CBEC plans strategy to bring more businesses in GST net

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Tax officials are working out strategies to encourage more businesses to register for the Goods and Services Tax (GST) and further increase the taxpayer base.

At present, there are about 90 lakh businesses registered to file returns and pay taxes under the new levy, which kicked in from July 1.

But, the Central Board of Excise and Customs will now also encourage small businesses and dealers, who may be exempt from registering for GST.

“We plan to increase awareness of even small businesses about the benefits of GST and why they should register,” said a senior official, pointing out that in the long run it will be beneficial to them as suppliers would only choose to buy from those businesses from where they can get input tax credit.

Further, in some cases tax officials may also verify whether businesses that were paying taxes earlier have registered for GST.

Officials believe that as the new tax system stabilises, more businesses will register under GST, taking the tax base to over one crore in the next one year, if not before.

At present, businesses with an annual turnover of up to ₹20 lakh (or ₹10 lakh in some States) are exempt from registering for GST.

Though the number of taxpayers registered with the GSTN is much higher than the original estimate of about 80 lakh, Prime Minister Narendra Modi had, at the recent Rajaswa Gyan Sangam, urged the Centre and State tax officials to further expand the tax base under GST.

“To enable all traders to take maximum benefit of GST, we should work towards ensuring that all traders, including even relatively smaller traders with a turnover below ₹20 lakh, should register with the GST system,” he had said, asking officials to further increase the taxpayer base.

The issue was also then followed up by Prime Minister’s Office. Also Cabinet Secretary PK Sinha and Revenue Secretary Hasmukh Adhia, at a recent video-conferencing meeting with Centre and State tax officials, assessed the roll out of the new levy and measures to increase the tax base.

Source: The Hindu Business line

Nuclear deal between India and Japan opens up new vistas of cooperation

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Prime Minister Shinzo Abe is visiting India nearly two months after operationalisation of the historic Indo-Japan civil nuclear deal, which has added a new dimension to bilateral ties that could scarcely be imagined in the wake of the 2011 Fukushima tragedy.

The journey traversed by the two nations over the past six years reflects growing confidence in each other and depth of the strategic partnership.

Japan and India signed a memorandum of understanding for civil nuclear cooperation in December 2015, when Abe was in Delhi for the annual bilateral summit, overcoming reservations over India’s status as a nation which has not signed the Non-Proliferation Treaty.

This was transformed into a deal in November last year when PM Narendra Modi was in Tokyo for the summit.

Subsequently the Japanese government got approval from the Diet (parliament) for the nuclear deal with India.The landmark deal came into force in July this year with the completion of necessary formalities in both countries. This will enable Japan to export nuclear power plant technology as well as provide finance for nuclear power plants in India.

Besides, Japan will assist India in nuclear waste management and may undertake joint manufacture of nuclear power plant components under Make in India initiative, people familiar with the development told ET. Growing civil nuclear ties will be highlighted during Abe’s trip as one of the key elements of Indo-Japan strategic partnership, they said.

Japanese conglomerate Toshiba, which owns US-based Westinghouse, will have a major role when the US nuclear firm supplies technology for the set of six reactors in Andhra Pradesh following its bankruptcy.

Westinghouse, which was to set up six nuclear reactors in Andhra Pradesh, will supply technology while construction will be undertaken by an Indian partner. This was discussed as a way out during Modi’s visit to Washington, D.C. for ensuring the presence of Westinghouse in India following the troubles the company faced over bankruptcy.

The finance for the project from the US Exim Bank remains intact and the initiative may kick-start only in 2018. Westinghouse, which was acquired by Japanese conglomerate Toshiba in 2006 for $5.4 billion, had filed for bankruptcy in March this year. HitachiBSE 2.80 %, another Japanese firm, has a stake in GE, which is also proposed to set up reactors in India.
ET View: Enhance areas of partnership

The partnership in space, like that on the African continent, will give a new dimension to the longstanding India-Japan ties. It makes sense for India to partner with Japan to focus such opportunities in areas where the two countries have complementary strengths. The space partnership will serve as another plank in the effort to present a counter to Beijing. For New Delhi, it is also a spring board for a bigger role in the global arena. India must seize this opportunity with a clear plan.

India, Japan Ink 15 Agreements Including Aviation, Trade and Science

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The pact in the area of disaster risk management, entered into between the Ministry of Home Affairs and the Cabinet Office of the Government of Japan, aims to cooperate and collaborate in the field of disaster risk reduction, an official statement said

India and Japan on Wednesday signed 15 deals in key areas, including civil aviation, trade, science and technology, and skill development.

The pact in the area of disaster risk management, entered into between the Ministry of Home Affairs and the Cabinet Office of the Government of Japan, aims to cooperate and collaborate in the field of disaster risk reduction, an official statement said.

It said the understanding in the field of skill development looks to further strengthen bilateral relations and cooperation in the field of Japanese language education in India.

The one titled ‘India-Japan Investment Promotion Road Map’ envisages enhanced Japanese investments in India while the ‘Japan-India special programme for Make In India’ is on bilateral cooperation towards infrastructure development in the Mandal Bechraj-Khoraj region in Gujarat.

There was exchange of RoD (Record of Discussions) on civil aviation under which Indian and Japanese carriers can now mount unlimited number of flights to selected cities in both countries.

There was an agreement to establish a joint exchange programme to identify and foster talented young scientists from both countries to collaborate in the field of theoretical biology.

The MoU (Memorandum of Understanding) between the Department of Biotechnology and Japan’s National Institute of Advanced Science & Technology (AIST) seeks to promote research collaboration between these institutions in the field of life sciences and biotech, the statement said.

The India Japan Act East Forum, among the agreements signed, seeks to enhance connectivity and promote developmental projects in India’s North Eastern region in an efficient and effective manner, it said.

There were four agreements in the field of sports, including one to facilitate and deepen international education cooperation and exchanges between both Sports Authority of India and Nippon Sport Science University, Japan.

Source: NDTV

FPI inflows: India’s forex reserves all set to hit whopping $400 bn mark; here is how long it took and why

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The reserves are hitting the psychological threshold also because benign current account deficits over the last few quarters had allowed RBI to use less of the reserves to finance it.
India’s foreign exchange reserves have climbed tantalizingly close to the $400-billion mark on September 1 on the back of strong foreign portfolio investments into the Indian market, especially the debt segment

The reserves are hitting the psychological threshold also because benign current account deficits over the last few quarters had allowed RBI to use less of the reserves to finance it.

To be sure, the latest $100 billion addition to the reserves has taken close to 10s years. The $300 billion mark was reached in February 2008, while the previous $100 billion was accumulated in a span of just eleven months.

While the rupee remains strong against the dollar at levels of 64 having appreciated 6% so far in 2017, few would have anticipated this strength, especially after the free fall of the currency in mid-2013 when it slipped all the way to 68.85 against the greenback (the forex reserves had plunged by more than $17 billion during this period).

The other critical period for the reserves and currency was in 2008, during the financial crisis when the currency lost almost 25% of its value between May and November. In this period, the reserves fell by a little over $70 billion to $245.8 billion.

Currently, the reserves take care of approximately 12 months of imports; in the past the reserves have typically covered seven to eight months of imports. Interestingly, India has seen the third-highest reserves accretion globally after Switzerland and China, so far in 2017.

According to Indranil Sengupta, chief economist at Bank of India Merrill Lynch, RBI has been intervening fairly aggressively in the forex market and might continue to do so if the dollar weakens but perhaps less so if the greenback was to strengthen.

After a brief overnight pause, the rupee was again caught in a downward spiral and slipped by 12 paise to 64.12 against the US dollar on Thursday on fresh demand for the American currency from banks and importers amid persistent foreign capital outflows. Foreign portfolio investors sold shares worth a net Rs 827 crore on the day.

Meanwhile, India’s CAD, which stood at 0.7% in the fourth quarter of last fiscal is expected to widen sharply to 3% in Q1FY18 due to a sharp deterioration in the merchandise trade deficit. According to Sonal Varma, chief economist at Nomura, the low commodity prices in the last two years have resulted in the CAD narrowing to about 1% of GDP. “With commodity prices marginally higher and a cyclical recovery expected in coming quarters, we expect the current account deficit to widen to a steady state of around 1.5-2.0% of GDP (for FY18),” Varma said.

Currently, as the central bank continues to shore up the reserves, it appears to be depending more on forward purchases than the spot market. This is due to the abundant liquidity in the system which prevents excessive action in the spot market.

MV Srinivasan, vice-president, Mecklai Financial Services believes the RBI is attempting to prevent any appreciation of the rupee beyond 63.80 levels. “The central bank is trying to rein in the excess liquidity in the system through OMO sales and dollar purchases in the spot will counter these measures,” he says.

Srinivasan believes that if the US Federal Reserve begins to reduce its balance sheet size, there could be forex outflows following which the RBI might intervene to stabilise the markets. Net portfolio inflows to the India’s bond and stock markets have been to the tune of $26.7 billion so far in 2017.

Source: Financial Express

Auditors come under lens amid crackdown on shell companies

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A multi-agency clampdown has begun on shell companies to tackle the black money menace wherein the role of auditors has come under the scanner for alleged connivance in facilitating illegal transactions.

The auditors’ role is also being looked into for not raising the red flag as several cases have come to the fore, including at listed companies, for alleged mismatch in financial statements, sharp erosion in net worth, siphoning off funds to group and promoter entities, sources said.

Stepping up the vigil, the corporate affairs ministry as well as Sebi and other regulatory authorities are keeping a close tab on activities carried out by shell companies.

Sources said regulatory agencies are examining the role of auditors to ascertain whether they were also involved in suspected illegal activities.

The ministry as well as Sebi are closely looking at the functioning of auditors in various companies, especially those that have not been carrying out business for long. After a detailed analysis, the authorities would decide on the next course of action, sources added.

Auditors, who have greater responsibilities under the Companies Act, 2013, are required to ensure that financial statements of a company are proper and can red flag dubious transactions.

As part of larger efforts to fight illicit fund flows and tax evasion, the ministry has already struck off the names of over two lakh companies from the records and further action is expected.

Besides, Sebi has taken against 331 listed entities that are suspected shell companies. While the watchdog had imposed strict trading restrictions on these scrips, curbs have been eased in some cases after the companies went on appeal against Sebi’s move.

On Tuesday, the government said more than 1.06 lakh directors would be disqualified for their association with shell companies.

The ministry, which is implementing the companies law, has also identified professionals, chartered accountants, company secretaries and cost accountants associated with the defaulting companies.

Besides, such people “involved in illegal activities have been identified in certain cases and the action by professional institutes such as ICAI, ICSI and ICoAI is also being monitored”, an official release said on Tuesday.

Separately, authorities are looking at the possibility of having stricter scrutiny of global auditing firms to make them more accountable with such auditors coming under the lens in various corporate misdoings.

A big area of concern pertains to the big guns seeking to wash off their hands whenever their names crop up in any accounting wrong-doing while their delaying tactics in the name of jurisdiction have also been noticed, an official had said earlier.

While the existing legal framework provides for stringent provisions for auditing activities, there is no specific system in place when it comes to overseas audit firms.

While discussions on having tighter regulations for foreign audit firms are going on, the ministry is already examining the recommendations of the 3-member expert panel on various issues related to audit firms amid concerns over certain practices circumventing regulations.

 The expert panel, headed by Teri Chairman Ashok Chawla, had submitted its report in March this year.
Source: Times of India

World Bank accepts many of Modi govt’s reform claims, big thumbs-up likely next month

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The government expects a double-digit improvement in India’s rank in the global index on ease of doing business, likely to be announced by the World Bank next month.

A senior official told ET that the World Bank had shared its feedback, stating that it had accepted many of the reforms claimed by the government. Last year, India’s rank had improved by just one spot to 130 among 190 countries.

“The World Bank has acknowledged around 20 reforms among many more mentioned by us in response to their study … The overall ranking will depend on how other countries have performed, but we should come close to the 100 mark,” the official said.

The World Bank had recently finished gathering feedback from users for its Doing Business Report. The cut-off date for implementing reforms for the study was June 1. Reforms implemented thereafter will not be counted for this year’s ranking.

Reforms such as GST have not been taken into account as the impact is yet to be felt by users. But India is expecting these to reflect in next year’s report and significantly boost the country’s position.

India had showed one of its poorest performances on the parameter of ‘Paying Taxes’ last time, ranking 172 among the countries surveyed for the report. That, along with an equally lower position in ‘Enforcing Contracts’, landed India at the 130th spot, falling behind countries such as Mexico (38), Russia (51) and Pakistan (138). The ranking considers business environment in Delhi and Mumbai.

Over the past few months, the government has taken up concerns about not getting due credit for its reform drive with the World Bank. While responding to the survey this year, the government flagged such issues citing examples of reforms undertaken for enforcing contracts, starting business and issuing construction permits, among other things.

The government also cited provisions in the existing legal framework that deal effectively with the issue of enforcing contracts.

ET View: Push legal reforms
The way ahead is to push reforms. India fares poorly, for example, in enforcing contracts. We need judicial reforms to drastically reduce legal delays. So, even if states improve lower courts, disputes could end up in the higher judiciary and the reform lies with the Centre. The Department of Justice should drive the reforms. The need is also to enhance transparency in funding of political parties. It will weed out corruption that will automatically improve ease of doing business.

Read more at: The Economic Times