIP Report on Equity Research (Fundamental and Technical Analysis).docx TAX EVASION

1. A REPORT
ON
EQUITY RESEARCH IN MINING AND INSURANCE
SECTOR
BY
Hrishikesh Himesh
HDFC LIFE
A report submitted in partial fulfilment of
the requirement of
PGPM Program of
IBS, JAIPUR
Distribution List:
Company Guide: Mr. Nikesh Ruparel
Faculty Guide: Shivangani Rathore
Date of Submission: 20th May 2020

2. AUTHORIZATION
This is to certify that the project work title “Fundamental analysis in mining
and insurance sector” is a good record of research work done by Hrishikesh
Himesh, 19BSPJP01C062 in partial fulfilment of the requirement of MBA
program of IBS Jaipur. This work was carried out from 23rd February 2020 to
22nd May 2020 in HDFC LIFE, New Delhi.
I also certify that this report has not been previously submitted for assessment in
any other unit.
Mr. Nikesh Ruparel Dr. Shivangani Rathore
Company Guide Faculty Guide
HDFC LIFE IBS Jaipur

3. ACKNOWLEDGEMENT
This project report had not been possible without direct and indirect cooperation
of various people. I take this opportunity to acknowledge people who helped me
in the successful completion of this project.
First of all I would like to thank Mr. Manish Saxena (Placement Cell) for inviting
HDFC LIFE for summer internship program then I would like to thank my mentor
Mr. Nikesh Ruparel for assisting me at every stage of the internship period who
made me understood the finance industry.
I express my deep gratitude to my faculty guide Dr. Shivangani Rathore
for rendering me valuable guidance always. She has been a perennial source of
inspiration and motivation right from the inception of this project.
Lastly, I would like to express my thanks to my family & friends who have been
constant support at every stage of the internship period.
HRISHIKESH HIMESH

4. TABLE OF CONTENT
1. EXECUTIVE SUMMARY……………………………………………………….......6
2. ABSTRACT………………………………………………………………………….......8
3. INTRODUCTION……………………………………………………………………....9
4. SWOT ANLYSIS…………………………………………………………………….….10
5. OBJECTIVE AND METHODOLOGY……………………………………..........11
6. EQUITY MARKET……………………………………………………………………...12
6.1 PRIVATE EQUITY……………………………………………………….
6.2 IPO AND STEPS…………………………………………………………13
6.3 IRCTC IPO DETAILS……………………………………………………17
7. INSURANCE SECTOR ANALYSIS REPORT……………………….............22
8. MINING SECTOR ANALYSIS REPORT…………………………….............26
9. INDEX OF MINING SECTOR……………………………………..................30
10. INDEX OF INSURANCE SECTOR………………………………..................31
11.INDEX WORK………………………………………………………….........……....32
12.GRAPHICAL REPRESENTATION OF MINING SECTOR….................33
13.GRAPHICAL REPRESENTATION OF INSURANCE SECTOR....….…....34
14.FUNDAMENTAL ANALYSIS…………………………………………….............35
14.1 P/E AND PEG RATIO CALCULATION………………………......36
14.2 RATIO ANALYSIS………………………………………………….......38
14.3 ALLOCATION OF FUND, AUM, NAV………………………......39
14.4 FUND SHEET………………………………………………………………40
14.5 GAIN FROM STUDY AND LIMITATION…………………………41
15.TAX EVASION………………………………………………………………..............42
15.1 TAX EVASION VS TAX AVOIDANCE………………………........
15.2 DOUBLE TAXATION……………………………………………........44
15.3 INDIA DTAA…………………………………………………………......46
15.4 INDIA MARUITIUS DTAC………………………………………......48
15.5 GAAR…………………………………………………………………........50
16.CERTIFICATION AND OTHER WORK……………………………………………53

5. EXECUTIVE SUMMARY
This report is based on the study of MINING AND INSURANCE SECTOR, its
fundamental analysis as observed during the 14 Weeks summer training at HDFC
LIFE, New Delhi.
The project aims at making a portfolio which can deliver good results to the
investors and for doing this we were thought how to analyse different stocks and
predict their future growth movement. To predict the future of any stocks, the
first step is to do its fundamental analysis. Starting with the training sessions we
were thought about different investment options available for an investor and how
to help investor to choose the best alternative so that he can gain maximum from
his investments.
We were given training how to analyse sector of the economy and what are the
things a portfolio manager should look at while selecting stocks for his portfolio.
We were given hand on training on online trading platform where we learnt how
to trade stocks online and how to do analyse the future performance of stocks.
We have been allocated a sector on which our project will be based on.
For fundamental analysis of stocks, research on Industry and companies is
required where the large cap and fund have been taken for the purpose of
analyzing. A study has been undertaken to analyze the large cap equity shares of
companies of the industry.
Initially it would be; Index Formulation (of the large cap and mid cap funds
chosen from the sector) - this helps us in taking various decision on based on the
movement of the shares. Further, Fundamental Analysis has been done where top
line, bottom line, ratio analysis and ratio ranking approach would be used for
shortlisting stocks.
Currently pursuing Goods and Services Tax course from Swayam learning portal
the national testing agency has postponed the examination May 2020 for January
semester due to lockdown on account of covid-19.
Attended the webinar on economic recovery post covid-19 the road ahead held
on 13 May 2020 organized by the ICFAI University.

6. Our team has developed website (http://apnainvestment.in/) for sharing our
learnings during our summer internship programme. Through this website we
want to convey the analysis of various sector of market which will assist people
for making investment in securities. There are also various research reports are
available on website which was also a part of our learning during internship. We
have put our best efforts to make this platform to provide to the best knowledge
for investment purpose.

7. EQUITY RESEARCH IN MINING AND INSURANCE SECTOR
ABSTRACT
The project has been initiated for the purpose of acquainting me gaining in-depth
knowledge of all issues concerning about finding and potential firms to invest
through shares by fundamental analysis.
This work is a detailed study of stock market and stocks. It's about the way in
which investor can invest in stock market. I have tried to explain the entire is
stock market trading in detail with the help of calculations and live examples
which give better insight of my work.
The objective of equity analysis is to determine what stock to buy at what price
and for that investor may the fundamental analysis method.
For my understanding I referred to various articles and websites on internet which
I have given as a reference. For data collection money control.com proved to be
a great help for me.

8. INTRODUCTION
HDFC Life is one of India's leading life insurance companies, offering a range of
individual and group insurance solutions that meet various life stage needs of
customers. The products include Protection, Pension, Savings & Investments,
Health, etc.
HDFC Life Insurance Company Limited (Formerly HDFC Standard Life
Insurance Company Limited) ('HDFC Life' / ‘Company’) is a joint venture
between HDFC Ltd., one of India’s leading housing finance institution and
Standard Life Aberdeen, a global investment company.
Established in 2000, HDFC Life is a leading long-term life insurance solutions
provider in India, offering a range of individual and group insurance solutions
that meet various customer needs such as Protection, Pension, Savings,
Investment and Health. As on March 31, 2019 the Company had 38 individual
and 11 group products in its portfolio, along with 8 optional rider benefits,
catering to a diverse range of customer needs.
HDFC Life continues to benefit from its presence across the country with 412
branches and additional distribution touchpoints through several
partnerships. The partnerships comprise 265 bancassurance partners including
NBFCs (Non-Banking Financial Companies), MFIs (Micro Finance Institutions),
SFBs (Small Finance Banks), etc. and 39 partnerships within non-traditional
ecosystems. The Company is also strengthened by a strong base of financial
consultants.
In Fiscal 2012, The Company established a wholly-owned subsidiary, HDFC
Pension Management Company Ltd., to operate its pension fund business under
the National Pension Scheme (NPS). And in Fiscal 2016, the Company
established its first international wholly-owned subsidiary in the UAE, HDFC
International Life and Re Company Ltd., to operate its reinsurance business.

9. Swot Analysis
Strength
1. Strong brand name which creates trust among the mass
2. First mover advantage in Insurance market in India
3. Strong Financial hold in assets and securities
4. Company with No Debt
Weaknesses
1. People rely on private insurance less because it is new concept in India and
LIC is having already good hold in the market.
2. Cost of management is heavy in managerial activities.
Opportunities
1. Large Indian market which is unexplored and untapped even now.
2. Better outsourcing opportunities in Indian market through technical skills of
Indian experts.
Threats
1. Cut throat competition by the other leading players like LIC, SBI Insurance
etc.
2. Attractive offers and rigorous innovation can divert the minds of customers
towards other players.

10. Objective
The purpose of an equity researcher is to provide insight and
detailed analysis into a company, entity or sector and this information is then
used by investors to decide how to allocate their funds.
The major objective of study:
- To study and compare the performance of mining and insurance sector
- To help investor making for choosing and making investment
- To understand the concept of equity analysis
Methodology
The data has been collected from secondary sources i.e. from financial report of
the company, moneycontrol.com and nseindia website
The collected data needed for analysis are:
- Comparative analysis of revenue and profits
- Financial ratios
- Data has been analysed through different graphs

11. EQUITY MARKET
What is called EQUITY?
Simply, EQUITY is ownership.
In finance, equity is ownership of assets that may have debts or
other liabilities attached to them. Equity is measured for accounting purposes by
subtracting liabilities from the value of an asset. For example, if someone owns a
car worth $9,000 and owes $3,000 on the loan used to buy the car, then the
difference of $6,000 is equity. Equity can apply to a single asset, such as a car or
house, or to an entire business entity. Selling equity in a business is an essential
method for acquiring cash needed to start up and expand operations.
Suppose a cloth manufacturing company i.e. XYZ. Ltd want to increase the sale
and management decide to go for capex strategy i.e. (capacity expansion) for
which the firm will require fund.
Usually there are two ways to raise fund
1. Sell shares
2. Loans
Further shares are also bifurcated into two parts
1. Private equity
2. IPO
PRIVATE EQUITY
Private equity is the funds that institutional and retail investors use to acquire
public companies or invest in private companies. These funds are typically used
in acquisitions, expansion of business, or strengthen a firm’s balance sheet. In
these cases, the fundraising takes place by offering a prospectus to investors who
are interested in funding the business.
Once the funds are exhausted, the private equity fund can raise a second round of
capital funding, or it can have several funds going on at the same time. PE firms
are not the same as venture capital firms because they are not investing in public
firms, but they invest solely in private firms, even if they are already established

12. and globally known. Also, PE firms may finance their investments with debt and
participate in a leveraged buyout.
INITIAL PUBLIC OFFER
Initial public offering (IPO) or stock market launch is a type of public
offering in which shares of a company are sold to institutional investors and
usually also retail (individual) investors. An IPO is underwritten by one or
more investment banks, who also arrange for the shares to be listed on one or
more stock exchanges. Through this process, colloquially known as floating,
or going public, a privately held company is transformed into a public company.
Step1: Appointment of investment bankers/underwriters
These financial experts carry out the IPO process on behalf of the company.
They act as intermediaries between the company and the investors.
The initial step in the IPO process is to decide on an investment bank that will
guide the issuing company. The bank will also provide the company with a team
of underwriters, comprised of lawyers, certified public accountants, public
relations experts, and SEC (Securities & Exchange Commission) professionals.
The underwriting team’s job is to make sure that the IPO is successfully
completed and that the stocks are sold at the appropriate price. Investment banks
typically charge between 3 and 7 percent of the IPO’s total sales price for the
underwriting and advisory services.
Step2: Register with SEBI
Next step would be to present the final company story as well as the prospectus
to SEBI for registration and review process. Initial prospectus contains all
information about the company except for the offer price and date, which are not
shown yet. Normally, the registration takes more than a month.
The investment bank and the company prepare a registration statement and a
draft prospectus.
Known as the red herring prospectus (RHP), it is the most important document
that a retail investor has access to and can use it to evaluate the offer. The
document details all the information about the business, with the exception of
price or quantum of shares being offered.

13. All businesses have to submit the red herring prospectus. According to Section
32 of the Companies Act:
 The company offering an IPO needs to submit the Red Herring Prospectus
with the Registrar of Companies at least 3 days before the offer is opened to
public for bidding.
 All the obligations that the company’s prospectus will have, should also be
contained in the RHP. Any variations between the two will have to be
highlighted and be duly approved by SEBI and ROC.
 Once the IPO bidding is closed, is closed, the company has to submit the final
prospectus to both ROC and SEBI. This should contain both the quantum of
shares being allotted and the final issue price on which the sale is closed.
The RHP is the document that the issuer and the underwriters use to market the
IPO with. It is the most important tool that a retail investor has access to and can
use to evaluate the offer. The document contains all the financial and other
information about the company. All the mandatory disclosures that SEBI and the
Companies Act are collated in this document as well. The sections include:
 Definitions: All the important issue and industry specific keywords are
defined in this section. If you are analyzing an offer from an industry you are
already familiar with, this section may not warrant a close reading.
 Risk Factors: Every business face risks and uncertainties. This section is
meant to disclose every possibility that could have a material impact on
company’s performance post listing, and the share price.
 Use of Proceeds: This is probably the most important section of the
prospectus. This gives the investors information about where the money raised
through the IPO will be used. This is a good indicator of the direction the
business will develop in, and proxy for how well the finances are being
handled by the company.
 Industry Description: This section provides forecasts and predictions about
the larger industry the company operates in.
 Business Description: This section talks about the core activities that the
company carries out. It describes how the company generates profits.
Investors pay close attention to this, as it describes what they will end up
owning, if they get the shares of the company.
 Management: Details about the promoters, directors and key management
personnel is provided in this section. Investment in a new company is largely
an investment in the management team’s competency. Therefore, investors
read this section with interest and gather whatever information they can about
the people behind the company.
 Financial Information: This section contains auditor’s reports and the
financial statements of the company for the previous 5 years.

14.  Legal and Other Information: All litigations filed against the company or a
promoter or a director which are not yet settled are listed in this section.
Step3: The Roadshow
Once the prospectus is ready, underwriters and company officials go on
countrywide 'roadshows', visiting the major trade hubs and promote the
company's IPO among select few private buyers (Usually corporates or HNIs).
They are fed with detailed information regarding company's future plans and
growth potential. They get a feel of investor response through these tours and try
to woo big investors.
Step4: SEBI Approval & Go ahead
Once SEBI is satisfied with the registration statement, it declares the statement to
be effective, giving a go ahead for the IPO to happen and a date to be fixed for
the same. Sometimes it asks for amendments to be made before giving its
approval. The prospectus cannot be given to the public without the amendments
suggested by SEBI. The company needs to select a stock exchange where it
intends to sell its shares and get listed.
Step5: Deciding on Price Band & Share Number
After the SEBI approval, the company, with assistance from the underwriters
decides on the price band of the shares and also decides the number of shares to
be sold.
There are two types of issues: Fixed Price IPO and Book Building IPO
 Fixed Price IPO – In a Fixed price issue – the company decides the price
of the share issue and the number of shares being sold. Ex: ABC Ltd public
issue of 10 lakh shares of face value ₹10/- each at a premium of ₹55/- each
is available to the public thereby generating ₹5 Crores.
 Book Building IPO – A Book building issue helps the company discover
the price of the issue. The company decides a price band and it gives the
investor an option to choose the price at which he/she wishes to bid for the
company shares. Ex: ABC Ltd issue of 10 lakh shares of face value ₹10/-
each at a price band of ₹60 to ₹70 is available to the public thereby
generating up to ₹7 Crores. Here the amount generated through the issue
would depend on the highest amount bid by most investors.

15. Step6: Available to Public for Purchase
On the dates mentioned in the prospectus, the shares are available to public.
Investors can fill out the IPO form and specify the price at which they wish to
make the purchase and submit the application.
Step7: Issue Price Determination & Share Allotment
Once the subscription period is over, members of the underwriting banks, share
issuing company etc. will meet and determine the price at which shares are to be
allotted to the prospective investors. The price would be directly determined by
the demand and the bid price quoted by investors. Once the price is finalized,
shares are allotted to investors based on the bid amounts and the shares available.
Note: In case of oversubscribed issues, shares are not allotted to all applicants.
Step8: Listing & Unblocking of funds
The last step is the listing in the Stock Exchanges. Investors who have applied
through ASBA & to whom shares were allotted would get the shares credited to
their DEMAT accounts & their funds getting debited from their bank account or
else for those investors to whom the shares were not allotted, funds would get
unblocked in their bank account.
REFERENCE:
1. https://www.motilaloswal.com/article.aspx/1448/Sequence-of-
steps-leading-up-to-an-IPO
2. https://www.angelbroking.com/ipo/what-ipo-process
3. https://corporatefinanceinstitute.com/resources/knowledge/finance/
ipo-process/
4. https://www.investopedia.com/terms/i/ipo.asp
5. https://www.moneycontrol.com/news/business/markets/all-you-
need-to-know-about-ipo-process-2918911.html

16. IRCTC Limited IPO Detail
Incorporated in 1999, state-owned Indian Railway Catering and Tourism
Corporation Limited (IRCTC) is a wholly-owned subsidiary of Indian Railways.
IRCTC handles tourism, catering, online ticket booking services and provides
packaged drinking water in trains and at railway stations in the country. It was
conferred as a Mini-Ratna or Category-I Public Sector Enterprise by the Indian
Government in 2008.
The company website (www.irctc.co.in) is one of the most transacted
websites in the Asia-Pacific region. As on 31st Aug 2019, around 1.40 million
travelled on Indian Railways and more than 0.84 million passengers booked ticket
online through the IRCTC website and mobile app on a daily basis. In the last
three months ended on 30th June, nearly 15 to 18 million transactions were placed
per month through the website.
IRCTC launched i-Pay payment gateway to manage domestic debit/credit
transactions in October 2018. The company is working on technical capabilities
and operational utility of the gateway to use it in additional market segments.
IRCTC also provides non-railway services including budget hotels, e-catering
and executive lounges to create a one-stop solution for customers. Currently, the
company operates majorly in four segments which are:
1. Travel and Tourism
IRCTC is specialised in rail tourism. It offers travel and tourism services across
diversified segments such as air, land, rail, & cruise tour packages, hotel
bookings and air ticket bookings.
2. Packaged Drinking Water
It is an authorized manufacturer and distributor of packaged drinking water on
trains and at railway stations. The company manufactures packaged drinking
water under brand name Rail Neer.
3. Catering Services
The company provides food catering services including on-board catering
(through mobile) on trains and static catering services at stations.
4. Internet Ticketing
IRCTC has a mobile app (Rail Connect) and a dedicated website to offer online
railway ticket booking facility.
Competitive Strengths
1. An authorized service provider by Indian Railways
2. Railway and non-railway tourism and hospitality services

17. 3. Exclusively authorized by Indian Railways to provide packaged drinking
water
4. A strong operating system across different segments.
Company Promoters:
The President of India acting through the Ministry of Railways is the promoter of
the company.
Company Financials:
Particulars For the year/period ended (in Rs. 10 Lakhs)
31-Mar-19 31-Mar-18 31-Mar-17
Total Assets 25,837.80 23,191.06 18,264.54
Total Revenue 19,566.60 15,695.60 16,028.50
Profit After Tax 2,725.95 2,206.19 2,290.81
Objects of the Issue:
The objects of the Offer are:
1. To carry out the disinvestment of Equity Shares by the Selling Shareholder
constituting Company's paid up Equity Share capital; and
2. To achieve the benefits of listing the Equity Shares on the Stock Exchanges.
IRCTC IPO Details
IPO Date Sep 30, 2019 - Oct 3, 2019
Issue Type Book Built Issue IPO
Issue Size 20,160,000 Eq Shares of ₹10
(aggregating up to ₹645.12 Cr)
Offer for Sale 20,160,000 Eq Shares of ₹10
(aggregating up to ₹[.] Cr)

18. Face Value ₹10 Per Equity Share
IPO Price ₹315 to ₹320 Per Equity Share
Retail Discount ₹10
Employee Discount ₹10
Market Lot 40 Shares
Min Order Quantity 40 Shares
Listing At BSE, NSE
IRCTC IPO Tentative Date / Timetable
Bid/Offer Opens On Sep 30, 2019
Bid/Offer Closes On Oct 3, 2019
Finalisation of Basis of Allotment Oct 9, 2019
Initiation of Refunds Oct 10, 2019
Credit of Shares to Demat Acct Oct 11, 2019
IPO Shares Listing Date Oct 14, 2019
IRCTC IPO Lot Size and Price (Retail)
Application Lots Shares Amount
Minimum 1 40 ₹12,800
Maximum 15 600 ₹192,000

19. IRCTC IPO Subscription Status (Bidding Detail)
No. of Times Issue Subscribed (BSE +
NSE)
As on Date & Ti
me QIB NII RII
Employe
e Total
Shares Offered 10,000,000 3,000,000 7,000,000 160,000 20,160,00
0
Oct 3, 2019 18:4
9
108.79x 354.52x 14.83x 5.81x 111.91
x
IRCTC IPO Listing Date
Listing Date Monday, October 14, 2019
BSE Script Code 542830
NSE Symbol IRCTC
Listing In B
ISIN INE335Y01012
IPO Price ₹320 Per Equity Share
Face Value ₹10 Per Equity Share

20. Listing Day Trading Information
.
IPO Price
Open
Low
High
Last Trade
Volume
BSE
₹320.00
₹644.00
₹625.00
₹743.80
₹728.60
5,440,273
NSE
₹320.00
₹626.00
₹625.00
₹743.80
₹727.75
45,270,607
Lead Manager of IRCTC IPO:
1. IDBI Capital Market Services Limited
2. SBI Capital Markets Limited
3. Yes Securities (India) Limited
Registrar of IRCTC IPO:
1. Alankit Assignments Limited
REFERENCE:
1. https://top10stockbroker.com/ipo-review/irctc-ipo-2/
2. https://www.chittorgarh.com/ipo/irctc-ipo/1018/

21. Insurance Sector Analysis Report
 The insurance industry can be broadly divided into two: life insurance and
general insurance. While life insurance relates to risk cover for life or
disability/accidents of an individual or a group of individuals, general
insurance or non-life insurance covers risk to other insurable assets such as
property, vehicles, health etc.
 The insurance sector is regulated by the Insurance Regulatory and
Development Authority of India (IRDAI). The IRDAI opened up the
insurance sector for private participation in 2000. Until 2000, there were
only one life insurer and four general insurers in the country, all from the
public sector. Presently there are 24 life insurance companies and 34
general insurance companies operating in the country.
 The market share of private sector players has increased over the years. In
the non-life insurance sector, private companies had a market share of
54.7% in FY19 (as of Jan ‘19). In the life insurance sector, private
companies had a market share of 33.7% in FY19 (as of Jan '19).
 Reinsurance refers to the arrangement whereby insurers transfer part of the
risks and liabilities to one or more insurers or reinsurers by entering
reinsurance contracts and paying premiums. Reinsurance allows direct
insurers to manage capacity, ease surplus strain, minimize fluctuations in
claim payments and lapse exposure and also manage their portfolios.
 The fortunes of the reinsurance industry are tied to the growth of underlying
life and non-life insurance businesses. Reinsurance of non-life insurance
business accounted for a lion's share of 95% of the total premium during
the year. The dominance of non-life in the reinsurance pie can be attributed
to the better geographical spread of life policies compared to non-life and
because the insured amounts are typically smaller in comparison,
reinsurance need is correspondingly lower. In addition, life insurance is
viewed as a protection-cum-savings product in India. Therefore, the uptake
of pure life protection policies (term insurance) that can be reinsured is on
the lower side.

22. HOW TO RESEARCH THE INSURANCE SECTOR (KEY POINTS)
 Supply
 Post the sector being privatised in 2000, there has been a steady rise in the
number of players. Presently there are 24 life insurance companies and 30
general insurance companies operating in the country.
 Demand
 Since the penetration of life and non-life insurance in the country is still lower
than the global average penetration, there is a lot of latent demand waiting to
be tapped.
 Barriers to entry
 Licensing requirement, investment in branch network, and regulatory
requirements.
 Bargaining power of suppliers
 Rising share of the bancassurance and digitisation has enabled players to
reduce costs and offer innovative and customised products while maintaining
cost efficiency.
 Bargaining power of customers
 Since the reinsurance component in non-life insurance schemes is higher as
compared to life insurance schemes, the customer's bargaining power in group
general insurance scheme is better.
 Competition
 With entry of more players, the competition in the industry has been on a
steady rise.
FINANCIAL YEAR '19
 The general insurance industry saw its profit after tax (PAT) in FY19 drop
90% to Rs 6.8 billion compared to a PAT of Rs 69.1 billion in FY18. The
public sector general insurance firms posted a loss of Rs 32.3 billion in
FY19 as opposed to a PAT of Rs 25.4 billion in FY18.
 While the state-owned general insurers suffered huge losses, the private
sector insurers reported 5% decline in profits in FY19 at Rs 35.8 billion
compared to Rs 38 billion in FY18.

23.  The underwriting losses of the general insurance industry increased to Rs
223.2 billion in FY19 from Rs 153.4 billion, a jump of 45%. While the
private general insurers reported a 38% jump in their underwriting losses
to Rs 28.9 billion, the public sector general insurers underwriting losses
increased 47% to Rs 185.3 billion.
 The life insurance industry reported a PAT of Rs 84.4 billion as against Rs
85.1 billion in FY18. Of the 24 life insurers in operations, 22 firms reported
profits.
 In FY19 (up to Jan 2019), the premium from new life insurance business
increased 3.9% year-on-year to Rs 1.6 trillion. Gross direct premiums of
non-life insurers reached Rs 1.4 trillion showing a year-on-year growth rate
of 12.7%.
 This sector has seen a lot of activity in the last few years. Indian e-
commerce giant Flipkart has tied up with Bajaj Allianz General Insurance
to provide customised insurance products for mobile phones sold on
Flipkart.
PROSPECTS
 The Indian life insurance industry has evolved in the last two decades post
privatization of the industry in 2000. While growth has been aided by
strong capital markets, there have also been interim setbacks in the form of
regulatory changes. The private players have shown a healthy growth since
2014. There has been a recalibration of their distribution models, ongoing
product innovation and realigning processes to provide a seamless
experience to the end customer. Going forward, insurers are well poised to
maximize the long-term growth potential of the industry on the back of a
stable regulatory environment, favourable demographics and increasing
digital adoption by the customers.
 In 2020, the industry is expected to reach US$ 280 billion. The life
insurance industry in the country will grow at 12-15% annually for the next
three to five years.
 Due to many changes in regulatory frameworks, there will be a great change
in the way business is conducted in this industry. The government is

24. planning to divest a significant stake in PSU general insurance companies
in order to execute the steep disinvestment target.
 A host of regulatory changes are expected to support the long-term growth
and development of the industry. In 2015, the foreign ownership cap was
raised from 26% to 49% of paid-up equity capital. Insurers have also been
allowed to raise hybrid capital such as subordinated debt and/or preference
shares. These measures are expected to fund the future growth of the
industry. Large foreign reinsurers have been permitted to set up branches
in the country benefitting direct insurance companies in managing their risk
coverage more efficiently.
 Factors like the growing middle class, younger population and increasing
awareness regarding the need for retirement and safety planning will boost
the growth of this industry.
REFERENCE:
1. https://www.equitymaster.com/research-it/sector-info/insurance/

25. MINING SECTOR ANALYSIS REPORT
Introduction
India holds a fair advantage in cost of production and conversion costs in steel
and alumina. Its strategic location enables convenient exports to develop as well
as the fast-developing Asian markets.
India produces 95 minerals– 4 fuel-related minerals, 10 metallic minerals, 23 non-
metallic minerals, 3 atomic minerals and 55 minor minerals (including building
and other minerals).
Rise in infrastructure development and automotive production are driving growth
in the sector. Power and cement industries are also aiding growth in the metals
and mining sector. Demand for iron and steel is set to continue, given the strong
growth expectations for the residential and commercial building industry.
Market Size
India is the third largest producer of coal. Coal production in the country stood at
688.8 million tonnes in FY18. India’s coal production in FY19 to reach 739.36
million tonnes.
India ranks fourth in terms of iron ore production globally. Production of iron ore
in FY19 (up to Feb 19) stood at 187.60 million tonnes. India has around 8 per
cent of world’s deposits of iron ore.
India became the world second largest crude steel producer in 2018 with output
106.5 million tonnes.
According to Ministry of Mines, India has the 7th largest bauxite reserves- around
2,908.85 million tonnes in FY18. Aluminium production stood at 2.25 MT in
FY19 (up to February 2019) and is forecasted to grow to 3.33 million tonnes in
FY20.
Investments/ Developments
 For FY2019-20, JSW Steel set a target of supplying around 1.5 lakh tonne
of TMT Rebars to metro rail projects across the country.
 In October 2019, Kamdhenu Ltd added new production capacity of 60,000
tonne per annum in Dadri, Uttar Pradesh to manufacture Kamdhenu
Structural Steel.
 India’s iron and steel export during between April-September 2019 stood
at US$ 4.67 billion.
 During April 2000–June 2019, FDI inflows into metallurgical industries
stood at US$ 11,383.62 million. During the same period, FDI inflows in
the mining, diamond and gold ornaments and coal production sectors stood
at US$ 2,651.57 million, US$ 1,159.94 million and US$ 27.73 million,
respectively.

26.  Under the Mines and Minerals (Development and Regulation) Act of 1957,
FDI up to 100 per cent under Automatic route is allowed for the mining
and exploration of metal and non- metal ores including diamond, gold,
silver and precious ores, while FDI up to 100 per cent under Government
route is allowed in for mining and mineral separation of titanium bearing
minerals and its ores.
 The Government of India is taking steps boost the country's domestic steel
sector and raise its capacity to 300 million tonnes (MT) by 2030-31.
Government Initiatives
 The Ministry of Steel aims to increase the steel production capacity to 300
million tonnes by 2030-31 from 134.6 million tonnes in 2017-2018
indicating new opportunities in the sector.
 FDI caps in the mining and exploration of metal and non-metal ores have
been increased to 100 per cent under the automatic route.
 Approval of MMDR Bill (2011) to provide better legislative environment
for investment and technology.
 National Mineral Policy 2019 launched for transparency, better regulation
and enforcement, balanced social and economic growth into the sector.
 In July 2018, Union Minister of Coal, Railways, Finance & Corporate
Affairs launched a mobile application ‘Khan Prahari’ and Coal Mine
Surveillance & Management System (CMSMS) developed by Central
Mine Planning and Design Institute (CMPDI).

27. Retrieval date: 10th
April 2020

28. Rise in infrastructure development and automotive production are driving growth
in the metals and mining sector in India. India has vast mineral potential with
mining leases granted for longer durations of 20 to 30 years. India produces 95
minerals– 4 fuel-related minerals, 10 metallic minerals, 23 non-metallic minerals,
3 atomic minerals and 55 minor minerals (including building and other minerals).
India is expected to overtake Australia and the United States in early 2020 to take
the position of the world’s second-largest coal producer.
Mineral production in India grew at a CAGR of 5.72 per cent between 2013-14
and 2017-18E to reach US$ 17.62 billion in 2017-18. In FY19 (till Feb 2019), the
mineral production stood at US$ 9.48 billion. Production of iron ore in FY 19 (up
to Feb 19) stood at 187.60 million tonnes.
India holds a fair advantage in cost of production and conversion costs in steel
and alumina. The country is the 3rd largest steel producer with production of
101.4 million tonnes of crude steel in 2017. In FY20 (Up to Oct’19), Crude Steel
and Finished Steel production stood at 64.102million tonnes and 60 million
tonnes respectively. India is the largest producer of sheet mica in the world and
has the 7th largest bauxite reserves at around 2,908.85 million tonnes in FY17.
Iron ore production in the country increased from 129.32 million tonnes in FY15
to 200.96 million tonnes in FY18 and reached to 187.60 million tonnes in FY 19
(up to Feb 19). It is forecasted to grow at the rate of 5 per cent in FY19. India’s
iron and steel export during between April-September 2019 stood at US$ 4.67
billion. Production of metallic minerals and non-metallic minerals in India FY19
(till Jan’19) respectively US$ 7.50 billion and US$ 1.09 billion.
The index of mineral production was 10.5.6 in February 2019 showing an
increase of 3 per cent as corresponding period of the previous year in the overall
mineral production. Mining group under the Index of Industrial Production (IIP)
stood at 101.9 for Apr-Nov 2019, showing a decrease of 0.1 per cent in April-
November 2019.
National Mineral Policy 2019 launched for transparency, better regulation and
enforcement, balanced social and economic growth into the sector.
The Government of India has allowed 100 per cent Foreign Direct Investment
(FDI) in the mining sector and exploration of metal and non-metal ores under the
automatic route, which will propel growth in the sector. Power and cement
industries also aiding growth in the metals and mining sector. Demand for iron
and steel is set to grow, given the strong growth expectations for the residential
and commercial building industry. By March 2019, 105 mineral blocks are
expected to be auctioned. As of May 2019, 64 mineral blocks have been
auctioned.

29. INDEX OF MINING SECTOR

30. INDEX OF INSURANCE SECTOR

31. INDEX WORK
Taking 1000 point as basis I have prepared my own index of mining and insurance
sector.
Company names in mining sector
1. Coal India
2. Vedanta
3. NMDC
Commencing from 26th
Feb the mining sector was down by 120.997 point and
closed at 879.003 and on15th
May mining sector index closed at 700.66 with a
jump of 30.52 point from previous day closing. From the opening date to the
present date the sector plunge by 29.93%.
Record high: 879.003
Record low: 571.877
Company names in insurance sector
1. HDFC Life
2. SBI Life
3. ICICI Pru
On 26th
Feb insurance sector was down by 19.086 point and close at 980.914 and
on 15th
May insurance sector index closed at 830.38 which jump of 12.43 point
from previous day closing. From day of opening date to the present date the sector
plunge by 16.96%.
Record high: 1003.099
Record low: 572.59

32. GRAPHICAL REPRESENTATION OF MINING SECTOR INDEX

33. GRAPHICAL REPRESENTATION OF INSURANCE SECTOR INDEX

34. FUNDAMENTAL ANALYSIS
Fundamental analysis observes numerous elements that affect stock prices such
as sales, price to earnings (P/E) ratio, profits, earnings per share (EPS), as well
as macroeconomic and industry specific factors.
Fundamental analysis predicts two things:
line factor(revenue)
-line factor(profit)
COMPANY STOCKS
UNDERVALUED OVERVALUED
TOP LINE
(REVENUE)
BOTTOM LINE
(PROFIT)
PEG RATIO

35. MINING SECTOR
MINI
NG
SECT
OR
P/E
OVERVALUED/UND
ERVALUED
reve
nue
in
fy20
19
reve
nue
in
fy20
18
pro
fit
in
fy
201
9
prof
it in
fy20
18
incre
ase /
decre
ase
PEG
=
PE/E
PSG
select/r
eject
COAL
INDIA 5 OV 0.033 select
VEDA
NTA 3.47 UV
44,7
96
49,5
33
5,0
75
7,25
6
decre
ase reject
NMDC 5.19 OV 0.199 select
Avera
ge
4.55333
3333
INSURANCE SECTOR
INSUR
ANCE
SECTO
R
P/E
OVERVALUED/U
NDERVALUED
reven
ue in
fy201
9
reven
ue in
fy201
8
profit
in fy
2019
profit
in
fy201
8
incr
ease
/
decr
ease
PEG
=
PE/E
PSG
select/
reject
HDFC
LIFE 70.46 OV 4.81 reject
SBI LIFE 51.97 UV
1,51,7
6,978
1,29,2
9,320
1,32,6
7,964
1,15,0
3,922
incre
ase select
ICICI
PRU 41.09 UV
1,72,7
8,937
1,83,3
6,019
1,14,0
6,462
1,61,9
8,259
decr
ease reject
Average
54.506
66667

36. Firstly, I have calculated the P/E multiple for both sector and then average has
been calculated so the we come to know which companies are undervalued and
overvalued.
For the undervalued stocks top line and bottom line of the company has been find
out.
Rule for selection and rejection of undervalued stocks:
1. if revenue increases and profit increase then, select
2. if revenue increases and profit decreases then, select
3. if revenue decreases and profit increases then, select
4. if both revenue and profit decreases then, reject
For the overvalued stocks peg ratio has been calculated
Rule of selection and rejection of overvalued stocks:
1. PEG Ratio between 0 - 1 are considered as good and to be
selected

37. RATIO ANALYSIS
MINING SECTOR
ratios mining sector ranking sum total of ranking
coal india nmdc
liquidity 2.68 2.6
nmdc
1st
coal india
2nd 1 2
debt equity 0.3 0.02 nmdc 1st
coal india
2nd 1 2
profitability 3.01 38.19 nmdc 1st
coal india
2nd 1 2
dividend
payout 63.04 237.93 nmdc 1st
coal india
2nd 1 2
activity 18.74 24.61 nmdc 1st
coal india
2nd 1 2
5 10
INSURANCE SECTOR
ratios
insurance
sector
sbi life
solvency ratio 2.17
operating ratio 6.4
persistency 85.07
commission ratio 4.1
settlement expense
ratio 95.03
embedded value 224.02
With the help of ratios stock are compared and ranked which in
allocation of fund.

38. ALLOCATION OF FUND
Assets under management
(AMU)=10,00,00,000
companies fund allocation
nmdc 4,00,00,000
sbilife 4,00,00,000
coal india 2,00,00,000
10,00,00,000
ASSET UNDER MANAGEMENT = 10,00,00,000
compa
nies 22-Apr
no of
share
s
allocatio
n
cash in
hand
(fixed) 23-Apr
no of
shares
allocatio
n
nmdc 75
5,33,3
33
4,00,00,0
00
3999997
5 76.95 5,33,333
4103997
4.35
sbi life 706.8
56,59
3
4,00,00,0
00
3999993
2.4 719 56,593
4069036
7
coal
india 141
1,41,8
44
2,00,00,0
00
2000000
4 140.9 1,41,844
1998581
9.6
10,00,00,
000
9999991
1.4
1017161
61
89
nav
10.1716
161
change
in sector
%chang
e in nav 1.71
INDEX
OF
MINING
665.7
7
INDEX
OF
MINING 670.35
0.687925
259
INDEX
OF
INSURA
NCE
796.9
1
INDEX
OF
INSURA
NCE 784.54
-
1.552245
548
NET ASSET VALUE = AUM/NO. OF UNITS, NAV = 10,00,00,000/1,00,00,000 = 10

39. MINING AND INSURANCE SECTOR FUND
About the fund
Objective: To make long term investment for investor by sectorial analysis in
fundamentally strong and large cap companies.
Strategy: To build actively and manage equity portfolio of fundamentally
strong large cap stocks. The fund will invest in companies having financial
strength robust efficient and visionary management enjoying competitive
advantage along with growth prospects and adequate market liquidity the
fund will adopt discipline yet fixable long-term approach towards investing
with a focus on generating long term capital appreciation
NAV as on 22nd
April 2020: ₹10 Benchmark: MINING AND INSURANCE INDEX
ASSET held as on 22nd
April 2020 ₹10CR Fund Manager: Mr. Hrishikesh Himesh
SECURITIES HOLDINGS
EQUITY 100%
NMDC 40%
SBI LIFE 40%
COAL INDIA 20%
100%
0%
AUM
EOUITY= 10cr.(100%)

40. Gains from this study,
I got to know about selection of stock in portfolio using PE and PEG ratio. I
tracked these stocks for these 3 months, and saw the fluctuation and changes in
these stocks. Investment is for long term; anyone should not rely on intraday
trading for regular income or wealth appreciation. Mutual fund is one of the best
available investment options for equity market, with less knowledge about
equities.
Limitations of the study
We made a virtual mutual fund with the help of large cap companies. Anyone
can choose a mutual fund as per their risk-taking ability. In our study, we just
made the fund using large cap companies, and PE, PEG ratio basis. More
financial analysis and modelling can be done for forecasting purpose.

41. TAX Evasion
What Is Tax Evasion?
Tax evasion is the illegal evasion of taxes by corporations, and trusts. Tax
evasion often entails taxpayers deliberately misrepresenting the true state of their
affairs to the tax authorities to reduce their tax liability and includes dishonest tax
reporting, such as declaring less income, profits or gains than the amounts
actually earned, or overstating deductions.
Tax evasion is an activity commonly associated with the informal economy. One
measure of the extent of tax evasion (the "tax gap") is the amount of unreported
income, which is the difference between the amount of income that should be
reported to the tax authorities and the actual amount reported.
Those caught evading taxes are generally subject to criminal charges and
substantial penalties. To will fully fail to pay taxes is a federal offense under
the Internal Revenue Service (IRS) tax code.
Tax Evasion vs. Tax Avoidance
Tax Avoidance
Tax avoidance is the legitimate minimizing of taxes, using methods included in
the tax code. Businesses avoid taxes by taking all legitimate deductions and by
sheltering income from taxes by setting up employee retirement plans and other
means, all legal and under the Internal Revenue Code or state tax codes. You may
have heard of "tax shields" These shields are for protection against higher taxes,
and they are the strategies of tax avoidance.
Example: Taking legitimate tax deductions to minimize business expenses and
thus lower your business tax bill.
Tax Evasion
Tax evasion, on the other hand, is the illegal practice of not paying taxes, by not
reporting income, reporting expenses not legally allowed, or by not paying taxes
owed. In this situation, the phrase "ignorance of the law is no excuse" comes to
mind.
Examples:

42.  Under-reporting income (claiming less
income than you actually received from a
specific source.
 Not reporting an income source
 Providing false information to the IRS
about business income or expenses
 Deliberately underpaying taxes owed
 Substantially understating your taxes (by
stating a tax amount on your return which is
less than the amount owed on the income you
reported).
 Filing false payroll tax reports or failing to
file these returns.
 Deliberately underreporting or omitting
income.
 Overstating the amount of deductions
 Keeping two sets of books.
 Making false entries in books and records
 Claiming personal expenses as business
expenses.
 Claiming false deductions
 Hiding or transferring assets or income.
Tax evasion is part
of an overall
definition of tax
fraud, which is
illegal intentional
non-payment of
taxes. Fraud can be
defined as "an act of
deceiving or
misrepresenting,"
and that's what
someone evading
taxes does —
deceiving the IRS
about income or
expenses. The IRS
Criminal
Investigation
unit prosecutes cases
under the broad
designation of "tax
fraud."
NOTE

43. Double Taxation
What Is Double Taxation?
Double taxation is a tax principle referring to income taxes paid twice on the
same source of income. It can occur when income is taxed at both the corporate
level and personal level. Double taxation also occurs in international trade or
investment when the same income is taxed in two different countries.
For example, corporate profits may be taxed first when earned by the corporation
(corporation tax) and again when the profits are distributed to shareholders as
a dividend or other distribution (dividend tax).
Many countries have entered into tax treaties (also called double tax
agreements, or DTAs) with other countries to avoid or mitigate double taxation.
Such treaties may cover a range of taxes including income taxes, inheritance
taxes, value added taxes, or other taxes. Besides bilateral treaties, multilateral
treaties are also in place. For example, European Union (EU) countries are parties
to a multilateral agreement with respect to value added taxes under auspices of
the EU, while a joint treaty on mutual administrative assistance of the Council of
Europe and the Organisation for Economic Co-operation and
Development (OECD) is open to all countries. Tax treaties tend to reduce taxes
of one treaty country for residents of the other treaty country to reduce double
taxation of the same income.
The provisions and goals vary significantly, with very few tax treaties being
alike. Most treaties:
 define which taxes are covered and who is a resident and eligible for benefits.
 reduce the amounts of tax withheld from interest, dividends, and royalties paid
by a resident of one country to residents of the other country.
 limit tax of one country on business income of a resident of the other country
to that income from a permanent establishment in the first country.
 define circumstances in which income of individuals resident in one country
will be taxed in the other country, including salary, self-employment, pension,
and other income.
 provide for exemption of certain types of organizations or individuals, and
 provide procedural frameworks for enforcement and dispute resolution.
The stated goals for entering into a treaty often include reduction of double
taxation, eliminating tax evasion, and encouraging cross-border trade efficiency.

44. KEY TAKEAWAYS
 Double taxation refers to income tax being paid twice on the
same source of income.
 Double taxation occurs income is taxed at both the corporate
level and personal level, as in the case of stock dividends.
 Double taxation also refers to the same income being taxed by
two different countries.
 While critics argue that dividend double taxation is unfair,
advocates say that without it, wealthy stockholders could
virtually avoid paying any income tax.

45. INDIA
India has comprehensive DTAAs with 88 countries, out of which 85 have entered
into force Th.is means that there are agreed rates of tax and jurisdiction on
specified types of income arising in a country to a tax resident of another country.
Under the Income Tax Act 1961 of India, there are two provisions, Section 90
and Section 91, which provide specific relief to taxpayers to save them from
double taxation. Section 90 (Bilateral Relief) is for taxpayers who have paid the
tax to a country with which India has signed DTAA, while Section 91 (unilateral
relief) provides benefit to tax payers who have paid tax to a country with which
India has not signed a DTAA. Thus, India gives relief to both kinds of taxpayers.
The rates differ from country to country.
Example of DTAA benefit - Suppose interest on NRI bank deposits attracts 30
per cent TDS (tax deduction at source) in India. Since India has signed DTAAs
with several countries, tax may be deducted at only 10 to 15 per cent instead of
30%.
In case of any conflict between the provisions of the Income Tax Act or DTAA,
the provisions of DTAA would prevail.
A large number of foreign institutional investors who trade on the Indian stock
markets operate from Singapore and the second being Mauritius. According to
the tax treaty between India and Mauritius, capital gains arising from the sale of
shares are taxable in the country of residence of the shareholder and not in the
country of residence of the company whose shares have been sold. Therefore, a
company resident in Mauritius selling shares of an Indian company will not pay
tax in India. Since there is no capital gains tax in Mauritius, the gain will escape
tax altogether.
The Protocol for amendment of the India-Mauritius Convention signed on 10
May 2016, provides for source-based taxation of capital gains arising from
alienation of shares acquired from 1 April 2017 in a company resident in India.
Simultaneously, investments made before 1 April 2017 have been grandfathered
and will not be subject to capital gains taxation in India. Where such capital gains
arise during the transition period from 1 April 2017 to 31 March 2019, the tax
rate will be limited to 50% of the domestic tax rate of India. However, the benefit
of 50% reduction in tax rate during the transition period shall be subject to the
Limitation of Benefits Article. Taxation in India at full domestic tax rate will take
place from financial year 2019-20 onwards.
The revised DTAA between India and Cyprus signed on 18 November 2016,
provides for source based taxation of capital gains arising from alienation of
shares, instead of residence based taxation provided under the DTAA signed in
1994. However, a grandfathering clause has been provided for investments made
prior to 1 April 2017, in respect of which capital gains would continue to be taxed

46. in the country of which taxpayer is a resident. It also provides for assistance
between the two countries for collection of taxes and updates the provisions
related to Exchange of Information to accepted international standards.
The India-Singapore DTAA at present provides for residence based taxation of
capital gains of shares in a company. The Third Protocol amends the DTAA with
effect from 1 April 2017 to provide for source based taxation of capital gains
arising on transfer of shares in a company. This will curb revenue loss, prevent
double non-taxation and streamline the flow of investments. In order to provide
certainty to investors, investments in shares made before 1 April 2017 have been
grandfathered subject to fulfilment of conditions in Limitation of Benefits clause
as per 2005 Protocol. Further, a two-year transition period from 1 April 2017 to
31 March 2019 has been provided during which capital gains on shares will be
taxed in source country at half of normal tax rate, subject to fulfilment of
conditions in Limitation of Benefits clause.
The Third Protocol also inserts provisions to facilitate relieving of economic
double taxation in transfer pricing cases. This is a taxpayer friendly measure and
is in line with India’s commitments under Base Erosion and Profit Shifting
(BEPS) Action Plan to meet the minimum standard of providing Mutual
Agreement Procedure (MAP) access in transfer pricing cases. The Third Protocol
also enables application of domestic law and measures concerning prevention of
tax avoidance or tax evasion. Singapore’s investment of $5.98 billion has over
taken Mauritius’s investment of $4.85 billion as the single largest investor for the
year 2013-14.

47. India-Mauritius DTAC
Background
The India Mauritius Tax agreement is in force since 1983, Mauritius in the
meantime have been the single largest Foreign investment destination to India.
There are multiple reasons for which various countries and companies have
invested in India through Mauritius. Two of those reasons are DTAC and minimal
tax in Mauritius.
Why and How was DTAC helping Mauritius in becoming a tax haven?
 Thirty-three years back Government of India negotiated a Double Taxation
Avoidance Agreement (DTAA) with Mauritius.
 Under this, tax payers who reside in one country and earn their income in another
would not be taxed twice for the same income. However, this had, in effect, led
to a situation where the entities concerned would avoid paying taxes in both
countries.
 Mauritius and other tax havens have almost negligible taxes. This is encouraging
resident Indian entities to route their investments back to India through Mauritius
and avoid paying taxes.
 At $64billion, it is the largest foreign direct investment source for India,
accounting for 38% of total FDI.
 Investors route money into India through Mauritius and use double tax treaty to
prevent India from charging capital gains tax on these investments.
 The result of this arrangement is that from 2000 to 2013, $72 billion has flowed
into India from Mauritius. This represents 38% of cumulative equity inflows into
India over this period.
 According to the tax treaty between India and Mauritius, capital gains can only
be taxed in Mauritius, the same treaty exist with 16 other countries.
 But with only 3% of capital gains tax, the quality of its service and regulatory
framework, its pool of professionals, geographical proximity, cultural affinities
and long historical ties with India, Mauritius is the most attractive conduit for
investments into India.
Why DTAC has been changed now?
DTAC have been the bone of contention between both the countries for the
following reasons:

48. 1. Limitations on Benefits clause: India wants to incorporate in the
DTAC, it will limit the tax benefits only to the residents of Mauritius and
would help India curb its tax losses.
2. Round Tipping and Black Money: Lots of black money flow back to
Indian economy via round tipping through Mauritius
3. Hot Money: The amendment to the agreement would also help control the
hot money inflow in India.

49. General anti-avoidance rule (GAAR)
General anti-avoidance rule (GAAR) is an anti-tax avoidance law under
Chapter X-A of the Income Tax Act, 1961 of India. It is framed by the
Department of Revenue under the Ministry of Finance. GAAR was originally
proposed in the Direct Tax Code 2009 and was targeted at arrangements or
transactions made specifically to avoid taxes. GAAR provisions were also present
in the Direct Tax Code 2010 and Direct Tax Code 2013. However, the Direct Tax
Code did not see the light of the day and was not implemented in India. GAAR
was finally introduced in India by then Finance Minister, Pranab Mukherjee, on
16 March 2012 during the Budget session introduced vide Finance Act, 2012.
However, it was considered controversial because it had provisions to seek taxes
from past overseas deals involving local assets retrospectively.
During the 2015 Budget presentation, Finance Minister Arun Jaitley announced
that its implementation will be delayed by 2 years. GAAR is finally applicable
from assessment year 2018-19.
BACKGROUND
The Parthasarthy Shome Panel was set up in 2012 for drawing up the final
guidelines on GAAR. In 2007, Vodafone entered the Indian market by
buying Hutchison Essar. The deal took place in Cayman Islands. The Indian
government claimed over US$2 billion were lost in taxes. In September 2007, a
notice was sent to Vodafone. Vodafone claimed that the transaction was not
taxable as it was between two foreign firms. The government claimed that the
deal was taxable as the underlying assets involved were located in India. In India,
the real discussions on GAAR came to light with the release of draft Direct Taxes
Code Bill (popularly known as DTC 2009) on 12 August 2009. It contained the
provisions for GAAR. Later on the revised Discussion Paper was released in June
2010, followed by tabling in the Parliament on 30 August 2010, a formal Bill to
enact the law known as the DirectTaxes Code 2010. The same was to be made
applicable wef 1 April 2012. However, owing to negative publicity and pressures
from various groups, GAAR was postponed to at least 2013, and was likely to be
introduced along with the Direct Tax Code (DTC) from 1 April 2013. Moreover,
an Expert Committee has been set by Prime Minister (Manmohan Singh) in July
2012 to vet and rework the GAAR guidelines issued in June 2012. The latest
reports (September 2012) indicates, it may not be implemented even for 3 years
i.e. this will be postponed for 3 years (2016–17).
Some of recent developments about GAAR are:

50.  (a) 16 March 2012: Finance Minister, Pranab Mukherjee takes a tough stand
and announces that the government will crack down on tax avoidance
effective from fiscal year 2012–13.
 (b) 7 May 2012: Finance Minister, Pranab Mukherjee forced to eat his words
and agreed to defer GAAR by a year as his announcements spooked oversea
investors.
 (c) 28 June 2012: Finance Ministry releases first draft on GAAR; There is
wide criticism of the provisions.
 (d) 14 July 2012: PM, Manmohan Singh, forms review committee under
Parthasarthy Shome, for preparing a second draft by 31 August and final
guidelines by 30 September 2012.
 (e) 1 September 2012: Shome Committee recommends to defer GAAR by
three years. It also recommends some more investor friendly measures.
 (f) 14 January 2013: Gov partially accepts the recommendations of Shome
Committee and has decided to defer the same for 2 years and will now be
effective from the year 2016–17.
 (g) On 27 September 2013, Gov issued notification and as per this notification
GAAR would be applicable to only to foreign institutional investors that have
not taken the benefit of an agreement under Section 90 or Section 90A of the
Income Tax Act, 1961 or Double Taxation Avoidance Agreement (DTAA).
Thus now
 (a) investments made by foreign investors prior to August 2010 will not attract
GAAR.
 (b) GAAR provisions that will come into effect from April 2017 and (c) apply
only to business arrangements with a tax benefit exceeding Rs 30 million.
On 20 January 2012, the Supreme Court of India gave the verdict in favour of
Vodafone, saying that Vodafone did not owe any capital gain taxes. On 16
March, GAAR was presented to the Parliament by Pranab Mukherjee, who stated
that its objective was to counter aggressive tax avoidance schemes.

51. SUMMARY
The regulation allows tax officials to deny tax benefits, if a deal is found without
any commercial purpose other than tax avoidance. It allows tax officials to
target participatory notes. Under GAAR, the investor has to prove that the
participatory note was not set to avoid taxes. It also allows officials to
deny double taxation avoidance benefits, if deals made in tax havens were found
to be avoiding taxes.
REFERENCE
1. https://www.thebalancesmb.com/tax-avoidance-vs-evasion-
397671
2. https://www.investopedia.com/terms/d/double_taxation.asp
3. http://www.ias4sure.com/wikiias/gs2/india-mauritius-dtac/
4. https://en.wikipedia.org/wiki/General_anti-
avoidance_rule_(India)

52. CERTIFICATION AND OTHER WORK
Currently pursuing Goods and Services Tax course from Swayam learning portal
the national testing agency has postponed the examination May 2020 for
January semester due to lockdown on account of covid-19.
Attended the webinar on economic recovery post covid-19 the road ahead held
on 13 May 2020 organized by the ICFAI University.
Our team has developed website (http://apnainvestment.in/) for sharing our
learnings during our summer internship programme. Through this website we
want to convey the analysis of various sector of market which will assist people
for making investment in securities. There are also various research reports are
available on website which was also a part of our learning during internship.
We have put our best efforts to make this platform to provide to the best
knowledge for investment purpose.