GST impact on companies: Gloom and doom vanishes, India Inc at ease

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Contrary to gloomy predictions, the roll-out of the goods and services tax (GST) has been a much smoother affair and the industry has adapted to it without major hassles.

Contrary to gloomy predictions, the roll-out of the goods and services tax (GST) has been a much smoother affair and the industry has adapted to it without major hassles. As FE spoke to a cross-section of the industry, several government officials and the administrative and field levels, tax experts and analysts, some things came out clearly: The gap between the country’s existing indirect tax assessee base and those registered on the GST Network has almost vanished, indicating that even large sections of small businesses that had the option of composition scheme decided to join the GST bandwagon. Grouses over the compliance burden that the new tax has imposed on small businesses are fast disappearing except for the cavils of those not wanting to report their entire transaction volume for fear of increased income tax liability. There are of course some niggling issues like how to compute the tax liability under the reverse charge mechanism but these too are getting resolved.

FE spoke to Delhi-based companies consisting of electronics dealers, auto parts dealers, small chartered accountant (CA) firms among others. While most of the businesses were VAT assessees in the previous era, the CA firm registered on the GSTN portal as a first-time taxpayer.

“Migrating to GSTN was a simple process that only took ten minutes,” Nitin Gupta of Siyaram Bros, a company sells automobile parts to retailers across the country. Gupta said with over `30 crore in annual turnover, his company has had a smooth ride in the first ten days of the new indirect taxation regime, that marks a giant leap towards a one-nation- one-tax regime. Although, businesses have often stated that filing returns in GST would be complicated, Gupta said that most of the processes are similar to what companies were doing under the VAT system. “We are still a month away from filing the first return but I don’t see a problem,” he said.

Govind Kumar of Baba Computers and Sandeep Mittal of Mittal Sandeep and Associates, a CA firm, concurred.

For them, the GSTN registration did not involve any glitches. Both the companies had been using accounting and tax software from Tally, and have now switched to GST-enabled version of the same. The software solution is expected to cost about `11,000 per year.

Gupta, however, added that those retailers the company deals with have been in state of panic largely due to lack of awareness. The company expects smooth flow of input tax credits as it buys from big businesses who are expected to be GST-compliant. “Some of the retailers who we sell to may not be ready, which could impact our sale volume,” Gupta said.

Mittal, who runs the CA firm, said that most of his clients were assessees before and have migrated to GSTN without a hiccup. Among other issues, his firm has advised small businesses on whether to opt for general GSTN registration or become a taxpayer under composition scheme.

The scheme allows easier compliance for certain businesses with annual turnover of less than Rs 75 lakh. However, according to the law, firms under the scheme can neither avail input tax credit nor supply to other states.

“Most of my client deal with inter-state supplies and hence they aren’t eligible for the composition scheme so far,” Mittal said. He added that he has advised a few firm to opt for the scheme based on a cost-benefit analysis but even these businesses are keen to avail input tax credits.

Speaking about the the issues faced by his business, Gupta admitted that he wasn’t quite clear about the reverse charge mechanism and how to deposit tax collected under it with the government at the time of filing returns.

According to GST law, a recipient is required to collect and deposit taxes under reverse charge mechanism for certain services including transportation. Of the 81 lakh existing taxpayers, 68 lakh have migrated to GSTN while nearly 2 lakh new taxpayers have also registered on the portal at the end of June. The GST tax base appearing smaller than in the previous regime is a misnomer. Earlier, a large section of the taxpayers needed to register seperately with the Centre (for excise, countervailing duty on imports and service tax) and states (for VAT). The GST has removed these duplications.

Source: http://www.financialexpress.com/economy/gst-impact-on-companies-gloom-and-doom-vanishes-india-inc-at-ease/758103/

EPFO’s new enrolment scheme works, 10 million members added in three months

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The government’s idea of including the number of Employees Provident Fund Organisation (EPFO) subscribers to calculate formal jobs is likely to swell the latter’s formal number.

 

For, the PF body has added a little more than 10 million members in the past three months, taking its membership to around 48 mn, from 37 mn on March 31.

 

This has been due to EPFO’s new enrolment scheme. Under it, employers got the opportunity to file declarations for unregistered employees with a nominal fine of Rs 1 per annum. According to data reviewed by Business Standard, the body has added 10,131,453 subscribers under the new scheme, higher than its expectation of 10 mn new ones. Most of the rise has come from urban areas such as Mumbai, Delhi and Bengaluru — Mumbai has added the highest number of subscribers, at 1,287,500.

 

NITI Aayog vice-chairman Arvind Panagariya had earlier said a task force for calculation of employment would use other data sources such as EPFO, National Pension System and other private pension schemes for formalisation of the workforce, beside existing sources like the National Sample Survey Office and labour bureau.

 

The panel is headed by Panagariya himself. It was set up to suggest a revamp of employment data surveys, to ensure timely and reliable data for policy making. There was a view within the government that the current surveys did not provide a real picture on job creation.

 

However, the EPFO subscriber base might only be showing a formalisation of the workforce, not an addition to the job numbers. “As a result of this (our move), workers who earlier were out of the social protection coverage will now get these benefits,” V P Joy, the central PF commissioner, told Business Standard.

 

Source: http://www.business-standard.com/article/economy-policy/epfo-s-new-enrolment-scheme-works-10-million-members-added-in-three-months-117071000045_1.html

GST impact: Dismantling of check posts save 24-36 hours of trucking time

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The Goods and Services Tax (GST) is saving fleet owners between 24-36 trucking hours, besides around Rs 7,500 per trip at the tax check posts which have since been dismantled.

The Goods and Services Tax (GST) is saving fleet owners between 24-36 trucking hours, besides around Rs 7,500 per trip at the tax check posts which have since been dismantled, an industry association said on Monday.

“Our quick check has shown that on an average a lorry or truck runs for 10-12 hours a day and should cover a distance of about 2,200 km between, say, Delhi-Chennai in three days.” “However, traversing through different states and braving the stoppages at several check posts of VAT, Octroi, other local taxes it was taking five to six days,” Associated Chambers of Commerce and Industry of India (Assocham) said here in a statement. At least 24-36 hours would easily be saved for these trunk routes after dismantling of the check posts, it said after interacting with the fleet owners and transport intermediaries.

“Besides, the bigger nuisance of corruption at each of the check posts and through various states would have meant an additional expenditure of Rs 5,000-7,500 per trip. That has also been done away with.” “For now, it has come as a big relief for the transporters who say, the ultimate advantage is accruing to the customers and to the trade and manufacturing value supply chain,” Assocham said.

The interaction with the fleet owners revealed that before start of a trip, the crew, comprising driver(s) and helpers was given “out of pocket” or “petty cash” of at least Rs 10,000 for the trunk routes of Delhi-Mumbai, Delhi-Kolkata, Mumbai-Jaipur, Ahmedabad-Delhi, Bengaluru- Delhi routes and so on. On completion of the trip, the driver would give his account that would include the expenses at each of the forced halt points.

Assocham hoped that further improvement would be done in this direction in terms of improving other infrastructure. “For instance, the ‘no entry’ traffic restrictions can be done away if high class dedicated bye-passes are constructed around the major cities so that the truckers can ply seamlessly,” Assocham Secretary General D.S. Rawat said.

Improvement in freight movement through road and rail would not only result in a huge cost saving for the trade and industry but would also take India quite high on the global index of Ease of Doing Business, the chamber said.

Source: http://www.financialexpress.com/economy/gst-impact-dismantling-of-check-posts-save-24-36-hours-of-trucking-time/757083/

GST basics: 7 misconceptions cleared

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GST only subsumes central and state taxes; the levies charged by local bodies are still outside its ambit.

The rumour mills have gone on an overdrive mode since the launch of GST.

Here’s a reality check for both GST supporters and its detractors.

 

  1. Now it’s one nation one tax

Myth : Since GST will replace all other taxes on all goods and services, we are in a single tax regime.

Reality : Though this was the original idea, certain exempted items such as petroleum products, are still outside GST’s ambit and, therefore, their tax rates vary significantly across states.

For example, petrol is still sold in Mumbai at Rs 74.30 per litre (as on 5 July) compared to Rs 63.12 in New Delhi. Similarly, some other items, such as liquor, have also been kept out of GST for now.

2.  Small businesses will suffer

Myth : The life of small businessmen will become difficult under GST because of computerised billing, need for Internet connectivity.

Reality : Shops can do manual billing under GST and Net connectivity is needed only at the time of filing monthly return and can be managed from a cyber cafe.

  1. Prices will shoot up

Myth : Personal expenses will go up on account of GST making it inflationary because tax rates have been fixed at higher levels—18%, 28%.

Reality : Though the GST rates seem high, it is only because the entire tax is now visible to the consumer. Earlier most taxes – central and state excise, additional excise, purchase tax, etc. – did not reflect on your bill. If one adds up all the taxes, it would have been more for most items (ie effective tax rates under GST will be lower for most products).

For example, the price of chicken dish in Kerala should fall because there was a 14.5% tax on live chicken earlier, which has come down to zero now under GST.

4.   Corporates may try to profiteer but govt won’t

Myth : Business will try to rob you of the GST benefits, but the government won’t make money at your expense.

Reality : Some state governments are also acting greedy and not passing on the GST benefits to consumers. For example, the Maharashtra government has increased the vehicle registration tax by 2% after auto firms passed on the GST benefit by cutting prices by 2-3%.

5.    No tax other than GST is now a reality

Myth : For every good or service that has been brought under GST, there won’t be any additional tax.

Reality : GST only subsumes central and state taxes and the levies charged by local bodies are still outside its ambit. Using this loophole, the Tamil Nadu government has allowed its local bodies to charge 30% tax on movie tickets over and above GST. GST is 18% for movie tickets up to Rs 100 and 28% for tickets that cost more than Rs 100.

But because of local body levies, tax in Tamil Nadu will be 48% for tickets up to Rs 100 and 58% for tickets that cost more. Not surprisingly, the cinema hall owners in the state went on strike. “Action of the Tamil Nadu government is against the spirit of the GST and the GST council should take action against it,” says Amit Sarkar, Partner and Head, Indirect Taxes, BDO India.

 6.   Economic growth will rise

Myth : GST will push up the economic growth.

Reality : Real economic growth comes from both organised and unorganised sectors. Tax evasion becomes difficult in GST, so cost advantage of unorganised sector goes and this will result in some businesses shifting to the organised sector. So, what happens will not be an in increase in ‘real’ economic growth but an increase in ‘recorded’ economic growth. However, there will be a small uptick in ‘real’ economic growth due to the improvement in the ease of doing business.

 7.  Pay GST twice for card payments

Myth : GST will be charged twice, if you make payments via credit card.

Reality : There is no additional GST for credit card payments and the confusion arose only because there is GST on additional fees—convenience charges—levied by companies. For example, you make Rs 10,000 payment and a company charges Rs 50 as convenience fee for helping you make the payment via the credit card, you have to pay 18% GST on that fee too—earlier you paid a 15% tax on it. So the 3% increase is very small—just Rs 1.5 on Rs 50.

 

Source:  http://economictimes.indiatimes.com/articleshow/59501148.cms

Big data analytics to become $16 billion industry by 2025

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The sector is expected to reach USD 16 billion by 2025 and register CAGR of 26 per cent over next five years.

Big data analytics sector in India is expected to witness eight-fold growth to reach $16 billion by 2025 from the current $2 billion, industry experts said here.

The sector is expected to reach $16 billion by 2025 and register CAGR of 26 per cent over next five years, they said.

According to these experts, India is currently among top 10 big data analytics markets in the world and Nasscom has set a target of making the country one among the top three markets in the next three years.

“The government, industry and academia can collaborate to build an ecosystem to generate sustainable solutions by harnessing the power of big data and digital innovation,” said WNS Global Services Group CEO Keshav Murugesh said.

“The combined power of harnessing big data and digital solutions can drive tremendous results in improving the citizen experience, implementation efficiency and boosting the nation’s economy,” added Murugesh.

Speaking at the ‘Emerging Worlds Conference’ workshop organised by Indian School of Design and Innovation (ISDI) in collaboration with MIT Media Labs, Murugesh said, “India is a diversified country with a wide array of challenges, and it is pertinent that we as citizens of this country, innovate to find effective solutions that can make a difference to the billion lives that live here.”

“If big data can be put to cutting-edge use for our corporations and clients, it can very well be a catalyst for the economy and the country,” he added.

The workshop brought together industry leaders, technical experts, data scientists, innovators, academic institutions, implementation collaborators and progressive corporate collaborators to source national challenges and potential solutions.

What GSTIN means, how to register for GSTIN, what is ARN number, code in GST India 2017

by | posted in: Corporate Updates, Economy, Business Updates, Corporate Affairs, Income Tax,e-Filing- Individuals, Firms, Companies | 0
GST will have an immediate effect on a few things, especially regarding businesses. One of such things is the tax identification number, which is now known as GSTIN. Find out what exactly is GSTIN and how to register.

GST or Goods and Services Tax is currently the poster boy for the Indian Economy. While experts, as well as regular citizens, are divided on how GST is going to transform India, the real effects can only be seen after some time. Meanwhile, there are a few things which will have an immediate effect, especially to the businesses. One of these things is the tax identification number, which is now known as GSTIN (Goods and Services Tax Identification Number). GST is basically a 15-digit number which has replaced the Tax Identification Number (TIN) that business entities were allotted while registering under a state’s Value Added Tax law. Such businesses also had to get several other identification numbers from various places. But now, after the GST implementation, all such numbers will be replaced by GSTIN. Also, while registering on the GST portal you get an ARN (Application Reference Number), which is required for further queries regarding your application, including GSTIN number validation.

In order to get the number, there is a two-step process which is needed to be completed by each business. On its part, the government has kept the process of online registration for GST quite simple. The registration for taxpayers and GST practitioners is now open on the GST portal gst.gov.in and one really does not need to do much provided you have the necessary documents ready for the process. GST registration is critical because it will enable you to avail various benefits that are available under the GST regime. According to government data, of the 83.50 lakh excise, service tax and VAT assesses; 65.6 lakh have already registered on the GSTN portal. Of this 65.6 lakh, nearly 13 lakh business entities are yet to complete the second stage of the registration process. Know all about the whole process below.

What is GSTIN? Under the GST regime, all these different identification numbers required for indirect tax purposes will be replaced by a single umbrella number, the GSTIN. All the taxpayers have been consolidated into a single platform for compliance and administration purposes and have been assigned registration under a single authority. The government has set up GSTN – a special purpose vehicle to provide the IT infrastructure necessary to support GST digitally. All of these businesses will be assigned a unique Goods and Services Tax Identification Number (GSTIN). This 15-digit number is similar to the Tax Identification Number (TIN) that is allotted to business entities registered under a state’s Value Added Tax law. Currently, businesses providing services are also required to obtain a Service Tax Registration Number assigned by the Central Board of Excise and Customs (CBEC).

How does GSTIN get allotted? There is a two-stage verification process:
Stage 1: Upon registration on the GST Network portal, a business is given a provisional GSTIN.
Stage 2: In the second stage, the business entity has to log on to the GSTN portal and provide details of its business, such as the main place of business, additional place of business, directors and bank account details.

Notably, the government has allowed traders and businesses to continue their businesses even after July 1 with provisional IDs, until the time they get their final identification numbers.

What does GSTIN contain? A complete break-up of the proposed GST Identification Number. Each taxpayer is allotted a state-wise PAN-based 15-digit Goods and Services Taxpayer Identification Number (GSTIN).

1. Firt 2 digits of the number represents the state code as per Indian Census 2011.
2. Next 10 digits is the PAN number of the taxpayer.
3. 13th digit gets assigned based on the number of registrations within a state.
4. 14th digit is Z by default.
5. Last digit is the ‘sum’ check code.

ARN: Application Reference Number is the full form of ARN. Basically, ARN Status in GST means, a user can check the status of their GST Registration Application. The ARN will be sent to the Registered User’s Mobile number and Email Address provided. There are five types of possible ‘status’ of your application: ‘Provisional’, ‘Pending for Verification’, ‘Validation against Error’, ‘Migrated’, and ‘Cancelled’.

 

 

Source: http://www.financialexpress.com/economy/gstin-under-gst-india-2017-what-gstin-means-how-to-register-for-gstin-what-is-arn-number-code-in-gst-india-2017/746661/

Bad loans at Indian banks climb to a 15-year high and may increase further Bad loans at Indian banks climb to a 15-year high and may increase further

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Bad debts at Indian lenders, especially state-run banks, have climbed to a 15-year high and may increase further, a central bank study showed.

Bad debts at Indian lenders, especially state-run banks, have climbed to a 15-year high and may increase further, a central bank study showed. Under the baseline scenario in a “macro stress test,” the industry’s gross bad-loan ratio may increase to 10.2 percent by March 2018 after climbing to 9.6 percent in March 2017, the highest since 2002, according to the Reserve Bank of India’s Financial Stability Report released Friday. Stressed assets, including soured debt and restructured loans, eased slightly to 12 percent in March 2017 from 12.3 percent in September 2016.

Weakness in the Indian banking system is a threat to growth in Asia’s third-largest economy and may stall Prime Minister Narendra Modi’s plan to revive credit growth from near a two-decade low. The soured loans have contributed to a $191 billion pile of zombie debt that’s cast the future of some lenders in doubt and curbed investment by businesses. “The RBI and the government are proactively taking steps to resolve NPA challenges in the banking sector,” Deputy Governor NS Vishwanathan said in a foreword to the report. “We have also activated prompt corrective action to stem the slide in the banking system.”

State-run lenders under performed their peers in the private sector, the report showed, which measures risks to the banking system by tracking factors such as profitability, asset quality and liquidity. Last month, the government gave new powers to the RBI in an effort to clean up the country’s bad-debt mess, which has left banks struggling with billions of rupees in nonperforming loans. The government amended the Banking Regulation Act to enable the RBI to order lenders to initiate insolvency proceedings against defaulters and to create committees to advise banks on recovering their loans.

The RBI in June ordered the banks to use the insolvency courts to find a solution for 12 of the debtors, though it didn’t name the institutions on its list. Earlier in the decade, many Indian steel and construction companies borrowed to fund expansion at a time when the economy was expanding at 9 percent to 10 percent a year. Loans turned sour as that growth slowed, weakening demand for steel used in construction projects.

Source: http://www.financialexpress.com/economy/bad-loans-at-indian-banks-climb-to-a-15-year-high-and-may-increase-further/744225/