As many as 117 companies have garnered a staggering Rs 62,736 crore through IPOs in the first eight months of Financial Year 2017-18, much higher than the cumulative amount raised in the last five fiscals, Parliament was informed on Friday.
These 117 initial public offers (IPOs) include 28 main- board public offers and the remaining for small and medium enterprises (SMEs), Minister of State for Finance Pon Radhakrishnan said in a written reply to Lok Sabha.
During April-November of 2017-18 fiscal, a total of 117 companies raised Rs 62,736 crore through IPO route. This was much more than the cumulative amount of Rs 62,147 crore garnered in the last five financial years.
Besides, the ongoing fiscal has witnessed the highest IPO activity since 2007-08, when companies had mopped up Rs 52,219 crore through the route.
The IPO chart in this fiscal is led by General Insurance Corporation of India (GIC) that garnered over Rs 11,176 crore. This was the largest public float by any firm after the October 2010 offer by Coal India which raised Rs 15,000 crore.
GIC is followed by New India Assurance Company that raised Rs 9,467 crore, HDFC Standard Life Insurance Company (Rs 8,695 crore) SBI Life Insurance Company (Rs 8,386 crore) and ICICI Lombard General Insurance (Rs 5,700 crore).
Individually, a total of 106 firms had garnered Rs 29,104 crore in the entire 2016-17, while 74 companies had raised Rs 14,185 crore in 2015-16.
Further, 46 firms had mopped up Rs 3,039 crore in 2014- 15, 40 companies had raised Rs 8,692 crore in 2013-14 and 33 firms had raked in Rs 6,497 crore in 2012-13.
Increasing the fear of an unravelling of the exercise of invoices-matching, which is crucial to realising the presumed merits of the goods and services tax (GST), like reduction of tax evasion and cascades, three-fourths of the 60 lakh eligible taxpayers haven’t completed the formalities of filing.
Increasing the fear of an unravelling of the exercise of invoices-matching, which is crucial to realising the presumed merits of the goods and services tax (GST), like reduction of tax evasion and cascades, three-fourths of the 60 lakh eligible taxpayers haven’t completed the formalities of filing both the inward and outward supplies-based returns for July till a day before the October 31 deadline. This has forced the government to give another window till November-end “to facilitate about 30.81 lakh taxpayers” to file details of inward supplies (GSTR-2). The triplicate comprehensive returns for July, the first month since GST’s launch, were originally required to be filed in the subsequent month itself, but due to the GST Network’s technical glitches and low levels of compliance, the deadlines have been extended multiple times. The schedule for filing these returns for August onwards has not even been announced yet, as this was to follow from the July-cycle learning. While invoice-matching is getting unduly delayed, piling up a huge job for the taxmen, the consequent blockage of input tax credits is bound to hit the working capital for large sections of the industry.
Since the launch of GST, small and medium enterprises have faced cash crunch, while exporters have got the refunds of July and August taxes only recently. Of course, the government has allowed industries with turnover up to Rs 1.5 crore to file the detailed returns on a quarterly basis while assuring them of prompt release of input tax credits claimed via monthly interim returns, but the deferment of invoices-matching would mean large-scale adjustments of the tax and ITC figures later. The government has faced much criticism for the imperfections of the GST it launched (multiple rates, high peak rates, exclusion of real estate and five petro- leum products etc). Also, since the GST was introduced, it has had to make more compromises that besmirched the new tax further. While dozens of items saw rate changes post-July, the GST Council, on October 6, accorded virtual tax waiver for exporters till March 31, 2018, despite exemptions running contrary to the GST’s basic tenet.
Besides, units with up to Rs 1.5 crore turnover were allowed to file quarterly instead of monthly returns, a move that would allow 90% of the non-composition GST registrants to shift to the easier system of filing returns every quarter, but could make prompt invoices-matching difficult. As reported by FE on Monday, the council may allow all taxpayers to move to quarterly mode of filing returns as it meets at Guwahati on November 10. The composition scheme — that allows businesses to pay taxes as a small percentage of turnover annually — is set to be made available to units with turnover up to Rs 1.5 crore, in what could effectively exclude 90% of the taxpayers from being part of the multi-point destination-based tax chain.
GST Network, which is the IT backbone of GST, estimates that about 80 crore invoices would be uploaded on to the system every month. A tax official said that even if 2-3 crore of the invoices don’t match, it will lead to numerous disputes, which would be arduous to resolve. “Besides, tax evasion takes place when transactions are off-book which will never be captured through invoices. The government needs precise and visible enforcement to minimise tax evasion,” the official said. To begin with, GST Council should have implemented matching at the GST level where sale and purchase are matched on the basis of the unique GST registration number of each taxpayer. Invoice matching should ideally have been brought in a few months later after the system stabilised. Now that some taxpayers are allowed to file returns only quarterly, the matching should also be harmonised with it and not be carried out every month.
These steps alone will make the process smoother,” Rahul Renavikar, managing director of Acuris Advisors said. Aditya Singhania, of Taxmann, said: “The matching concept is a much appreciated step for allowing input tax credit which is regulated by the GSTR 1, 2 and 3 mechanism. But with the brilliant concept, the IT platform of GST i.e. www.gst.gov.in should equally work in same wavelength for achieving the objective. Due to certain bugs and frictions, coupled with totally new forms of returns, taxpayers were unable to file the (returns) on time.” While industrialised states like Maharashtra, Gujarat and Karnataka among others had invoice-matching systems prior to GST, although these were not granular-level matching. A Maharashtra tax official, who requested anonymity, said that matching at the level of VAT number –much simpler than invoice-level matching – had enabled identification of 80% mismatches, which enabled the tax department to take action against hawala operations.
However, some tax officials have doubted the efficacy of invoice-matching, saying this wasn’t much of a success in any country with GST-type tax. “The first two month would pose immense challenges on how to deal with invoice mismatches and the provision may eventually have to be done away with,” a revenue department officials told FE on the condition of anonymity. The tax department is also worried that about 40% of taxpayers who filed the returns for July have claimed nil-tax liability. “It is indeed a large number. If enforcement is required, we will carry it out, though not in the nature of search and seizure. We may opt for discreet inquiries and meetings with such groups of taxpayers, to find out the reasons for the trend,” revenue secretary Hasmukh Adhia had told FE earlier.
More than 90 days after the roll-out of the goods and services tax (GST), lenders are gravitating to sanctioning working capital loans, especially to micro and small units, against documents used in the new tax regime.
They are no longer looking at just sales of the units concerned to decide on loan sanctions.
Banks are looking at input credit in deciding how much working capital loans they should advance.
The country’s largest lender, State Bank of India, and Union Bank of India, also a public sector bank, have started giving loans, especially to micro, small and medium enterprises (MSMEs) after assessing their input tax credit claims.
A public sector bank executive said the large number of small and medium enterprises (SMEs) had been included under the ambit of formal trade with the introduction of the GST.
SMEs are facing a working capital crunch because in the absence of proper financial returns, they are unable to access bank credit.
In the traditional route, banks make working capital assessments based on sales, as indicated in the balance sheet.
Besides this, entrepreneurs are facing a credit crunch because in the GST regime SMEs are entitled to input tax credit, and it is stretching their operating cycle.
A Punjab National Bank (PNB) official said the banking system is shifting to looking at the history of transactions such as GST credit-based decisions about credit, especially for SMEs.
SBI Chief General Manager (SME) V Ramling said using GST claims by banks would give SMEs the time to manage their working capital requirements till the time they got input tax credit. It will also help stabilise SMEs to run their operations without any hurdles.
SBI said the loan would be sanctioned outside Assessed Bank Finance (ABF) at 20 per cent of the existing fund-based working capital limit or 80 per cent of input tax claim due on purchases, whichever is lower.
Units and companies seeking a loan under the product need to give a certificate from their chartered accountant, confirming the input credit claims.
Insolvency and Bankruptcy Board of India has published draft rules dealing with insolvency resolution process of individuals and firms on its website . The existing insolvency and bankruptcy code, at present, applies only to corporate defaulters
The government on Tuesday expanded the scope of the new insolvency rules to bring individual businesses under its purview.
On Tuesday, the Insolvency and Bankruptcy Board of India (IBBI) published the draft rules dealing with insolvency resolution process of individuals and firms on its website (www.ibbi.gov.in) ; public comments can be submitted till 31 October.
Once notified, even individual businesses such as proprietorships will come under the bankruptcy regime. This will enable an orderly bankruptcy resolution within the purview of a transparent rules-based regime. The existing insolvency and bankruptcy code, at present, applies only to corporate defaulters.
“These rules shall apply to matters relating to the insolvency resolution process for individuals and firms under Part III of the code,” said the draft rules issued by IBBI.
Part III of the Insolvency and Bankruptcy Code, 2016, deals with insolvency and bankruptcy of individuals and partnership firms.
According to a statement issued by IBBI on Tuesday, the draft rules and regulations have been submitted by a working group which was formed to recommend the strategy and approach for implementation of the provisions of the Insolvency and Bankruptcy Code, 2016, dealing with insolvency and bankruptcy in respect of guarantors to corporate debtors, i.e., personal guarantors, and individuals having businesses.
“So far, the rules were only in respect of the Corporate Insolvency Resolution Process (CIRP) and the rules concerning individuals and partnership firms were yet to come,” said Satwinder Singh, partner at Vaish Associates, a law firm. “The jurisdiction for corporate, companies, limited liability partnership (LLP) lies before the National Company Law Tribunal (NCLT) and with the Debt Recovery Tribunal (DRT) for individuals and firms. The provisions relating to insolvency and bankruptcy of individuals and firms had not been notified earlier, so now the IBBI has come out with the draft rules.”
Harsh Pais, partner at law firm Trilegal, said, “It is a positive step towards consolidating the bankruptcy regime for individuals, for whom there was no systematic approach previously. For companies, at least there was recourse to the Companies Act, whereas for individuals there were only some archaic laws from the early 1900s, which were hardly relied upon in practice.”
Most of the small and medium enterprises (SMEs) take the legal form of either partnership or proprietorship firms. Though the loans are smaller in value, SME borrowers far outnumber companies, resulting in their borrowings exerting a significant influence in the financial sector’s stability.
Bankruptcy resolution is high on the agenda of the central government, which is keen to improve the ease of doing business in India and attract more private investments from domestic and overseas sources. An efficient exit route from failed projects is an essential factor that lenders consider before participating in projects.
GST Council has considered the implementation experience of the last 3 months and gave relief to small traders, says Arun jaitley.
More than three months after the Goods and Services (GST) was introduced, the GST Council made a number of big changes today, to give some relief to small and medium businesses (SMEs) on filing and payment of taxes. The panel also eased rules for exporters and cut tax rates on some items. Those businesses with annual turnover of up to Rs 1.5 crore and which constitute 90 percent of the taxpayer base but pay only 5-6 percent of overall tax, have been permitted to file quarterly income returns. “GST Council has considered the implementation experience of the last 3 months and gave relief to small traders… Compliance burden of medium and small taxpayers in GST has been reduced,” Finance Minister Arun Jaitley said. The SMEs had earlier complained of tedious compliance burden under the new regime. Below is the full text of the recommends made by GST today:
The GST Council, in its 22nd Meeting which was held today in the national capital under Chairmanship of the Union Minister of Finance and Corporate Affairs, Shri Arun Jaitley has recommended the following facilitative changes to ease the burden of compliance on small and medium businesses:
Composition Scheme
1. The composition scheme shall be made available to taxpayers having annual aggregate turnover of up to Rs. 1 crore as compared to the current turnover threshold of Rs. 75 lacs. This threshold of turnover for special category States, except Jammu & Kashmir and Uttarakhand, shall be increased to Rs. 75 lacs from Rs. 50 lacs. The turnover threshold for Jammu & Kashmir and Uttarakhand shall be Rs. 1 crore. The facility of availing composition under the increased threshold shall be available to both migrated and new taxpayers up to 31.03.2018. The option once exercised shall become operational from the first day of the month immediately succeeding the month in which the option to avail the composition scheme is exercised. New entrants to this scheme shall have to file the return in FORM GSTR-4 only for that portion of the quarter from when the scheme becomes operational and shall file returns as a normal taxpayer for the preceding tax period. The increase in the turnover threshold will make it possible for greater number of taxpayers to avail the benefit of easier compliance under the composition scheme and is expected to greatly benefit the MSME sector.
2. Persons who are otherwise eligible for composition scheme but are providing any exempt service (such as extending deposits to banks for which interest is being received) were being considered ineligible for the said scheme. It has been decided that such persons who are otherwise eligible for availing the composition scheme and are providing any exempt service, shall be eligible for the composition scheme.
3. A Group of Ministers (GoM) shall be constituted to examine measures to make the composition scheme more attractive.
Relief for Small and Medium Enterprises
4. Presently, anyone making inter-state taxable supplies, except inter-State job worker, is compulsorily required to register, irrespective of turnover. It has now been decided to exempt those service providers whose annual aggregate turnover is less than Rs. 20 lacs (Rs. 10 lacs in special category states except J & K) from obtaining registration even if they are making inter-State taxable supplies of services. This measure is expected to significantly reduce the compliance cost of small service providers.
5. To facilitate the ease of payment and return filing for small and medium businesses with annual aggregate turnover up to Rs. 1.5 crores, it has been decided that such taxpayers shall be required to file quarterly returns in FORM GSTR-1,2 & 3 and pay taxes only on a quarterly basis, starting from the Third Quarter of this Financial Year i.e. October-December, 2017. The registered buyers from such small taxpayers would be eligible to avail ITC on a monthly basis. The due dates for filing the quarterly returns for such taxpayers shall be announced in due course. Meanwhile, all taxpayers will be required to file FORM GSTR-3B on a monthly basis till December, 2017. All taxpayers are also required to file FORM GSTR-1, 2 & 3 for the months of July, August and September, 2017. Due dates for filing the returns for the month of July, 2017 have already been announced. The due dates for the months of August and September, 2017 will be announced in due course.
6. The reverse charge mechanism under sub-section (4) of section 9 of the CGST Act, 2017 and under sub-section (4) of section 5 of the IGST Act, 2017 shall be suspended till 31.03.2018 and will be reviewed by a committee of experts. This will benefit small businesses and substantially reduce compliance costs.
7. The requirement to pay GST on advances received is also proving to be burdensome for small dealers and manufacturers. In order to mitigate their inconvenience on this account, it has been decided that taxpayers having annual aggregate turnover up to Rs. 1.5 crores shall not be required to pay GST at the time of receipt of advances on account of supply of goods. The GST on such supplies shall be payable only when the supply of goods is made.
8. It has come to light that Goods Transport Agencies (GTAs) are not willing to provide services to unregistered persons. In order to remove the hardship being faced by small unregistered businesses on this account, the services provided by a GTA to an unregistered person shall be exempted from GST.
Other Facilitation Measures
9. After assessing the readiness of the trade, industry and Government departments, it has been decided that registration and operationalization of TDS/TCS provisions shall be postponed till 31.03.2018.
10. The e-way bill system shall be introduced in a staggered manner with effect from 01.01.2018 and shall be rolled out nationwide with effect from 01.04.2018. This is in order to give trade and industry more time to acclimatize itself with the GST regime.
11. The last date for filing the return in FORM GSTR-4 by a taxpayer under composition scheme for the quarter July-September, 2017 shall be extended to 15.11.2017. Also, the last date for filing the return in FORM GSTR-6 by an input service distributor for the months of July, August and September, 2017 shall be extended to 15.11.2017.
12. Invoice Rules are being modified to provide relief to certain classes of registered persons.
While the number of businesses registered for the goods and services tax (GST) has crossed 90 lakh, much higher than tax base in the previous regime, filing of even the interim (summarised) returns and tax payments are not keeping pace.
While the number of businesses registered for the goods and services tax (GST) has crossed 90 lakh, much higher than tax base in the previous regime, filing of even the interim (summarised) returns and tax payments are not keeping pace. Just over 30 lakh taxpayers have filed the interim return (GSTR-3B) for August, before the stipulated September 20 deadline, GST Network (GSTN) chairman Ajay Bhushan Pandey told FE. The glitches plaguing GSTN, the inability of a sizeable section of SMEs to comply and a general lackadaisical tendency among taxpayers are said to be reasons for the slack in the return-filing process. But the filing pace for August was not much slower than it for July GST — by August 20, the initial deadline for GST payment for July, only 32 lakh taxpayers filed the interim return and made tax payments; the figure rose to 39 lakh by August 29, the extended deadline without penal interest, and then to 49 lakh till date.
While about Rs 92,300 crore was collected as GST for July till August 20, a similar amount has been paid by the taxpayers till Wednesday for August GST, sources said. To make things easier for the business, the GST Council had extended the last dates for filing detailed returns — GSTR1, GSTR2 and GSTR3 — but businesses need to pay the tax with GSTR-3B filing. However, the slow pace at which even the interim returns are being filed is vexing the government — a TV channel reported that finance minister Arun Jaitley has asked the Central Board of Excise and Customs to submit daily reports of GST filings. With the GSTR1 for outward supplies for the month of July can now be filed until October 10 and GSTR2 for inward supplies by October 31, the government is now putting in place an interim arrangement for refund of taxes to exporters, as waiting for these funds for longer periods could hit the liquidity of thousands of exporters. Pandey said that some assessees were still filing return for July along with August. For July, there were nearly 60 lakh eligible taxpayers and this number must have moved up for August and new registrants are being added.
Pandey said the GSTN portal could handle the sudden rush in filings in the last two to three days, which displayed its robustness. He said GSTN accepted up to 85,000 returns per hour on Wednesday, as nearly 14 lakh assessees filed the interim summarised return on that day. While the government is keeping its fingers crossed on the GST revenue, analysts expect it to cut rates — at least for the goods that fall under 28% slab — given the robustness of collections. The government is closely examining the huge transitional credit claims of Rs 65,000 crore by the industry — these can be availed of by the industry against its supplies in the next six months. Sanjay Garg, partner, indirect tax, KPMG in India, said: “Expansion in the tax base at the outset due to the applicability of GST on transactions not taxed before would likely shrink after the industry avails the credit generated by payment of tax on such newly-taxable transactions. The GST collections might decline. It is apparent that fingers would remain crossed at least for next two quarters of (FY18).” Earlier this month, the GST Council had constituted a group of ministers (GoM) under Bihar deputy chief minister Sushil Modi, to resolve issues faced by businesses while filing returns and paying taxes on GSTN portal. The GoM met earlier this week, and assured taxpayers that most technical glitches in GSTN would be resolved by October-end.
Companies and financial institutions have mopped up close to Rs 56,000 crore by way of fund-raising through equities so far in 2017. This is about 20% higher than the amount of Rs 46,733 crore raised in 2016.
Companies and financial institutions have mopped up close to Rs 56,000 crore by way of fund-raising through equities so far in 2017. This is about 20% higher than the amount of Rs 46,733 crore raised in 2016. The fund-raising has been helped by a booming stock market; the Sensex has gained by 22% in the year so far.
On Monday, the benchmark gauge closed at 32,514.94.The Nifty has put on 23.10% in 2017 closing Monday’s session at 10,077.10.Since the beginning of the year, firms have mopped up Rs 55,905 crore through initial public offerings (IPO), offers for sale (OFS), Qualified Institutional Placements (QIP), and rights issues among others, data from Prime Database showed.
A significant portion — close to 61% — of the total equity raised this year has been by way of QIPs at Rs 34,182 crore. State Bank of India (SBI)’s Rs 15,000 crore offer has been the biggest in 2017 so far — the lender had issued around 52.21 crore new shares at a price of Rs 287.25.
The issue was aimed at augmenting the bank’s capital adequacy ratio and for general corporate purposes.This is the highest in the past eleven years. Banks constituted 84% of the amount raised through QIPs.
Market participants said the need for Tier 1 capital and the necessity to meet Basel III requirements as the reasons for banks opting for QIPs.
After QIPs, the maximum amount of money was raised through IPOs in 2017.
In 2017, companies raised Rs 14,026 crore through IPOs. Listing gains and returns by newly listed companies as also the positive sentiment in the broader market are among the reasons attributed to the trend.
BSE, HUDCO, CDSL, Avenue Supermarts, Shankara Building Products and S Chand and Company are some of the companies who completed their IPOs in the last seven months.
The newly listed companies have given good returns to investors, the BSE IPO index a gauge of newly listed companies rose by 40% year to date.
Small enterprises raised Rs 716 crore through SME IPOs, this is the highest since 2012.
Market participants said the buoyancy in the primary market is set to continue with more than a dozen companies gearing up to hit the market with their offerings.
As many as 117 companies have garnered a staggering Rs 62,736 crore through IPOs in the first eight months of Financial Year 2017-18, much higher than the cumulative amount raised in the last five fiscals, Parliament was informed on Friday.
