Total bad loans seen at whopping $130 bn; as defaults rise, cases at NCLT accumulate

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Stressed loans near $10-billion mark; total bad loans seen at over $130 billion; 250 NCLT cases across 10 benches
While many of the loan exposures had turned toxic in 2015 and 2016, bankers were looking to recover their dues via other schemes such as the strategic debt restructuring or the S4A (scheme for sustainable structuring of stressed assets ) and 5/25.

While many of the loan exposures had turned toxic in 2015 and 2016, bankers were looking to recover their dues via other schemes such as the strategic debt restructuring or the S4A (scheme for sustainable structuring of stressed assets ) and 5/25.

With defaults on loans and corporate bonds nudging $10 billion in 2017 so far and the total quantum of bad loans estimated to have crossed $130 billion, the number of cases at the National Company Law Tribunal (NCLT) has jumped to around 250 across 10 benches. At the end of March, fewer than 40 cases had been referred to the tribunal. Banks are hoping to recover their loans via the Insolvency and Bankruptcy Code(IBC) and have already referred a dozen large accounts to the tribunal following a recommendation from the Reserve Bank of India (RBI). They are expected to approach the tribunal for another two dozen accounts.

Apart from banks, also knocking on the doors of the NCLT are other creditors such as non-banking financial companies and asset reconstruction companies. A few corporate debtors too have approached the tribunal.

While many of the loan exposures had turned toxic in 2015 and 2016, bankers were looking to recover their dues via other schemes such as the strategic debt restructuring or the S4A (scheme for sustainable structuring of stressed assets ) and 5/25.

Consequently, several of the exposures had not been classified as non-performing assets. With the RBI asking banks to refer the cases to the NCLT, the tribunal has been inundated with cases.

Industry watchers believe that given the quality of the fixed assets — plant and machinery — at many of the companies is of good quality, the firms are unlikely to be liquidated. However, buyers will come in only if banks take big haircuts since just about 45-50% of the debt is believed to be sustainable.

Of the 12 cases referred to the NCLT, 11 have been admitted. While some of the companies — Essar Steel, Bhushan Steel and Monnet Ispat — raised objections, the tribunal overruled these.

Bhushan Steel, which owes banks a whopping Rs 44,447 crore, had earlier objected to the insolvency proceedings alleging that State Bank of India (SBI) had inflated the dues by around Rs 100 crore.

Nonetheless, SBI’s petition was admitted by the NCLT, which ordered the interim resolution professional (IRP) to take charge of the company. The IRP, along with a committee of creditors, is currently working on a resolution plan.

The central bank has recently sent a second list of defaulters like Videocon Industries, IVRCL and Visa Steel that banks must take to the bankruptcy court if stress is not resolved by December 13.

These defaults, in turn, have put pressure on banks’ balance sheets which have reported a remarkable rise in bad loans in the June quarter of FY18. India’s largest bank SBI saw its gross bad loan ratio — total non-performing loans as a percentage of its total loans — rise 86 basis points sequentially to 9.97%.

SBI has an exposure of Rs 50,247 crore to the 12 accounts referred to the NCLT and the total provision on those accounts stood at Rs 19,943 crore. SBI chairman Arundhati Bhattacharya told reporters during the results press conference that the bank requires incremental provision of Rs 8,571 crore with respect to the 12 accounts in FY18.

Source: Financial Express

 

Last date for filing of GST returns for July, Aug extended

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Of the 59.57 lakh businesses, who should file return for July, 38.38 lakh had filed their GST returns.

Businesses will have more time to file the final GST returns as the government on Monday extended the last date for filing of sales and purchase data as well as payment of taxes for the months of July and August.

Now sales return or GSTR-1 for July will have to be filed by September 10 instead of September 5 earlier and purchase returns or GSTR-2 would be filed by September 25 instead of September 10 earlier.

 GSTR-3, which is the match of GSTR-1 and GSTR-2, will have to be filed by September 30, in place of September 15.

“GIC (GST Implementation Committee) decides to extend date of GSTR 1, GSTR 2 and GSTR 3 for the month of July to 10th, 25th and 30th September 2017, respectively,” the government said in a tweet.

With regard to August, the date for filing GSTR-1, GSTR-2 and GSTR-3 has been extended to October 5, October 10 and October 15 from earlier September 20, September 25 and September 30, respectively.

The industry has been demanding an extension of the date of filing final GST returns in view of scores of invoices to be uploaded.

The government will shortly issue notification to extend the date of filing returns.

In the initial returns filed in form GSTR-3B, taxes worth Rs 92,283 crore were collected for July from just 64.42 per cent of the total taxpayer base.

Of the 59.57 lakh businesses, who should file return for July, as many as 38.38 lakh taxpayers accounting for 64.42 per cent of the total businesses who had registered in July had filed their GST returns.

Through a notification last week, the Central Board of Excise and Customs (CBEC) had waived fee for delayed filing of GSTR-3B and had allowed businesses to correct errors in the initial return form while filing the final returns.

It also said entities who had not filed GSTR-3B can file the final returns in GSTR-1, GSTR-2 and GSTR-3 and pay taxes.

Souce: The Tribune India

CBDT signs 4 more APAs with taxpayers in August

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The Central Board of Direct Taxes (CBDT) signed four more advance pricing agreements (APAs) in August with Indian taxpayers as it looks to reduce litigation by providing certainty in transfer pricing.

The four APAs entered into during August, 2017 pertain to various sectors of the economy like telecom, banking, manufacturing and education, an official statement said today.

“Out of these four agreements, three are unilateral and one is a bilateral,” it said.

According to the statement, the bilateral APA is for international transactions between an Indian company and a UK-based company and this is the eighth bilateral APA with the United Kingdom and 13th overall (the other five being with Japan).

With the signing of these four agreements, the total number of APAs entered into by CBDT has reached 175, the statement said, adding, “this includes 162 unilateral APAs and 13 bilateral APAs.”

Besides, in the current financial year, a total of 23 APAs (2 bilateral and 21 unilateral) have been signed till date, the statement noted.

The APA provisions were introduced in the Income-tax Act in 2012 and the “rollback” provisions were introduced in 2014.

The scheme endeavours to provide certainty to taxpayers in the domain of transfer pricing by specifying the methods of pricing and setting the prices of international transactions in advance.

The statement pointed out that since its inception, the APA scheme has been well-accepted by taxpayers and that has resulted in more than 800 applications (both unilateral and bilateral) being filed so far in five years.

Noting that the progress of the APA scheme strengthens the government’s resolve of fostering a non-adversarial tax regime, the statement said the Indian APA programme has been appreciated nationally and internationally for being able to address complex transfer pricing issues in a fair and transparent manner.

 

Source: Times of India

1% of expected invoices uploaded to GSTN

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There are all indications of a last-minute scramble near Sept 5 deadline and a clamour for extension

About 1% of the expected goods and services tax invoices had been uploaded on the GST Network more than a month after the facility opened, suggesting a last-minute scramble near the September 5 deadline and a clamour for an extension.

 

Only 4.4 million invoices have been uploaded as part of the GSTR 1 return filing, a facility that became operational on July 25.

 

“At least 440 million invoices should have been uploaded. The facility is open for 38 days, but only 4.4 million invoices have been uploaded. In last-minute filing, they will commit errors and the system will not accept the return,” said a GSTN official. Taxpayers would then seek an extension, he added.

 

“We will consider extending the deadline if people face genuine difficulties in filing GSTR 1,” said another official.

 

The last date to file provisional return GSTR 3B was extended from August 20 to August 25 after taxpayers faced difficulties in filing.

 

So far, 39.7 million returns have been filed by the 5.95 million entities registered for the GST in July, excluding those under the composition scheme. Based on this, 20-25% of those registered have not filed tax returns.

 

Experts pointed out taxpayers were grappling with GSTR 3B, the self-declaration form, for the first two months. This did not give them enough time to upload invoices, they added.

 

“People were busy filing GSTR 3B. They will start uploading invoices now,” said MS Mani of Deloitte.

 

Besides, the GSTN does not allow rectification or modification in returns submitted but not filed, making it a better option to wait. “In some cases, punching errors have increased the tax liability of assessees by crores of rupees, resulting in significantly high cash flows because the returns cannot be submitted without paying tax,” said Pratik Jain of PwC India.

 

He added the deadline for GSTR 2 of July was September 10, 2017, however, the offline utility was not yet available on the portal. In addition, there is an issue with the GSTN recognising existing SEZ units that migrated to the GST.

 

Companies were also grappling with filing input tax credit for pre-GST stocks with the offline utility tool unavailable. The government is expected to allow rectification of returns filed to claim credit.

 

With the offline utility for GST TRAN 1 form not available, companies faced difficulty in keying in the details. The lack of a provision for rectification of transitional credit claims may mean companies losing credit.

 

“In many cases, taxpayers had paid tax in cash. Till date, the credits of such cash payments are not reflected in the electronic cash ledger and the payments are shown as pending for banks’ confirmation,” Jain said.

GST relief

 

The government on the recommendation of the Goods and Services Tax (GST) Council on Friday waived the late fees for the GSTR 3B returns for July, filed after the due date. The announcement comes amid concerns raised over difficulties faced by the industry in filing returns.

 

The Council waived the late fees of Rs 200 (Rs100  each for State GST and central GST) for returns filed after August 25, the deadline.

 

“The Central Government, on the recommendations of the Council, hereby waives the late fee payable under section 47 of the said Act, for all registered persons who failed to furnish the return in FORM GSTR-3B for the month of July, 2017 by the due date,” said the notification.

 

Source: Business Standard

July GST collections of Rs 92,000 crore exceeded target: Finance Minister Arun Jaitley

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July GST receipts touch Rs 92,200 cr: Jaitley

Goods and services tax (GST) collections have exceeded estimates in the first month of the landmark levy’s rollout despite a significant number of assessees not having filed returns yet.

“We seem to be comfortable… The redline has been crossed in the first month itself,” finance minister Arun Jaitley said at his briefing on the first set of data on tax collections on Tuesday.

“Not many had thought that the redline would be crossed in the first month itself.” GST, which replaced multiple state and central levies, took effect on July 1.

The total collection under GST for July is pegged at Rs 92,283 crore. Extrapolating Budget targets, the central government’s July tax revenue should be Rs 48,000 crore and that of states Rs 43,000 crore, adding up to Rs 91,000 crore, Jaitley said.“We have exceeded the target,” he said, adding that even after the compensation cess is excluded, the target will still be surpassed when all taxpayers file returns. The last date for payment of tax for the month of July was August 25 and for those seeking transitional credit for taxes paid in the pre-GST era, the deadline was August 28.

Of the total, central GST accounted for Rs 14,894 crore, state GST for Rs 22,722 crore and integrated GST for Rs 47,469 crore, which includes Rs 20,964 crore on imports. IGST is levied on inter-state movement of goods and imports and is equal to CGST and SGST.

The compensation cess amounts to Rs 7,198 crore, of which Rs 599 crore is that on imports.

Jaitley said the total number of taxpayers having to file returns for July stood at 5.96 million if those that registered in August and those opting for the composition scheme were excluded. Of these, the minister said, 3.84 million returns have been filed — 64.42% of the total. This suggests that by the time all returns are filed, the tax kitty could swell further.

IGST will be allocated between CGST and SGST to the extent it has been used for payment of either of them. This allocation will be based on the cross-utilisation report to be received from the GST Network (GSTN), the technological backbone of the system.

STATE COMPENSATION
Exact revenue figures of the Centre and individual states would be known after this exercise, which will be conducted before the end of month. Jaitley said it will have to be seen if any specific state needs to be compensated. The tax collection number would “somewhat increase” with greater compliance, he added.Of the total 7.23 million taxpayers, 5.85 million have fully migrated to GSTN, while 1.38 million are yet to complete procedural formalities. The number of new taxpayers that registered with GSTN up to August 29 was 1.883 million.

“On the face of it, collection of over Rs 92,000 crore in the first month looks quite encouraging, given the fact that GST is still stabilising,” said Pratik Jain, partner and leader, indirect tax, PwC.“It is also to be noted that only 64% of registered dealers have actually done the compliances and therefore the actual collection could go up in next few days. Also, a large component of IGST collected on imports might be used as an offset in coming months and some amount of GST collected would also be given as a refund to exporters. Therefore, while initial trend shows healthy collection, the real picture would emerge over next couple of months.” MS Mani, senior director, Deloitte Haskins & Sells LLP, echoed this sentiment.

“The 65% compliance achieved in the first month of GST accompanied with the collection of Rs 92,000 crore is a very good beginning and both the compliance and collections are expected to show a significant upsurge in the coming months,” he said.

GST returns filing: Deadline ends, figures suggest robust collections

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As the extended deadline for filing the first tax returns under the goods and services tax (GST) ended on Friday evening, taxpayers inundated the GST Network (GSTN), the technology back end.
Given that the states’ combined GST tax revenue is estimated to be roughly equal to that of the Centre, a monthly GST revenue of Rs 1.55 lakh crore would meet the projections.

As the extended deadline for filing the first tax returns under the goods and services tax (GST) ended on Friday evening, taxpayers inundated the GST Network (GSTN), the technology back end. However, no official word was available on how many of the 87 lakh businesses registered on the portal filed the returns or paid taxes before the deadline.

Although it is too early to make any estimate, the tax collections under GST seem to endorse the forecast that the new tax will boost government revenues.

When just about 20 lakh of the 87 lakh taxpayers registered on the GSTN portal filed their returns and paid taxes as on Wednesday, some Rs 50,000 crore went to the total GST kitty. The Centre’s indirect tax target for the current financial year is Rs 9.26 lakh crore, which means a monthly average collection of Rs 77,200 crore.

Given that the states’ combined GST tax revenue is estimated to be roughly equal to that of the Centre, a monthly GST revenue of Rs 1.55 lakh crore would meet the projections. This doesn’t appear to be a tall order given the collection trend.

Of course, the GST collections being cited now are gross figures, without deducting the input tax credits that businesses are expected to claim and are estimated to be substantial, given the inherent nature of the new taxation system.

Till Thursday, 25 lakh taxpayers had filed their returns while an equal number had saved relevant details on the portal. GSTN officials told FE that the final numbers on the returns filed and taxes collected would be revealed by the revenue department.

The GSTN has, however, been grappling with a large number of taxpayers who are yet to complete their registration. This would prevent them from filing their return for July. The GSTN had prepared for a potential 39 lakh taxpayers to use the portal for filing tax return on Friday. This, GSTN officials said, was expected as even in the VAT regime half of the taxpayers filed returns on the last two days of the deadline.

Of the total GST amount of Rs 50,000 crore collected till Wednesday, Rs 20,000 crore had come in as integrated GST, which is levied on interstate movement of goods and imports. An amount of just over Rs 5,000 crore had been paid by assessees by way of cess on demerit goods such as cars and tobacco. The remaining Rs 25,000 crore had come in as central GST and state GST, which would be split equally between the Centre and the states.

Last Saturday, the government decided to extend the deadline for filing the interim summarised tax returns to August 25 from August 20 earlier, citing requests from taxpayers and difficulty experienced by states hit by floods.

This came after taxpayers and GST Suvidha providers — IT companies authorised to file returns on behalf of customers — complained that the GSTN system wasn’t accepting the filings.

Separately, nearly 10 lakh have registered on the portal for the composition scheme, which allows simpler compliance for businesses with an annual revenue of up to Rs 75 lakh. Of 87 lakh registered on the GSTN portal, nearly 71 lakh businesses have migrated from the earlier VAT, central excise or service tax regime, while 16 lakh are new taxpayers.

Source:  Financial Express