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What's New

28/01/2020

Clarifications in respect of ITR AY 2019-20

Multi Vehicle Option for e-Way bill

FAQs on Financial Services Sector.

Budget 2020 Wishlist: Here are the key challenges for automobile sector

Sector snapshot
The FY20 year-to-date (April to December) domestic sales volumes in all vehicular segments witnessed a sharp decline with passenger vehicles and commercial vehicles reporting 16% and 21% drop, respectively. The key reason is subdued customer demand due to liquidity crunch and higher cost of finance and insurance. Like the last quarter, firms will focus across its value chain to ensure smooth transition to BS-VI.
Key challenges
Higher upfront cost: Customers are required to pay a higher upfront insurance premium for two - wheelers and four - wheelers and hence, sales volumes have dipped in these segments Shift to BS-VI: The shift to BS-VI by April 2020 will be challenging for automakers as it will result in price increase which is likely to adversely impact demand
Liquidity crunch: The demand was impacted due to squeeze in the NBFC financing Industry expectations Reduction in GST rate applicable to automobiles to 18% from the current 28% to absorb the extra price impact of shift to BS-VI A cut in personal income tax rate will provide more disposable income in the hands of consumers, which could lead to automotive demand recovery
PwC quote
“FY20 has been one of the most challenging years for the sector due to record decline in demand, increased costs and liquidity crunch. We expect the Budget to address the immediate concerns of demand revival and create an environment for sustainable growth in the sector”
Industry voice
"The Budget announcements will be key to setting the tone for 2020 for the industry. The government’s announcements on promotion of EVs is encouraging. However, we feel more work needs to be done to promote EV adoption in India not only in public transport but among private customers as well.” We hope that the government provides the right policy, incentives, and charging infrastructure to put more EVs on the road. It should also look at providing incentives to stakeholders for sourcing critical raw materials for EV battery manufacturing in India. This will enable a strong EV-centric ecosystem and will be beneficial for the long-term growth of this high-potential space. The government should also look at offsetting the increase in GST costs due to the recently-introduced BS-VI norms to stimulate market demand for ICE vehicles." - Rajeev Chaba, President & managing director, MG Motor India.
Business Standard, 28th January 2020

Budget 2020: Time for govt to reintroduce wealth tax, says Abhijit Banerjee

India had passed the Wealth Tax Act, 1957 which was levied on an individual, a Hindu Undivided Family and a Corporate entity on its valuation, which was repealed in April 2016 Considering the current stage of inequality in the country, it is time for India to reintroduce wealth tax in the Union Budget 2020 and also focus on redistribution of wealth, Nobel laureate Abhijit V Banerjee said on Monday. “Given the amount of inequality now, wealth tax is completely sensible and more redistribution is required,” he said at the Tata Steel Kolkata Literary Meet. India had passed the Wealth Tax Act, 1957 which was levied on an individual, a Hindu Undivided Family and a Corporate entity on its valuation, which was repealed in April 2016.
However, Banerjee remained skeptical about the current government's enthusiasm to introduce it. Responding to a question about his views on the Centre's disinvestment drive, Banerjee said, “I would love to sell out the prestigious PSUs.” The 58-year old economist said that corporate tax cut hasn’t yielded the desired results and corporate India is sitting on a pile of cash. Instead, he stressed the need to refinance the banking sector and give a boost to the infrastructure segment. Banerjee, however, said that refinancing the banking sector will not yield results in the near future, rather will take time. Speaking on government programmes, he said that the Centre has undertaken “very expensive new schemes” like Ayushmann Bharat which once “properly implemented” will address some key welfare issues. Other schemes like Ujjwala and Swachh Bharat are also “costly” according to him.
Asked about his viewpoint on migration in light of the ongoing protests around CAA and NRC, he said that migration is better for the economy as migrants put in their best to compete with the local population. He reasoned that migration is the result of either civil wars as in the case of West Asia or an economic catastrophe seen in the case of Greece from where around 50,000-60,000 people migrated elsewhere.
Business Standard, 28th January 2020

27/01/2020

SMS for Week ended 27-01-2020
S.No.
Messgae
1. Today (20.01.20) is Last Day to file GSTR-3B Return Summary by Regular & Casual Suppliers, GSTR-5 &5A by Non-Resident foreign Taxable person for Dec19.Webtel
2. Continue to file GSTR-3B by 20 of next month if turnover in last year exceeds 5cr. For others, due date to be 22/24 of next month as per State of Registration.

25/01/2020

India faces first fall in direct taxes in at least two decades: Report

Government was targetting direct tax collection of Rs 13.5 trillion ($189 billion) for the year ending March 31 - a 17% increase over the prior fiscal year Corporation and income tax collection for the current year is likely to fall for the first time in at least two decades, over half a dozen senior tax officials told Reuters, amid a sharp fall in economic growth and cut in corporation tax rates. Prime Minister Narendra Modi’s government was targeting direct tax collection of ~13.5 trillion ($189 billion) for the year ending March 31 — a 17 per cent increase over the last fiscal year. However, a sharp decline in demand has stung businesses, forcing companies to cut investment and jobs, denting tax collections and prompting the government to forecast 5 per cent growth for this fiscal year — the slowest in 11 years. The tax department had managed to collect only ~7.3 trillion as of January 23, more than 5.5 per cent below the amount collected by the same point last year, said a senior tax official. After collecting taxes from companies in advance for the first three quarters, officials typically garner 30-35 per cent of annual direct taxes in the final three months, the data for the past three years shows.
But eight senior tax officials interviewed by Reuters said despite their best efforts, direct tax collections this fiscal year were likely to fall below the ~11.5 trillion collected in 2018-19. “Forget the target. This will be the first time that we’ll see a fall in direct tax collection ever,” said a tax official in New Delhi. He estimates that direct tax collections for this year could end up roughly 10 per cent below fiscal 2019. Direct taxes typically account for about 80 per centof the government’s projections for annual revenue, and the shortfall may leave the government needing to boost borrowing to meet expenditure commitments. The tax officials also say that a surprise cut in headline corporation tax rate last year aimed at wooing manufacturers and boosting investment in Asia's third-biggest economy is another key reason behind the sluggish tax collections. "We'll be very happy if we can even breakeven with what we collected last year," said another senior tax official in the financial capital Mumbai, the biggest tax generator, accounting for about a third of revenues from direct taxes. "But given the state of the economy, I'm not too hopeful."
Business Standard, 25th Januay 2020

24/01/2020

Budget 2020: Prakash Javadekar hints at 'action plan' for economic revival

Markets to open for regular trading on February 1Information and Broadcasting Minister Prakash Javadekar on Wednesday said the government would unveil its “plan of action” in the Budget to boost the economy, which is grappling with a slowdown. The Budget is scheduled to be presented on February 1. The economy is on the path of revival and nobody should have a pessimistic view about it, said Javadekar said in response to a query about the downward revision of India’s growth rate by the International Monetary Fund (IMF). He was speaking at a press briefing here on Wednesday after a Union Cabinet meeting. He said: “From the Union Budget, you will get the government’s plan of action. Our fundamentals are very strong.” “Therefore, nobody should create a pessimistic view about Indian economy,” he added. Asserting that the economy was on the path of “revival”, Javdekar said there are ups and downs in world economy, and it reflects on countries. While industry expects the government to announce growth-boosting measures, the Centre is struggling with a resource crunch with tax collections and disinvestment not proceeding in line with projections made in the Budget for 2019-20.
Official advance estimates had pegged India’s gross domestic product (GDP) growth at 5 per cent for the current financial year (financial year 2019-20, or FY20), compared to 6.8 per cent in the previous year. However, IMF projected the growth to go down even further to 4.8 per cent for FY20. This triggered a war of words between the ruling Bharatiya Janata Party (BJP) and the Congress. BJP spokesman on economic affairs Gopal Krishna Agarwal expressed doubts about the IMF’s projections.
ALSO READ: Budget 2020: Laundry list of demands from various sectors of the economy
“We have doubts on IMF projections, whether they have taken into considerations the impact of Narendra Modi government initiatives like NIP (national infrastructure pipeline), credit line for MSME (micro, small and medium enterprises) and NBFC (non-banking financial company) and mega exercise on Budget, IBC and GST (goods and services tax) reforms. GDP growth rate has bottomed out and we will see significant growth ahead,” Agarwal tweeted. IMF projected India’s economic growth to recover to 5.8 per cent in FY21 and 6.5 per cent in FY22. It said slowdown in India’s economic growth rate would pull down global economic expansion over these two years. Agarwal said India is affected by global slowdown and not the causes that the IMF listed. Earlier, senior Congress leader P Chidambaram claimed an attack on IMF and its chief economist Gita Gopinath by government ministers was imminent. He also alleged that the IMF’s growth figure of 4.8 per cent is after some “window dressing” and he won't be surprised if it goes even lower.
Markets
The equity markets will remain open for regular trading on February 1 (Saturday), the day of the Union Budget, both the NSE and BSE said in a notification on Wednesday. The markets tend to be volatile on the Budget day as investors react to the measures announced by the finance minister that impact economy and corporate earnings. The last time the Budget was presented on a Saturday was in 2015. Back then, too, the stock markets were kept open for regular trading hours, which is 9 am to 3:30 pm.
Business Standard, 23rd January 2020

Tax Sops, Higher Rural, Infra Spends on Wish List

The Union budget for FY21 will be the most watched event by market participants in the near term. With India's economic growth slipping to its lowest level in six years, investors have high expectations from the upcoming budget to provide a stimulus to revive the economy, brokerages said. Analysts believe that any disappointment on this front could lead to a sharp correction in the market. Indian markets have gained about 15% from September 20 when the government had announced a cut in corporate tax rates. Brokerages believe the government is likely to miss the fiscal deficit target of 3.3% of the GDP for this fiscal year and may also miss the divestment target. Here's what the brokerages are expecting from the upcoming budget which the government will be presenting on February 1.
The Economic Times, 24th January 2020

Sebi Betting on AI to Keep a Tab on Social Media Posts

The Securities and Exchange Board of India is acquiring capabilities to keep a tab on social media posts to track market manipulations, its chief Ajay Tyagi said on Thursday. The regulator plans to create a ‘data lake’ project to augment analytical capability that would involve the use of artificial intelligence, deep learning, big data analytics, pattern recognition, and structured and natural language processing tools to spot manipulations.
“Social media platforms are increasingly being used by manipulators for market manipulation. Regulators worldwide are increasingly acknowledging that there is much more surveillance input that can be gained from such social media platforms,” Tyagi said at a research conference organised by Sebi and National Institute of Securities Markets (NISM).


“We want to acquire technology and unstructure data analysis because structured data analysis is not helping much, manipulators use all sort of things. So, analysis of what is coming in social media, which largely is unstructured data, and language processing, that is a must to see in addition to pricing volume changes. We intend to acquire that technology.” A tender has been floated for acquiring the technology. In recent times, Sebi has been doing social media screening related to corporate announcements and price volume issues in insider-trading cases. “We are anyway doing data analysis and seeing unstructured data in our surveillance department and trying to correlate with pricing volume data to come to better analysis,” Tyagi said.

Last year, in a case of frontrunning of several funds of the Fidelity Group, the regulator checked the profile of a trader at a matrimonial site in order to establish his link with the family members. In another insider-trading case related to Deep Industries, Sebi checked the Facebook profiles of suspected persons to ascertain whether they were connected to each other. The regulator found that the entities involved were friends on the social networking platform and had ‘liked’ each other’s pictures posted on the site.
The Economic Times, 24th January 2020

23/01/2020

Market expects the Budget to focus on fiscal prudence, raising revenue

We expect the Budget to contain some pro-market/economy measures, says Sanjay Mookim, India Equity Strategist at BofAML Credible fiscal numbers and gradual consolidation, rising revenue via strategic divestment and asset monetisation are some of the measures that the markets expect from the Budget for financial year 2020-21 (FY21) scheduled to be announced on February 1 amid a weakening economy. ALSO READ: Budget 2020: All eyes on tax receipts as mop-up dips by Rs 1.91 trillion Over the past few quarters, gross domestic product (GDP) growth has slowed to a 26-quarter low of 4.5 per cent in quarter ended September 2019, with risks to the economy stemming from both domestic (risk aversion in the financial sector and corporate sectors and weak private capex cycle) and external fronts (uncertainty caused by US-China trade tensions). On its part, the Reserve Bank of India (RBI) has cut the key lending rate / repo rate by 135 basis point (bps) in 2019 to a 10-year low of 5.15 per cent to prop-up growth.
Combined with a likely miss of Rs 850 billion on divestment, the total net collection for the government will likely be behind by Rs 2.8 trillion (1.4 per cent of GDP), wrote analysts at at Bank of America Merrill Lynch (BofAML) in a recent report. In addition, the central government has payables of around Rs 3 trillion for food, fertiliser and fuel subsidies, and may have to pay states around Rs 600 billion for a GST (goods and services tax) shortfall. These, according to BOfA, should be corrected in the FY21 budget by limiting expenditure growth to below revenue growth. "We expect the Budget to contain some pro-market/economy measures. Tax cuts (lower income categories, long-term capital gains), real estate incentives and credit support for small businesses are potential candidates," wrote Sanjay Mookim, India Equity Strategist at BofAML in a recent report.
ALSO READ: Investor expectations from the Budget
Though the impact of Budget on the market has been on the wane since the past few years, aruge analysts at Morgan Stanley, factors according to them that will likely have maximum impact include the government spending plan on infrastructure and farmers, a credible fiscal deficit target, and re-alignment of direct taxes (including long-term capital gains tax for all classes and scale of privatisation. "We expect the budget to focus on credible fiscal numbers and gradual consolidation, continue to favour investment-driven growth with redistributive spending likely to remain in line with nominal GDP growth, provide strong intent to raise additional resources through strategic divestment and asset monetisation and also provide a credible medium-term fiscal consolidation plan and improve the health of the public sector balance sheet," wrote Ridham Desai, head of India research and India equity strategist at Morgan Stanley in a co-authored report with Sheela Rathi, Upasana Chachra and Nikita Jain.
ALSO READ: How well did the Modi govt manage its fiscal deficit in the last 6 years?
Morgan Stanley expects the central government’s fiscal deficit to gradually narrow to 3.5 per cent of GDP in F2021 (3.7 per cent estimated for FY20). As regards growth, India Ratings and Research (Ind-RA) sees a marginal uptick in GDP for FY21 at 5.5 per cent with risks to the downside. "Ind-Ra expects the shortfall in the tax plus non-tax revenue to result in the fiscal deficit slipping to 3.6 per cent of GDP (budgeted 3.3 per cent) in FY20, even after accounting for the surplus transferred by the RBI. A continuance of low GDP growth even in FY21 means subdued tax revenue and limited room for stepping-up expenditure," their analyst said.
Business Standard, 23rd January 2020

22/01/2020

Budget 2020: All eyes on tax receipts as mop-up dips by Rs 1.91 trillion

The numbers become all the more important because actual tax collections fell short by Rs 1.91 trn compared to what was projected in 2018-19. With just days to go before the Union Budget 2020-21 is presented, all eyes are on tax receipts for the current fiscal year (April 2019-March 2020, or FY20), which would be revised in the Budget. The numbers become all the more important because actual tax collections fell short by Rs 1.91 trillion compared to what was projected in 2018-19. Besides, the Budget for FY20 did not give actual figures for 2018-19, but the revised numbers given in the interim Budget. The actual numbers missed the revised estimates figures by Rs 1.68 trillion in 2018-19. The growth projected in revenue collections was just 9.47 per cent for FY20 compared to the revised estimates of 2018-19. However, it meant a growth of 18.31 per cent compared to the actual numbers of FY19.
ALSO READ: Budget 2020: Expect Bharatmala allocation to rise to Rs 1.01-trn, says ICRA The first year of the Modi government in the previous stint (2014-2019) also registered a fall of over Rs 1 trillion compared to initial projections for tax collections. Then Finance Minister Arun Jaitley had blamed it on his predecessor P Chidambaram whose numbers in the interim Budget were taken as it is by Jaitley. However, the interim Budget this time was presented by the Bharatiya Janata Party government, with Piyush Goyal as the finance minister.
Business Standard, 22nd January 2020

Budget: Here's a look at how 'winners' from last year's fiscal plan fared

The slump in consumption has hit the rural sector hard From banks to farmers to the property market, the gains from July Budget haven’t yet panned out as expected. In her maiden budget six months ago, Finance Minister (FM) Nirmala Sitharaman pledged to boost revenue collection by 13 per cent, narrow the fiscal deficit to 3.3 per cent of gross domestic product and spur the economy to $3 trillion by March. Things haven’t gone according to plan though, largely because of a worsening slowdown in the economy. As the FM prepares to deliver her second Budget, here’s a look at how the expected winners from last year’s fiscal plan fared: State-run banks In July, Sitharaman said the government would inject 70,000 crore of capital into state-run banks, including Union Bank of India, Bank of Baroda and Canara Bank. In August, the government followed up by announcing the biggest-ever consolidation of banks it controls to spur lending. However, that’s done little to boost credit growth, which is at a three-year low and has weighed on profitability of banks, including State Bank of India.
Rural India The July Budget gave bigger allocations for rural housing, roads and programmes that support small businesses producing cattle feed, measures that were seen buoying companies like Hindustan Unilever, ITC and Mahindra & Mahindra. However, the slump in consumption has hit the rural sector hard. Unilever, the parent of Hindustan Unilever, cited India’s slowdown as a reason for its weaker growth outlook. Carmakers like Mahindra, which sells SUVs and tractors, have also suffered from declining vehicle sales. Godrej Agrovet, a local animal feed and edible oil producer, bucked the trend. Aviation The government’s plan to consider further opening up foreign investment in aviation and forming an aircraft financing and leasing company remain incomplete, and carriers including SpiceJet, InterGlobe Aviation and TATA SIA Airlines are yet to see any real benefits. At the same time, the economic slowdown has meant local air traffic has been growing at low single digits from double-digits previously.
Water A plan to provide piped water to households across the country by 2024 was seen benefiting companies such as Shakti Pumps India, Jain Irrigation Systems, Kirloskar Brothers, VA Tech Wabag and PI Industries. Given the long gestation period of the programme, any gains are yet to reflect in the stock prices of most of those companies. Real estate & construction The Budget outlined plans to build 19.5 million rural homes by 2022 and continue the government’s focus on road construction — steps that would help builders like Larsen & Toubro, Dilip Buildcon, IRB Infrastructure, GMR Infrastructure, Oberoi Realty, and DLF. But domestic orders continue to be affected by the slowdown.
Business Standard, 22nd January 2020

Budget 2020 wishlist: Here are the key challenges for agriculture sector

Need improvement in fishing gear, infra for deep sea fishing, collection, storage and traceability of harvest, and processing of aqua produce At a glance Agriculture and allied sector GVA growth rate declined from 6.3% in 2017 to 2.9% in 2019 Export in terms of value of agri commo-dities and processed food jumped 7% in 2019 Erratic weather patterns disrupted agri activitie Production is expected to decline for most crops as compared to the previous years Cereals and food grains are expected to have a surplus production, while pulses and oilseeds will be short in supply as compared to demand, in the coming decade
chartKey challenges
Agri-insurance scheme is facing issues Capacity utilisation in edible oil refining has decreased from 65% to 46% in five years. High-yielding cattle can be developed by using high quality sorted semen or live embryos. Climate change and bio-security affect agri Only 52% of the potential of inland fishery has been realised so far
Industry ask
MFBY needs to be revamped in terms of design Both short- and long-term measures needed to promote indige-nous edible oil Regulatory mechanism for import of high-quality semen and live-embryo for livestock needs to be simplified Need improvement in fishing gear, infra for deep sea fishing, collection, storage and traceability of harvest, and processing of aqua produce Export needs to be supported through awareness programmes Start-ups and ag-tech promotion A multi-faceted, syste-mic approach needed for climate change issue There is a need for planning in sowing, connecting various markets digitally for a better price discovery mechanism, and regular flow of marketable surplus
Ajay Kakra Leader - Food and Agriculture, PwC IndiaPwC point of view“There is a huge potential for investment in various sub-sectors across thematic areas such as insurance, marketing infrastructure, cold chain and food processing. Policy thrusts in the right area can significantly improve performance of the sector. However, climate change poses a huge threat” Shailendra Jagtap, MD & CEO John Deere India Industry voice The agri sector needs priority and attention. Looking at this sector holistically across the value chain, addressing every stage, from farm to fork, shall prove beneficial. The entire crop diversification needs a robust incentive and implementation plan”
Business Standard, 22nd January 2020

21/01/2020

For First Time, RBI Releases Minutes of its Board Meeting

The Reserve Bank of India has taken a step in improving transparency of its business at the board meetings by releasing the minutes of the meeting, for the first time. While the nature of the board is that of advisory in nature, its deliberations have evinced much interest when Urjit Patel was governor during which time the board was divided on its role and functions. The minutes disclosed that the 579th central board meeting held in October 11 had deliberated upon, among several other routine things, the issues related to the financial sector and the regulatory and supervisory architecture of commercial and cooperative bank as well as non-bank lenders. Board members, including finance secretary Rajiv Kumar, were apprised of the steps taken to strengthen supervision, which has been put on questions following the failures of IL&FS and PMC Bank.
The RBI has integrated the supervision functions into a unified Department of Supervision and regulatory functions into a unified Department of Regulation from November 1, 2019. Members at board meeting, held in Chandigarh, have also given their approval for making their presentations public. Ever since Shaktikanta Das took over the reins at RBI, the channels of communication with outside stakeholders have opened up — a deviation from the practices during his predecessor Urjit Patel. The Chandigarh meeting, whose minutes have come out with a lag, has also decided to change the unit in balance sheet and income statement to “amount in rupees crore” instead of “amount in rupees billion”. Another central board meeting took place in Bhubaneswar in December.
The Economic Times, 21st January 2020

20/01/2020

SMS for Week ended 20-01-2020
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1 Today (13.01.2020, Monday) is the Last date to file GSTR-6 (Return of ISD) for the month of December 2019. Regards Webtel
2 GSTGyan 1448. Dept may not allow availment of ITC where other conditions like proper bill are satisfied but tax not paid by seller. Rule 86A(1)(b) wef 26.12.19.
3 15.1.20(Wed) is extended last date for Sabka Vishwas, a dispute resolution-cum-amnesty scheme for settling pending disputes of Service Tax & Excise. Rgds Webtel
4 Today(15.01.20) is the last date of TCS return for all collectors forquarter ending Dec 19 & for e-payment of PF & ESI for Dec,19 month.Regards Webtel.
5 Today (15.01.20,Wednesday) is last date for issuing certificate of TDS on payment made for purchase of property in November 2019.Regards Webtel.
6 Today (20.01.20) is Last Day to file GSTR-3B Return Summary by Regular & Casual Suppliers, GSTR-5 &5A by Non-Resident foreign Taxable person for Dec19.Webtel
Sebi may Raise Trading Margins in Commodities

The Securities and Exchange Board of India (Sebi) has been reviewing the margining framework in the commodity derivatives segment in the aftermath of the castorseed default by certain trading members and their clients on the country’s largest farm derivatives bourse NCDEX, two persons aware of the development told ET. They added that margins to trade could consequently increase. “Post the castor crisis on the exchange, it has become imperative to review and strengthen the margining framework, especially in narrow commodities and Sebi’s Commodity Derivatives Market Regulation Department (CDMRD) would complete this task within the next few months,” said one of the persons. “This could mean margins to trade increasing.” “The focus (of margin review) will be on narrow commodities as prices of these could be more susceptible to manipulation than broad commodities like say wheat, soyabean, gold and silver, etc,” said the other person.
Typically, exchanges and the regulator use margins and position limits as a means to prevent excessive speculation on a counter. To trade, a participant has to pay a margin to her broker which is normally a fraction of the commodity contract value. For example, on castor, the margin to trade on Friday morning was 26.81% with an additional margin of 5% each on the long (buy) and short (sell) side. At contract value of around ?2.05 lakh, a long or short would have to put up ?65,210 to trade 5 tonnes. That implies over 3 times leverage. Prior to the castor fiasco in September-October last year, the margin was in single digits, offering more than 10 times leverage. “High-leverage increases risk as a large price movement either side could lead to huge losses,” said Navin Mathur, director (commodities & currencies) at Anand Rathi. “Strengthening the margin framework is one of the important ways for risk monitoring and surveillance by an exchange. It’s good that Sebi is strengthening the framework.” Narrow commodities include castor, jeera, guar, Mentha, coriander, pepper, etc while broad ones are soyabean oil, wheat, sugar, gold, silver etc.
Late last year, traders had created heavy long positions on castor, but when prices collapsed dramatically, many longs (clients and prop traders) defaulted on their mark to market margin payments, forcing the exchange’s clearing arm to use their deposits to make good payments. The clearing corporation eventually used its byelaws to extinguish the long positions of defaulting members by tearing up an equal quantity of short positions of non-defaulting members. Shorts received 12% of the settlement prices on contracts expiring through October-December plus a 5% penalty from defaulting longs. The result was a loss of faith by participants, which has since been restored. Sebi is examining a factfinding report from NCDEX which led to the castor fiasco. One of the parameters Sebi will weigh on is also that aspect of byelaws used by exchanges to prevent a systemic risk. Commodity Participants Association of India (CPAI) representing brokers will provide inputs to the regulator on strengthening the margin framework, the body’s chairman Narinder Wadhwa told ET. In November, five exchanges offering commodity derivatives segment notched turnover of ?7.43 lakh crore, Sebi data show.
The Economic Times, 20th January 2020

18/01/2020

FinMin revises target for GST collection in FY20; aims mop-up at Rs 1.5 trn

The government aims to collect Rs 10,000 crore more than what was targeted earlier at a time when all months till December in FY20 yielded less than Rs 1.1 trillion, except for April Weeks ahead of the Budget, the finance ministry has revised its target for goods and services tax (GST) collection in January and February — to Rs 1.15 trillion, from the earlier Rs 1.1 trillion. This would be achieved by detecting fraudulent input tax credit using data analytics. At a meeting convened by the Department of Revenue, under the finance ministry, the target for March was retained at Rs 1.25 trillion. This means the government aims to collect Rs 10,000 crore more than what was targeted earlier at a time when all months till December in the current financial year (FY20) yielded less than Rs 1.1 trillion, except for April.
Last month, the target for December, January, February and March was set at Rs 1.1 trillion, with one of the months to yield Rs 1.25 trillion. However, the December collection stood at Rs 1.03 trillion. Four of nine months in FY20 so far have delivered less than Rs 1 trillion in GST collections. Parag Mehta, partner at NA Shah Associates, said, “Considering the sluggish economy, it is an ambitious target. Even during the festive period of Diwali, the collections could touch only Rs 1 trillion.” The meeting, attended by senior officials of the Central Board of Indirect Taxes and Customs (CBIC) and the Central Board of Direct Taxes (CBDT), highlighted that the GST authorities would look into the mismatch of supply and purchase invoices, failure of filing returns, and over-invoicing, among other things, said sources.
The authorities would also look at fake or excess refunds availed beyond the permissible limits, plugging tax leakages, fake or huge input tax credit (ITC) claims, and data analytic review of all the refund under inverted duty structure, the sources said. Sources said that SMSs and emails will be sent to those claiming fraudulent or excess ITC, defaulters, non-filers and those who provide mismatched information in their returns or over-invoice or who have been identified through data analytics for evading tax by duping the system through rogue modus operandi. Taxpayers who have taken ITC wrongfully can voluntarily repay an amount equal to inadmissible credit before verification and punitive action is taken against them, the sources said. It is further learnt that electronic communications to such people would be followed by visits from the GST field formations.
Business Standard, 18th January 2020

17/01/2020

RBI Should Target Core Inflation at 3%: Sen

Pronab Sen, the newly appointed chairman of the Standing Committee on Statistics, has said core inflation target of 3% with an upper tolerance level of 4% and lower limit of 2% should be part of the Reserve Bank of India’s (RBI) mandate, along with the headline retail inflation. Core inflation, excluding telecom tariffs, has entered deflationary territory, which is a cause for worry, Sen, who is also India’s former chief statistician, told ET. Retail inflation rose to its highest level in more than five years in December to 7.35% following a spike in food prices, with core inflation, a measure of demand inflation, being 3.7% in December. “I’m not worried on the inflation front but more on the nature of the response. A small uptick in telecom has led to higher core inflation. Actually, there are parts of core which are staring at deflation, not inflation,” Sen said, adding that the RBI should be looking at core. On the inflation target band, he said, “The band for headline inflation is alright but incomplete without one for core inflation,” and favoured an additional target of core should be provided. Referring to a report by the Comptroller and Auditor General (CAG), which pegged India’s fiscal deficit for 2017-18 at 5.85% against the government’s reported figure of 3.46%, he said, “3.4-3.5% fiscal deficit figure is fiction. Till the time we have the real deficit number, we can’t talk of the slippage. I think it is 4.2-4.4%.” With growth expected to expand nominally to 7.5% this year, which is lower than the budget estimate of 11%, there is pressure that the fiscal deficit will breach its target of 3.3%. Sen also said that the timing for tax cuts is not right, and that monetisation of assets like highways is “doable”. “Personal income tax cuts would be good if you had fiscal space. The government should raise expenditure because that would give it bigger bang for the buck. “This is not the time for tax cuts,” Sen said, adding that there is urgency to bring money out in the system. The Economic Times, 17th January 2020

16/01/2020

Income-tax (12th Amendment) Rules, 2019.

14/01/2020

Sebi Puts Off Deadline for Splitting CMD Post by 2 Yrs

Sebi has postponed by two years the deadline for listed companies to comply with the rule on splitting the roles of chairperson and managing director. The deferral comes after intense lobbying and resistance from many top companies and industrialists to the original deadline of April 1, 2020, said people with knowledge of the matter. The capital markets regulator on Monday announced April 1, 2022, as the new date for implementing the rule. It did not give a reason for the deferral. “Sebi had received many representations, including from various trade associations, seeking more time. Considering the current economic scenario, Sebi has decided against putting additional compliance burden on corporates,” said a regulatory official, seeking anonymity.
Panic Among Promoters’
Corporates and industry bodies said the biggest objection was to the condition that the chairman and MD should not be related. Bajaj Auto managing director Rajiv Bajaj said this stipulation may have been a cause for concern. “I believe that splitting these roles better secures the interests of not just the company and its shareholders but also of the chairman and MD themselves, as it embeds clarity of responsibility and accountability across the organisation,” Bajaj said. “However, the choice of the individuals should be dictated by merit, above all else, and that ought not to be sacrificed at the altar of lesser considerations such as the relationship between them. Had Sebi not overreached with the latter requirement, perhaps industry would have implemented the former on schedule,” he added. A member of the Federation of Indian Chambers of Commerce and Industry (Ficci) said the clause about the chairman and MD not being related had caused a ‘lot of panic’ among promoters.
“The issue was that Kotak committee didn’t recommend chairman and managing director can’t be related,” said Sandip Somany, former president of Ficci. “70-80% of Indian companies are promoter-driven. There is no such rule in any part of the world. It takes 8-10 years to train our children to take over the business. This rule makes it difficult to do succession planning.” In May 2018, the regulator had mandated that the top 500 listed companies should split the roles of chairperson and MD based on the recommendations of the Uday Kotak committee on corporate governance.
‘NEGATIVE DEVELOPMENT’
Monday’s extension irked corporate governance experts. “The extension of time, by two years, for separating the positions of chairman and MD is a negative development,” said M Damodaran, former Sebi chairman. “It is not about the fact that some companies had complied or what signal it sends to the market. The decision was taken following the recommendations of the Kotak committee, and after consultations. Companies had enough time to comply,” said Damodaran, who is now the chairperson of Excellence Enablers. Corporate watchers said the delay could result in the rule getting shelved altogether. “My fears have come true. Two years’ deferment is a long time, and could effectively mean dropping off,” said Prime Database chairman Prithvi Haldea, who is a member of Sebi’s Primary Market Advisory Committee. “Though not relevant, slowing down of the economy has been used as a pressure point to postpone this regulation.”
LOW COMPLIANCE
Almost half the top 500 listed companies were yet to comply with the Sebi rule. According to data compiled by nseinfobase.com, the chairperson has an executive role in 213 companies, while the chairman is also the MD or CEO in 161 of them. The chairman is related to either the MD or CEO in 79 companies, including Bajaj Finserv, Bajaj Auto, Adani Port, Shree Cement, UPL and Lupin. “There has been pushback from corporate India as it was not ready for this change,” said Shriram Subramanian, founder and MD of InGovern Research Services, a corporate governance advisory firm. “One needs to see whether they will accept it after two years.” Till late last year, Sebi had insisted on companies complying with the rule. Chairman Ajay Tyagi said in November that companies had been given sufficient time. Sebi’s view was that separation of the roles would provide a more balanced governance structure, enabling effective supervision.
‘PROPOSAL WELL-INTENDED’
“Most promoters have for long treated their companies as proprietary firms with all powers and most gains concentrated in one family,” said Haldea of Prime Database. “It has been found worldwide that concentration of these two roles in one person or family has led to poor governance. The proposal was well-intended, and Sebi had enough reasons to mandate it,” he added. Some corporate watchers said companies could well start splitting the role now, given that there is no pressure of immediate compliance. “Even though the government has pushed back the deadline, there will be companies that will start separating the roles,” said Amit Tandon, founder and MD of Institutional Investor Advisory Services.
The Economic Times, 14th january 2020

13 /01/2020

SMS for Week ended 13-01-2020
S.No.
Messgae
1 ITR 1 & 4 notified for AY 20-21 cant be used if assessee owns property jointly with 2 or more persons. Income-tax (1st Amendment) Rules, 2020 wef 1.4.20.Webtel
2 MCA adds Additional criteria for requirement of Secretarial Audit if “outstanding loan or borrowings from banks or PFIsis RS 100 Cr. Or more’. Notf dtd 03.01.20
3 MCA increases Threshold Limit for requirement to appoint of CS in Pvt. Ltd. From Rs. 5 Cr. to Rs. 10 Cr. MCA notification dtd. 3rd January,2020.Rgds Webtel
4 Today (07.01.2020) is last date for payment of TDS/TCS Deducted/Collected in December 2019 in challan no.ITNS-281.Regards Webtel.
5 GSTGyan 1447. 10.1.20(Fri) is Last Day to file pending GSTR-1 from Jul 2017, to avoid late fee & blocking of eway bill, even if 2 consecutive GSTR-1 not filed.
6 Tomorrow (11.01.20,Saturday) is the Last date to file GSTR-1 for the month of December 2019. Regards Webtel
7 ITR 1&4AY 20-21can be used if assessee owns joint property. ITR-1 can be used if electricity/travel expenses or deposits in current accounts exceed threshold.

10 /01/2020

RBI approves Aadhaar-based video authentication as alternative to e-KYC

The Reserve Bank of India (RBI) on Thursday allowed video-based authentication as an alternative to the accepted e-KYC (know-your-customer) practices, but such verification will be Aadhaar-based, either online or offline. The need for video-KYC was proposed in the report of the Expert Committee on Micro, Small and Medium Enterprises, headed by UK Sinha, former chairman of the Securities and Exchange Board of India (Sebi) in June last year. The panel observed that currently for conducting even e-KYC, the customer has to be physically present and the whole process takes lots of data handling. On the other hand, in video-KYC, the whole process can be done simply through a video chat where the customer can display documents. Such video-KYC can be done through Google Duo or Apple FaceTime, the committee had recommended. However, experts pointed out that considering these applications were of foreign origin, the RBI would unlikely allow them. Under the data protection Bill, the central bank is unwilling to let companies store customer data in foreign locations. The RBI master direction did not mention what application can be used for video chat. But experts say it is likely that the government will have to develop such an app specifically for video-KYC whose servers will be located onshore. The RBI accepted the recommendations and amended its master direction on KYC.
Business Standard, 10th January 2020

Tax Dept allows joint property owners to file returns using simple forms

"After the notification, concerns have been raised that the changes are likely to cause hardship in the case of individual taxpayers," the Central Board of Direct Taxes (CBDT) saidRolling back its week old order, the Income Tax Department on Thursday allowed joint owners of single house property to file income tax return using simple Form-1 (Sahaj) or Form-4 (Sugam). On January 3, it had debarred individual taxpayers owning house property in joint ownership and those who paid Rs 100,000 in electricity bills in a year or incurred Rs 200,000 expense on foreign travel from filing their annual income return using the simple return forms. "After the notification, concerns have been raised that the changes are likely to cause hardship in the case of individual taxpayers," the Central Board of Direct Taxes (CBDT) said in a statement.According to the statement, the issue was examined and "it has been decided to allow a person, who jointly owns a single house property, to file his/her return of income in ITR-1 or ITR-4 Form, as may be applicable, if he/she meets the other conditions"."It has also been decided to allow a person, who is required to file return due to fulfilment of one or more conditions specified in the seventh proviso to section 139 (1) of the Act, to file his/her return in ITR-1 Form," it added.
The government, which usually notifies forms for filing income tax returns by individuals in April every year, on January 3 notified tax return forms for assessment year 2020-21 (income earning year April 1, 2019 to March 31, 2020).Returns in ITR-1 Sahaj can be filed by an ordinary resident individual whose total income does not exceed Rs 50 lakh, while Form ITR-4 Sugam is meant for resident individuals, HUFs and firms (other than LLP) having a total income of up to Rs 50 lakh and having presumptive income from business and profession.The January 3 notification effected two major changes in the ITR forms -- first, an individual taxpayer cannot file return either in ITR-1 or ITR4 if he is a joint-owner in house property. Second, ITR-1 form is not valid for those individuals who have deposited more than Rs 1 crore in bank account or have incurred Rs 200,000 or Rs 100,000 on foreign travel or electricity respectively, it said. Such taxpayers were to use different forms, which would have been notified in due course. The CBDT said to ensure that the e-filing utility for filing of return for assessment year (AY) 2020-21 is available as on April 1, 2020, the Income-tax Return (ITR) Forms ITR-1 (Sahaj) and ITR-4 (Sugam) were notified on January 3.
"In the notified returns, the eligibility conditions for filing of ITR-1 and ITR-4 Forms were modified with an intent to keep these forms short and simple with bare minimum number of Schedules. Therefore, a person who owns a property in joint ownership was not made eligible to file the ITR-1 or ITR-4 Forms. "For the same reason, a person who is otherwise not required to file return but is required to file return due to fulfilment of one or more conditions in the seventh proviso to section 139 (1) of the Income-tax Act, 1961 (the Act), was also not made eligible to file ITR-1 Form," it said. After the notification, concerns were raised that the changes are likely to cause hardship in the case of individual taxpayers. "The taxpayers with jointly owned property have expressed concern that they will now need to file a detailed ITR Form instead of a simple ITR-1 and ITR-4. Similarly, persons who are required to file return as per the seventh proviso to section 139(1) of the Act, and are otherwise eligible to file ITR-1, have also expressed concern that they will not be able to opt for a simpler ITR-1 Form," it said. Usually, the Income Tax Department notifies the ITR forms in the first week of April of the relevant assessment year. However, in contrast to the old practice, it has notified two ITR forms ITR-1 and ITR-4 for the assessment year 2020-21 in the first week of January.
Business Standard, 10th January 2020

09/01/2020

Amid revenue shortage, govt begins audit of GST returns for FY 2017-18

Amid a looming revenue shortage, the government has begun a nation-wide audit of goods and services tax (GST) returns for the 2017-18 financial year.It is sending notices to companies across the board, seeking details on GST and income tax (I-T) returns, much ahead of the due date for annual filing.In the notices, 12 sets of documents have been sought — details of business agreements on purchase and sales, sample copies of invoices and bills for the period of audit, returns of both taxes and on taxes deducted at source, input service invoices, cost audit reports, electronic cash/credit ledgers and the like.“You are hereby directed to attend in person or through an authorised representative conversant with activities of the firm/company…along with following self-attested documents and records…required for audit,” reads one such notice accessed by Business Standard.The instruction is that audit of large units be completed within seven working days, of medium units in five working days and of small ones in three.The GST Council had on December 18 extended the final date for filing of Forms GSTR-9 (annual return) and GSTR-9C (reconciliation statement) for 2017-18 to January 31, 2020, from December 31, 2019.
Rajat Mohan, partner at AMRG & Associates, says: ”Tax authorities are expected to undertake an exhaustive inspection of output taxes and input taxes, to find short payment and non-payment…This will saddle industry honchos with the task of juggling between departmental audits and new compliance initiatives like e-invoicing, QR code and new return filings.”To stop revenue leakages, an agreement is expected between the Central Board of Direct Taxes, Central Board of Indirect Taxes and Customs (CBIC) and the GST Network (GSTN, information technology backbone for this levy) to exchange data on a quarterly basis, instead of an annual basis.“Notices have been sent to those who have already filed their annual return and reconciliation statements. More will be sent out as and when more returns are filed,” said a government official.Last month, the government had simplified these forms, saying this would help timely filing. GSTR-9 is to be filed yearly by those registered under GST, comprising detail on outward and inward supplies during the relevant previous year under different heads i.e CGST, SGST, IGST and HSN codes. This helps in reconciliation of data and returns filed monthly or quarterly.
Business Standard, 9th January 2020

08/01/2020

Nine-Point Plan Firmed Up to Plug GST Revenue Leaks

A nine-point plan has been firmed up to plug revenue leakages under the goods and services tax regime. It includes setting up a panel with tax officials from Centre and states to draw up a standard operating procedure for tackling refund frauds. The action plan was finalised after a meeting of state and central GST chief commissioners on Tuesday chaired by revenue secretary Ajay Bhushan Pandey. “The committee of Centre and state officers will come out with a detailed standard operating procedure within a week, which may be implemented across the country by January-end,” said a GST Council Secretariat statement. The committee’s aim will be to examine and implement quick measures to curb fraudulent refund claims. Linking foreign exchange remittances with integrated GST refunds may be undertaken to check fraudulent refund claims for new or risky exporters, while a single bank account for remittance receipt and refund disbursement will be created, it said. Further, the GST Network, Central Board of Direct Taxes and Central Board of Indirect Taxes and Customs will share data on a quarterly basis for early identification and checking of fraud cases, the statement said.
“A memorandum of understanding will be signed by the agencies. This will ultimately lead to increased revenue collections and at the same time ensure that genuine taxpayers are not harassed,” an official said. Also, CBDT and CBIC will jointly profile fraudsters by sharing data of cases involving evasion and fraudulent refund. Besides sharing of data, access to banking transactions including the bank account details by GST system will be developed in consultation with the Reserve Bank of India and the National Payments Council of India. The GST system will be aligned with Financial Intelligence Unit for getting details of bank accounts, transactions and PAN-based banking transactions. Further, GSTR forms will be amended to include self-assessment declaration in case of closure of businesses, as a means of ease of doing business for companies. Tax experts said the proposed measures should be implemented well. “While these measures cannot be questioned, it needs to be ensured that these are implemented well on the ground, not leading to harrassment for taxpayers,” said Pratik Jain, indirect taxes leader, PwC. Industry needs to be careful in GST filing and should ensure that adequate control is exercised on vendor's compliances, which would anyway be needed with introduction of e-invoicing from April, Jain added.
The Economic Times, 8th january 2020

06/01/2020

SMS for Week ended 06-01-2020
S.No.
Messgae
1. 31.12.19(Tues) is last day to avail Sabka Vishwas Scheme 2019, file BEN-2 (Disclosure of Significant Beneficial Owners by specified Cos) & link PAN & Aadhar.
2. Wef 11.1.20, e-way bill will not be generated even if GSTR-1 is pending.  File all pending GSTR-1 since Jul 17 to Nov 19 by 10.1.20 without late fee.Rgds Webtel
3. MCA has extended due date of filing CRA-4 (Cost Audit Report) for F.Y. 2018-19 without late fees to 29.02.2020. General Circular No. 17/2019. Rgds Webtel
4. The ICSI has extended the Date for generation of eCSIN from 31.12.2019 to 15.01.2020. Refer https://www.icsi.edu/media/webmodules/Extension_of_ECSIN.pdf.
5. MCA has extended due date of filing Form BEN-2  and BEN-1 without late fees to 31.03.2020. General Circular No. 1/2020. Rgds Webtel
6. Startups can get Company Identification Number (CIN), PAN, GSTIN, EPFO No & Employer Code under ESIC in one application at MCA portal through SPICE-AGILE Form.
7. CBDT further extends the timeline for Linking PAN with Aadhaar from 31st December,2019 to 31st March,2020.Notification No. 107/2019. Rgds Webtel
8. Further Extension of time limit of 12 months for applying for Compounding of Offences under Income Tax Act till 31.1.20. Circular 1/2020-Income Tax of 3.1.2020.
9. ITR 1 & 4 notified for AY 20-21 cant be used if assessee owns property jointly with 2 or more persons. Income-tax (1st Amendment) Rules, 2020 wef 1.4.20.Webtel

02/01/2020

GST mop up crosses Rs 1 trn, indicates stabilisation of revenue collection

The mop-up stood at Rs 1.031 trillion in December, slightly lower than the seven-month high of Rs 1.034 trillion collected in November
Goods and services tax (GST) collection crossed the Rs 1 trillion mark for the second straight month in December, but fell short of the Rs 1.1 trillion target set for the last four months of 2019-20. The latest numbers, however, indicated the stabilisation of revenue collection owing to anti-evasion measures introduced by the government.
The mop-up stood at Rs 1.031 trillion in December, slightly lower than the seven-month high of Rs 1.034 trillion collected in November. On a year-on-year basis, the GST receipts in December 2019 posted a growth rate of 8.9 per cent, the data released by the finance ministry showed on Wednesday. These figures are for GST on the transactions done in November and collected in the month of December. Although the December figures come as a breather for the government, which is facing intense revenue stress, these are lower than the numbers needed to meet the steep target for 2019-20.
Revenue Secretary A B Pandey has pressed for a monthly GST collection target of around Rs 1.1 trillion between December 2019 and March 2020. Of these four months, Rs 1.25 trillion collection has to be achieved in at least one month, he had told tax officials. GST collection on domestic transactions witnessed 16 per cent growth, the highest during the year. GST collection on imports continued to witness a contraction of 10 per cent, as against a fall of 13 per cent in November, indicating persistent weakness in domestic demand and production. The ministry also released state-wise GST collection figures from domestic transactions. Arunchal Pradesh witnessed the highest growth at 124 per cent to Rs 58 crore in December 2019 year-on-year.
Business Standard, 01st January 2020

GST Rate Hikes may Come in Phases to Reduce Price Pains

Panel of officials looking at option of small hikes in lower rates or moving up items in tranches
India could look at a calibrated increase in the goods and services tax rates to shield consumers from sudden price shocks, apart from minimising exemptions, as it seeks to lift tax revenue collections. A panel of officials on revenue augmentation, comprising officials from the states and the Centre, is reviewing the current rate structure. There is a view that rate increases can be carried out in a benign manner, either through small increases in lower rates or by moving some items to a higher bracket in tranches.
“There is a need to re-look at the structure. How you do it is another issue,” said a government official. “You can do it in a calibrated manner to avoid sudden shocks. This is one option.” About 150 items that are exempt from GST are likely to get a close look. There are over 260 items currently in the 5% slab. Processed items cannot be in the lowest slab or the exempt category because it also leads to problems of input tax credits for them and erodes their competitiveness, said the official.
GST Council to Examine Suggestions
GST collections have averaged Rs 1,00,646 crore so far in the current financial year, short of about Rs1.12 lakh crore a month needed to meet the budget target. The panel’s suggestions are likely to be examined by the GST Council, the apex decision-making body for the tax, at its next meeting. The GST Council secretariat had asked the states on November 27 to suggest ways to boost revenue, including rate rationalisation and reducing exemptions. States such as Punjab suggested slabs of 10% and 20%, with a third rate of 25% for sin and luxury goods. Others such as West Bengal and Delhi do not back significant changes at the current juncture, especially pertaining to rate increases.
Currently, GST has seven rate categories – exempt, 0.25%, 3%, 5%, 12%, 18% and 28%. The officers panel is also looking at how to minimise exemptions in both goods and services and raise the revenue-neutral rate – that single rate of GST at which there is no loss of tax. This was estimated at 15.5% when GST was rolled out on July1, 2017. The panel had presented a paper at the previous meeting of the council, but was asked to look into issues in more detail and come back with a more comprehensive report.
It had suggested restructuring slabs, increasing rates on some goods to correct inverted duty structures, including on mobile phones, and revisiting rates on items that had seen a reduction to 18% from 28%. Some businesses have asked to be moved from the exempt category or 5% tax bracket without input tax credit to the higher 12% rate where they can adjust tax paid on inputs against final liability. The panel had highlighted an over Rs 63,000 crore shortfall in compensation cess in the current financial year, which, with moderate revenue growth, is a key challenge. Tax experts said given the current economic scenario, large-scale changes seem difficult.
“However, the government may want to explore merging the 5% and 12% slabs into a single rate of say, 8 or 9%. Alternatively, the 12% and 18% slabs may be merged into a single rate of 15% or 16%,” said Pratik Jain, indirect taxes leader at PwC. Jain said there is a need to have a long-term plan on GST rates and start working towards it, rather than changing them frequently. There is little evidence to suggest that rate increases would necessarily result in revenue augmentation, he added.
Economic Times, 01st January 2020

31/12/2019

GST facelift: Electronic invoicing, new returns to be introduced in 2020

Two things that will change the way transactions are reported under the goods and services tax (GST) system in 2020 are electronic invoicing and new returns. While both of these will be introduced mandatorily from April 1, e-invoicing would be implemented on a voluntary basis by those having an annual turnover of above Rs500 crore from January 1. Those with an annual turnover of over Rs100 crore can use e-invoicing from February 1. Finally, those with annual turnover of over Rs100 crore will have to use e-invoicing system from the beginning of the next financial year. In the e-invoicing system, the invoices are authenticated electronically by GST Network (GSTN) for further use on the common GST portal. Two procedures are required in e-invoicing system — generation of invoices in standard format and reporting it on to a central portal system. The new system requires invoice details to be uploaded on the government site — Invoice Registration Portal or IRP — on real-time basis. Based on the uploaded details, a unique invoice reference number (IRN) will be allocated against an each invoice. IRN would be get validated through IRN portal and GSTN.
According to GSTN Chief Executive Officer Prakash Kumar, e-invoices are generated by large number of businesses even today. However, they all use the format as provided by the ERP or billing software they use. Lack of a standard leads to a scenario where e-invoice generated on one billing software can’t be read by another, requiring manual data entry from electronically generated invoice. “All this means lots of engagement in maintenance of invoice, manual feeding in system, a pile of paper work, and lot of transcription errors,” he said. Here comes a system that does away with much of paper, human error, transcription error, saves time and gives you a format which is compatible to all. He said no changes are required as far as the businesses are concerned as they will continue to use the same software with same user interface to generate the e-invoices such as ERP, accounting and billing software, excel based billing system etc. The companies, which have developed the ERP or billing software, will have to make changes in their software codes to make them conform to the approved standards, he said.
Abhishek Rastogi, partner at Khaitan & Co, said the phased manner of implementation of e-invoicing will enable adequatetesting of the system before it is made mandatory. Harpreet Singh, partner at KPMG, said: “In the long run, e-invoicing should be the only data collection point for the tax authorities replacing e-waybills and multiple returns.” However, new simplified returns would be implemented from April 1. The GST Council had earlier decided to defer the implementation of these returns from the planned staggered manner from October this year. In the new returns, there would be one main form — GST RET-1, which will contain details of all supplies made, input tax credit availed, and payment of taxes. This return will have two annexures — GST ANX-1 and GST ANX-2. Form GST ANX-1 will have details of all outward supplies and form GST ANX-2 will contain details of all inward supplies. Currently, taxpayers are filing two returns: GSTR-1, which contains details of all outward supplies made, and GSTR-3B, which is a monthly self-declaration of outward supplies, input tax credit availed, and taxes paid.
Archit Gupta, CEO of ClearTax, said the e-invoice system would be integrated with the new return filing system for filing e-way bills and new return formats. Initially, businesses had a fear that their cash flow would be blocked because there was a proposition of only allowing credits to those invoices that were uploaded by vendors and tax discharged. To address the issue, the government had proposed allowing businesses to avail of input tax credit on the basis of self-declarations in GSTR-3B for initial months even under the new mechanism. Gupta said the pain point involved in frequent matching of invoices was that the taxpayer had to allocate time from his daily business activities or he has to appoint personnel to do the same. There is also an issue of tracking and reporting of missing invoices to avail credit. Gupta said this would put additional responsibility even though the recipient paid the tax amount to his supplier.
Business Standard, 31st December 2019

28/12/2019

Slowdown, credit squeeze to increase NPA, but banks more resilient now: RBI

After witnessing a fall in the gross non-performing assets (NPAs) ratio in March 2019 — the first time in seven years — Indian banks’ GNPA ratio is set to rise again, as a slowing economy and shrinking credit make the share of bad debt in the loan book larger, according to the half-yearly Financial Stability Report (FSR), released by the Reserve Bank of India (RBI) on Friday. The system has, however, become better in terms of resilience since since March, the reference point used by the last FSR, thanks to the recapitalisation by the government and measures taken by the central bank, the latest report said, adding that the collapse of any large housing finance company won’t pose as big a risk as it had six months ago. The gross NPA ratio of banks may increase from 9.3 per cent in September 2019 to 9.9 per cent by September 2020 “primarily due to changes in the macroeconomic scenario, a marginal increase in slippages, and the denominator effect of declining credit growth”, it said.
The report is prepared by the sub-committee of the Financial Stability and Development Council (FSDC) and is released by the RBI. Earlier this week, the Trend and Progress Report had said “further improvements in the banking sector hinge around a reversal in macroeconomic conditions”. Risks posed by geopolitical uncertainties remain an overhang for the overall financial system. Exports might suffer, but the current account deficit would remain under control, the report said. “Reviving the twin engines of consumption and investment while being vigilant about spillovers from global financial markets remains a critical challenge,” the FSR said. Aggregate demand slackened in the second quarter of 2019-20, further extending the growth deceleration. Writing the foreword of the report, RBI Governor Shaktikanta Das said the challenge was to “ensure transmission of monetary policy impulses to the advantage of real economies and not to aid build-up of froth in financial markets. We need to be mindful of the ‘cobra effect’ ”.
Cobra effect refers to the situation when a solution to a problem makes the problem worse. On its part, the RBI has endeavoured to provide a responsive and proactive monetary policy in an economic environment wherein sources of vulnerabilities are continuously interacting, Das said, reemphasising the importance of good corporate governance across the board, which, according to the governor, “is the most significant factor that can lift the efficiency of our economy to its full potential”. While the banking sector shows signs of stabilisation, PSBs should improve their performance and should build buffers against disproportionate operational risk losses, while “private sector banking space also needs to focus on aspects of corporate governance,” the governor said. The market is becoming more discerning on prudential concerns around NBFCs, which continue to show signs of restructuring of their underlying business models, according to the RBI governor.
Credit growth of banks was 8.7 per cent year-on-year in September, while deposits grew 10.2 per cent. This is the first time since Q2FY17 that credit growth fell short of deposit growth, the report observed. Credit fell ‘across the board’ for commercial sector. However, private sector banks registered credit growth of 16.5 per cent. While the GNPA ratio remained unchanged at 9.3 per cent between March and September 2019, the provision coverage ratio (PCR) of the banking system rose to 61.5 per cent in September 2019 from 60.5 per cent in March 2019 “implying increased resilience of the banking sector”, the report said. Bilateral exposures between entities in the financial system witnessed marginal decline. Private sector banks saw the highest YoY growth in their payables to the financial system, while insurance companies recorded the highest YoY growth in their receivables from the financial system. The size of the inter-bank market continued to shrink with inter-bank assets amounting to less than 4 per cent of the total banking sector assets as at end-September 2019, the report said. This reduction, along with better capitalisation of public sector banks reduced the contagion risk under various scenario compared with March 2019.
Still, banks may have the capital adequacy ratio below the minimum regulatory level of 9 per cent by September 2020 without considering any further planned recapitalisation, the report said. If the macroeconomic conditions deteriorate, five banks might record the capital adequacy ratio of below 9 per cent under a severe stress scenario. However, the report said 49 of the 52 banks would remain resilient for meeting day-to-day liquidity requirements in case of sudden and unexpected withdrawals of around 10 per cent of the deposits and utilisation of 75 per cent of the credit lines. The RBI’s latest systemic risk survey (SRS) showed that all the major risk groups, such as global risks, risk perceptions on macroeconomic conditions, financial market risks and institutional positions were perceived as medium risks affecting the financial system. But the “perception of domestic growth risk, fiscal risk, corporate sector risk and banks’ asset quality risk increased between the earlier survey (April 2019) and the current survey.”
The survey participants felt that resolution of the legacy bad assets under the IBC was essential to enable the banking system to support the aspirations of economic growth. According to another set of survey of 13 banks with regard to assets that were initially assigned to be resolved through the prudential framework (as of June 30), an inter-creditor agreement is yet to be signed for exposures amounting to Rs 33,610 crore while the same has been signed with respect to aggregate exposures of Rs 96,075 crore. However, resolution plan has been implemented only with respect to one borrower with a reported exposure of Rs 1,617 crore. Mutual funds were the largest net providers of funds to the financial system. Their gross receivables were around Rs 9.40 trillion, or around 37.8 per cent of their average assets under management (AUM) as on September 2019, and their gross payables were around Rs 57,355 crore as at end-September 2019. The top-three recipients of their funds were banks followed by NBFCs and HFCs.
Business Standard, 28th December 2019

26/12/2019

Budget 2020: Income Tax Cuts, Slab Rejigs on Table

A flat tax rate without exemptions, new slabs for those earning higher incomes, cuts in personal income tax in line with those in corporate tax — these proposals are being examined ahead of the budget as the government eyes ways of boosting consumption and reviving growth. The finance ministry will present arguments for and against these suggestions before a decision is taken at the highest level, a government official said. The budget will be presented in February. “All options are being examined... Any such move needs to be examined in the context of gains it can bring to the overall economy vis-a-vis the cost it entails,” the person said. An alternative to income tax cuts is putting more money in the hands of the people directly through schemes such as PM-KISAN or enhancing the spending on infrastructure. Any possible change in the structure will only benefit the 30 million individuals who pay income tax, said the person, adding that the cost to the exchequer needs to be balanced with benefits by way of a consumption boost. On the other hand, “infrastructure sector spending has a multiplier effect”, said the person. The government has already given away ?1.45 lakh crore through corporate tax cuts, but that’s seen as part of broader direct tax reform aimed at attracting investments. But it sparked calls for cuts in personal income tax, since there were no reliefs in this regard in the last budget.
Task Force’s Suggestions
On the contrary, high income earners saw a rise in what they’d be paying out through a surcharge. The committee set up to review direct taxes has sought a 10% personal income tax rate for those with annual incomes up to ?10 lakh; 20% for those with incomes over ?10 lakh and up to ?20 lakh; 30% for incomes over ?20 lakh and up to ?2 crore; and 35% for incomes above ?2 crore. It hasn’t suggested any change to the current income tax exemption limit. The taskforce also suggested removal of the surcharge on incomes at the upper limit. Currently, annual income up to ?2.5 lakh is tax free. Income of ?2.5-5 lakh is taxed at 5%; ?5-10 lakh at 20%; and over ?10 lakh at 30%. These slabs have been stable for many years though the government has been providing relief at the lower end through rebates. Those earning over ?50 lakh have to pay an additional surcharge of 10-37%, depending on the income. Slab rationalisation as suggested by the direct tax task force could entail a substantial drop in revenues without effective measures to widen the tax net, experts said.
Bibek Debroy, chairman of the Economic Advisory Council to the Prime Minister, has suggested a flat rate of tax, but this has been met with some reservations. A flat rate with no exemptions can pose a challenge for savings that have been encouraged through tax sops, said the person cited above. Moreover, there’s also the risk that exemptions will creep back in eventually. Besides, given the narrow base, any relief in income tax will not be substantial enough to provide the consumption boost needed, but will lead to substantial revenue loss. Former chief economic advisor Arvind Subramanian has argued for a universal basic income instead of personal income tax cuts to boost consumption, saying the latter would be inequitable and have limited impact. Demands for personal income tax rationalisation, particularly in the highest slab, have come from several quarters including industry.
The Economic Times 26th December 2019

23/12/2019

Glitches in ITR Processing Lead to Bloated Tax Liability on Capital Gains

Hundreds of taxpayers are believed to have received notices from the income tax (I-T) department whose systems are unable to process the tax returns correctly. This has led to bloated tax liability on capital gains and denial of credit for tax deducted at source (TDS), among other discrepancies. Senior accountants have drawn the attention of Pramod Chandra Mody, chairman of Central Board of Direct Taxes (CBDT), regarding the errors at the department’s Central Processing Zone (CPC) in Bengaluru, sources told ET. After years, Indians will be taxed on their long-term capital gains at 10% if such gains are more than ?1 lakh. In grandfathering the tax rule, the government had pegged the price of a stock on February 1, 2018, or the actual purchase price, whichever is higher, as the cost in computing the gain. For instance, if a stock is purchased at ?500 in 2016 and sold at ?900 in March 2019, while the share closed at ?800 on February 1, 2018, the gain is ?100, not ?400. The department’s software system is failing to compute the long-term capital gains (LTCG), particularly gains involving multiple stocks. Another error in LTCG computation relates to shares acquired between February 1, 2018, and March 31, 2018.
Problem after Software Tinkering
For such trades, the whole sale consideration is considered by the system as gain. For instance, if shares allotted in an IPO after February 1, 2018 for ?2,000 are sold for ?4,000 on March 15, 2018, the system is considering the entire ?4,000 as LTCG. “The I-T return form and the computer system processing the returns are not compatible with the provisions of the law as well as the legal positions on some of the matters. Not only is this causing hardship, but the objective to minimise litigation may also suffer a setback,” said senior chartered accountant Dilip Lakhani. In July, many tax payers had faced problems while filing their returns as the I-T department tinkered with the software for I-T return forms on the e-filing website. This forced the government to extend the July 31 deadline for filing of returns. According to Ameet Patel, chairman, Taxation Committee, of the Bombay Chartered Accountants' Society, “Returns filed by thousands of tax payers using different versions of the government utility at different points of time are being processed by the CPC and to their shock, they are getting notices from CPC stating that the CPC proposes to make adjustments to the long-term capital gains shown in the return. This is happening in many cases, causing unnecessary hardship.”
Many companies which filed their returns in November are grappling with another issue. “They are getting notices stating that the return is defective because tax audit report has not been filed. This is happening despite the fact that tax audit report have been filed in time,” said Patel. The Bombay Chartered Accountants’ Society is pursuing the matter with the apex authority CBDT. Such cases relate to matters on transfer pricing which arises when there are international transactions between the assesse company and its associates. However, the biggest problem, said Patel, revolves around processing I-T return for assessment year 2019-20 where there is longterm capital gains from sale of listed shares and units of equityoriented mutual funds.
The Economic Times, 23rd December 2019

21/12/2019

PFRDA seeks systematic withdrawal in NPS, tax only on interest component

The Pension Fund Regulatory and Development Authority (PFRDA) wants systematic withdrawal plans (SWPs) to be allowed in the National Pension System (NPS), so that subscribers may choose a more efficient option than annuity products. Supratim Bandyopadhyay, whole-time member (finance) of the PFRDA, on Friday shared a clutch of changes that the regulatory body is seeking from the government. According to people in the know, the PFRDA is expecting some of these changes to be introduced by the Centre in the upcoming Budget itself. In the NPS, 40 per cent of the accumulate pension assets need to be used for an annuity product, while 60 per cent can be withdrawn by the subscriber. PFRDA officials say that with lower returns and taxation on annuities, investors would be better served with the SWP option. Even though 60 per cent of the total money received at maturity from the NPS is tax-free, annuities are taxed in the hands of investors. PFRDA has suggested that only interest earned should be taxed and not the entire annuity. As on December 14, 2019, the total assets under management of NPS stood at Rs 3.92 trillion.
As part of its Budget proposals, PFRDA has also asked the government to increase the deduction under Section 80CCD (1B) to Rs 1,00,000 from Rs 50,000 per annum. Instead of different regulatory bodies overseeing pension products, the PFRDA wants all pension-related products to be brought under its ambit. At present, the overall assets managed in pension products stand at around Rs 25 trillion. It has also suggested that the NPS trust be independent of the PFRDA. “Being the creator and settler of the trust, there could be conflict of interest,” said Bandyopadhyay. In addition, the body has proposed extending tax exemption under 80C to tier-II voluntary NPS accounts. Right now, the exemption can only be availed by central government employees.
The PFRDA has been advocating exemption to other employees as well. The PFRDA is also planning to develop an industry body on the lines of the Association of Mutual Funds in India (Amfi). Bandyopadhyay said that we have been pleased with the investor awareness work done by Amfi to deepen the penetration of MF products. To improve the management fee at which NPS products are offered, there could be a fresh request to submit a proposal to set a new benchmark for the same, said people in the know. Currently, the low management fee at which NPS products are run also deters other players from entering the fray, industry sources said. Over the last ten years, the equity NPS products have delivered annualised returns of 11 per cent. The corporate bond schemes have delivered 10.3 per cent returns, while government securities schemes have yielded 9.5 per cent returns. Meanwhile, a conservative investor exposed to a diversified mix of the above products, would have seen a blended return of ten per cent over the last ten years.
Wish list
Increase deduction under Section 80CCD (1B) to Rs 1 lakh Extend 80C exemption from central government employees to others Bring all pension products under one regulatory body New management fee structure for NPS products NPS trust should be made independent of PFRDA
Business Standard, 21st December 2019

20/12/2019

Business fears hit to cash flow from new GST input tax credit restriction

Industry fears that the Goods and Services Tax (GST) Council’s decision to further restrict input tax credit (ITC) on invoices not uploaded in the relevant form would block the cash flow of businesses, says the latter, at a time when they’re struggling on finances due to economic slowdown. On Wednesday, the Council approved a proposal to restrict ITC to 10 per cent of eligible credit, against the current 20 per cent, for such invoices. The mechanism works this way: Suppose you paid Rs 1,000 as taxes to your suppliers and claimed this as ITC on your summary input-output form, GSTR 3B. You have to also ensure all your suppliers upload these invoices in their supply-side return, GSTR 2A. Now, if invoices amounting to 20 per cent of the ITC claimed are not so uploaded by your vendors, then your eligible credit would be only Rs 800. You can claim further ITC of Rs 80 (10 per cent of Rs 800) after the GST Council’s decision is notified. Earlier, you could have done so for Rs 160. In fact, before October, whatever was claimed as ITC in GSTR 3B, was being released by the authorities. In October, the government restricted this to 20 per cent of eligible credit. And, now, to 10 per cent.
Archit Gupta, chief executive at fintech service platform ClearTax, says the new restriction will be challenging for businesses. "They will have to do regular follow-ups with their suppliers." M S Mani, partner at consultants Deloitte India, said the restrictions on ITC increase the blockages of working capital. Rule 36 (4) under the Central GST Act, which enables such restrictions, is already under challenge at the Delhi high court. "Businesses would welcome the elimination of such restrictions which are not in consonance with key GST principles which mandate seamless credits across the value chain," said Mani. Abhishek Rastogi, partner at Khaitan & Co., said the restriction on credits due to the fault of the vendors will have to cross the constitutional test. "Further, even the percentage of either 10 or 20 per cent is not based on any logic and hence is completely arbitrary," he said.
Harpreet Singh, partner at consultancy KPMG. He says many multinational companies have completely forgone the 20 per cent or 10 per cent credit, on account of the hassle of month-on-month reconciling of credit. Abhishek Jain, tax partner at consultancy EY, says the new restrictions are due to falling tax collections and to plug fraudulent credits. "It is imperative for businesses to ensure timely credit reconciliation, including follow-up with vendors, timely correction and maintaining of adequate date for the said compliance. Wherever proper reconciliations are not done, it may lead to cash flow issues,” he said. Gupta of ClearTax feels further reduction in credit could have been considered later, with the new return filing process. In the latter, there is the concept of invoice matching — ITC cannot be claimed on invoices not reconciled. These returns would come into effect from April 1.
Business Standard, 20th December 2019

19/12/2019

In a first, GST Council votes to tax lotteries at uniform rate of 28%

In a first, the Goods and Services Tax (GST) Council on Wednesday resorted to voting to decide an issue. The controversial issue of the GST rate for lotteries was decided on the basis of voting, with the Council fixing a uniform tax rate of 28 per cent on both state and private lotteries with effect from March 1, 2020. All the earlier decisions by the Council had been taken through consensus. The move was a partial defeat for Kerala Finance Minister Thomas Isaac's proposal on whose insistence voting was conducted. “It (voting) was not imposed by the Council. It was not imposed by me as the chair. It was on the insistence of one member,” Finance Minister Nirmala Sitharaman told reporters after the meeting. Currently, there are dual rates for lotteries — 12 per cent tax on state-run lotteries and 28 per cent on state-authorised, or private, lotteries. Voting happened twice on the issue. The first time it was on whether there should be a uniform or dual rate. Seventeen states voted in favour of single rate and seven for a dual rate. Maharashtra, which was earlier for a uniform rate, voted for a dual rate this time. Then there was voting on whether there should be an 18 per cent or 28 per cent rate for lotteries. All voted for 28 per cent.
Kerala favoured a dual rate for the two kinds of lotteries. Isaac had said if it came to a uniform rate, then the rate for private lotteries should not be lowered to 18 per cent, but the rate for government-run lotteries be raised to 28 per cent. The five-hour-long meeting of the Council also decided to block the input tax credit (ITC) for fake invoices in certain cases and further restrict the credit for invoices not uploaded in relevant forms to 10 per cent from the current 20 per cent of the eligible credit. “To check the menace of fake invoices, suitable action will be taken for blocking fraudulently availed ITC in certain cases," Revenue Secretary A B Pandey said. However, no decision was taken on changing GST rates with the officers’ committee on revenue augmentation only presenting an account of the tax collected. "The committee did not directly or indirectly give any suggestions on increasing or reducing GST rates. It was a matter of fact presentation of data and data alone," said Sitharaman.
M S Mani, partner at Deloitte India, said the focus on revenue augmentation measures could lead to several anti-evasion measures in the coming months as the decision to block ITC in cases of fake invoices indicated. She also reiterated the Centre's commitment to pay compensation to the states in case they did not clock 14 per cent growth in GST revenues on the base year of 2015-16, even as some states expressed fears about the Union government's ability to do so. Besides lotteries, the Council decided to exempt the upfront amount payable for long-term lease of industrial or financial infrastructure plots by an entity in which the Centre or state governments have at least 20 per cent ownership. This exemption is currently available to those where the governments have at least 50 per cent stake. This would promote setting up of industrial and financial parks, said Pandey.
Business Standard, 19th December 2019

GST revenue growth promised to states may be trimmed to 10-12% from FY21

The annual growth in goods and services tax (GST) revenue promised to states under the GST law could be slashed to either 12 per cent or 10 per cent from the current promise of 14 per cent from next year, Business Standard has learnt. However, this change is only under consideration and, if states agree to come on board, it could take place only in the next fiscal year, officials said on the condition of anonymity. But states would vehemently oppose such a proposal, it is being said. In fact, sources said this idea was discussed during the presentation given by N K Singh, chairman of the 15th Finance Commission (15th FC), in the previous GST Council meeting. “Doing such a change immediately is off the table, but in the long term, it would be considered,” said a senior government official. The GST Council meeting, currently underway, is likely to discuss this. Under the law, the Centre is bound to “protect” a 14 per cent growth in states’ GST revenues, and if shortfall arises, compensate it to the tune of the amount of shortfall, till June 2022. The GST Council has introduced, and levies, compensation cess on certain items over and above the GST rate to compensate states.
If the protected growth in GST revenue is reduced to 10 per cent, the Centre would save more than Rs 25,000 crore in 2020-21 if none of the states show any revenue growth. This would nearly amount to 0.1 per cent of the gross fiscal deficit of the government. This would aid in avoiding fiscal slippage to some extent in subsequent years. This number has been derived from the data presented by the finance ministry to Parliament. In a way, while states would potentially lose slices of revenue “to be protected” if they fail to achieve 14 per cent growth in GST revenues themselves, the Centre would gain an amount equal to summation of slices for all states. In the hypothetical case mentioned above, Maharashtra’s revenue to be protected will reduce the most (as it is the topper in revenue collection) by Rs 4,000 crore, and that of Karnataka and Tamil Nadu, by Rs 2,500 crore and Rs 2,000 crore, respectively. If the guaranteed growth in revenue-to-be-protected is slashed to 12 per cent, the Centre would gain somewhat less than Rs 15,000 crore in the deal.
Experts said that such measures seem in line with the current subdued revenue trend for both the Centre as well as states. “With slowing revenues, the Centre might not be able to guarantee 14 per cent growth every year from now on,” said Sacchidananda Mukherjee of National Institute of Public Finance and Policy (NIPFP). Apart from states in the Northeast, which have a low share in overall national GST revenue, no other state has been able to clock a 14 per cent growth in GST revenue on its own. There is a possibility that states would demand an extension in the compensation period beyond June 2022, and they would have to accept a slower growth in protected revenue in the bargain.
Business Standard, 19th December 2019

17/12/2019

More scope to cut interest rates, says RBI Governor Shaktikanta Das

There is scope for cutting interest rates further and the central bank will use it when required after studying the growth and inflation data, Reserve Bank of India (RBI) Governor Shaktikanta Das said on Monday. The monetary policy committee (MPC) surprised markets and analysts this month by holding rates steady after trimming the key interest rate by 135 basis points since the beginning of the current rate reduction cycle in February. “While taking a pause we, very carefully and very definitely, said there is space for further monetary policy action, but the timing will have to be decided in a manner that its impact is optimum and its impact is maximised,” Das said at a conclave organised by the Times media group. Das said the markets were surprised when the committee started cutting rates in February but subsequently accepted that it was right in doing so. “And this time, the pause we have taken, I do hope that events will unfold in a manner which will prove that the MPC decision is right,” Das said. He said both the government and the central bank had taken steps to help the economy recover but the outcome of events in the global economy would play a role. Das said he hoped a recent trade deal between the United States and China would hold and not be reversed.
The “Phase one” agreement reduces some US tariffs in exchange for a big jump in Chinese purchases. “What is important in the current context is coordinated and timely action by all the advanced and emerging economies to revive growth,” he said. “Growth is an issue of discussion in India and global growth is also an issue of discussion because that does impact. For a moment, I am not implying that the slowdown that we have seen in India is entirely due to global factors, but it does impact growth prospects for India.” India’s economic growth slowed to 4.5 per cent in the July-September quarter. Its weakest pace since 2013, this put pressure on Prime Minister Narendra Modi to speed up reforms as five rate cuts by the central bank have failed to boost investment. Das stressed the importance of communication for the markets and said the RBI had tried to be as clear and transparent as possible. "Of course, communication should follow action and any communication should not be empty words, it should be followed by further action."
Business Standard, 17th December 2019

16/12/2019

SMS for Week ended 16-12-2019
S.No.
Messgae
1. Tomorrow (11.12.19,Wednesday) is the Last date to file GSTR-1 for the month of November 2019. Regards Webtel
2. Today (10.12.2019)is the last date to file GSTR-7 return by Tax deductor  & GSTR-8 by e-commerce operators for the month of  November 19. Regards Webtel
3. Today (11.12.19,Wednesday) is the Last date to file GSTR-1 for the month of November 2019. Regards Webtel

Note : Above is compilation of SMS sent to sms subscribers last week. Please see if you have missed out on any important update, due date

GST Council May Discuss Plugging Revenue Leakage

A concept paper based on the report of the committee of officials on revenue mobilisation is likely to be presented to the council, said a government official. A row has also been brewing between states and the Centre about releasing compensation payments. The states remain divided on the issue of raising rates or carrying out a significant revamp of the structure at this time. Punjab and Kerala have backed raising rates or tweaking them to make up for the revenue shortfall while others do not see this as an opportune time due to the economic slowdown. A final call on this will be taken by the GST Council. The concept paper will highlight key reasons for the shortfall in revenue. They include lowering of tax incidence following the GST rollout, a large number of exemptions and administrative loopholes. Goods and services such as hospitalisation in deluxe rooms, mobile phones and fabrics such as linen could be in focus with some states keen to shrink the list of exempted items or raise rates on some.
Tweak in GST Slabs
There are suggestions that the slab of 5% be raised to 8% or 10%, and the 12% and 18% slabs be bumped up into one of 20%. The GST Council secretariat had, at the end of last month, sought the views of states to address the issue of revenue shortfall, including rate rationalisation. The Centre is expected to ask the states to share the burden of revenue loss on the count of cuts in tax rates as also exemptions. Some of these changes had been made at the behest of state governments themselves. GST collections crossed the Rs 1 lakh crore mark in November after three consecutive months in which there were below this mark. The panel of officials has also suggested administrative tightening measures, including the extensive use of data to plug evasion, which could be taken up by the council, the official said.
COMPENSATION DELAY
The upcoming meeting could be a stormy one with states, especially the Opposition-ruled ones, expected to try and pin the Centre down over the delay in the release of compensation in lieu of revenue loss on account of the shift to GST. “I would request Union finance minister Nirmala Sitharaman to expeditiously release the August-September compensation instalment,” Bihar deputy chief minister Sushil Modi said. Seven states including Kerala have threatened to approach the Supreme Court against the Centre over the delay. A senior official from another state said the delay in compensation will need to be addressed urgently if the Centre wants harmony to prevail on the council. “Delays in release of funds have hurt state finances,” the official said. Another state government official pointed out that the opening balance for the current financial year was over ?47,000 crore. A payout of ?65,151 crore was made to states and cess collections stood at ?41,574 crore, leaving a fund balance of ?23,695 crore with the Centre. “Payment to states can well be made on ad hoc basis... Actual shortfall, if any, would reflect only in the last quarter.”
The Economic Times, 16th December 2019.

13/12/2019

Centre will honour GST compensation payment to states, says FM Sitharaman

With states not being paid compensation for loss of revenue from implementation of GST since August, Finance Minister Nirmala Sitharaman on Thursday assured the Centre will honour its commitment but did not say by when the dues will be cleared. States -- that surrendered powers to collect taxes on goods and services after local levies got subsumed into the Goods and Services Tax (GST) from July 1, 2017 -- was through legislation guaranteed to be paid for any loss of revenue in the first five years of GST implementation. This monthly compensation was to be paid within two months but states haven't received any such amount since August 2019. During the debate in the Rajya Sabha on the bill seeking Parliamentary nod for additional or supplementary spending in the current fiscal, Congress, Left and TMC raised the issue of non-payment of the GST compensation and sought to know when it will be paid. The Finance Minister said the Centre was committed to discharging its obligation and asserted that "no one should have any doubt". She said the compensation is paid to the states out of cess levied on five products. The compensation is paid keeping 2015-16 revenues of the states as the base and guaranteeing 14 per cent addition on top of it every year. GST cess collection in 2017-18 -- the first year of GST implementation -- was Rs 62,596 crore, out of which Rs 41,146 crore was released to states.
The balance Rs 15,000 crore was accumulated, she said, adding in the subsequent year, GST collection was Rs 95,081 crore and Rs 69,275 crore was released to states. In the current fiscal, Rs 55,467 crore was collected till October 31, 2019 and Rs 65,250 crore paid to states. "There was excess payment of Rs 9,783 crore" during the current fiscal, she said adding the dues of the states will be honoured. She, however, did not reply to a pointed question from CPM's K K Ragesh on when the dues will be cleared. Sitharaman said all states and not just non-BJP ruled states have not been paid compensation since August. On the issue of states not getting their due share from Integrated GST, which is levied on the transfer of goods from one state to another, the minister said no state claimed I-GST dues in 2017-18 but in the subsequent year it has been paid. Claims were subsequently made and a group of state ministers has been set up to look into divisibility of the IGST revenue for 2017-18 and the matter will be put up before the GST Council - the highest decision making body of the indirect tax regime, no sooner the report of the group is presented, she said. Sitharaman said Modi government was committed to the principle of cooperative federalism and will honour dues of the states.
After her reply, Rajya Sabha approved additional spending of over Rs 21,000 crore by voice vote. Lok Sabha had previously given its nod for such expenditure. During the debate, Congress leader Jairam Ramesh said states have not been paid their GST compensation for four months. This delay together with the economic slowdown is adversely impacting state finances, he noted. He quoted a letter written on the subject by Kerala Finance Minister Thomas Issac to Sitharaman to say that this non-payment constitutes a dispute between the Centre and the states but the GST law passed by the Parliament in 2017 does not provide for a dispute resolution mechanism. The draft legislation Congress-led UPA had brought for GST had dispute resolution provision, he said. "We have reached a stage where we have a serious dispute," he said, adding that . the "first element of cooperative federalism is fulfilling your promises, fulfil what law has been passed". According to him, the states are guaranteed 50 per cent of the I-GST revenues but haven't been paid. "The central government is sitting on a corpus of Rs 1 lakh crore, of which 50 per cent is law mandated share of states but it is not being shared with states," he added.
Sitharaman, however, said there is no dispute between the Centre and the states over GST compensation payment as the Centre has not declined to recognise the share of the states. Ramesh also said the state finances will deteriorate further with implementation of upcoming 15th Finance Commission recommendations as it may not give states the bonanza that the previous panel on sharing of tax revenues between centre and states had offered. Ragesh said GST compensation is to be paid at the end of every two months but non-BJP ruled states such as Kerala, Madhya Pradesh, Rajasthan, Chattisgarh, West Bengal, Delhi and Punjab have not been paid. "You are taking it as an opportunity to push non-BJP states into financial crisis," he added.
Business Standard, 13th December 2019

11/12/2019

GST must go back to drawing board; rates need to be simplified: N K Singh

The goods and service tax (GST) needs to be taken back to the drawing board and simplified, the Fifteenth Finance Commission Chairman N K Singh said on Tuesday. “GST needs to go back to the drawing board. We need simplicity of rates. Whether one rate or not is a matter of debate,” Singh said, adding in its current form, GST had made compliance very difficult. Singh was speaking at the launch of a book by former Finance Secretary Vijay Kelkar and economist Ajay Shah. In a chapter in the book, the authors have proposed a single-rate GST of 10 per cent. Kelkar said at the event that given the present situation in the Indian economy, reviving growth was far more important than anything else in meeting various objectives. Shah said that at the current level of state capability in India, it was better for the state to do fewer things but do them well. The event was also attended by former Prime Minister Manmohan Singh, who did not speak.
Additionally, a Fifteenth Finance Commission source said on Tuesday that the final report of the Commission will have a big chapter on GST. “There will be a big robust chapter on GST in our final report. We have very vital things to say about how the revenue behavior takes place. So from this point of view we have a strong stake in how future of the GST pans out,” the official said. The official said that GST needed to be revenue neutral and that the GST Council needed to move from multiplicity of rates to one standard rate. “A huge amount of simplification of procedures is needed to make compliance easier for a small scale industry guy, so that he does not have to employ a chartered accountant to fill forms. You also need to give it predictability and certainty because you cannot have predictability if you have many changes,” the official said.
Business Standard, 11th December 2019

10/12/2019

Central GST collection falls short of budget estimate by 40% during Apr-Nov

The Central GST collection fell short of the budged estimate by nearly 40 per cent during the April-November period of 2019-20, according to the data presented in Parliament on Monday. The actual CGST collection during April-November stood at Rs 3,28,365 crore while the budgeted estimate is of Rs 5,26,000 crore for these months, Minister of State for Finance Anurag Singh Thakur said in a written reply in Lok Sabha.The minister added that the data was, however, provisional. In 2018-19, the actual CGST collection stood at Rs 4,57,534 crore as against the provisional estimate of Rs 6,03,900 crore for the year, he said. In 2017-18, the CGST collection was Rs 2,03,261 crore. The minister said that as many as 999 cases were registered till October in the current fiscal for GST evasion and Rs 8,134.39 crore has been recovered. During 2018-19, a total of Rs 19,395.26 crore were recovered (1473 cases) and in 2017-18 the recovery was of Rs 757.81 crore (148 cases).
For strengthening monitoring tools to prevent GST evasion, emphasis has been laid on system based analytical tools and system generated intelligence, Thakur said. "In this connection, the Directorate General of Analytics and Risk Management(DGARM) has been set up by the CBIC. Further, E- way bill squads have been activated for the purposes of random verification of the goods in transit," he said. The minister also informed the house that it has inserted a new CGST rule which puts restriction that the input tax credit (ITC) availed by a taxpayer shall not exceed 20 per cent of the eligible credit available in respect of invoices or debit notes. The capping of ITC would lead to reduction in cases of fraudulent ITC availment as well as increase in payment of tax through cash thereby boosting GST collection, Thakur said further.
Business Standard, 10th December 2019.

07/12/2019

Govt will honour compact to give states their share of GST: Sitharaman.

The central government will keep its "compact" to give state their share of the goods and services tax (GST) though the cess collected has been inadequate, said Finance Minister Nirmala Sitharaman on Saturday. Sitharaman's statement comes after Kerala last week threatened to take the central government to Supreme Court over delay in the payment of compensation to states. The finance ministers of Punjab, Kerala, Delhi, Rajasthan, Chhattisgarh, and Madhya Pradesh had met Sitharaman on December 4 and urged that funds due for four months since August be released as soon as possible. “In the last GST collection, the cess fund wasn’t adequate (and) so the states didn’t get the 14 per cent?compensation. When we collect the required cess, we will honour the compensation rate,” said Sitharaman at the Hindustan Times Leadership Summit in New Delhi.
It’s not that the compact (with states) has been broken. The compact will be honoured,” she said. Cess collections under the GST to compensate states for revenue loss have fallen short of requirements in the current fiscal year on account of slowdown in demand. Under the law, if the states’ GST revenue does not grow by at least 14 per cent, the Centre pays them the difference after every two months. The August and September compensation dues for Rajasthan are Rs 4,400 crore, for Punjab it is Rs 2,100 crore, for Delhi it is Rs 2,355 crore, for Kerala it is Rs 1,600 crore, and for West Bengal it is Rs 1,500 crore.
Business Standard, 7th December 2019

06/12/2019

Top 10 business headlines: RBI pauses on rate cut, GST slab raise & more

1. RBI keeps repo rate unchanged at 5.15%, stance stays accommodative
The Reserve Bank of India on Thursday surprised markets by exercising a “temporary pause” on its interest rate, as it waits to get more clarity on inflation and government measures in the upcoming Budget in February, before re-engaging with the Centre on the “national endeavour” of lifting growth. The six-member monetary policy committee, headed by RBI Governor Shaktikanta Das, voted unanimously to keep the policy repo rate unchanged at 5.15 per cent. Read More
2. Not in favour of scrapping consumer survey report: NSC's Bimal Kumar Roy
Cryptologist Bimal Kumar Roy, former director of Kolkata-based Indian Statistical Institute, took charge as chairman of the National Statistical Commission at a time when questions were raised over the autonomy of statistical institutions. In his first interview after being appointed NSC chief, Roy speaks to Somesh Jha on the recent controversy over the government’s decision to scrap the consumer expenditure survey. Read More
3. 5% GST slab may be increased to 6%: Panel considering ways to boost revenue
The panel for shoring up muted goods and services tax collection is examining slab restructuring by increasing the 5 per cent rate to 6 per cent to begin with — a move that can result in additional revenues of Rs 1,000 crore per month. The 5 per cent slab covers essential commodities like basic clothing, footwear, and food items. The exercise assumes GST collection of Rs 1 trillion a month. According to the official data, the 5 per cent slab accounts for roughly 5 per cent of GST collection. Read More
4. CBDT quizzes senior officers over cancellation of Tata Trusts' registration
The Central Board of Direct Taxes has summoned senior officials who were till recently handling the case linked to the cancellation of Tata Trusts registration. The tax department is seeking explanation from these officials over the cancellation date to find out if there were lapses. Tata Trusts—the largest shareholder in the group’s holding company Tata Sons with a 66 per cent stake — had last month moved the Income Tax Appellate Tribunal to challenge the tax department order on cancelling the registration. Read More
5. Funds swindled by Nirav Modi could be much higher than earlier estimates
The total amount borrowed by diamantaire Nirav Modi — who was declared a fugitive economic offender by a special court here on Thursday — is much higher than the earlier estimates, said people aware of the forensic examination of the multi-billion-dollar fraud that hit Punjab National Bank last year. He is the second Indian to be declared a fugitive economic offender, after liquor baron Vijay Mallya. PNB officials declined to specify the exact numbers of letters of undertaking issued to Modi, if all related records in their possession were shared with BDO India (which is conducting the forensic audit in the case), and the exact value of loans taken by him over nearly a decade. Read More
6. India’s air connectivity to small towns and villages struggles to take off
Only about a third of the 232 routes to connect 137 cities that have been awarded to airlines under the RCS program are currently operational, even as the government has launched a fourth round of bidding this week. But there is likely to be limited appetite for the airport offerings, not only because of poor infrastructure, including landing systems, but also challenging geography like hilly areas, airline officials told Mint on condition of anonymity. As things stand, the focus of the fourth round of RCS bidding will be to connect to priority areas like North East India, Jammu and Kashmir, Ladakh, as well as hilly states in other parts of the country, and islands, reported Mint.
7. RBI's monetary policy spells more trouble for India Inc's earnings
Odds were in favour of a 25-basis-point reduction in repo rate. But when the Reserve Bank of India decided against it on Thursday, the stock market seemed to have taken it in its stride: Without losing much ground, the BSE Sensex closed almost flat at 40,779. According to Pankaj Pandey, head of ICICI Securities, an increase in inflation as spelt out in the RBI policy had somewhat been priced in. What gives some hope, explains Prabhudas Lilladher Chief Portfolio Manager Ajay Bodke, is “the monetary policy committee’s willingness to reduce rates in future if conditions warrant a reduction”. Read More
8. Flipkart leads $60 million round in logistics startup Shadowfax
Walmart-owned Flipkart has led a $60 million (about Rs 429 crore) investment round in logistics startup Shadowfax, as India’s largest online retailer looks to enable faster 2-hour delivery using a hyperlocal network and launch newer on-demand categories. The etailer has infused $35-$37 million in Shadowfax, sources said. Eight Roads Ventures, the venture capital arm of Fidelity, NGP Capital, Qualcomm Ventures, Mirae Asset Naver Fund, and World Bank-backed International Finance Corporation (IFC) also participated in the Series D round, according to Economic Times.
9. Cash cows sold, cash guzzlers remain: Rocky ride ahead for Chandra's Essel
Essel Group, led by media mogul Subhash Chandra, is in for a rocky ride after losing control over two of its biggest cash cows — Zee Entertainment and Essel Propack. Both companies accounted for the bulk of the group companies combined post-tax profits last financial year and were debt-free on a net basis, unlike the rest, shows an analysis of its financials. Analysts say the group is now largely left with cash-guzzlers like Dish TV, Zee Media, Siti Networks, Shirpur Gold, and Essel Infraprojects. Read More
10. Saudi Aramco raises $25.6 billion in largest-ever IPO; surpasses Alibaba
Saudi Arabia's state oil company Aramco launched its initial stock offering on Thursday, pricing at the high end of the target range and raising $25.6 billion, two sources told AFP. The sum raised by the oil giant surpasses the $25 billion garnered by the Chinese online trading group Alibaba in 2014 when it entered Wall Street. The market debut also puts the Saudi oil behemoth's value at $1.7 trillion, far ahead of other corporate giants in the trillion-dollar club: Apple ($1.2 trillion), Microsoft and Alibaba ($1.1 trillion).
Business Standard, 06th December 2019

05/12/2019

RBI likely to cut rates for sixth time this year, try help growth

The Reserve Bank of India is set to deliver its sixth straight interest-rate cut Thursday, shrugging off a spike in inflation as it stays doggedly focused on supporting economic growth. While all 34 economists surveyed by Bloomberg News as of Wednesday expect a reduction, the majority expect a quarter-point cut, with the rest expecting reductions of 15 basis points to 50 basis points. The RBI has cut borrowing costs by 135 basis points so far in 2019 to a nine-year low of 5.15%. The meeting of the six-member Monetary Policy Committee led by Governor Shaktikanta Das, who completes one year in office next week, comes amid deepening concerns about growth, financial stability and weak public finances. The policy decision will be announced at 11:45 a.m. in Mumbai, followed by a press conference 15 minutes later by Das. Here’s a look at what else to watch out for:
Growth trajectory
The RBI has lowered its growth forecast for the current fiscal year four times already, with the latest revision in October pegging expansion at 6.1%. Data since then has shown gross domestic product expansion slowing to 4.5% in the July to September period, the weakest pace in more than six years. “With no imminent signs of a turnaround, we expect the RBI to cut rates by 25 basis points at its December meeting,” said Teresa John, an economist at Nirmal Bang Equities Pvt. in Mumbai. The July-September period saw economic slack deepen, with manufacturing contracting. A purchasing managers survey indicated that activity in the dominant services industry slowed during that period. With surveys for both manufacturing and services in November pointing to a rebound, it’s worth watching if and by how much the RBI will further lower its growth forecast.
Flexible inflation
The MPC meets at a time when headline inflation has popped above the RBI’s 4% medium-term target for the first time in more than a year. The acceleration is driven by a spike in food prices, although underlying price pressures -- which strips out volatile food and fuel prices -- are benign. The rate-setting panel is likely to latch on to the subdued core inflation to vote for a rate cut and keep the outlook accommodative. Nevertheless, the central bank may revise upwards its inflation forecast for the fiscal year to March, indicating that room for further easing is closing. The headline inflation forecasts are likely to stay within the RBI’s wider band of 2%-6%. “The December policy will, in some sense, test the ‘flexible’ portion of the flexible inflation-targeting framework,” said Suvodeep Rakshit, senior economist at Kotak Institutional Equities in Mumbai. “Given the transient nature of food prices, and the sustained decline in core inflation, the MPC will likely continue to focus on the output gap and growth outlook.”
Financial conditions
While the RBI has delivered 135 basis points of interest-rate easing this year, lenders have only transmitted a fraction of that to borrowers. As such, the spread between the central bank’s key policy rate and the weighted average lending rate on outstanding loans from commercial banks is the highest in data going back to February 2012. Demand for loans has slowed and that reflects tight domestic credit conditions amid what Sonal Varma, chief economist for India and Asia, ex-Japan, at Nomura Holdings Inc., describes as a “triple balance sheet impairment of corporates, banks and shadow banks.” Companies are using money to repay loans instead of investing, banks are exercising caution in lending, fearing a bad loan pile up, while the shadow banking sector is grappling with a crisis that has seen defaults rise. “We expect incrementally the focus to now shift to government measures on specific sectors and to revitalize the financial sector,” Varma said.
Business Standard, 5th 2019

04/12/2019

As banks turn immune to monetary policy, QE may save the day for RBI

With India’s nominal GDP growing at its slowest pace in 17 years, it’s a given that the central bank will cut interest rates again this Thursday. What’s the point, though? Commercial bank lending rates have turned immune to monetary policy, so much so that a sixth reduction this year in the benchmark price of money will make hardly any difference. The only medicine that can work is quantitative easing, a remedy authorities aren’t even discussing. QE may not cure the patient, but it may well succeed in bringing India’s economy out of a coma. To see why the quantity of money is a bigger problem than its price, consider M4. The growth rate of India’s broadest measure of money supply has collapsed to single-digit levels for some time now, and is refusing to budge. New loans automatically create new deposits in the banking system. But until there are creditworthy takers for fresh advances, deposits won’t revive. Time and demand deposits at banks account for 84 per cent of money supply, so it’s hard for the latter to get a boost without an uptick in the former. Unconventional asset purchases can make a difference, though not the vanilla Japanese variety in which the central bank buys government bonds from banks for cash, which they stuff into their current accounts with the monetary authority.
This kind of QE does have a couple of advantages. One, it lowers the long-term government bond yield. That reduces loan costs for risky borrowers, since government bond yields act as a benchmark. Two, a more liquid banking system with more low-yielding cash than higher-yielding bonds will be impatient to lend — at least in theory. Yet this type of QE relies on loans being made. If the demand side of the economy is struggling, the impact may be limited because of the one thing it doesn’t do: lift money supply in the broader economy. That’s a point Invesco Asset Management chief economist John Greenwood has made in Japan’s case. For India, it would help much more for the central bank to buy government bonds from nonbanks, following in the footsteps of the US Federal Reserve, which primarily purchased securities from hedge funds, broker-dealers and insurance companies. Since nonbank sellers of bonds don’t have accounts at the Reserve Bank of India, they’ll deposit any cash they receive with commercial lenders. Money supply would accelerate even without new loans being made.
That may be quite useful in India’s current circumstances. Banks, shadow lenders and India Inc. are all suffering from what Nomura Holdings Inc. economist Sonal Varma calls the “triple balance sheet problem.” The Indian government is already helping itself to practically all of the household sector’s savings. It doesn’t have more scope for deficit spending. In any case, borrowing at a higher cost than the nominal GDP growth rate would only swell the national debt. If the RBI does experiment with Fed-style quantitative easing, how far can it go? As much as 15 per cent of the outstanding 59 trillion rupees ($827 billion) of federal Indian debt is already owned by the central bank, while commercial lenders are sitting on another 40 per cent. The remaining 45 per cent is with other financiers, insurance companies, provident and mutual funds, corporations, foreign investors, primary dealers and state governments. Were the RBI to buy half of nonbanks’ $365 billion stockpile of bonds, India’s $1.8 trillion in bank deposits could rise by 10 per cent, injecting new life into the anemic expansion of money supply.
If nothing else, a more liquid nonbank sector would want to buy new government debt to earn a yield. New Delhi’s financing constraints would ease, allowing for a round of fiscal pump-priming that hopefully would create new machinery and project orders for the private sector, ending years of gloom around investment. If the RBI thinks of asset purchases as a way to further reduce the price of money, then it will want to wait until it has exhausted its conventional firepower by cutting the 5.15 per cent policy rate further. Given the primacy of food and fuel in India's inflation, which is currently hovering at 4.6 per cent, policymakers have some limited elbow room. But if the central bank views asset purchases as a way to influence the waning quantity of money, then it should act now. Doing so may well save the day.
Business Standard, 4th December 2019

29/11/2019

Cos opting for new lower tax can't claim MAT credit, other deductions: CBDT

The finance ministry on Wednesday said companies opting for the lower corporate tax rate of 22 per cent will not be allowed to reduce their tax liability by claiming deductions towards additional depreciation and Minimum Alternative Tax (MAT) credits. The Central Board of Direct Taxes (CBDT), in a clarification, said companies will be allowed to utilise such credits only against regular taxes under the old regime and may opt for lower corporate tax regime in the subsequent assessment years. There is no timeline within which the option under newly inserted 115BAA in the Income Tax Act can be exercised, it added. Under Section 115BAA, it was stated that companies opting for lower tax rate of 22 per cent will not be allowed to claim any deduction or exemption. It gave the companies right to exercise the option before furnishing the income tax return. It was also stipulated that the option, once exercised, cannot be withdrawn in subsequent years. The section does not provide any timeline for companies to opt for the new regime of lower tax rate. Responding to clarification sought by companies if they would be allowed to reduce their tax liability by adjusting losses on account of additional depreciation and take advantage of MAT credit, the CBDT said, " a domestic company which would exercise option for availing benefit of lower tax rate under section 115BAA shall not be allowed to claim set off of any brought forward loss on account of additional depreciation for an Assessment Year for which the option has been exercised and for any subsequent Assessment Year."
As regards MAT, the CBDT said "the tax credit of MAT paid by the domestic company exercising option under section 115BAA of the Act shall not be available consequent to exercising of such option (relating to lower tax rate)." The CBDT clarified that as there is no timeline within which option under section 115BAA can be exercised, a domestic company having credit of MAT may opt for the new tax regime after utilising the credit while discharging the regular tax liability under the structure which prevailed prior to promulgation of the tax Ordinance. The President last month promulgated an Ordinance reducing the rate of corporate tax to 22 per cent from 30 per cent with some riders. According to Deloitte India partner Rohinton Sidhwa, the circular clarifies whether at the time of the switch a one-time write off of MAT credit would be triggered or not. "The circular now confirms that it will. This could be a huge cost to some companies who will now perhaps consider continuing under the old regime for the time being. This was perhaps done to minimize the costs to the exchequer for the transition," he said.
The new changes overall are heavily weighed in favour of new companies and new investors, he said, adding the one-time transition costs, requirement for fresh investments and other hurdles posed for existing taxpayers are significant enough to dent the benefits intended in the original announcement. In the biggest reduction in 28 years, the government last month slashed corporate tax by almost 10 percentage points as it looked to pull the economy out of a six-year low growth and a 45-year high unemployment rate by reviving private investments with a Rs 1.45-lakh crore tax break Base corporate tax for existing companies has been reduced to 22 per cent from the current 30 per cent; and for new manufacturing firms, incorporated after October 1, 2019 and starting operations before March 31, 2023, to 15 per cent from the current 25 per cent India had the highest effective corporate tax rate of 38.05 per cent in 1997.
Business Standard, 29th November 2019

28/11/2019

Rupee is the worst performer in emerging Asia as RBI tries to lift economy

The Reserve Bank of India’s efforts to support the flagging economy are turning out to be a bane for the rupee. The currency is the worst performer in emerging Asia this quarter, and analysts say that’s because the central bank is mopping up dollars gushing into local stocks and bonds. The RBI bought has about $18 billion of foreign exchange since the end of September, according to estimates by Bloomberg Economics. While the purchases have propelled reserves to a record, the rupee has fallen about 0.7% since Sept. 30. Weakness in the rupee despite robust inflows is seen as a sign the central bank wants to curb a sharp appreciation in the currency that can hurt exports. With slew of data pointing to weak economic activity, boosting shipments is high on agenda for the government. “Part of the rupee’s under performance is deliberate,” said Mitul Kotecha, a senior EM strategist at TD Securities in Singapore. “Higher reserves prove that the central bank is probably making determined efforts to keep the rupee’s competitiveness.”
The RBI has said it does not target any particular level of exchange rate and steps in only to curb undue swings in the currency. Though, as the rupee was heading for its worst quarterly decline in a year in the three months ended September, Governor Shaktikanta Das said September 19 that the currency is fairly valued, indicating tolerance for a weaker rupee. India’s exports have shrunk for three months in a row, contributing to further deepening of a growth slowdown. A report on Nov. 29 is likely to show gross domestic product grew 4.6%, which would be the weakest pace of expansion since the first three months of 2013. Expectations that the government will continue to take steps to revive growth has prompted foreign funds to pump $4.6 billion into local shares and more than $600 million into debt this quarter. The purchases have pushed up the nation’s main stock index to a record. The central bank will continue to soak up the inflows to address the rupee’s overvaluation, according to Kotak Securities Ltd. “When you have decent inflows, there is no reason for the rupee to depreciate and the RBI’s sharp dollar purchases are the predominant reason behind the weakness,” said Anindya Banerjee, a currency analyst at Kotak in Mumbai.
Business Standard 28th November 2019

23/11/2019

Sebi bans Karvy Stock Broking for Rs 2,000 crore client defaults

Sebi said the unauthorised use of clients' funds creates a serious doubt over the conduct and integrity of KSBL. After a major scandal hit the stock markets with the brazen modus operandi of misusing clients' funds, the Securities and Exchange Board of India (Sebi) has banned Karvy Stock Broking (KSBL) from taking new clients and executing trades. IANS had first reported the payment defaults occurring in Karvy Stock Broking and its clients filing complaints with the Prime Minister's Office (PMO), the Finance Ministry and Sebi. Sebi said the unauthorised use of clients' funds creates a serious doubt over the conduct and integrity of KSB This is one of the biggest cases of broker defaults in the equity segment and despite numerous regulations, the fact remains that clients' money and securities were brazenly misused for its own purposes by Karvy Stock Broking. The defaults are to the tune of Rs 2,000 crore and in an ex-parte order, Sebi has directed that pending forensic audit, KSBL is prohibited from taking new clients with respect to its stock broking activities.
The depositories, i.e. NSDL and CDSL, in order to prevent further misuse of clients' securities by KSBL, are hereby directed not to act upon any instruction given by KSBL in pursuance of power of attorney given to KSBL by its clients with immediate effect, Sebi said. The depositories shall monitor the movement of securities into and from the DP account of clients of KSBL as DP to ensure that clients' operations are not affected. "Therefore, there is need for urgent regulatory intervention to prevent further misuse of clients' securities," said Ananta Barua, wholetime member, Sebi, in the order. Detecting the fraud, the order noted that the securities lying in the aforesaid DP account actually belong to the clients who are the legitimate owners of the securities. Therefore, KSBL did not have any legal right to create any kind of pledge on these securities, the order said. Even if clients' securities were pledged, it should have only been for meeting the obligation of the respective clients which was not observed in this case. "Considering the issue of misuse of clients' securities by KSBL in an unauthorised manner, for its own use and purposely not disclosing the DP account no. 11458979, named KARVY STOCK BROKING LTD (BSE) to the Exchanges in their reporting create a serious doubt on the conduct and integrity of KSBL," Sebi said in the strongly worded order.
The NSE on Friday forwarded a preliminary report to Sebi on the non-compliances observed with respect to the pledging/misuse of client securities by KSBL. NSE has also stated that a detailed report in the matter will be submitted shortly. KSBL has sold excess securities (securities not available in DP account) to the tune of Rs 485 crore through nine related clients till May 31, 2019. Further, KSBL has also transferred excess securities to six out of these nine related clients to the tune of Rs 162 crore till May 31, 2019. On subsequent verification, it was observed that securities worth Rs 257.08 crore, pledged on behalf of four clients out of the aforesaid nine clients, were unpledged between June 1, 2019 and August 22, 2019 and securities worth of Rs 217.85 crore was recovered by KSBL from four out of the nine client accounts. KSBL has also purchased securities in five out of the nine client accounts amounting to Rs 228.07 crore during the period from June 1, 2019 to September 8, 2019. KSBL had undertaken the recovery/purchase of securities to recoup the securities shortfall.
Prima facie, a net amount of Rs 1,096 crore has been transferred by KSBL to its group company, i.e. Karvy Realty Private Limited, between from April 1, 2016 and October 19, 2019. Further, KSBL has sold excess securities (securities not available in DP account) to the tune of Rs 485 crore through nine related clients till May 31, 2019. Further, Karvy had also transferred excess securities to six out of these nine related clients to the tune of Rs 162 crore till May 31, 2019. On subsequent verification, it was observed that securities worth Rs 257.08 crore pledged on behalf of four clients out of the aforesaid nine clients were unpledged between June 1, 2019 and August 22, 2019 and securities worth of Rs 217.85 crore was recovered by KSBL from four out of the nine client accounts. KSBL has also purchased securities in five out of the nine client accounts amounting to Rs 228.07 crore between June 1, 2019 and September 8, 2019.
Business Standard, 23rd November 2019

22/11/2019

RBI sets up three-member advisory committee to assist DHFL administrator

The committee would comprise of Rajiv Lall, non-executive chairman, IDFC First Bank Ltd, N S Kannan, managing director and CEO, ICICI Prudential Life Insurance Co. Ltd, and NS Vekatesh, CEO Amfi The Reserve Bank of India (RBI) on Friday constituted a three-member advisory committee to assist DHFL's administrator in discharge of his duties. The three-member advisory committee would comprise of Rajiv Lall, non-executive chairman, IDFC First Bank Ltd, N S Kannan, managing director and CEO, ICICI Prudential Life Insurance Co. Ltd, and NS Venkatesh, chief executive, Association of Mutual Funds in India. The appointment is in line with Insolvency and Bankruptcy Code rules that provide for the concerned financial sector regulator appointing a committee of advisors to advise the administrator in the operations of the financial service provider during the insolvency resolution process.
The RBI on Wednesday had appointed R Subramaniakumar, former managing director and chief executive of Indian Overseas Bank, as the administrator of DHFL, to run the affairs of the entity which was once controlled by the Wadhawan family. Banking sources said the size of DHFL’s debt on book is large (about Rs 94,000 crore) and its administrator will need assistance in creating a resolution plan. The administrator will also finalise the timetable for financial performance review. Lenders are already working at a new plan for resolution after the IBC proceedings against DHFL are admitted in the NCLT. Under this, banks might convert a part of their loans to equity. Lenders also plan to get private equity investors for fresh capital.
Business Standard, 22nd November 2019

18/11/2019

SMS for Week ended 18-11-2019
S.NO
Messgae
1 Today (11.11.19) is the last date to file GSTR-1 by Regular & Casual suppliers for the month of October, 2019(Turnover exceeds 1.5 crores).Regards Webtel
2 GSTGyan 1439. ITC restiction of 20% as per Rule 36(4), availed after 9.10.19 to be on Self Assessment& not through portal. Circular 123/42/2019-GST of 11.11.19
3 Wef 1.10.19, new employee can be registered on ESI portal within 10 days of joining only. Late ESI Deposit latest by 11 Nov for Apr-Sep & 11 May for Oct-Mar.
4 Today (13.11.19, Wednesday) is the Last date to file GSTR-6 (Return of ISD) for the month of October 2019. Regards Webtel
5 Extension of due date for filing GST Annual Return & Audit Report in GSTR-9&9C for FY 17-18 till 31-12-19 &for FY 18-19 till 31-03-20.Press Release of 14.11.19
6
GSTGyan 1440. GSTR-9C (FY 17-18 & 18-19) Expense wise breakof ITC (Item 14) & Cash flow statement Optional. Reconciliation of Turnover in single item 5O. Webtel
   

15/11/2019

Deadline for GST filing, returns extended to March 31; forms simplified

The earlier deadline for filing of GSTR-9 and GSTR-9C for 2017-18 was November 30, 2019, while that for 2018-19 was December 31, 2019 In a relief to taxpayers, the government on Thursday extended the due dates for filing GST annual returns for 2017-18 to December 31 and for the financial year 2018-19, to March 31 next year. The dates for filing the reconciliation statement has also been extended accordingly. In another relief, it has also decided to simplify the two GST forms by making various fields of these forms as optional, the Central Board of Indirect Taxes and Customs (CBIC) said in a statement. "The government has decided today (Thursday) to extend the due dates of filing of Form GSTR-9 (Annual Return) and Form GSTR-9C (Reconciliation Statement) for 2017-18 to December 31, 2019 and for 2018-19 to March 2020," it said. The earlier deadline for filing of GSTR-9 and GSTR-9C for 2017-18 was November 30, 2019, while that for 2018-19 was December 31, 2019.
Notifications regarding the extension of the dates have been issued. The CBIC in the revenue department has also notified the amendments regarding the simplification of the annual return and reconciliation statement forms. A reconciliation statement allow taxpayers to not provide split of input tax credit availed on inputs, input services and capital goods for 2017-18 and 2018-19. CBIC further said it is expected that with the simplifications in the two forms and the extension of deadlines, "all the GST taxpayers would be able to file their annual returns along with reconciliation statement in time". Various representations regarding challenges faced by taxpayers in filing of GSTR-9 and GSTR-9C were received on which by the Government has "acted in a very responsive manner", the CBIC statement added.
Business Standard, 15th November 2019

14/11/2019

At 4.6% in Oct, retail inflation breaches RBI comfort level after 15 months

But core inflation, which excludes the volatile components of food and fuel, stood at 3.3 per cent in October; this is its lowest in eight years The food inflation rate rose to 7.9 per cent, the highest in 39 months, with vegetables (up 26 per cent) and pulses (up 11.7 per cent) contributing the most to this Consumer prices rose at 4.6 per cent in October, the fastest rate since June last year, reflecting that vegetables and pulses have become more expensive in the country. This is an inch above the median 4 per cent target set by the Reserve Bank of India under its inflation-targeting framework. But the core inflation rate, which excludes the volatile components food and fuel, dropped to its lowest in the past eight years, at 3.3 per cent, in October. Core inflation represents the demand and pricing power in the economy, and a sharp drop in October portends feeble prospects of recovery in the current quarter also. The food inflation rate rose to 7.9 per cent, the highest in 39 months, with vegetables (up 26 per cent) and pulses (up 11.7 per cent) contributing the most to this. Food inflation in urban areas, at 10.7 per cent, is the highest in six years.
But in part, this ramp-up is due to a low-base effect, as food prices were stagnant for the most of 2018. Experts said low core inflation would prevail over rising headline inflation as the monetary policy committee (MPC) gears up for its December meeting, staring at another slowing quarter. “While volatile food inflation is an idiosyncratic factor, core inflation reflects weaknesses in the economy. While it is generally sticky (rarely moves fast), it has been hammered down by a weak economy,” D K Joshi, chief economist at CRISIL, told Business Standard. He said growth was slowing fast, and it had opened up further the space for monetary easing. Ananth Narayan, who teaches finance at a premier business school in Mumbai, said a declining core inflation rate showed that pricing power in the economy had diminished.
“While this makes growth the chief concern before the MPC, the struggle to ensure efficient transmission in lending rates would assume even more importance in coming months,” he said. Economists also said inflation would stay at above 4 per cent for some more months, owing to the low base effect. “Food price inflation is likely to increase further at least till March next year, mainly due to food price deflation till February 2019 and low inflation in March 2019,” said Devendra Pant, chief economist at India Ratings. Core inflation was flying above 6 per cent in 2018, which had prompted the then MPC led by former governor Urjit Patel to raise policy rates, and change stance to calibrated tightening. This was followed by a gradual fall in core inflation, a rate cut cycle that has spanned 135 basis points since February 2019. “Overall, CPI inflation may remain higher than 4 per cent in the remainder of FY20, complicating policy choices in light of the slowdown in the economic growth momentum,” Aditi Nayar, principal economist at ICRA, said.
Business Standard, 14th November 2019

11/11/2019

Direct Tax Revamp to Fetch ? 55K Cr: Experts

The government could boost its revenues by more than ?55,000 crore if it implements a task force report that calls for a complete rejig of income tax slabs and capital gains tax regime, two persons familiar with the content of the report said. “There could be an overall gain in revenues if the recommendations are implemented in full,” one of the persons said. The government has begun examining the report of the task force on direct taxes, and it is expected that some its recommendations may find place in the upcoming budget. The report—which is yet to be made public — has suggested a radical shift to taxation approach by suggesting no prosecution or reopening of assessment for people who declare and pay higher income tax for a past period of up to six years with interest and 50% penalty.
“It has been seen that taxpayers do not pay higher tax for a past period for fear of reopening of assessment and prosecution,” said the second person cited earlier. It would give a boost to revenues, the person said. he report has also suggested new income-tax slabs of 10% for people earning up to ?10 lakh per year, 20% for those with incomes of over ?10 lakh and up to ?20 lakh, 30% for incomes of over ?20 lakh and up to ?2 crore, and 35% for individuals earning more than ?2 crore. It has not suggested any change to current income tax exemption limit The current I-T rates are 5% plus 4% cess for people earning between ?2.5 lakh and ?5 lakh, 20% plus 4% cess for incomes of more than ?5 lakh up to Rs 10 lakh, and 30% plus 4% cess for those earning over ?10 lakh.
The task force has suggested removal of surcharge that ranges between 15% to 37%. It has also proposed restricting deductions available to individuals to provident fund, medical and education expenses, housing loan and charity to bring efficiency gains. Currently, individuals can avail a host of deductions in lieu of interest on savings in fixed deposits, equity-linked savings schemes and insurance. The task force has suggested removal of deduction available in lieu of interest and rentals. On the capital gains tax regime, the task force has suggested three categories: equity, non-equity financial assets, and all others including property. Indexation benefits is proposed to be restricted to non-equity financial assets and all other assets categories.
A long-term capital gains (LTCG) tax of 10% is proposed for gains on sale of equity assets held for more than 12 months. For equities held for a shorter period, 15% short-term capital gains tax has been proposed. For non-equity financial assets held for over 24 months, a LTCG of 20% with indexation has been proposed for gains on sale. In case of all other assets, a 20% tax with indexation on gains on sale post holding a period of 36 months has been proposed. At present, equities, preference shares, equity-based mutual funds, zero coupon bonds, Unit Trust of India units are considered long-term assets if held for a period of over 12 months. Debt-oriented mutual funds, jewellery held for a period of over 36 months are treated as long-term. Real estate held for over 24 months is treated as a long-term asset.
The task force has not suggested discontinuation of securities transaction tax levied on equities. It has suggested changes to taxation of employee stock option plans to incentivise startups. The report has suggested 25% tax for foreign companies and a branch profit tax rate of 15% if these are repatriated. It suggested scrapping of dividend distribution tax, and instead tax dividends in the hands of recipient. It has also suggested widening of presumption taxation to enhance tax base. The report called for public rulings. The task force, with Central Board of Direct Taxes member Akhilesh Ranjan as convenor and chief economic advisor K Subramanian as member, had submitted its report on August 19.
The Economic Times, 11th November 2019

SMS for Week ended 11-11-2019
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06/11/2019

Sebi Tightens Rules on Participatory Notes

India’s capitalmarkets regulator on Tuesday tightened rules on participatory notes (p-notes), or offshore derivative instruments issued by brokers to foreign investors not registered locally, while easing some operational norms for select overseas funds.ET was the first to report last month on the likelihood of the Securities and Exchange Board of India (Sebi) tightening the rules governing pnote investments. Sebi said late Tuesday that foreign portfolio investors (FPI) would have to make separate registrations for issuing p-notes for underlying derivatives. However, this requirement is waived for p-notes against underlying cash equities. “Based on the new guidelines, some of the existing FPIs will have to get separate registrations if they want to issue p-notes based on derivatives,” said a tax consultant, who did not want to be named. “However, Sebi has not prescribed any relaxation for such separate registrations. This could escalate the compliance burden on some of the big FPIs. Since the KYC information is already available with custodians and Sebi, funds should not be made to wait 45 days for a registration.”
ET had reported last month that stricter rules would impact at least two of the top five p-note issuers in the Indian markets, which reportedly have a combined market share of around 30%. The total value of p-notes issued stood at ?79,800 crore in August, Sebi data showed. The regulator also said that an ODI-issuing (offshore derivative instrument) overseas investor, which hedges its ODI only by investing in securities held by it in India, cannot undertake proprietary derivative positions through the same FPI registration. Such an FPI must segregate its ODI and proprietary derivative investments through separate FPI registrations. “An ODI-issuing FPI cannot commingle its non-derivative proprietary investments and ODI hedge investments with its proprietary derivative investment or vice versa in the same FPI registration,” Sebi said in the new operating guidelines posted on its website. P-notes are derivative instruments issued by registered foreign portfolio investors to overseas investors to enable them to trade in Indian stocks without having to register with Sebi.
Sebi Tightens Rules on Participatory Notes
“No fresh derivative position, not in compliance with the above requirements, shall be allowed henceforth. FPIs have 90 days’ time from the date of publication of the Operating Guidelines to comply with the above requirements,” the Sebi order said. “Offmarket transfer of assets/positions will be allowed for FPIs intending to transfer assets/ position from one FPI account to another FPI account to comply with the above requirements.” To be sure, the regulator has also relaxed some KYC norms for FPIs. It has exempted category I FPIs from submitting the information of their beneficial owners to custodians. Market participants said that the regulator has also given more clarity on the KYC documents that need to be collected for each category of offshore funds. The regulator has also put in place a data-privacy mechanism for sharing of KYC documents across market institutions, such as brokers and depositories. Going forward, all such data sharing will be consent based. Further, global custodians have been allowed to rely on the documentation collected by their own bank in a different country. Hence, in some cases, leading global custodians will be able to onboard FPIs into Indian markets without any fresh KYC.
“We believe that clarifications such as reliance on information available from reliable public sources would make life much simpler for several investors,” said Sriram Krishnan, managing director, Deutsche Securities Services. “Around 80% of all FPIs, if not more, are likely to be in Category I, where for identification and verification of beneficial owners, the document number is not required to be provided.” Some long-standing concerns remained even after the regulator issued the new guidelines. “Several procedural clarifications have also been provided in the new guidelines, making the new FPI norms more robust and transparent,” said Tejesh Chitlangi, partner, IC Universal Legal. “However, some of the major industry concerns pertaining to continuing restrictions on majority NRI holdings in FPIs and less favourable treatment of non-FATF member jurisdictions, such as Mauritius, from the perspective of higher KYC and ODI restrictions continue.”
The Economic Times, 6th November 2019

04/11/2019

PM says will further improve tax regime to attract overseas investment

India is committed to further improving its people-friendly tax regime, Prime Minister Narendra Modi said, as Asia’s third-largest economy seeks to attract more overseas investment to spur growth. The government has cut corporate tax rates and introduced a nationwide goods-and-services charge to integrate the nation’s economy, Modi said in a speech at Aditya Bira Group’s golden jubilee celebrations in Thailand on Sunday. “We want to work toward making it even more people friendly,” he said. Attracting new investment is key to creating jobs and boosting growth in the economy, which slowed to a six-year low growth rate of 5 per cent in the quarter ended June. India is considering tax relief for individuals as it looks at measures to accelerate consumer demand.
The next pulse check for the economy is due on Nov. 29, when the government will publish gross domestic product data for the July-September period. Modi aims to make India a $5 trillion economy by 2025. “For investment and easy business, come to India,” Modi said. The nation welcomes investors who are keen on innovation and plan to start new businesses, he said.
Business Standard, 4th November 2019

SMS for Week ended 04-11-2019
S. No.
Messgae
1. Tomorrow(31.10.19) is last date to file ITRs by Cos & audit cases,Tax Audit Report etc,TDS Returns & GSTR-1 of Sep quarter,MSME-1 Apr-Sep with MCA. Rgds, Webtel
2. Extension of last date for filling AOC-4, AOC(CFS) AOC-4 XBRL to 30.11.2019 & for filling MGT-7 to 31.12.2019 without late fee. Circular No.13/2019.Rgds,Webtel.
3. TODAY(31.10.19) is last date to file ITRs by Cos & audit cases, Tax Audit Report etc, TDS Returns & GSTR-1 of Sep quarter, MSME-1(Apr-Sep) with MCA. Rgds Webtel
4. GSTGyan 1437. From Oct returns onwards, pay tax on RCMon Renting of motor car toCo(where applicable), Transfer of Copyright by author & Securities Lending

02/11/2019

RBI Revamps Units for Effective Supervision, Regulation of Fin Sector

The Reserve Bank of India (RBI) reorganised its regulatory and supervisory departments as a part of its initiative to have a holistic approach towards supervision and regulation amidst growing complexities and interconnectedness in the financial system. With a view to having a holistic approach to supervision and regulation of the regulated entities to address growing complexities, size and interconnectedness and also to deal more effectively with potential systemic risks that could arise due to possible supervisory arbitrage and information asymmetry, it has been decided to integrate the supervision functions into a unified Department of Supervision and regulatory functions into a unified Department of Regulation with effect from November 1, 2019, according to an RBI release on Friday.
The RBI board had in May 2019 approved the creation of a separate supervisory and regulatory cadre. “The restructuring of the regulation and supervision function is among a series of steps RBI will take to implement this decision,” the central bank said. Currently, supervision is conducted through three separate departments, department of banking supervision, department of non-banking supervision, and department of co-operative bank supervision. Similarly, regulation is also carried out by three separate departments. The restructuring will make the supervisory and regulatory process more activity based rather than being segmented purely based on the organisational structure of regulated entities, facilitate more effective consolidated supervision of financial conglomerates among the RBI supervised entities, among others.
The Economic Times, 2nd November 2019

30/10/2019

Stocks Rally for Third Day on Tax Cut Hopes

Stocks surged for the third straight day and closed at near-four-month highs as better than expected earnings and hopes of tax sops for equity investors lifted sentiment. Higher retail and car sales during the long Diwali weekend and the festival month of October also added to the buoyant mood with investors expecting more government measures to propel the economy out of its year-long slump. The Sensex climbed 582 points to end at 39,831.84, its highest close since July 2. The Nifty rose 160 points to close at 11,786.85. All indices ended in the green except telecom, which fell 4%. The BSE MidCap and SmallCap indices rose 1.12% and 0.55%, respectively. The Sensex and the Nifty have risen 10.43% and 8.51%, respectively year-to-date. Markets were buoyed by reports that the government may consider rationalising the taxes that equity investors pay, including the long-term capital gains tax announced in last year’s budget. The finance ministry and the prime minister’s office are holding consultations on cutting some rates and doing away completely with the securities transaction tax, some media reports said. Foreign portfolio investors bought shares worth ?877 crore on Tuesday while domestic institutions pumped in ?145 crore in equities. Stocks surged for the third straight day and closed at near-four-month highs as better than expected earnings and hopes of tax sops for equity investors lifted sentiment.
Higher retail and car sales during the long Diwali weekend and the festival month of October also added to the buoyant mood with investors expecting more government measures to propel the economy out of its year-long slump. The Sensex climbed 582 points to end at 39,831.84, its highest close since July 2. The Nifty rose 160 points to close at 11,786.85. All indices ended in the green except telecom, which fell 4%. The BSE MidCap and SmallCap indices rose 1.12% and 0.55%, respectively. The Sensex and the Nifty have risen 10.43% and 8.51%, respectively year-to-date. Markets were buoyed by reports that the government may consider rationalising the taxes that equity investors pay, including the long-term capital gains tax announced in last year’s budget. The finance ministry and the prime minister’s office are holding consultations on cutting some rates and doing away completely with the securities transaction tax, some media reports said. Foreign portfolio investors bought shares worth ?877 crore on Tuesday while domestic institutions pumped in ?145 crore in equities.
Good Show by Heavyweights
Heavyweights like ICICI Bank, SBI and Tata Motors posted better than expected second quarter earnings over the weekend leading many investors to believe that the worst may be over for auto and banking stocks. Tata Motors surged 17% on Tuesday capping 30% rise in just two days. SBI fell on Tuesday but the shares had risen 7% on Friday after posting a three-fold rise in second quarter profits. Reliance Industries surged 2.3% to Rs 1,467, contributing most to the Sensex’s gain, after it announced plans to make its telecom subsidiary net-debt free and the setting up of a new company to house all digital initiatives and apps. Metal stocks were also big gainers. Tata Steel and JSW Steel rallied 7% while SAIL and Jindal Steel gained 5% each. “A sharp turn in sentiment can lift all the boats and offer good trading opportunities in the beaten down stocks,” Gaurav Dua, head of capital market strategy & investments at Sharekhan, said referring to the improved mood after the Diwali sales and earnings reports.
The Economic Times, 30th October 2019

23/10/2019

GST-Audit-Manual-2019

22/10/2019

SMS for Week ended 21-10-2019
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  • Cost Audit Amendment Rules


  • APPLICABILITY OF COST AUDIT REPORT

    W.E.F. FY 2014-15

    G. S. R. 425 (E) dated 20.03.2013


    Delhi VAT Commissioner has allowed to Cost Accountants to Special VAT Audit.

    Relaxation of additional fees and extension of last date infiling of various forms with the Ministry of Corporate Affairs-reg

     

    General Circular No. 07/2013  dated 20.03.2013

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