India is world’s 40th most competitive economy: WEF

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The Global Competitiveness Index (GCI) is prepared on the basis of country-level data covering 12 categories or pillars of competitiveness.

India has been ranked as the 40th most competitive economy — slipping one place from last year’s ranking — on the World Economic Forum’s global competitiveness index, which is topped by Switzerland.

On the list of 137 economies, Switzerland is followed by the US and Singapore in second and third places, respectively.

In the latest Global Competitiveness Report released today, India has slipped from the 39th position to 40th while neighbouring China is ranked at 27th.

“India stabilises this year after its big leap forward of the previous two years,” the report said, adding that the score has improved across most pillars of competitiveness. These include infrastructure (66th rank), higher education and training (75) and technological readiness (107), reflecting recent public investments in these areas, it added.

According to the report, India’s performance also improved in ICT (information and communications technologies) indicators, particularly Internet bandwidth per user, mobile phone and broadband subscriptions, and Internet access in schools.

However, the WEF said the private sector still considers corruption to be the most problematic factor for doing business in India.

“A big concern for India is the disconnect between its innovative strength (29) and its technological readiness (up 3 to 107): as long as this gap remains large, India will not be able to fully leverage its technological strengths across the wider economy,” it noted.

Among the BRICS, China and Russia (38) are placed above India.South Africa and Brazil are placed at 61st and 80th spots, respectively.

In South Asia, India has garnered the highest ranking, followed by Bhutan (85th rank), Sri Lanka (85), Nepal (88), Bangladesh (99) and Pakistan (115).

“Improving ICT infrastructure and use remain among the biggest challenges for the region: in the past decade, technological readiness stagnated the most in South Asia,” WEF said.

Other countries in the top 10 are the Netherlands (4th rank), Germany (5), Hong Kong SAR (6), Sweden (7), United Kingdom (8), Japan (9) and Finland (10).

The Global Competitiveness Index (GCI) is prepared on the basis of country-level data covering 12 categories or pillars of competitiveness.

Institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication and innovation are the 12 pillars.

According to WEF’s Executive Opinion Survey 2017, corruption is the most problematic factor for doing business in India.

The second biggest bottleneck is ‘access to financing’, followed by ‘tax rates’, ‘inadequate supply of infrastructure’, ‘poor work ethics in national labour force’ and ‘inadequately educated work force’, among others.

The survey findings are mentioned in the report.

“Countries preparing for the Fourth Industrial Revolution and simultaneously strengthening their political, economic and social systems will be the winners in the competitive race of the future,” WEF founder and Executive Chairman Klaus Schwab said.

200,000 more directors disqualified for holding posts in defaulting companies

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The govt has struck off more than 200,000 firms that have not complied with the provision of the law from the list maintained by the RoC and frozen their bank accounts to check any siphoning off of funds.

The corporate affairs ministry has disqualified another 200,000 directors for holding posts in defaulting companies that have not filed their financial returns for the last three years or more, taking the total number to over 300,000, while cancelling the registration of another 10,000 companies.

These directors won’t be able to hold board seats in other companies as well and may have to resign soon from them, potentially impacting other firms as well.

While the current law does not provide for any appeal, the government is thinking of exercising “the review power to take any such plea into consideration,” PP Chaudhary, minister of state for corporate affairs, told ET. “By operation of law, these directors are disqualified but we have to see under what provision of law we can examine this. If we need to frame a rule we will do it.”

According to Section 167 of the Companies Act, a director is disqualified automatically from all other posts of director once barred under Section 164, said Chaudhary, a lawyer by profession.

200,000 more directors disqualified for holding posts in defaulting companies

The government has struck off more than 200,000 firms that have not complied with the provision of the law from the list maintained by the Registrar of Companies and frozen their bank accounts to check any siphoning off of funds.

“This exercise is part of demonetisation. No one had the guts to stop all this till now. It will prove a catalyst for the Indian economy,” said the minister of state, who took over this responsibility after the recent reshuffle. He said the money trail will be traced after data mining of these companies.

 

The government will prioritise those cases where there is evidence of a large movement of cash. He rejected the criticism that the action was retrospective in nature.

“Law has not been retrospective. Companies had two years to file returns… there was healing time,” the minister of state said. So far the shell firm chase has been limited to defaulting firms that have not filed their financial returns for the last three years or more but the government will soon go after compliant firms as well to check their holding companies structures and fund flows.

Chaudhary said the intent is to restore trust in the corporate structure and also improve ease of doing business in the country.

“We do not want to create any terror. Trust in the corporate structure is gone and we want to increase the investor confidence, not interfere in the corporate structure,” Chaudhary said.The government wants to promote ease of doing business to ensure investors that their money is safe in India, he added.

“This exercise has been triggered due to governance. We have shown scale and speed in an unparalleled way in the way we have acted against these companies and directors,” Chaudhary said.

Last week, the government made public the names of 55,000 directors who were disqualified under Section 164 (2) (A) of the Companies Act. The list included the names of prominent politicians including former Jammu and Kashmir chief minister Omar Abdullah and Malayalam filmstar Mohanlal among others.While the government will not impose any penalty on the directors of government-owned companies that figured in the list of defaulters, those in private firms will have to resign from other board seats and won’t be eligible for reappointment for up to five years.

The corporate affairs ministry will also look into these companies to identify shell companies to see if they have been used for money laundering or any other illegal activity. “We need to find who the shell company’s real beneficiary is… It could be in the name of the cook or a driver. We are taking stock of the money in these companies pre and post demonetisation,” Chaudhary said.

While spotting defaulting companies is an ongoing process, Chaudhary said that, using artificial intelligence, the government will sift out the shell companies from among those that are compliant with regulations and also create an early warning system. “The system will trigger alerts every time we see unusual activity taking place in a company. It will also help us find out the beneficial owner of the shell companies,” he said.

India growing pretty robustly: World Bank President Jim Kim

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Jim Kim said Japan, Europe and the US along with India were growing and there was a levelling-out in developing countries.

India has been growing “pretty robustly”, World Bank President Jim Yong Kim has said as he predicted a strong global growth this year.

Speaking at the Bloomberg Global Business Forum meeting here on Wednesday, Kim also called for more cooperation among the multilateral system, private sector and the governments to take advantage of the current win-win situation.

“That dormant capital will earn a higher return, where developing countries will have access to much more capital for the infrastructure needs, even for investing in health and education, investing in resilience to climate change and other factors,” Kim said.

He said Japan, Europe and the US along with India were growing and there was a levelling-out in developing countries.

“A country like India is growing, has been growing pretty robustly. We think, Japan is growing. Europe is growing in a much more healthy way. The United States continues to grow. There is a levelling-out in developing countries,” he said, adding that the growth will be more robust this year.

In June, the World Bank predicted a 7.2 per cent growth rate for India this year against 6.8 per cent growth in 2016. India remains the fastest growing major economy in the world, the World Bank officials had said.

“It used to be that commodity importers were doing much better than commodity exporters. But that’s levelling out. So the growth is relatively more evenly distributed,” Kim said.

He said in terms of indebtedness, the bank was watching very carefully the debt-to-GDP ratios of every single country.

“In Africa, the debt-to-GDP ratios are still very manageable…We would not be moving toward providing more financing for countries if we thought there was a real problem with over indebtedness in the countries. Because we follow this very closely, along with the IMF,” he said.

“We think that there are tremendous opportunities for investment. But sometimes, purely based on perception, investors in sovereign wealth funds – I’ve heard them say, Africa is risky. Right, as if Africa was a single country.

Africa’s not a single country and the risk profiles from country to country have enormous differences,” he said.

Source: Economic Times

 

Only Rs 12,000-cr Input Credit claims valid

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GST regime allows tax credit on stock purchased during the previous tax regime

The government on Friday said only Rs 12,000 crore of the Rs 65,000 crore of input tax credit claimed by assessees for the pre-GST stocks were valid.

The governments, both the Centre and states, had got Rs 95,000 crore of revenues from the goods and services tax (GST) for July, the first month of the indirect taxation system. But after claims of Rs 65,000 crore were made for refunds of taxes paid on stocks lying with businesses as of June 30, the government was startled, as that would  have meant just Rs 30,000 crore of revenues from GST, which would be shared between the Centre and the states. The finance ministry said Rs 95,000 crore was the amount actually paid in cash, other than availing credit.


The Press Trust of India reported the government has estimated valid transitional credit claims of taxpayers in July were just Rs 12,000 crore and not Rs 65,000 crore, as previously claimed. This would give the government a short in the arm in its efforts to mop-up additional resources to perk up a subdued economy.

 

Only Rs 12,000-cr credit claims valid

The GST regime allows tax credit on stock purchased during the previous tax regime. This facility is available only up to six months from the date of the GST roll-out. Even these claims could be adjusted in future months, a statement by the finance ministry suggested.

An expert explained that some of the credit available in earlier taxes would be blocked in the new regime. For instance, he said, the credit for taxes paid on purchasing vehicles were not available for businesses under the new tax unless it was a dealership or business of carrying passengers. Also, credits claimed might be under litigation and, therefore, it might not be available to the assessee to carry forward or for utilisation.

Earlier in the day, the finance ministry had issued a statement to allay concerns about high transitional credit claims, saying the Centre’s revenue kitty would not go down because of these claims. It said claims worth Rs 65,000 crore does not mean that businesses would have used all of this for payment of their output tax liability for July. In other words, the credit, which now stands reduced to Rs 12,000 crore could be utilised for future tax liability.

On how the government would stagger the adjustment, Abhishek Rastogi of Khaitan & Co cited the example of banking services. In the earlier regime, banks had to pay a centralised service tax. Under GST, they will pay state-wise tax as well. So adjusting credit for pre-GST stocks may take some time as tax liability in one centre, which used to pay earlier taxes, might not be as huge this time.

The ministry also said Rs 65,000-crore transition credit claimed was “not incredibly high” as Rs 1.27 lakh crore of credit of central excise and service tax was lying as closing balance as of June 30, 2017.

The statement said some assessees would have committed a mistake in filing the form TRAN-1 and hence, the government will allow facility of revision of TRAN-1 by the middle of October.

The GST Council has already extended by a month the date for filing TRAN-1 form till October 31.

Archit Gupta, CEO of ClearTax said while the move to extend the deadline is a good step, there would be confusion to reconcile the credit available in the old regime with the one in the GST system.

Source: Business Standard

GST interim returns: Over 30 lakh paid tax in August, matching July trend

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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.

Source: Financial Express

FDI likely to rise further after GST: Moody’s

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FDI in India grew by 18% during 2016 to touch $46 billion, data released by the Department of Industrial Policy and Promotion showed.

India is likely see increased foreign direct investment (FDI) inflows on the back of reforms such as introduction of the goods and services tax and the bankruptcy code, international ratings agency Moody’s said in a report on Monday.

“Combined with reforms such as the introduction of a goods and services tax, which lowers the cost and complexity of doing business, and a simplified and clarified bankruptcy code, FDI is likely to rise further,” the agency said in its report on how structural reforms by Asia Pacific sovereigns could become more effective from stronger global demand.

In India, Moody’s said, the government has raised ceilings for authorised FDI in a number of sectors. “FDI has already increased substantially, albeit from a low base,” the report said.FDI in India grew by 18% during 2016 to touch $46 billion, data released by the Department of Industrial Policy and Promotion showed.

The Narendra Modi government has liberalised FDI framework for a number of sectors including insurance, defence and civil aviation and also taken steps towards the ease of doing business. Moody’s said the positive economic impact of India and Indonesia’s measures to attract higher levels of FDI, combined with steps to improve business conditions, are likely to be more apparent in a stronger global macroeconomic environment. The agency has maintained India’s sovereign rating at Baa3 positive.

“India and Indonesia’s governments have both implemented reforms over the past few years to improve the overall business climate and, more specifically, to attract FDI,” Moody’s said, adding that a robust global environment is likely to amplify the positive impact of the reforms on the two countries’ attractiveness to foreign investors.

Moody’s Investors Service said the strengthening in global demand since the end of last year has buoyed Asia Pacific’s trade-reliant economies, but added that faster export growth has yet to feed into a sustainable acceleration in output growth.